Below is a policy proposal I wrote and submitted to the United States Congressional Finance Committee:
PROMOTING HEALTHCARE RELATED INVESTMENT IN HIGH NEEDS AREAS
OVERVIEW OF THE PROBLEM
Based on a comparison of discharges for avoidable hospital conditions (AHCs), we find that Paris provides greater access to primary care than Manhattan. Age-adjusted AHC rates are more than 2.5 times as high in Manhattan as in Paris (Gusmano, Rodwin, & Weisz, 2011).
For uninsured Americans, access to health care depends largely on where they live, this study suggests. It found that people in some cities were twice as likely to report trouble getting care as those in other cities. Overall, about 31 percent of uninsured Americans said they did not get needed care or they postponed getting care, the Center for Studying Health System Change reported in a study published by the Journal of the American Medical Association (“Access to health care varies,” 1998).
Recognizing the importance of health coverage for assuring children access to preventive and other health care for a healthy start in life, there currently is significant focus at the national and state level on reducing the number of uninsured children. Largely because of their high uninsured rate, low-income non-citizen children have particularly poor access to care, with many lacking a regular provider and going without preventive care (Artiga & Schwartz, 2007).
Controlling for age, gender, ethnicity, and area of residence, children who received care from a private practice pediatric group were 73% less likely to utilize the Emergency Department if insured and 93% less likely if uninsured to use the ED than children who had not visited a pediatrician. Uninsured children were nearly 4 times more likely to use the ED than insured children. Among insured children, those covered by Medicaid were 54% less likely to use the ED than children with private insurance. Compared with white, non-Hispanic children, Asian or Hispanic children were no more likely to use the ED. Insured Native American children were more than twice as likely as white, non-Hispanic children to utilize the ED (Johnson & Rimsza, 2004).
EFFECTS OF THE PROBLEM
The effect of poor access to healthcare, ie. the lack of a primary care physician, local clinic, and a general lack of quality healthcare alternatives related to socioeconomic status and geographic location means a lack of quality healthcare treatment for those people who need it. This means an increase in adult and child mortality rates for those individuals, an increase in the severity of disease in those individuals and an increase in avoidable hospital conditions or (AHCs).
CURRENT MODEL INVESTMENT POLICYS
The American Recovery and Reinvestment Act was enacted in 2009. The legislation allowed an extension for businesses to continue to deduct bonus depreciation along with an expanding of IRS section 179. Section 179 outlines what is subject to bonus depreciation. The goal of the ARRA was to stimulate the economy and to incentivize businesses to invest in new property and equipment. The legislation allowed business to recover more of their depreciated asset during the first year than would otherwise be possible. Section 179 of the IRS code allowed businesses to deduct up to 250 thousand dollars of a durable goods purchase in 2009. In order for a business to quality for the 100% bonus depreciation rule, the purchased property or good would have had to occur before September 8, 2010 and under section 168 acquired or constructed after 2008. If the business acquired the property or durable good after September 8, 2010 the business (or taxpayer) would still be eligible for a 50% depreciation bonus the first year, as opposed to the 100% depreciation bonus if bought before September 2010. In December of 2010 the ARRA was amended by The Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010. This act extended the 100% bonus depreciation from September 8, 2010 to January 1, 2012 and then reverts back to the 50% bonus for 2012. With the new extension, the property or good must have been placed in service before 2012, but after 2008 and have a recovery period of less than 20 years.
ACCELERATED DEDUCTIONS BASED ON GEOGRAPHIC LOCATION
These accelerated methods of depreciation are not equal to traditional straight line method, but instead provide a higher level of depreciation for a purchase in the earlier years of a property or good. Most types of tangible goods such as buildings, machinery, vehicles, equipment; computer software and even copyrights and patents are despreciable, the one exception being land. Current incentives to invest in distressed areas include the Federal Empowerment Zones (EZs) program and a second example being the New York State Excelsior Jobs program which superseded the New York State Empire Zone program. If a business qualifies for the EZs program among other incentives, they will qualify for increased 179 deductions which include: taking an increase in deduction up to $35,000 of the cost of eligible equipment purchases, subject to certain limitations, in the placed-in-service year of the equipment in an EZ location. Those deductions were available for equipment placed in service after December 31, 2001, but before January 1, 2010. The deductions were $35,000 per business, with the full benefit received if a total of 160 thousand dollars to 1 million dollars of eligible equipment was purchased and placed in service in 2007. You can also see IRS Publication 946 for what equipment is (was) eligible. Also see IRS Publication 954 for what the requirements are for qualifying as an “EZ business.” The second example is the NYS Excelsior Jobs Program. Under the Excelsior Investment Tax Credit a company which qualified could deduct two percent of qualified investments on their taxes. They could also qualify for the Excelsior Research and Development Tax Credit which is a credit of 50 % of the Federal Research and Development credit up to three percent of research expenditures in New York State, if investments was in research.
Knowing this I propose a similar deduction schedule as the ARRA and Section 179 of the IRS code based on geographic consideration and specific to medical/healthcare related investment in urban high needs areas, such as those designated as Federal Empowerment Zones or similar to NYS older Empire Zone locations. Section 179 outlines what is subject to bonus depreciation and this policy would follow those accelerated deduction schedules, though for medical investments. Again like the ARRA in order for a business to quality for the 100% bonus depreciation rule the purchased property or good would have have to be before a date in time to be determined. However, unlike the ARRA, investments would be geographically based, similar to Federal Empowerment Zones or previous New York State Empire Zones and would have to be medical or healthcare related in nature. The geographic regions would be delineated by AHC rates (avoidable hospital conditions), uninsured rates, level of emergency department use or other such factors. The types of property or equipment investments which would qualify for the accelerated deduction schedule would be construction built for healthcare related purposes, rehabilitation of buildings used for clinical or healthcare related purposes, major investments in healthcare related equipment or in healthcare information technology. The goal of this proposed legislation would be to facilitate an increase in preventive healthcare services as well as an increase in the quality of healthcare services provided in high need geographic regions, or with populations which are undeserved at this time.
Access to health care varies. (1998).Journal of Commerce, p. 5.A-5A. New York, United States, New York.
Artiga, S., & Schwartz, K. (2007, May). Health Insurance Coverage and Access to Care for Low-Income Non-Citizen Children. The Henry J. Kaiser Family Foundation. Washington, DC.
Bonus Depreciation and Increased Section 179 Deduction under the American Recovery and Reinvestment Act. (n.d.). Internal Revenue Service. Retrieved March 24, 2012, from http://www.irs.gov/businesses/small/article/0,,id=213666,00.html
Excelsior Jobs Program . (n.d.). Welcome to Empire State Development. Retrieved March 24, 2012, from http://www.esd.ny.gov/BusinessPrograms/Excelsior.html
Gusmano, M. K., Rodwin, V. G., & Weisz, D. (2011). A new way to compare health systems: avoidable hospital conditions in Manhattan and Paris. Health affairs (Project Hope), 25(2), 510-20. doi:10.1377/hlthaff.25.2.510
Johnson, W., & Rimsza, M. (2004). The Effects of Access to Pediatric Care and Insurance Coverage on. Pediatrics, 113(3), 483-488.
Welcome to the Community Renewal Initiative – Economic Development – CPD – HUD. (n.d.). Community Planning & Development. Retrieved March 24, 2012, from http://www.hud.gov/offices/cpd/economicdevelopment/programs/rc/index.cfm