If an apple a day keeps the doctor away, what would it take to keep healthcare out of the news for 24 hours? An orchard? The topic that seems to be on the mind of American’s everywhere once again topped headlines this week. While Obama avoided the fray early in the week, he appeared Thursday in a Philadelphia-based radio talk show to shore up his position. In doing so, he laid down a set of four requirements for what he would see as a successful overhaul of the U.S. health care system: reducing overall healthcare costs, extending affordable coverage, protecting consumers, and not adding to the budget deficit.
Elements of this list echo sentiments raised by David Dranove, Walter J. McNerny Professor of Health Industry Management here at the Kellogg School. His 2008 book Code Red (previewed over at Insight) foreshadowed some of the requirements necessary to make healthcare reform meaningful (including streamlining patient records and drastically reducing the number of uninsured), while his blog of the same name recently explored a few of the payment options available to Congress and the Obama administration.
Secret Swiss savings
If you were able to tear yourself away from the frightening soap opera of assault rifle-toting protestors for a few minutes, you may have heard the muted cries of the Swiss tradition of bank secrecy. After a successful lawsuit against UBS earlier in the year, the U.S. Internal Revenue Service (I.R.S.) dealt Europe’s second largest bank another crushing blow. Thanks to a little diplomatic hardball, secret bank accounts will remain a Swiss staple, but using those accounts to hide money from the taxman will not.
In a deft political move, the Swiss government did not require the banks to break the law (secrecy is codified in the landlocked nation), but rather loosened its definition of fraud, broadening it to include substantial tax evasion. Swiss banks were already compelled to reveal account details in other fraudulent cases—like drug deals and money laundering—so the slick amendment allows Switzerland’s valuable banking industry to save some face while bowing to diplomatic pressure.
The accounts in question were making many wealthy Americans gobs of interest which went unreported to the I.R.S. The agreement to release the names “seems like a good thing for U.S. taxpayers,” said Mitchell Petersen, Glen Vasel Professor of Finance here at the Kellogg School.
“This is essentially not paying taxes you’re supposed to pay,” he said of the account holders’ actions. Since the accounts did not have any name publicly attached to them, the culprits skirted the law by simply not reporting the interest to the I.R.S. By obtaining the names, though, the I.R.S. has just upped the ante in what Petersen describes as a tax “arms race.”
“The accounting and tax system are constantly evolving,” Petersen said. The I.R.S., he added, likely knows they won’t catch everyone concealing money in offshore accounts, but the few big fish they do hook should make many potential offenders think twice in the future.