Lowden’s ‘barter’ proposal isn’t as eccentric as it sounds
Republican U.S. Senate frontrunner Sue Lowden has been excoriated within and without Nevada for a comment she made on the campaign trail.
A video of Lowden, posted online, was reportedly shot by a Democratic Party “monitor” on April 6 at an appearance in Mesquite. In it, Lowden suggests, as an alternative to the new Democratic health-care law, that patients bargain with their physicians over prices.
“I would have suggested, and I think that bartering is really good,” Lowden said at the appearance. “Those doctors who you pay cash, you can barter, and that would get prices down in a hurry. And I would say, go out, go ahead out and pay cash for whatever your medical needs are, and go ahead and barter with your doctor.”
On the video, Lowden also made reference to health savings accounts and a Republican proposal to increase the amount that could be saved in such accounts: “I would have said to all of you, if you have a health savings account, I don’t really care how much you save. Good for you—pre-tax, go ahead and save as much as you want. It’s for your health, and if you want to save 20,000, good for you. Save it, pre-tax.” That prompted a reader comment on a Las Vegas newspaper asking how someone making $36,000 a year could save $20,000.
The video has been posted or quoted on more than a hundred sites online and has generated widespread criticism and ridicule.
Tonight Show host Jay Leno told his audience, “I love this story. A woman named Sue Lowden, I think it is—L-O-D-E-N. She’s a Republican who is running for the Senate in Nevada. You know this health-care thing? The Republicans are against it. She says one of the ways you can keep the costs of your health care down is to barter with your doctor. You know, trade with him. That’s a great idea. But what if your doctor’s not Amish?”
Nevada State Democratic Party figure Phoebe Sweet led a delegation to Lowden’s campaign headquarters with a goat, four chickens and reporters in tow. “Since I tried to trade this goat for some health care, and my doctor looked at me like I’m crazy, so I was just curious if you had some information on her barter plan,” Sweet told the unfortunate receptionist. Sweet called the barter plan “ridiculous.”
Naturally, the dispute has generated a good deal of news coverage of the reaction to and political impact of Lowden’s comments—but not of the barter proposal itself. Before it is dismissed out of hand, consider:
• In Henderson, Nevada’s second largest city, Western Barter Corporation acts as a broker between businesses bartering “a wide variety of products and services around the United States and Canada.”
• At least 11 state governments and an unknown number of municipal governments have stuck a toe in the barter field in some fashion as a way of coping with the recession.
• At U-Exchange, an online site, Nevadans are bartering scuba instruction, slot machines, photography, furniture, cars, flight instruction and even real estate.
• The Internal Revenue Service website reads, “The internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. … If you are in a business or trade, you may be able to deduct certain costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds From Broker and Barter Exchange Transactions. The IRS also will receive the same information.” Even before the recession, barter was common enough that the IRS had a procedure for it. It is declared on Schedule C.
• The Nevada Department of Taxation (NDOT) says “barter clubs” are becoming popular. Nevada law contains provisions for bartering and NDOT oversees barter when it becomes more than a casual thing between friends. “Every person making more than two retail sales of tangible personal property during any 12-month period is considered a ‘Retailer’ and is required to register with the Department and collect and remit sales tax on those retail sales,” according to an NDOT publication. In addition, if a retailer who normally deals in cash sales agrees to a barter, the normal tax kicks in.
There is, in fact, what the New York Times has called a “shadow economy” of bartering out there.
In November, the Times reported on people in the San Francisco area who were doing their holiday shopping through barter, a development that the newspaper said was fueled by hard times: “In a time of hedge funds and derivatives, barter might sound old-fashioned. But thanks to neighborhood swaps, websites like Craigslist and groups like International Monetary Systems, it is making a comeback during this economic downturn. And with the Christmas shopping season officially under way, the shadow economy, with its ersatz currency, is a growing force in the Bay Area.”
Economists say the problem with Lowden’s idea is not the bartering, but the notion of using it with physicians. That’s not a fruitful field for bartering, they say.
“What could I offer a doctor for his services?” asked economist Glen Atkinson.
“What could you offer a doctor—that you write a story? … It would take a lot of haircuts for a barber to pay for an office visit. You know, something like that could be done, but it would be extremely limited.”
And even if a doctor accepted barter for care, Atkinson said, it would be the merchant who would be able to do it—employees of most kinds of companies would be in no position to barter their company’s products or services.
“But if you work at a job, you couldn’t barter anything out of your company. … She [Lowden] seems to be sort of assuming everybody is their own employer.”
But economist Thomas Cargill, who is consulting with the Lowden campaign, said he thinks the whole thing has sprung from a misunderstanding. After the exact words of Lowden’s comment were read to him, he said it was clear that although she used the term barter, she was actually talking about negotiating cash payments so the physician’s office would not have to process insurance claims.
“Why can’t you negotiate a fee with the doctor?” Cargill asked. “It’s being done all the time, you know. … The word barter usually means exchanging goods for goods. But that’s clearly not what she’s saying. So she’s using the word barter as the same for negotiating. Probably the word negotiating would have been clearer, but it’s obvious what she’s saying. And a doctor would be quite willing to discount the service. … It is a huge burden on a medical office to deal with Medicare, to deal with government, to deal with insurance companies, with forms. … So if somebody walks in and says, ‘Look, I’ve got cold cash, I need some services, what would you provide your service for?”—I don’t see any problem with that. None.”
In fact, when the publicity was first spreading, Lowden’s campaign sent a response to Talking Points Memo, one of the sites that posted the video, to try to clarify what she said:
“Currently, there are [a] number of medical doctors in Nevada and across America who already accept cash, check and credit cards,” read the Lowden statement. “This isn’t a plan, this is fact. Usually, doctors will offer a lower payment in an agreement with patients because it saves them the hassle of dealing with insurance companies and government-administered health care. This may come as a surprise for Harry Reid, but many doctors are also small business owners, and they have their own bills to pay.”