I've kept myself out of this debate for a while, partly because of my moral objections to paying for sex as well as being with a woman who made a "career" of it.
Setting that moral position aside, I think the issue of legalizing prostitution is rife with problems.
If - under this system of quarterly exams - a prostitute is infected with HIV and a condom breaks and all the alleged safeguards fail, how do you deal with the aftermath? She may have passed on HIV to hundreds by the time the disease is caught.
Secondly, how do you contain the health risk if the infected prostitute drops out of the legal system and continues in her line of work, evading the public health bureau that is charged with making sure diseased women are out of the biz?
I mean come on, we can't even agree on nationalized health care. Does anyone really think one could get bipartisan support for a Federal Bureau of Prostitution?
Look at it from a historical standpoint, too. No matter how much we've tried to regulate and legitimize society's vices, they have a nasty habit of encouraging new ones... that thrive off of simply being illegal.
I don't think we could ever hope to fully contain prostitution within the bounds of the law.
Ultimately, AIDS changed the whole game IMO.
It has made casual hookups more risk than they're worth.
Add that belief to the cost of HIV therapy (which in some form would come back to the taxpayer) and I have a hard time believing that any revenue from nationally regulated prostitution would cover those costs.
My 2¥.

h: