How does Gov. Josh Green’s general consumption tax (GET) cuts help low-income people who barely pay taxes? Tax cuts benefit rich people. Eliminating the 4.5% general excise tax on medical services such as doctor and dental bills, blood tests, MRIs, X-rays and medications would keep more money in the pockets of Big Island citizens. A tax cut that is felt every day.
People on lower incomes spend more of their income on medical services. Hawaii is one of only four states nationwide that tax medical services. These essential services should not include additional consumption taxes.
In 2022, Hawaii had a shortage of 1,000 doctors, up 300 doctors from two years ago. This is a health crisis! Physicians cannot pass the 4.5% excise tax on to patients on Medicare, Medicaid, and TRICARE, so excise taxes are deducted from the physician’s income. This means doctors can make more money practicing in another state, so they relocate.
Eliminating the excise tax on medical services could lead to a few positive things: 1) Keep more doctors in Hawaii by making their income more like California or Alaska; 2) If there were more doctors, there would be more immediate and better care for residents, and the elderly would not have to move to the mainland for critical medical care.
Why do we need more doctors on the Big Island? Few specialists reside on the Big Island but regularly come over from Oahu. They are fully booked months in advance with waiting lists. Then patients have to travel to Oahu to have surgery.
A personal example: My friend Sara needed a knee replacement. I flew to Oahu with her. A very long day! We flew to Oahu from Kona at 6am, took her to the surgery clinic, she was in and out in five hours. Still groggy from the anesthesia we put her in a wheelchair at the hospital, took a taxi to the airport, a porter pushed her into a wheelchair and we put her on the plane. A third of the plane was packed with surgical patients. We landed in Kona and I put her in another wheelchair, in my car and drove her home. We fought our way up the five steps to her house and put her to bed. Two weeks later, she went back to Oahu to see the surgeon. Two years later she had to redo the knee.
How is this great patient care?
Our governor is a doctor who knows the reimbursement difficulties. As a Senator and Lieutenant Governor, he knows how to change laws. He is the perfect person to unite elected officials in Congress and the state legislature to lobby for an adjustment to the Medicare reimbursement rate.
The Medicare reimbursement rate is the rate at which Medicare (the government insurance program) reimburses doctors, pharmacies, hospitals, and other medical providers. According to the Centers for Medicare and Medicaid Services (CMS), Medicare’s reimbursement rate averages about 80% of the total bill. Those high bills you see are not reimbursed to the doctors, hospitals, X-ray and MRI providers, which is why so many medical providers do not accept insurance.
Hawaii has one of the lowest Medicare reimbursement rates in the country, similar to other rural areas like Louisiana, Guam, Puerto Rico and Ohio. According to an assessment by the Hawaii Physician Shortage Crisis Task Force, providers in Hawaii receive rates similar to Ohio doctors, despite the higher cost of living. Alaska solved the problem by getting the federal government to allow a Medicare geographic price-cost index (GPCI) of 1.5, which increases a doctor’s reimbursement rate. In comparison, other states like Ohio, California, and Hawaii have GPCIs closer to 1.0. The federal government increased Alaska’s GPCI to compensate for difficulties in providing health services to Alaska’s widespread, rural communities. The same might be true here, since Hawaii’s doctors also serve a widely dispersed, geographically isolated population. and because we have a much higher standard of living than other rural states.
By lowering the excise tax on physician fees and adjusting the Medicare reimbursement rate, our state could attract and retain more physicians, reduce physician shortages, accommodate older people, and make medical care more accessible to all residents. Eliminating the Excise Tax (GET) would keep more money in the pockets of Hawaii residents, visitors would also have more to spend on vacations, an all-win situation! Healthy people with more money to spend are happier and can use Dr. Just re-elect Josh Green for governor.
Debbie Hecht lives in Kailua-Kona