How do Gov. Josh Green’s general excise tax (GET) cuts help low-income people who pay hardly any taxes? Cuts in taxes benefit rich folks. Removing the 4.5% general excise tax from medical services, like bills for doctors and dentists, blood tests, MRIs, X-rays, and drugs would keep more money in the pockets of the citizens of the Big Island. A tax cut that is felt every day.
People with lower incomes spend a larger portion of their income on medical services. Hawaii is one of only four states nationwide that taxes medical services. These essential services should not have added excise taxes.
In 2022, Hawaii had a shortage of 1,000 doctors, a 300-doctor increase from two years ago. This is a health care crisis! Doctors cannot pass the 4.5% excise tax to patients who are on Medicare, Medicaid, and TRICARE, so excise taxes are deducted from doctor’s income. This means doctors can earn more money by practicing in another state, so they move.
Removing excise tax from medical services might result in a couple of positive things: 1) keep more doctors in Hawaii by making their incomes more like California or Alaska; 2) if there are more doctors, there would be more immediate and better care for residents and older people wouldn’t 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 come over from Oahu periodically. They are booked up months in advance with waiting lists. Then patients have to travel to Oahu to get surgeries.
A personal example: My friend Sara needed a knee replacement. I flew with her to Oahu. A very long day! We flew from Kona to Oahu at 6 a.m., got her to the surgery clinic, she was in and out in five hours. Still dopey from anesthesia, we got her into a wheelchair at the hospital, got a taxi to the airport, a porter pushed her in a wheelchair, and we got her onto the plane. One-third of the plane was full of surgical patients. We landed in Kona, and I got her into another wheelchair, into my car and I drove her home. We struggled up the five stairs to her house and got her into bed. Two weeks later, she went back to Oahu for her checkup with the surgeon. Two years later she needed to redo the knee.
How is this great patient care?
Our governor is a medical doctor, who knows the reimbursement difficulties. From being a senator and lieutenant governor, he knows how to get laws changed. He is the perfect person to unite elected officials in Congress and at the state Legislature to lobby to adjust the Medicare reimbursement rate.
The Medicare reimbursement rate is the rate at which Medicare (the federal insurance program) reimburses doctors, pharmacies, hospitals, and other medical service providers. According to the Centers for Medicare and Medicaid Services (CMS), Medicare’s reimbursement rate on average is roughly 80% of the total bill. Those big bills that you see, the doctors, hospitals, X-ray, and MRI providers aren’t reimbursed that amount, which is why so many medical service providers do not accept insurance.
Hawaii has one of the lowest Medicare reimbursement rates in the nation, similar to other rural areas like Louisiana, Guam, Puerto Rico and Ohio. According to an assessment from the Hawaii Physician Shortage Crisis Task Force, providers in Hawaii receive rates similar to Ohio physicians, despite the higher cost of living here. Alaska has solved the problem by getting the federal government to grant a Geographic Price Cost Indices (GPCI) of 1.5 from Medicare, which raises a physician’s reimbursement rate. By comparison, other states such as Ohio, California, and Hawaii, have GPCIs closer to 1.0. The federal government raised Alaska’s GPCI to compensate for the difficulty of providing health care services to Alaska’s widespread, rural communities. The same could apply here, because Hawaii’s physicians also serve a widely dispersed, geographically isolated population. and because we have a much higher standard of living than other rural states.
By reducing the excise tax on doctor’s fees and adjusting the Medicare reimbursement rate, our state could attract and retain more doctors, lessen the doctor shortage, allow older people to stay here and make medical care more easily accessible for all residents. Removing excise (GET) taxes would keep more money in the pockets of the residents in Hawaii, visitors would have more to spend on vacation too, an all-win situation! Healthy people with more money to spend are happier and might just re-elect Dr. Josh Green as governor.
Debbie Hecht is a resident of Kailua-Kona