Will Tax Incentives Spur Medicaid Care?

TMA Written Testimony on House Bill 453

House Ways and Means Committee
House Bill 453 by Rep. Matt Shaheen 

April 9, 2019

The nearly 53,000 physician and medical student members of the Texas Medical Association sincerely appreciate Representative Shaheen for offering this legislation and for Chairman Burrows and Committee for conducting this public hearing.

For centuries, physicians have provided free or reduced-price care to patients who needed their medical services but could not afford to pay for them. This past year, our research estimates that the average Texas physician provided $68,939 worth of charity care.  However, as profit margins shrink, so does the physician’s ability to provide free care.

In some cases, these are voluntary acts of charity. In other instances, such as in hospital emergency rooms, physicians provide care first and inquire about ability to pay later, as mandated by federal Emergency Medical Treatment and Labor Act (EMTALA) laws. 

Physicians who provide charity care are providing a service that is valuable directly to the patient and indirectly to Texas taxpayers. In outpatient settings, for example, providing good ambulatory care can prevent bad outcomes for the patient that could become costly inpatient care at taxpayer expense.  

Few real options are available that address this problem head-on. There is no federal tax deduction for the value of donated personal services. Texas’ franchise tax deduction for charity care, though potentially helpful to large or incorporated groups, provides little or no benefit to physicians in solo practice, simple partnerships, or other small practices. 

Again, we appreciate the property tax reduction proposed in this legislation and the intentions of Representative Shaheen. It is a helpful attempt to solve some of this problem. We do have questions as to how the system would work and how much effort would be required of both physicians and local jurisdictions. It also could have the unintended consequence of discouraging Medicaid provider participation, particularly among physician subspecialists.

While we take no formal position on this legislation, we do recommend that lawmakers focus on actions that could have much more certain, immediate, comprehensive, and widespread impact. We have shared many of these with the House Appropriations Committee in regards to House Bill 1:

  • Improve physician Medicaid payment and simplify the overwhelming and costly administrative burden for physicians in the Medicaid program.
  • Reduce uncompensated care costs among physicians by increasing coverage among Texas’ most vulnerable populations, including by enhancing postpartum coverage for women enrolled in the Healthy Texas Women program.   
  • Improve the financing and operation of indigent health care provided by counties and hospital districts, with a goal to fund physician outpatient care, and to simplify the eligibility, application, and payment request processes for physicians and their patients.
  • Provide funding or encourage counties and/or hospital districts to provide funding for local charitable programs that help to fund services and connect uninsured patients to needed care.

TMA thanks you for your consideration of our comments and we are ready to work with the author and committee during its deliberations on the issue of access.

86th Texas Legislature Letters and Testimonies

TMA Legislative main page

Last Updated On

April 09, 2019

Originally Published On

April 09, 2019

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