Talking Points on Taxing Physician Practices

Talking Points on Taxing Physician Practices  

  • No other business is required to give away its products or services for free. However, physicians have a legal and ethical obligation to provide emergency care without asking whether the patient can pay. Plus, physicians provide charity care and subsidize care for Medicare, Medicaid, and Children's Health Insurance Program (CHIP) patients.
  • Taxing sickness is neither good public policy nor good for Texas.
  • A tax on medicine would further restrict our patients' access to quality medical care.
  • Texas physicians already pay a $1 billion-per-year hidden tax through unreimbursed charity care. This is a $1 billion savings to Texas taxpayers. New taxes on health care would drive costs even higher or be unrecoverable expenses that would force more Texas doctors out of practice and worsen our state's access-to-care crisis.
  • Private insurance companies and government programs pay physicians according to prearranged, fixed managed care rates. Taxing health care shrinks the amount of each dollar that goes to health care.
  • Taxing health care will increase the cost of health care. Patients will be sent to public hospitals, further wasting taxpayer dollars on care that could be performed more affordably in a doctor's office.
  • Medicaid and CHIP payments to Texas physicians cover less than half the cost of providing care. Each Texas physician provides an average of $49,000 per year in uncompensated care to Medicaid patients; this figure is even higher in rural Texas and along the U.S.-Mexico border.
  • A robust medical system is vital for continued economic development in our state. Without a healthy and educated workforce, and ready access to high-quality medical care, Texas cannot attract new industries and employers.
  • A tax on patient care will cost Texas jobs in the health care sector and be bad for our economy. Health care is a vital component of Texas' economy, generating tens of billions of dollars in revenue per year and providing hundreds of thousands of jobs.
  • TMA recognizes that a robust public school system is essential to developing the physicians of tomorrow. A well-educated Texas is a healthier Texas. However, a healthy Texas requires healthy physician practices. Increasing expenses and falling reimbursements already threaten the viability of many of our offices.
  • Patient care decisions involving expensive treatments to save a patient's life should not result in a punitive tax on the patient and doctor.

  Talking Points on Providing Tax Exemptions on Medical Services  

  • Taxing patient care is neither good public policy nor is it in the best interests of Texas.
  • Texas physicians already pay a huge hidden tax that directly offsets real taxes that other Texans would otherwise have to pay. No other profession is required to give away its products or services for free.
  • Ethically and legally, physicians must provide emergency care without inquiring into the patient's ability to pay. Texas physicians already pay a $1-billion-a-year hidden tax via unreimbursed charity care.
  • Medicaid and Children's Health Insurance Program (CHIP) payments to Texas physicians cover less than half the cost of providing care. Texas physicians provide $49,000 a year each in undercompensated care to Medicaid patients; even more in rural Texas and on the border.
  • Although Medicare isn't a state program, how we provide quality care to elderly Texans is a state problem. Medicare pays only a fraction of physicians' actual costs. Payments are low because, they haven't kept up with the government's own conservative estimates of physicians' cost increases. In fact, our costs to care for patients have grown twice as fast as Medicare payments.
  • Charity care exemptions might be difficult to calculate and verify, but tax exemptions based on government health care revenues (Medicaid, Medicare, and CHIP) would be simple to calculate and verify.
  • Basing physicians' tax exemptions on all of their Medicaid, Medicare, and CHIP revenues would provide an incentive for all physicians to expand their participation in these programs. 

Texas Medical Association Talking Points on "Elective" Cosmetic Surgery Tax  

  • Any definition of a taxable cosmetic procedure is subject to a great deal of ambiguity? In many cases a physician could perform the identical procedure on two different patients and the procedure might be taxable for one and not taxable for the other.
  • Contrary to the popular misconception, a tax on cosmetic procedures would hurt average Texans - like those with acne scars or disfiguring birthmarks? Or won't routine newborn circumcision be taxable?
  • Removal of moles or other skin lesions may be considered cosmetic. But what if a subsequent pathology report reveals that the mole is really skin cancer? Can the taxability be determined after the time of service? If so, how will the physician collect the tax?
  • Rhinoplasty - a nose job - may be cosmetic. But how about when the procedure has functional aspects, like when it helps a patient breath or corrects a deformity secondary to trauma?
  • Many other procedures, such as septorhinoplasty for airway obstruction and breast reconstructions that also involve enlargement, involve both cosmetic and functional components. Will these procedures be subject to the tax? If so, are they taxed in whole or in part?
  • Many cosmetic procedures, including scar revisions, can be done to improve appearance after a previous functional repair. Will those patients have to pay the tax?
  • How about consultations that lead to cosmetic surgery? Will they also be subject to the tax? What if the procedure is never performed?
  • Often physicians order preoperative blood work and medical tests before a procedure. These procedures have independent medical significance because the patient is about to undergo surgery. In most cases, the physician who provides these services is not informed of the ultimate procedure to be performed. Will these procedures be taxed if they support a cosmetic procedure? Again, what if the procedure is never performed?
  • If a medical complication results from a cosmetic procedure, will the subsequent medical care and procedures to resolve the complication result in additional taxable services?
  • Who is going to make all of these decisions? Won't auditing tax compliance require the Comptroller's staff to make medical necessity decisions? Do we really want to set up another situation where a non-medical professional is second guessing the clinical decisions made by the physician at the bedside? Far too many of us have already seen what happens when we leave those decisions up to HMOs.
  • In these cases, can we really determine taxability any way other than by looking into the patient's medical record? Physicians have a legal and ethical duty to maintain the confidentiality of the information patients provide. Our state and federal privacy laws likely will allow a physician to release a patient's personal health information to a tax auditor. But we have a deeper policy question. Do you really want the Comptroller's tax auditors pawing through your personal medical records?
  • All of these questions and ambiguities lead us to basic, bottom-line question: Why would Texas impose a subjective tax that requires an excessive amount of time and resources with little-to-no return to the state?
  • New Jersey is the only state to have implemented a cosmetic surgery tax. We've learned from New Jersey that this tax is financially risky. Legislators there grossly overestimated potential revenue from the tax and underestimated the administrative burden to collect it. New Jersey projected to raise $25 million in its first quarter. In fact, they collected just $6.8 million.
  • Most importantly, aren't health care costs high enough already? Won't this tax not only increase the costs to our patients but also add to the already overwhelming administrative expense of running a medical office? We don't need additional taxes on health care. We need to spend our scarce health care dollar on health care, not elsewhere.
  • In short, taxing elective cosmetic surgery is an inappropriate and inherently flawed answer to our state's fiscal problems.