How Hawaii GE Tax Squeezes Private Practice Doctors
Dear Editor, July 25, 2022
1) Hawai’i is the ONLY state in the union that taxes Medicare, Medicaid, Champus (all federal programs), by charging GET tax on all private medical practices’ receipts.
Not a good look for the “Aloha State.” (Can you say government greed? I can.)
By federal Medicare law, all doctors are prohibited from passing that GE tax on Medicare on to their patients.
2) Hawaii's not-for-profit hospitals, such as Maui Memorial & Hilo Medical Center, don’t pay any GET tax even on the fees collected for their employee physicians. All private clinics and doctor practices DO pay GET, on ALL insurance fees, EXCEPT Medicare, and they attempt to pass it on to patients, clearly at some extra cost in the effort.
3) Hawai’i Medicare physicians payment schedule are near lowest in nation--50% less than Alaska. Then Hawai’i takes 4.7% GE Tax off the top. That’s a tax on the gross, not the net.
Now the federal Center for Medicare & Medicaid Services (CMS) is proposing a 4.33% cut for 2023, as we face 9% cost of living inflation at the same time.
Years ago, Sen. Dan Inouye & Alaska’s Sen. Stevenson reached a deal: Alaska got a 50% Medicare bump up. Forever.
We got a School of Pharmacy (Now the Dan Inouye School of Pharmacy. Yay! Not.)
4) Hawai’i has the highest cost of living in the nation. Now combine that with #3.
5) Doctors employed by the hospitals get higher Medicare rates than docs not so employed plus other bump ups and hospital bonuses for various things, including every COVID admission, ventilation, and death.
6) Hospital doctor employment contracts are tied to productivity, including in-house referrals. They are dinged for outside referrals, a blatant prima facie federal Stark Law violation regarding referral for profit, which further cuts off private practices from patient access.
Hawaiʻi Physician Workforce Assessment Project Report (UH School of Medicine) for 2020, which was submitted to the Hawaiʻi State Legislature, estimated a Hawai’i shortage of over 1,000 doctors, and increasing steadily. 37.3% of Hawaii’s doctors are over age 60.
And folks wonder why they can’t find a doc, that the docs in private practice are aging, dying, leaving, retiring, quitting & giving up. They shouldn’t. As in any abusive relationship, eventually you end it.
Edward Gutteling, MD
Member, Hawai’i Physician Shortage Crisis Taskforce
UH Hilo team physician, and one of the last marginalized, free-range, endangered orthopedic surgeons on the Big Island