UMA says NO to Taxes Targeted at Physicians for Medicaid Expansion

"Ding Dong, the tax is dead. Which old tax? The doctor tax.
Ding Dong, the doctor tax is dead." (With apologies to the Munchkins)

A Medicaid Expansion plan containing a physician and other provider tax as a funding mechanism released in September is no longer on the table. Thanks to the work of the Utah Medical Association, the provider tax proposal was soundly rejected by the Republican House Caucus before it ever saw the light of legislative day. Below is information on the proposal which we shared as part of our effort to defeat this bad idea:

Here is a brief update on the current legislative proposal on Medicaid Expansion. But first, here is the Utah Medical Association’s (UMA) stance:

“The Utah Medical Association formally opposes the current Medicaid expansion proposal called UtahAccess+, specifically because of the funding mechanism which taxes physicians and other licensed professionals to pay for expansion.”

We have taken this position because of the resolution passed at our September, 2015 House of Delegates meeting (see resolution below*) which is also supported by the responses received from a physician survey which indicated over two-thirds of physicians in Utah support Medicaid expansion, but 99% oppose a physician tax to pay for it.

UtahAccess+ proposes to tax each physician $797 annually beginning in FY2017 (starting July 1, 2016) and raise that tax to $1107 in FY2021 and beyond. This tax would be permanent. The estimated total for FY17 that Utah physicians are being asked to pay is nearly $6.8 million. The estimated tax is tied to the number of enrollees and the cost of coverage for enrollees. The tax would increase per physician based on a number of variables:

1. If the actual number of enrollees in the expansion population is greater than the estimated number, the tax would increase.. In other expansion states, actual enrollees have exceeded estimates in some cases by 200-300 percent. The probability of a similar enrollee increase in Utah is good.
2. If the costs to cover the enrolled population increase above estimates, regardless of the number of enrollees, the tax would increase. This could happen in two ways:
   1. If the Federal Government increased the percentage that States had to cover from 10% to some higher number (maybe 11%, 12%, or even 30% - which is the current state proportion for Medicaid program expenses), or
   2. If the total cost to care for these enrollees increases over estimates, either because there are more enrollees than anticipated, or actual care costs are higher.

In addition to an actual tax – in the form of an increase in physician licensing fees – physicians who fall into the following categories would also be required to pay more than the extra tax on licensing fees. The categories are:

1. If a physician has ownership in an Ambulatory Surgery Center (ASC). ASCs will be taxed a gross receipts tax – still unclear on what that means for each ASC as it is not detailed other than to say that the 46 ASCs will annually pay a total of between $353,500 and $475,500 (which could increase a possible 200-300 percent or more based on the same factors above).
2. If a physician has ownership in a Psychiatric Facility or Hospital.
3. If a physician has ownership in a Freestanding Clinical Laboratory or “X-Ray Facility.” These facilities will be taxed a gross receipts tax totaling $234,000 to $319,800 (which again could go up depending on enrollment and cost).

There are several additional proposed taxes which may affect physician-owners of various organizations/facilities.

Again the fundamental objection we have to the financing proposal is that the state should not be taxing licensed individuals for providing a service that the State has decided to provide, regardless of the amount.

We are also concerned that once you open up this door as a funding mechanism, it will become a tempting target to finance any other health care budget shortfall.

In addition, UMA is concerned that:

1. There is no CAP on the amount that could be taxed based on enrollment or costs.
2. The financing seems very haphazard – such as taxing Physician’s Assistants at $797 a year but Nurse Practitioners at $1.49 a year (why bother). Anesthesiologists are taxed at $797 in FY2017 while Nurse Anesthetists are taxed at $1.49. How does that make sense?
3. Supposedly, the argument behind the funding is that “those who benefit are those who will be taxed.” If that is the case, where are all the others that are paid through Medicaid? And what about the employers whose low-income employees will have insurance paid by the state?
4. The expansion benefits all citizens, so why wasn’t a financing plan found that would contemplate a general tax or a more acceptable, less arbitrary funding plan, such as using the tobacco tax or an e-cigarette tax?
5. This plan also really harms small physician practices who are trying to survive in this market.  Utah is supposed to be friendly to small business, not work against it.

We have previously sent out arguments against a physician (licensed professional) tax both with the survey and with our Call to Action last week. Please refer to those for more arguments against the physician tax.

The UMA has contacted and continues to meet with Legislators about our objections to this proposal. Advocates of the plan, however, are urging their representatives to accept the UtahAccess+ plan along with the proposed funding.

There is a hearing on Tuesday, October 6, 2015, before the State Legislative Health Care Reform Task Force at 3:00pm at the State Capitol where UMA will again testify against the tax. It is open to the public but will be very crowded and is in a fairly small room (Rm 30) in the West (House) Building at the Capitol. If you would like to come and testify, you are welcome. They will limit testimony so it may be more meaningful to send a letter to your legislators before the meeting on Tuesday if you have not already done so (click here to find contact information for your legislators).

We are also getting together with a broad coalition of organizations who are on the list to be taxed, to oppose the funding proposal and propose alternative funding options.

* RESOLUTION A2 – Medicaid Expansion Support; Physician Tax Opposition

RESOLVED , that UMA supports the Governor’s Healthy Utah Medicaid expansion plan proposed during the 2015 Legislative Session; and be it further

RESOLVED, that UMA opposes taxing individual licensed professionals to provide a service that the government has decided to provide; and be it further

RESOLVED, that UMA will oppose any legislation that imposes a tax/fee on physicians but will continue to work with Utah state government officials to find a solution that provides a fair funding mechanism for Medicaid expansion.

(Adopted by UMA House of Delegates – Sept. 19, 2015)