From: Michelle S. McOmber, MBA, CAE
To: David Lifferth,
Subject: Please Do Not Support a Physician/Individual Licensed Provider Tax for Medicaid Expansion
Date: Tue Sep 29 21:41:36 MDT 2015

Please Do Not Support a Physician/Individual Licensed Provider Tax for Medicaid Expansion

September 28, 2015

Dear Rep. Lifferth:

While the majority of physicians in Utah support Medicaid expansion, they do not support a tax on licensed individuals to help pay for expansion. We do have options we would like to propose which I will detail later and we are happy to discuss other options further.

The Utah Medical Association sent out a survey to all physicians in Utah and our results show that 99% oppose a tax. We believe there are many other options to help pay for expansion that are more fair and that work better. One of those options is to take the current tobacco tax funds that are being deposited into the general fund and transfer some of that money back to health care by helping pay for Medicaid expansion which improves the health of the poor and uninsured population of Utah. Another is to implement a tax on e-cigarettes, at the same rate as all other tobacco products, since it is a tobacco product, to help pay for expansion. If you take the tax on tobacco products and put the money toward expansion, you reduce uncompensated care by insuring more individuals, you improve the health of low income individuals by covering them with some type of insurance (whether it be Medicaid or other insurance) and you reduce costs to businesses that employ many of these low income individuals. In addition to using money from tobacco taxes to help pay for expansion, the Hospitals have offered to pay a $25 million dollar a year tax because they realize that they definitely benefit from expansion as can be seen in other expansion states. The Arizona Hospital Association, for instance, reported that they had a reduction in uncompensated care of 1/3 in the first six months of expansion in their state for Hospitals. The Hospitals are the ONLY group that has offered to pay a tax. We would urge you to consider accepting the Hospital offer and getting the rest of the money from a tobacco tax. The State could also increase the tobacco tax by 10 cents per pack as we are still only 20th out of the 50 states for tax rate on tobacco products.

Medicaid is a safety-net insurance for all citizens in Utah. If you lose your job, you qualify. If you are low income under a certain rate of the Federal Poverty Level (FPL) and in certain categories, you qualify. If expansion is implemented it helps many individuals in the State of Utah and, by extension, all by reducing the cost of insurance because it reduces cost shifting in premiums and health care costs. If individuals have health care access to basic services, they can remain healthy and therefore work or remain in work places. This benefits all Utah. There were many organizations that supported the Healthy Utah Plan during the 2015 Legislative session, not all of them are being asked to pay a “tax.” There is a list of some individuals and some corporations that are being asked to pay a tax to pay for expansion. Physicians, and some other individuals, are on that list. We do not agree with that route for funding. There are many downsides to taxing physicians (licensed individuals) some of which I will talk about here specifically as they relate to physicians, and which we hope you would consider when discussing whether you support expansion and more importantly how it should be paid for when the State has to start picking up a small portion of the total cost.

  1. Other states have taxed the Hospitals to pay for expansion, not physicians. The only state where this is not the case is in Minnesota where they already had a tax on ALL licensed individuals since 1998 and they are switching the revenue from some of those licenses to Medicaid expansion. But, NO other States, except Utah have considered or have implemented a physician tax to pay for expansion.
  2. We already have a physician shortage in Utah, particularly in primary care. We do not want to incentivize primary care physicians, who earn the least out of all physicians, to choose somewhere else to practice. We are 46th out of 50 states in physicians per capita and we have an aging physician population. This would incentivize physicians to retire early and not do charity care or cover other colleagues but to drop their licenses and not practice at all.
  3. Medicaid is a “safety net” insurance program provided by the state for low or no-income Utahns and everyone is a beneficiary of that. This program is available for all Utahns if they lose their jobs and need insurance, if they have low income jobs that don’t provide insurance, etc. Expansion should be paid for by the general public, not individual licensed providers who provide a service that the state has decided to provide. This would be like taxing engineers for providing a service to the state or attorneys or another other licensed individuals.
  4. Throughout the many years that Utah has had a Medicaid program, physicians have already supplemented the state budget through a low reimbursement rate that most of the time does not even cover the cost of seeing Medicaid patients. Why should doctors be asked to write out an extra check to help pay for expansion?
  5. Many physicians, under the Affordable Care Act, already pay extra Medicare taxes and business taxes that are sent to the federal government to help pay for expansion. Why should they again be asked to pay more for expansion out-of-pocket by actually writing a check to the state?
  6. A physician tax will impact all physicians in Utah, including retired physicians who keep their licenses to do volunteer work in charity clinics, resident physicians who make just a little more than minimum wage, part-time physicians (mothers and others) who may work only one day a week or a month. This tax will really harm those who are trying to continue providing some type of care to Utahans but will be unwilling to pay for the privilege to do so if a tax is implemented.
  7. Retired physicians provide a great deal of the charity care in the numerous free or low-income clinics in Utah. If they decide to drop their licenses because of a tax/fee on physicians, which we have been told will happen by most of those retired physicians, the patients who are being seen in those charity care clinics will end up in emergency rooms seeking care. That will actually increase uncompensated care and costs in Utah rather than decrease them as expansion is trying to do. Many of the patients who are treated in these charity clinics do not fall into the expansion population and would not be affected by expansion.
  8. The expansion population is composed of adults, not children. However, pediatricians who only treat children would still have to pay the tax under the CMS rule saying a tax has to be broad-based.
  9. If a physician tax/fee is implemented to help pay for expansion and a physician were to work for 35 years in Utah, they would end up paying anywhere from $67,000 (at the low end) to $125,000 or more (could be a lot more if the expansion estimates are not correct and the tax is tied to expansion numbers as we have been told it would be) in a tax just for the privilege of working in Utah over the life of their career. Why would physicians stay in Utah? Why would physicians come to Utah to practice? Physicians already come out of school with an average debt between $125,000 to $225,000 today. Adding an extra fee that they have to pay just to work in Utah will incentivize them to find somewhere else to work, or incentivize those considering medicine as a career in Utah to choose something else, exacerbating the physician shortage we are already seeing in Utah.
  10. Most physicians in Utah already have full practices; they are not waiting around to see if they can serve more Medicaid patients. There is no benefit to these busy physicians.
  11. This could drastically impact the number of medical missionaries for the LDS church who must hold a current license. Many may not be willing to pay a fee to keep a license just so they can volunteer to be a medical missionary.

These are just some of the reasons that the UMA and Utah physicians do not support a tax/fee on licensed healthcare individuals (physicians or others). We would urge you to vote no on funding by assessing a tax on a small group of licensed individuals.

We are willing to work with the legislature to find other ways for physicians to help, and have expressed this willingness, but have been told that physicians will need to pay a tax. Why can’t we work with the legislature to find an alternative solution that physicians are willing to support including possibly taking a slight reduction on reimbursement if indeed a patient is in a private plan that pays third party payer rates?

Thank you for your time and attention to this important matter.

Michelle S. McOmber, MBA, CAE
Utah Medical Association

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