A measure that would eliminate general excise tax for independent primary care medical services advanced out of the House Finance Committee.
It’s meant to ease the burden of business on physicians to address the state’s doctor shortage.
Care from physicians in larger health care nonprofit systems is already exempted from Hawaiʻi’s 4% general excise tax. But primary care physicians who are part of small or independent practices are charged.
Unlike other businesses, health care providers are unable to pass this expense to the consumer. Government programs, such as Medicare and Medicaid, don’t compensate doctors for the tax burden.
Dr. Esther Smith, president of the West Hawaii Independent Physicians Association, emphasized the need for the measure to apply to all insurance-covered outpatient procedures by family physicians, internal medicine doctors, OBGYNS and pediatricians.
“I am telling you that every day, your primary care providers’ hearts are broken by the care that we cannot get for our patients because of the disaster — the ongoing disaster that is health care in this state,” she said.
“And it threatens to break our spirit, watching our colleagues leave to the mainland or quit the profession out of despair.”
A similar bill was introduced last session but did not end up passing.
According to the University of Hawaiʻi at Mānoa John A. Burns School of Medicine, the state needs 750 more physicians. The shortage is particularly acute on neighbor islands and more rural areas where often, smaller practices operate.
The measure will next be heard by the full House of Representatives for a third reading.
