Friday, July 12, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, May 28, 2023
GET on Health Care
By Tom Yamachika @ 6:00 AM :: 2342 Views :: Health Care, Military, Taxes, Cost of Living

GET on Health Care

by Tom Yamachika, President, Tax Foundation Hawaii

One of the bills in this past legislative session that fell to the cutting room floor when it probably shouldn’t have was Senate Bill 1035, which would have exempted medical services provided by health care providers if the services were paid for by Medicaid, Medicare, or TRICARE (the healthcare system for the uniformed services).

At first, it looks like a dumb bill.  Yes, health care providers get paid for their services, and they pay general excise tax (GET) on those services.  So do most other providers of services like lawyers, accountants, and computer repair shops.  And besides, the doctors and other providers are rich anyway, so why do they need a tax break?

But consider this.  Many doctors work at hospitals.  Some of them could be considered wealthy depending on how you define wealthy.  But the GET is not in play here at all.  It’s not imposed on the doctors, nor is it imposed on the hospitals.  Why?  The doctors as employees of the hospital don’t pay GET because employees don’t pay GET on their wages.  That’s why most of us poor saps who trudge into work every day and collect a paycheck a few times a month don’t need to worry about GET.  For the hospitals, those now in Hawaii are either government entities (Hawaii Health Systems Corporation hospitals) or nonprofit organizations (Queen’s, Kaiser, Kapiolani are examples).  Government entities don’t pay GET because the government doesn’t tax itself.  Nonprofits don’t pay GET because the tax law says that nonprofits get a tax exemption for money they make for activities that are central to their exempt purpose.  Being a hospital, infirmary, or sanitarium “as such” counts as an exempt purpose in the GET law, so the payments the hospital gets for medical services beat the tax.  The tax still catches income from any side hustles such as parking fees or vending machines, but that revenue is peanuts compared to payments for medicine and medical services.

So, let’s go back to doctors and other healthcare professionals.  If they practice with a nonprofit hospital, then the GET doesn’t apply either to the hospital or to the professionals.  If they open up their own clinic or are in solo practice, the GET applies with full force.   Medicaid, Medicare, and TRICARE pay the same money for the same medical procedures regardless of who performs them, and they require the recipients of that money to just take it and be content with it.  When GET is applied to the medical bills, the laws governing Medicaid, Medicare, and TRICARE prohibit the medical professionals from passing that tax on to the patient (or anyone else).

Does anyone other than me think that there’s something wrong with this picture?

Even if you might not have sympathy for the healthcare professionals in general, it does seem that doctors and other health care professionals in private practice, who are especially important to support Neighbor Islands and rural communities, are getting the short end of the stick for no good reason.

Maybe our lawmakers can do something about that next legislative session.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii