As a general rule, I try to stay away from political issues on this website. However, this is a website all about the finances of high-income professionals, particularly doctors, and this “political issue” directly impacts physician finances. I just spent my day, in-between night shifts, at a conference where some of the details of a plan that is being worked out behind closed doors have come to my attention. Let me give you some background information so you can understand the issue and why I think it is important for every reader of this blog, whether they live in Utah or not.
Utah, like some other conservative states, has not yet taken money from the federal government for ACA expansion. Obviously, since this is our money (last I checked I definitely paid a significant amount in Obamacare tax,) that’s kind of stupid not to get your own money back. Medicaid expansion, at least starting in 2017, is paid for 90% by the federal government and 10% by the states. (until 2017, it’s 100% by the federal government.) In Utah, Medicaid expansion means providing Medicaid for single adults up to 100% of the poverty line ($23,834 in 2015 for a family of four in Utah.) Children and adults with children up to 100% of the poverty line are already covered by Medicaid here. Families from 100% to 138% of the poverty line qualify for a 100% subsidy on a standard PPACA plan. So there is no doubt this expansion is a good thing for patients, doctors and hospitals (who are now often seeing these patients for free,) and for society at large who now has a better safety net underneath them in case of financial catastrophe.
There were two competing plans in the Utah legislature this last session to get that money (back.) One passed the house but not the senate. The other passed the senate and not the house. So since the session ended six months ago, a “Gang of Six,” including the Governor, Lt. Governor, the sponsor of each of the bills (including a senator who is an emergency physician and one of my partners in another division of our group), the senate president (the senator in my district,) and the speaker of the house, has been working to find a compromise that will get through the senate, the house, and past the governor. Each of these men are good people wrestling with a difficult issue trying to balance conflicting priorities. Due to constitutional constraints, Utah cannot deficit spend, so not providing revenue to pay for this isn’t an option. The “Gang” is also, to a man, like Utah, very conservative and anti-tax, so increasing the general tax rate (i.e. raising income tax on everyone) is not going to be very politically popular. So they have come up with a working concept/principle that “that those who will benefit from this expansion should be asked to give a little back in order to pay for it.” That sounds nice, doesn’t it. It actually sounds more Marxist than conservative, which is part of the reason their proposal has surprised me so much. Here’s what they mean:
They’re going to tax hospitals and doctors to pay for it.
Literally. That’s the plan. I was so appalled when I first heard about it way down in the opinion section of the local paper that I wrote a letter to the editor. How do you just tax doctors? Well, you do it by raising their licensing fees. However, it wasn’t until today that I found out just how much that tax was going to be. By way of reference, in order to be a doc in Utah, you’ve got to pay your $200 fee, plus (for most of us) $731 for a federal DEA license and $100 for a state DEA license and if this is your first year applying, you also need to pay the $350 FCVS fee. The license fee in other states range from $130 in Wisconsin to $1002 in Texas and $1300 in the Virgin Islands, some of which require the FCVS fee and some of which do not.
$5,000 Physician Licensing Fee!
So what will the new fee in Utah be? Well, the number being floated around by the Gang of Six is between $12.5M and $17M per year. Divide that by the 6091 doctors in Utah, and it comes out to $2,052-2,791 per year. Since your license is good for two years, your licensing fee is going to be something like $5K.
$5,000 to practice medicine! That’s every doctor in the state. It won’t matter if you work part-time. It won’t matter if you take Medicaid or not. It won’t matter if you only do volunteer charity work (how long are you going to do that when it costs you $5K a year to do so?) It won’t matter if you’re in primary care or the narrowest specialty. It won’t matter if you’re an emergency physician and already seeing 20-40% self-pay (i.e. no pay) patients. $5K or go somewhere else.
If this law is passed with this provision in it, Utah will become the only (or should I say the first) to place a direct tax on physicians. Now, you may not think this applies to you because you don’t practice in Utah and don’t ever expect to. You may not think it applies because you’re not a physician (although be aware they seem to be considering including anyone else who gets Medicaid dollars- including pharmacists, occupational therapists, dentists, physical therapists, psychologists etc.) But keep in mind this famous quote from Martin Niemoller about Nazis that is often used to describe a slippery slope:
First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out—
Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.
A little dramatic? Sure. And perhaps just the usual application of Godwin’s law any argument eventually arrives at. But the fact remains that if it passes, this will be the first time a single profession has been, well, singled out for a tax. This is the equivalent of taxing construction companies to do highway work or taxing attorneys to improve the courts. These senators seem to think that since we’ll be getting a “windfall” (never mind that we’re exactly the same people paying the PPACA taxes that fund 90% of this already) we should be the ones who pay the last 10%. There does not seem to be a recognition that this isn’t a windfall, since we’re actually doing work to get this money. We just happen to be currently doing it for free either due to an unfunded federal mandate (EMTALA) or out of the goodness of our hearts.
Don’t think for a second that your state legislature isn’t going to look at what happened in Utah when it starts looking for a way to pay for the Medicaid expansion it has already authorized (at least our legislature is considering the costs a priori where many other states just implemented it without a plan to come up with their 10% starting in 2017.) Physician-specific taxes may soon be coming to a state near you. Utah might be the first, but if it passes here, I can assure you it won’t be the last.
What Can You Do?
First, if you are a student or resident considering practicing in Utah when you are finished training, you can help these elected officials see how a physician-specific tax affects your decision to stay or relocate here, further exacerbating our physician shortage, especially in rural primary care.
Second, if you are a physician or other professional already practicing here, know that this proposal could very well be law 30 days from now if you don’t act. So either contact your leaders, or start revamping your budget to cover this cost.
Third, even if the only time you’ll ever be in Utah is to see the national parks, realize that this isn’t a local issue. If this passes in Utah, it will only be a matter of time before a similar proposal is taken up in your state. Just like forest fires are easiest to put out in the first hour, this is the time to take this idea into the corner and drop an anvil on it.
So please, take the time to shoot a short email to one or all of the “Gang of 6” and let them know what you think about this proposed mechanism of paying for Medicaid expansion and specifically about a physician-specific tax/fee/assessment. Please, keep your emails polite as these truly are well-meaning, good people working long hours for little money on this issue, but they need to get the message that taxing a single profession/industry to pay for a bill that will benefit all of society is a terrible idea.
- Governor Gary Herbert
- Lt. Governor Spencer Cox
- Senate President Wayne Niederhauser (wniederhauser (at) le.utah.gov)
- Speaker of the House Greg Hughes (greghughes (at) le.utah.gov)
- House Majority Leader Jim Dunnigan (jdunnigan (at) le.utah.gov)
- Senator Brian Shiozawa, MD (bshiozawa (at) le.utah.gov)
What do you think? Would a $5,000 physician licensing fee dissuade you from practicing in a state? Do you think a tax on a single profession is fair? Do you feel getting paid to see Medicaid patients is a “windfall?” How would you like to see your state pay for their share of Medicaid expansion? Are you willing to email these elected officials? Why or why not? Comment below!