The House Committee on Finance is the last hurdle for two key bills that could determine the future of health care in Hawaii.
“We are approximately 1,000 physicians short in Hawaii,” said Kealakekua family physician Esther Smith during testimony at the House Committee on Finance hearing Thursday. “I could not find a neurologist for a patient with a brain tumor, there is not a rheumatologist on the Big Island, there is not an endocrinologist I can send my patients to…The health care crisis isn’t looming, it’s here, people are getting sick, people are not getting the care they need, people are dying.”
The first bill, Senate Bill 1035 would exempt medical providers from the state’s general excise tax, or GET, for treating patients with Medicare, Medicaid and TRICARE. This includes low-income adults, the elderly, children, pregnant women, people with disabilities, active service members, retirees and members of the National Guard.
“Access to healthcare has become a troubling issue for so many of our citizens, especially our elderly, our veterans and our underserved populations,” said John Henry Felix, Chairman of the Veterans Affairs Task Force for Hawaii and the Pacific. “I’ve been in government for over 7 decades as a servant leader to the people of Hawaii, and this medical crisis has become intolerable.”
In Hawaii County, the GET is a 4.7% tax on nearly all business transactions and purchases. While businesses are not required to pass the tax along to consumers, nearly all do, but providers cannot pass the GET on to patients with Medicare, Medicaid or TRICARE coverage. Hospitals and community health centers are exempt from the GET, but private providers are not.
“The majority of small practices will likely be gone in 3 to 5 years if House Finance does not pass this bill,” said Scott Grosskreutz, head of the Hawaii Island Physician Shortage Task Force.
If private providers disappear, emergency rooms will be one of the few options left for patients, which could be a costly alternative.
A 2019 study from UnitedHealth Group found the average cost of treating common conditions at a hospital is nearly 12 times higher than visiting a physician’s office and 10 times higher than an urgent care center.
“While hospitals are exempt from GET taxation, the high cost of providing health care and low reimbursements in Hawaii means that many small and rural hospitals need taxpayer funding to survive,” Grosskreutz said. “Hawaii needs strong hospital systems, but more patients flooding the hospitals will inevitably require even more taxpayer funding to cover their care.”
A companion bill, House Bill 662, was not heard by the House Committee on Finance and died in February.
Over 259 pages of testimony were submitted for SB 1035, mainly in support.
“We need to be taking care of our health care providers who are taking care of us,” said Hawaii County Mayor Mitch Roth. “I know of several health care providers here who are just having a hard time getting by.”
Veteran organizations have also spoken out.
“I and countless numbers of my fellow Veterans are placed on long waiting lists of several months just to see a physician,” said Donovan Lazarus, President and CEO AM-VETS Hawaii. “Health care without physicians is health care denied.”
The second bill, Senate Bill 397, would increase Medicaid reimbursement rates and match them to Medicare rates.
Reimbursement rates are the rate at which doctors, pharmacies, hospitals and other medical providers are reimbursed for providing care to Medicare and Medicaid patients.
But a 2020 survey from the Medical Group Management Association found 92% of practices throughout the U.S. reported Medicare reimbursement rates did not even cover the cost of caring for patients, and Hawaii already has one of the lowest Medicare reimbursement rates in the nation.
“Currently, the private sector providers have less incentive to see Medicaid patients due to the low reimbursement rates,” said testimony from Big Island Docs, a group representing over 50 private care providers in Hawaii County. “Our providers are struggling to keep their clinics open in a region that has a severe shortage of physicians.”
The need for both bills was amplified by the impacts of the COVID-19 pandemic, according to some supporters.
‘The psychological and adverse financial impact of COVID-19 on people throughout the state of Hawaii is real, and regrettably far too prevalent amongst our residents,” said Honolulu County Mayor Rick Blangiardi. “It cannot be overstated that the current shortage of doctors and health care professionals only serves to exacerbate this adverse impact, and unless immediately addressed by our state government, it will undoubtedly have lethal consequences to our population.”
Both Senate Bill 1035 and Senate Bill 397 have unanimously passed all previous House and Senate committee votes. If heard and passed, the bills will head to the governor for approval.
Email Grant Phillips at gphillips@hawaiitribune-herald.com
