Relating To Health Care Services.
The proposed legislation is designed to amend the Hawaii Revised Statutes, specifically Chapter 237, to exempt gross proceeds from medical services related to primary care from the general excise tax. This change intends to relieve the financial pressures that currently derail the viability of small medical practices, which struggle with low profit margins and high operational costs. By alleviating the tax burden on medical services, the bill seeks to encourage healthcare providers to remain in practice and attract new talent, thereby enhancing healthcare accessibility for the community.
House Bill 240 addresses the critical shortage of physicians in Hawaii by proposing an exemption from the general excise tax for medical services provided by physicians and advanced practice registered nurses acting as primary care providers. This legislative action has been motivated by findings from the 2021 Hawaii physician workforce assessment report, which indicated a 22% statewide shortage of physicians. Neighbor islands are particularly affected, with shortages exceeding 40% in counties like Hawaii, Maui, and Kauai. The bill aims to mitigate this crisis and improve patient access to care by making it financially viable for medical practices to operate in Hawaii's high-cost environment.
Notably, opponents of the bill may express concerns over the regressive nature of the general excise tax and its disproportionate impact on low-income families. While the exemption could aid in addressing physician shortages, there are questions about long-term state revenue implications and whether alternative funding sources can support healthcare services. Additionally, some legislators may emphasize the importance of balancing tax policy with the need for sustainable public funding for health services.