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Op-ed opposing Governor Shumlin’s proposed provider tax gains statewide coverage

The below op-ed was written on behalf of the Vermont Medical Society in opposition to Governor Peter Shumlin’s recently announced plan to assess a provider tax on independent physicians, a move the Society fears could drastically threaten the future of independent providers in Vermont.

The op-ed was picked up by several outlets, including the Montpelier-Barre Times Argus, Burlington Free Press and VTDigger.

Gov. Shumlin’s Medicaid “cure” worse than the underlying disease

In recent years, Governor Peter Shumlin has, to his credit, shined a spotlight on the chronic underfunding of Medicaid in Vermont, a situation in which doctors who care for Medicaid patients are paid less than what it actually costs them to provide the service.

That’s what makes his recent proposal to levy a new tax on independent physicians – the ones who in many cases are already losing money caring for Medicaid patients – so disheartening.

In proposing his tax, Governor Shumlin has said it will help “hardworking family docs who have been struggling,” but as one physician recently told the House Ways and Means Committee, the tax threatens to put non-hospital employed doctors “out of business and leave some Vermonters without care.”

The proposed 2.35-percent tax on independent physicians, which if passed would be retroactive to Jan. 1, 2016, would generate $17 million in revenue for the state. It would draw a federal match of $20 million for a total of $37 million. Of that, only $3.4 million of new revenues would be returned to independent primary care physicians in the form of increased Medicaid payments beginning July 1, while dentists would receive approximately $1 million in increased payments.

It’s not hard to see that paying out $17 million, only to receive $4.4 million in increased Medicaid payments, is not a good deal for health care providers. One rural practice has estimated that the tax will cost it $40,000, which is a substantial sum for a small business with already razor-thin margins.

Besides the obvious irony of imposing a new tax on already struggling independent practices, the real danger lies in what it will do to patients’ access to primary care. It would severely hamper Vermont’s ability to attract and retain physicians, a particularly troubling development considering the state’s current and worsening physician shortage. If physicians are forced out of practice, and those practices that survive aren’t able to recruit new doctors or replace retiring ones because of newly imposed financial disincentives, it will become harder and harder for Vermonters to get in to see their doctors.

This, as Gov. Shumlin pointed out in his January budget address, is already being seen in Franklin County, which within the last year has lost four of its 11 pediatricians due in part to low Medicaid reimbursement. As a result of the physicians leaving practice, closing up shop or leaving the state altogether, an estimated 6,000 young patients were left searching for access to primary health care.

This tax would put Vermont at a distinct recruiting disadvantage because it would soon make it the only state in the country to impose one on independent physicians. Minnesota – the only other state to impose such a tax – plans to sunset theirs in 2019.

The Vermont Medical Society urges the General Assembly to reject the proposed 2.35 percent tax on independent physicians and dentists, due to the crippling economic impact on the state’s health care system, and the high probability that it will decrease patients’ access to care.

Governor Shumlin’s plan to cure the state’s Medicaid deficit by taxing independent physicians is far worse than the underlying disease. Vermonters need a second opinion.