The tax is expected to generate about $17 million a year — more than $10 million from physicians and $6 million from dentists. The administration says the revenue would be pumped back into the health care system, supporting Medicaid, primary care and dental services.
The vast majority of the tax revenue — $12 million in state money — would support the Medicaid deficit and would be matched with $14.3 million in federal dollars.
The proposal, which Shumlin announced in his budget address last week, has already been hotly contested by smaller health care providers in the state.
Paul Harrington, executive vice president of the Vermont Medical Society, voiced strong opposition to the measure before the Senate Finance Committee Tuesday, saying it would hurt businesses and hobble efforts to attract and retain physicians in the state.
“I think this is a tax that, if I was a small business owner, would send a chill up my back,” Harrington said.
The tax would be applied to a number of independent providers, including physicians, dentists, psychiatrists and ophthalmologists. Those who would not be subject to the tax include chiropractors, radiologists, and drug and alcohol counselors.
While most of the revenue — $26.3 million in state and federal money — would go toward shrinking the state’s Medicaid gap, some would boost the amounts paid to providers.
Roughly $8.4 million a year — $3.9 million from the state and $4.5 million from the feds — would be directed to raise Medicaid provider rates to Medicare levels, a requirement under the federal Affordable Care Act. The smallest chunk — $2.2 million — would go back to dentists to increase Medicaid reimbursements for preventive services like teeth cleanings.
The most recent briefing from the state on the proposed tax can be viewed here.
Robin Lunge, the administration’s director of health care reform, said there is no easy fix to budget woes, adding, “It’s hard to meet a Medicaid budget target without there being winners and losers.”
Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, said he had received many emails from physicians bemoaning the proposed tax. Ashe acknowledged “those emails are more about the concepts and not the details.”
On Wednesday, the Senate Finance Committee will hear testimony from a number of dentists and physicians who have voiced concern over the tax.
