2020-01-27 Letter to Rosalyn Baker and Stanley Chang SB 2413 and SB 2327, Relating to General Excise Tax Exemtions (2)

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Q;�VI OF ft Roy Takemoto • • • Managing Director Harry Kim •. �y1••\`,'�i+l; ,1laror -A• Barbara J. Kossow �r•os'M'� Deputy Managing Director County of Hawaii Office of the Mayor 25 Aupuni Street,Suite 2603 • Hilo, Hawaii 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawai'i 96740 (808)323-4444 • Fax(808)323-4440 January 27, 2020 Senator Rosalyn Baker, Chair Senator Stanley Chang Committee on Consumer Protection and Health Dear Chair Baker, Vice Chairs Chang, and Committee Members: RE: SB 2413, Relating to General Excise Tax Exemptions and SB 2327, Relating to General Excise Tax Exemptions Thank you for this opportunity to testify on two bills dealing with a crucial issue facing our State. "Making Hawai'i a nice place to live" is simple to say, and almost too obvious a goal to highlight, but nevertheless that phrase sums up the most important task facing our elected community leaders. For this reason alone, I want to thank and praise any effort to deal with one of the most critical issues that we must confront, and that is the crisis in our healthcare system caused by our physician shortage. We are justly proud of the Hawai'i Prepaid Healthcare Act, but how valuable is insurance if you cannot find a provider? How can we expect our people, especially our aging population, to live comfortably, if they believe that quality healthcare is only available if they have the time and ability to travel to the mainland? How can we attract more providers when they realize that they will be expected to work extraordinary hours because there is not a reasonable number of other providers to share the burden? And the ramifications are important, too. To what extent do we limit our primary economic driver, tourism, when visitors are warned "Don't get sick in Hawaii"? I am not smart enough to know how to entirely solve our physician shortage problem. However, I am told, and do believe, that eliminating the General Excise Tax on healthcare services would be a very positive step in improving the economics for healthcare providers, thereby encouraging existing providers to stay in practice and enticing new providers to join us. Of the two bills you are considering, it is much easier to support SB 2327 than SB 2413. SB 2413 goes beyond addressing our healthcare crisis and might be so expensive for the State as to amount to a "poison pill." Also, I believe that a substantial percentage of the tax on food is paid by our visitors, while virtually all of the tax on healthcare is borne by our local providers. For both those reasons, I would ask for a favorable vote on SB 2327. In closing let me note that I try to use the word "provider" because, in truth, our healthcare crisis goes beyond our physician shortage. For that reason, I want to note that SB 2542, which is not on today's agenda but has been referred to this Committee, would provide a general excise tax exemption for medical services provided by physicians and advanced practice registered nurses acting in the capacity of primary care providers. It seems to me that broadening the exemption to APRNs is a sensible way to go, if the State is able to absorb the initial additional loss of revenue ("initial" because most or all of the loss would be offset as the higher earnings of the APRNs are spent and circulate through the community, generating new tax revenue). Thank you again for addressing our healthcare dilemma. Res ctfully Submitted, tioLLN Harry Kim MAYOR County of Hawaii is an Equal Opportunity Provider and Employer.