On Jan. 1. 2020, a 20% increase to Washington state's business and occupation (B&O) tax goes into effect, increasing the tax burden on health care providers, including independent physician practices. This tax increase threatens to negatively impact these practices—and their patients. Learn how the WSMA is responding—and how you can help.
About the B&O Tax Increase
During the 2019 legislative session, state lawmakers passed a tax package in the form of House Bill 2158, which increases the B&O tax on health care providers by 20 percent beginning this January. The estimated impact to the physician community? A whopping $50 million over the next two years alone.
This tax increase disproportionately harms Washington's private practices and independent medical clinics, about a third or more of our state's physicians. The tax increase will:
- Limit access to care for patients, particularly those covered by Medicaid.
- Put a strain on many independent practices' ability to remain economically viable and competitive.
- Increase the burden on our state's emergency departments, increasing health care costs for everyone.
- Result in a loss of jobs, since independent practices run on tight margins.
- Impact the ability of these practices to invest in innovations that improve patient care.
Hear from several WSMA members who run private practices or work in independent clinics on how they'll be impacted by this tax increase in this series of brief video interviews.
What Is WSMA’s Position on the B&O Tax Increase?
The WSMA opposes taxes on physicians that are costly to both physicians and to patient care. In recent years, over multiple state legislative sessions, the WSMA successfully fought back increases in the B&O tax on health care to help ensure the health of our state's independent practices and patient access to care. As in previous sessions, the WSMA strenuously opposed the B&O tax increase debated during the 2019 legislative session. While we were unable to prevent the 20% increase as included in HB 2158, we were successful in preventing the passage of a much larger 67% increase, as originally proposed by Gov. Jay Inslee.
Recognizing the threat to our state's independent practices and the health care system at large, in the fall of 2019, the WSMA House of Delegates unanimously passed policy calling on the WSMA to advocate to amend state law to exempt all physicians from the state B&O tax surcharge passed by the Legislature in 2019.
#NOtoBandO: How You Can Help Exempt Physicians
The WSMA is working today to build momentum to exempt physicians from this onerous surcharge in the 2020 session.
We need your help to make it happen.
There's still time to keep the pressure on local legislators between now and the start of session in January. Here's how:
- Schedule a meeting with your lawmakers. Nothing moves legislators more than personal stories of how the ripple effect of their actions impact your business and the lives of your patients.
- Respond to calls to action from the WSMA on the issue (keep an eye on your email inbox. To make sure we have your correct email, check your member profile, or contact us at 206.441.9762).
- Boost WSMA's social media advocacy—use the hashtag #NottoBandO.
Talking points are available on this page. For tips on how to schedule a meeting with your legislator(s) and a sample agenda for the meeting, click here.
Talking Points for the B&O Tax Increase
The 20% B&O tax increase on health care will:
- Limit access to care for patients. A physician practice loses money caring for Medicaid patients since reimbursement is far below the actual cost of service [if you have an example, share it here]. Adding additional taxes onto their business will force many practices to stop seeing Medicaid patients to stay viable, or to close their practice and join a large integrated system, limiting choice in the community.
- Put a strain on many practices' ability to remain economically viable and competitive in today's marketplace. Consider that approximately 70 cents on every dollar received by a medical practice goes toward overhead and dealing with insurance plan requirements, not patient care. Where it used to take three support people per physician, now the number is five.
- Result in a loss of jobs, hinder physician recruitment, and limit the ability of practices to invest in innovations that improve patient safety and patient care, since independent physician practices run on very tight margins.
- Put independent practices at a competitive disadvantage to hospital-based medical groups, which are protected from the increase.
- Drive up health care costs. As practices limit or stop seeing Medicaid patients to stay viable, more patients will rely on expensive, episodic care in urgent care and emergency rooms, increasing the burden on our state's emergency departments and increasing health care costs for everybody.
WSMA Members Highlight the Problems with the B&O Tax Increase on Independent Physicians
Sen. Steve O'Ban (R-Pierce County) recently conducted video interviews with four WSMA members who are also physicians at small practices and small business owners and who will be directly affected by the tax increase. For quick one-minute video shorts, click on the following links which address:
How the B&O tax increase will affect your family budget and health care
In the first full-length interview, WSMA members Teresa Girolami, MD, and Brianna Label, MD, help highlight the problems with the B&O tax increase on independent physicians. Watch part one of the three-part interview below. Visit Sen. O'Ban's website for parts two and three of the interview.
Will the tax increase on doctors and other small business owners make it harder for low-income patients to access care?
In the second full-length interview, WSMA members Chelsea Unruh, MD, and Sung-Won Kim, MD, discuss how the B&O tax increase is forcing independent physician practices to make hard choices that have real impacts on patients' access to care. Visit Sen. O'Ban's website for parts two and three of the interview.