State Taxation on Cosmetic Surgery: Guilt Trip or Smokescreen?

Abstract

Be thankful we’re not getting all the government we’re paying for. —Will Rogers Politicians in the United States are looking to physician services for taxes to shore up and offset fiscal distress and provide more funding for their states’ government initiatives. Specific interest in taxing cosmetic surgery seems illogical and ill-conceived, whether these taxes are applied to the physician or the patient. Taxes on cosmetic procedures, conceived as “luxury” or “vanity” taxes, discriminate against women, particularly working women, who represent 86 percent of those seeking cosmetic surgery. About 60 percent of the working women who choose cosmetic surgery procedures report a household income of $30,000 to $90,000 per year. Only 10 percent have an annual income of more than $90,000.1 The added financial burden of taxes on cosmetic surgery procedures threatens access to these services for most working women. To obtain public approval of taxation on cosmetic surgery procedures, politicians are using a guilt trip approach. They suggest that these vanity taxes are necessary to pay for the uninsured or for charity care. In reality, the actual revenues from these taxes could not pay for even a tiny fraction of those costs. So-called vanity taxes are little more than a smokescreen for states’ failure to responsibly provide for the uninsured and charity cases. By attempting to be more fiscally responsible, using more appropriate venues, and cutting expenses in other areas of their budgets, states could provide funding via a more acceptable method. Taxation of medical services sets a dangerous precedent for patients in the United States. What are the parameters? Where does it end? Will eye surgery, joint replacement, or heart surgery be next on this unending list of elective procedures? This becomes a slippery slope for all of medicine. Furthermore, government programs have never shown that broad-based health care provider taxes work. In fact, Minnesota health care premiums have skyrocketed because of a 2 percent tariff that has been in place for more than 10 years.1 Because of these increased premiums, there has been an increase in the number of uninsured individuals. Essentially, the tax is injurious to health care. The individuals who need it have even less access to proper health care. Why do politicians want to tax small businesses even more? Physicians represent a large component of small businesses. Many plastic surgeons are in solo private practice or are part of a small group. Patient access to health care is already difficult in the medical subspecialties because of skyrocketing professional liability premiums and practice costs. Targeting this group with additional taxes will only make it more difficult for physicians to provide the necessary care for their patients. While state governments may consider it a source of revenue, is a tax on medical services questionable ethically? Can we allow political leaders to decide which medical procedure is more important than another, which gets taxed and which does not? Moreover, as financial experts look in depth at this issue and state legislatures contemplate this “grand source of new revenue” to balance their budgets, they are finding that it is both unreliable and unworkable as a uniform revenue stream. The projections in some states have been off by as much as 70 to 75 percent.2 Another interesting question within this dilemma is assessing what is truly a cosmetic procedure. Some procedures are not yet covered by insurance and might be considered elective or cosmetic; however, they are medically necessary to improve the patient’s overall health and well-being. Included are such procedures as breast reduction to reduce back pain and removal of excess skin after massive weight loss. These and other questions about what is considered cosmetic or reconstructive plastic surgery are unclear and unanswerable to date. Potential solutions to this problem should be pondered. Could we prevail upon politicians to think about budget cuts and fiscal restraint before instituting new taxes? Could we tax proven health threats to humans, such as tobacco, alcohol, high-fat fast food, and even semi-automatic weapons? Perhaps people would then avoid such risky ventures in their lives. State legislatures need to institute viable fiscal solutions for critical health care problems and avoid irresponsible Band-Aids, such as a cosmetic surgery tax. We need to work to advance health care for our patients and oppose taxation on any medical services. Guilt: the gift that keeps on giving. —Erma Bombeck