A noted physician exposes the hidden toxicity of the Senate’s proposed 5% federal tax on cosmetic procedures.
Thinking about a touch of Botox before your next event? Perhaps a little filler before your next job interview? Or even some liposuction now that menopause has hit and no matter what you do, you’re carrying a little extra plumpness around the middle? You may want to move fast or consider a trip abroad or even start researching non-licensed practitioners who can perform these procedures. Sounds ridiculous, doesn’t it?
When I first heard about the 5% tax on elective procedures that is being proposed in the Senate health-reform bill, there was a moment of “wow” – and then I paused to reflect. The “wow” came because there was intuitively something arbitrary and bizarre about the tax, which came out of left field. Why the pause? I am not part of the knee-jerk opposition that immediately balks at anything from the right or the left. After all, as physicians we understand the need and value of health-care reform that actually improves access to and quality of care. I also understand the fiscal constraints of these times and the need to limit expanding the deficit.
So last week, one of my out-of-state patients sheepishly observed – with the kind of guilt that often accompanies cosmetic surgery – that the proposed “Bo-tax,” the first federal tax of its kind, would probably not make a big difference for my patients. Inspired, I set out to do my own research. I knew that next door in New Jersey there was a similar state tax in place, so at least we had a small model to look at. The more I learned, the more outrage I felt. Here’s what I found out.
The tax discriminates against women: According to the American Society of Aesthetic Plastic Surgery (ASAPS), 91% of all cosmetic procedures are requested by women. In fact, a full 86% of plastic surgery patients are working women. And these procedures are not always done to look younger but many times to deal with side effects of multiple pregnancies and such.
The tax is a middle-class tax in disguise: Much to my own surprise, according to the American Society of Plastic Surgeons (ASPS) data, 71% of surgeries were for individuals making less than $60,000 a year. These are not people living on Fifth Avenue or in Beverly Hills. According to an ASPS survey, among those planning to have cosmetic procedures within the next two years, 60% reported annual income of $30,000 to $60,000. Only 10% of this group reported income higher than $90,000. The demographics of plastic surgery patients have obviously shifted dramatically over the decades and it is no longer just a “luxury” for the rich and famous. In my own patients, I have many who consider it a necessity to remaining competitive in the workplace.
The tax will seriously compromise patient safety and cause increases in unsafe medical tourism: What most don’t know is that the provision is limited to procedures performed by “a licensed medical professional.” You can bet that the easiest tax loophole is to seek these procedures from non-medical personnel in all sorts of inappropriate locations. Already there are problems with complications and even death from cosmetic surgery and procedures performed in salons and by non-qualified personnel. This is such a disastrous consequence and such an obvious one that I would oppose it for that reason alone. Is there such a lack of thoughtfulness about patient safety and the forces that would undermine our efforts to keep patients safe? Additionally, the tax is sure to drive more Americans abroad for these procedures. News programs everywhere have reported on horror stories resulting from medical tourism.
Why would we mandate a federal tax when it was not a success at a state level in New Jersey? In 2004, New Jersey became the only state to have adopted such a tax. The tax was passed without much discussion of the ramifications and without a cost-benefit analysis to determine the true impact. According to independent studies, for every $1 NJ collects on the tax, the state loses $3.39 in total revenue. Only a small fraction of the projected revenue has resulted, and there are compelling arguments against it, including the difficulty in collecting it and determining what is taxable. Many patients go out of state now to avoid paying the tax, so New Jersey providers and its economy lose these consumers. Legislation was sponsored to repeal this tax. It passed the NJ Senate and Assembly in 2006 but was vetoed by Gov. Jon Corzine. Assemblyman Joseph Cryan, who sponsored the legislation and was previously the chairman of the New Jersey Democratic State Committee, has written about the unsuccessful New Jersey experience in a public letter to Harry Reid. Further, at least ten other states have considered this tax and then rejected the idea.
Determining which procedures qualify is tricky: As evidenced by the New Jersey experience, the distinction between cosmetic and reconstructive procedures is not always clear. If it often difficult to determine which procedures are elective and which are medically necessary. Are we now deferring to tax auditors to determine medical necessity? If you are not clear, consider some of the following procedures that have traditionally been battle areas for patients with insurers and now, apparently, will be up for discussion with tax auditors: breast reductions, some breast reconstructions and symmetry procedures for breast cancer, keloid scars, circumcisions, congenital vascular lesions, benign skin lesions, body contouring after bariatric surgery or massive weight loss, treatment of gynecomastia in men (abnormally large breast tissue), etc.
Are doctors expected to act as tax collectors, and what about patient privacy? The provision requires physicians to collect the tax and it then holds physicians liable should an individual fail to pay the tax. This is mandated to be implemented by the beginning of the year. Do we really want our doctors and their offices to become tax collectors? Additionally, the provision invariably invites the IRS into doctors’ offices to determine whether procedures are elective or cosmetic. Are they going to look at patient photographs and go through their histories?
The point of all of this is to raise a tiny portion (projected $5.8 billion) of the estimated $848 billion proposed ten-year health-care bill. Experience tells me that the total cost will be much higher than projected and the total raised from such a measure will be much less. I hope we all realize that the proposed tax will mainly squeeze the patients (i.e., consumers) and the doctors – not the big pharmaceutical companies. I hope we also realize that at a time when service businesses are hurting, this kind of bill will affect physicians (very small businesses) and their employees, vendors and manufacturers already affected by the economic downturn.
Some proponents argue that these are luxury services and not medical services. I beg to differ. If we commoditize them in this way, then we will see real complications for real people. This is not like getting one’s hair colored in a salon – and even if it were, is hair color tax next? Or laser eye surgery? Perhaps a new hip or knee so we can walk better? Where do we draw the line? After all, these are all lifestyle choices and luxuries of one kind or another.
Ultimately, the cosmetic tax is not an effective fund-raising scheme that affects only the privileged few who live on Fifth Avenue and shop on Rodeo Drive. This is a misconception. It will affect mainstream Americans, mainly women with a final cost-benefit analysis that is negative. I have to agree with ASPS president Dr. Michael McGuire. “Medical Care should not be used as a tool to fix broken finances.”
Editor’s Note: Dr. Haideh Hirmand is a noted plastic surgeon, academic and thought leader in the aesthetic and beauty arenas. She completed her Doctorate in Medicine at Harvard and is Clinical Assistant Professor of surgery at the The New York Hospital/Cornell-Weill Medical Center. She specializes in eyelid and facial rejuvenation, secondary breast surgery, body contouring and is recognized nationally as a pioneer in injection techniques