O’Ban fights to repeal business tax increase on health-care providers

20-percent business and operations tax increase could hurt patients, doctors, taxpayers


OLYMPIASen. Steve O’Ban announced a bill Wednesday that he is sponsoring for the 2020 legislative session that would repeal the 20-percent increase in the business and occupations (B&O) tax levied against small private-practice doctors and other independent health-care providers, including dentists and veterinarians.

O’Ban, R-Pierce County, had strong concerns about how the increase would affect patient care after it takes effect Jan. 1, 2020. He explored the issue further in a video series detailing how the increase will cripple access to care for patients on Medicaid and those in rural communities.

He found that doctors who aren’t part of larger health-care systems are already struggling to cover their overhead after increased regulation that results in higher costs. The increase in the B&O tax would  push those costs over the top for many doctors who would have to make tough business decisions to survive.

“This 20-percent tax increase was enacted, over my objection, when the state was collecting record taxes and it still has a bright forecast thanks to a strong economy,” said O’Ban. “The increase will undermine access to health care for many people who count on small-practice physicians and other independent medical providers who do not work for large health-care companies. Medicaid reimbursements are too low even now, so doctors already lose money when treating patients on Medicaid. With this tax increase looming, some doctors are already deciding not to treat those patients at all.”

As a result, patients on Medicaid will need to get care at hospital facilities that charge more for procedures – sometimes 12 times what a procedure can cost at an independent surgical center. Taxpayers will be on the hook for this additional expense.

And, since many private-practice doctors treat a patient’s whole family, especially in rural areas, removing that option will fracture their care across different providers.

“The physicians I spoke with made it very clear that this tax could also put many private-practice providers out of business. The doctors would have to pay the tax directly, but because it also applies to services they use in the course of business, they’ll be paying it as consumers of those services as well.

“The cost of doing business in Washington has skyrocketed. Unlike other businesses that can pass their costs onto consumers, these doctors can’t raise prices because they are limited by contracted fees with insurance companies. It’s a cost that comes out of pocket for them. And if private-practice providers close down, their patients will suffer.”

Some providers, such as dentists and veterinarians, would be able to raise prices to cover the tax increase, but it would put the care they provide out of reach for many who pay for these services out of pocket.

The bill will be prefiled this week. O’Ban hopes it will get a hearing in the Senate Committee on Health and Long Term Care, of which he is the ranking member.

O’Ban’s bill would exclude independent providers of the following services from the 2019 B&O tax increase:

  • General or specialized medicine or surgery;
  • A range of outpatient services including family planning, diagnosis and treatment of mental health disorders and alcohol and other substance abuse, and other general or specialized outpatient care by businesses with medical staff;
  • Medical and diagnostic laboratories;
  • General or specialized dentistry or dental surgery; and
  • Veterinary services.


Watch videos from Sen. O’Ban’s series on how the B&O tax increase will affect small, independent health-care providers: