The tax on facelifts and tummy tucks could be repealed in New Jersey, under legislation being voted on today in Trenton.
Lawmakers are mulling whether to phase out a 6 percent tax on cosmetic surgery procedures that went into effect eight years ago.
The tax applies to elective procedures, like Botox, that aren’t usually covered by health insurance plans. The New Jersey Society of Plastic Surgeons has lobbied for repeal ever since the tax was enacted in 2004, arguing that it encourages patients to leave New Jersey and have procedures done in Pennsylvania and New York to avoid the tax.
In 2006 the legislature voted to repeal the tax outright, but that bill was vetoed by then-Gov. Jon Corzine. The bills coming up for a vote Monday, A-3646 and S-1988, would instead reduce the taxes in phases: to 4 percent in the first quarter of 2012, then 2 percent beginning July 1, 2012, with total repeal on July 1, 2013.
Dr. Christopher Godek, president of the New Jersey Society of Plastic Surgeons, is optimistic that if the repeal legislation passes and lands on the desk of Gov. Chris Christie, the governor will agree with the physicians’ position that the tax is bad economic policy. Christie, “is very pro-business so my guess is that he will support” the repeal, Godek said.
Christie often doesn’t announce his positions on bills before they’ve passed the legislature, and Godek said he hasn’t received an indication of the governor’s position on the bill.
The tax has added money to state coffers to help support hospital charity care. According to the state Office of Legislative Services, the amount raised was $10.8 million in fiscal 2011, with $9.9 million raised in fiscal 2010, $9.8 million in 2009 and $11.2 million in 2008, according to the state Division of Taxation.
The state will lose that revenue if the tax is repealed, Godek said, “but in the long term, we think the state would recoup the money, based on patients not leaving (the state) and the increase in plastic surgery cases going on in New Jersey.”
The money raised by the cosmetic surgery tax contributes to the state fund that reimburses hospitals for the uncompensated charity care that they provide to patients who don’t have health insurance. That fund awarded $665 million in charity care to New Jersey hospitals in the current fiscal year.
Suzanne Ianni is president and chief executive officer of the Hospital Alliance of New Jersey, whose members are the “safety net” urban hospitals that provide most of the hospital charity care in New Jersey. She said the HANJ has not taken a position on the cosmetic surgery repeal bill, but said bills that reduce funding for charity care are ill-advised.
“Because the federal government matches these appropriations dollar for dollar, for every single dollar cut, New Jersey loses $2 in healthcare funds. Currently that money pays for healthcare for those with no insurance,” Ianni said.
Randy Minniear, senior vice president, government relations and policy for the New Jersey Hospital Association, said “we do have concerns this could impact funding to charity care and hope to work with the sponsors and administration to mitigate this potential.”
According to the bills, assuming cosmetic tax revenue remains stable, phasing in the repeal will reduce the tax by $1.8 million in the current fiscal year; $7.2 million in fiscal 2013 and $10.8 million when the tax disappears in 2014.
The repeal also has the support of the New Jersey Association of Ambulatory Surgery Centers. Cosmetic surgeries are performed in surgery centers, as well as in surgical practices in physicians’ offices. “We fully support this legislation,” says Jeffrey Shanton, chair, advocacy and legislative affairs committee, for the NJAASC.