When Connecticut’s new Governor proposed taxing cosmetic surgery in February, the idea immediately caused concern among people familiar with a similar tax enacted in New Jersey in 2004. The New Jersey medical procedure tax was so unsuccessful that the original sponsor of the bill that created the tax is now calling for its repeal. It is very helpful to learn from the mistakes of others so as not to make the same mistakes ourselves.

As in New Jersey, the Malloy Administration’s proposal would exempt critical and reconstructive services from the cosmetic tax.  Some surgeries are clearly reconstructive such as breast reconstruction after a mastectomy, repair of congenital deformities such as cleft lip and palate, or repair of wounds from skin cancers, accidents and burns. Other surgeries are usually cosmetic such as liposuction, breast augmentation, or facelifts. The problem for the tax law however is that there is a large number of procedures that are open to interpretation.

Consider a child with protruding ears. This is a congenital deformity in which the ears stick out from the head.  Children are often self conscious and they get teased and bullied in school.  Surgical correction or otoplasty, restores a normal appearance and facilitates normal emotional and psychological growth. Although most parents think this surgery should be covered by medical insurance it rarely is and many parents will pay out of pocket for corrective surgery. Will the Department of Revenue Services follow the policy of most insurance companies and classify this surgery as cosmetic, and therefore taxable? What will they do with the few cases that are covered by insurance? A tax selectively applied to some patients and not others based on their insurance coverage is discriminatory and therefore prohibited by both state and federal laws.

One might initially think breast enlargement with implants would be easy to classify as cosmetic and is therefore taxable.  Most teenage girls develop “normal” breasts-average size and relatively symmetrical. In some girls the breasts may be significantly asymmetrical. One side may be small, average, or large and the other side may be small or even completely non developed. As with prominent ears, health insurance policies rarely cover correction of breast asymmetry. Patients and plastic surgeons typically feel it is reconstructive and it should be covered by insurance. For taxation purposes, who will make the decision? In cases where the degree of asymmetry is less, different surgeons and different patients will have different opinions. Will the doctor and patient decide if surgery is cosmetic and taxable or will that decision be made by an auditor from the DRS based on a review of the patients medical record, including their before and after pictures? What criteria will the auditors use? Will it be the patient’s emotional response to the condition or an auditor’s impression of the patient’s appearance in the preoperative photographs?  What happens if the state deems a procedure cosmetic, but the doctor and patient believe it is reconstructive? Is there an opportunity to appeal?

Enforcement of a law that applies to so many ambiguous situations, all subject to very different interpretations and opinions, would require auditing the entity collecting the tax, which in this case is the doctor’s office. This would involve reviewing medical files and it would violate the privacy of thousands of patients across the state.  Will the state create a new audit division at the Department of Revenue Services with people trained to read medical files? Will charts – that include HIPPA protected information like mental state, drug use, and HIV status – be reviewed? In America, we have had considerable disagreement over the use of body scanners at our airports.  Many believe these scanners are a major violation of our privacy. Plastic surgery deals with sensitive areas of the body- face, breasts, genitalia, etc.  Do we really want auditors from the DRS reviewing our private medical files with names, addresses, telephone numbers, personal health information, before and after photographs, and financial information so they can decide if an operation was cosmetic or reconstructive?

Proponents of the tax will argue that the audited information would be confidential. But even if a patient did approve its release, how can we be sure our private health information will not end up on another lost DRS laptop? One of my colleagues financial information was on that now infamously lost DRS laptop, exposing him to identity theft. With that kind of record, how are we to trust that the state will protect our patients under this proposal?

New Jersey is a small state and it is a short drive from any town to get to another state. Following implementation of the cosmetic tax there was a 52 percent drop in cosmetic surgery volume during the next three years. Most of the patients went to New York, Pennsylvania, and Delaware. Connecticut is a smaller state than New Jersey. One would reasonably expect a similar drop in cosmetic volume here. Proponents of this bill have said they are ok with patients going to other states for the cosmetic procedures that would be taxed here.  Medical offices that lose patients to surrounding states will also lose revenue. This loss, coupled with the additional financial and bookkeeping burden of the tax could drive some of the best plastic surgeons out of Connecticut or into retirement, leaving cancer, burn and other needy patients without care they need. Other offices may be forced to downsize staff. Not only will patients loose access to specialized surgical care but Connecticut will lose jobs.
In New Jersey, with the loss of surgical cases and with so many difficulties in differentiating between reconstructive and cosmetic surgery, the cosmetic tax cost more money to administer than it generated. It resulted in a net loss of revenue to the state and they are trying to repeal it. Here in Connecticut, the proposal to tax cosmetic surgery raises many of the same questions that are not likely to have satisfactory answers.Taxing medical procedures won’t bring in the needed revenue, and its long term impact could be devastating.

Dr. Harold Beam is president of the Connecticut Society of Plastic and Reconstructive Surgeons and a member of the Connecticut State Medical Society.