You may have heard that the government has proposed a 5% tax on cosmetic surgery to help pay for health care reform. This kind of tax has all sorts of problems associated with it. A tax implies that cosmetic surgery is frivolous – or even bad, like cigarettes or gas-guzzling cars. But that attitude belies the multitude of psychological studies that show a positive impact on self-esteem after cosmetic procedures.
Let’s look at a few examples. Children are often born with protruding ears. Those fun-loving playmates will start to call them affectionate names like “Dumbo” by age 5 or 6. Protruding ears can be fixed in a few hours with an operation called an otoplasty. This procedure can have life altering psychological benefits. But it is cosmetic, not reconstructive, and so it will be taxed.
And how about a 15 year-old kid with a large nose. I’ve seen children so devastated by their noses that they won’t go to dances and have few friends. After a 3-hour rhinoplasty, many introverts have been transformed into extroverts. The smiles in the post-op visits make my long working hours worthwhile. Is this something that should be taxed?
And how about women with excessively large breasts – breasts that cause back pain, rashes, and decrease exercise tolerance. A 4-hour breast reduction can change their lives. But if insurance doesn’t pay for it (and it often doesn’t), then the procedure will be taxed as cosmetic. And how about all those women whose bellies stretched during pregnancy, creating poor posture and low back pain. A 3-hour tummy tuck can restore appearance and function. But I have not seen an insurance company pay for this procedure in 15 years. And so, it will be considered cosmetic and therefore taxed.
So, who will decide when a procedure is cosmetic or reconstructive? Who draws the line – and where is that line going to be drawn? There will be many arguments over these types of procedures. Surgeons will err on the conservative side, and charge the patient the tax if the procedure is questionable. Failure to do so will result in the tax being paid by the surgeon in a subsequent audit. (You can’t go back to the patient 2 years later and ask for the tax….) Audit, did I say audit? Well, if there’s a tax, there must be enforcement. And like all taxes, audits will be necessary. But unlike other audits, this one will require a review of patient charts. And since cosmetic surgery is a “visual specialty,” inspection of patient photographs will be required.
Does this ever open a “can of worms?” Consider the situation where a plastic surgeon decided that an upper eyelid lift was not to be taxed because vision was impaired by excessive skin. In an audit, this might be challenged. The only way for the patient and plastic surgeon to defend the decision not to pay the tax would be for a judge or a jury or a special panel, to review the photos and make a decision. So much for patient privacy. We just went through a massive privacy regulation called HIPAA (The Health Insurance Portability and Accountability Act of 1996 Privacy Rule.) What happens to that law during the tax audit or tax trial?
Wow, there are a lot of issues out there. Taxing cosmetic surgery isn’t as easy as taxing cigarettes, is it?