GET exemptions make healthcare more affordable

RE: TESTIMONY IN SUPPORT OF SB389 — RELATING TO GENERAL EXCISE TAX

Aloha Chair Buenaventura, Vice-Chair McKelvey and other members of the Committee,

The Grassroot Institute of Hawaii supports SB389, which would expand the general excise tax exemption established by Act 47 to include amounts received by optometrists, audiologists and chiropractors for healthcare-related goods and services purchased through Medicaid, Medicare, and TRICARE.

Expanding the GET exemption for medical services would help make healthcare more affordable while addressing the state’s physician shortage and shortages in medical staff.

Hawaii’s physician shortage stands at 833, up from 768 in 2024. Rural areas have significant shortages of both specialists and primary care physicians, and Hawaii Island and Maui have the highest shortages as a percent of the workforce, at 40% and 41% respectively.^[1]

Act 47 created a limited GET exemption for medical services payments provided under Medicare, Medicaid and TRICARE to address the tax burden on providers, but was limited in its application. The Legislature should take this opportunity to broaden that exemption, and its long-term goal should be to extend GET relief to all healthcare providers, which would end Hawaii’s status as the only state that taxes medical care.^[2]

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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^[1] “Annual Report on Findings from the Hawai‘i Physician Workforce Assessment Project,” University of Hawai‘i, December 2025, p. 6.
^[2] Keli’i Akina, “Let’s end embarrassing tax on medical services,” Grassroot Institute of Hawaii, April 20, 2024.