10.12.04

Congress Passes Cantwell's Proposal to Attract More Doctors to Rural and Underserved Communities

Closing tax loophole makes more money available for doctors

WASHINGTON, D.C. – U.S. Sen. Maria Cantwell (D-WA) pushed through Congress an educational loan tax break that will make it easier for more medical professionals to practice medicine in underserved communities.

Right now, doctors who agree to work in underserved areas for two years can receive financial assistance for as much as $25,000 from the National Health Service Corps (NHSC). However, the Internal Revenue Service taxes that financial assistance. Cantwell's bill would make these grants non-taxable, making more money available for medical professionals.

"Rural healthcare just got a big boost by not taxing doctors' education loans who promise to practice medicine in rural areas," Cantwell said. "We will be able to get thousands of more doctors into rural communities instead of spending 40% of the program's funding on taxes. This is a common sense solution that benefits everyone."

"It just doesn't make sense to tax to death a program that sends doctors where they are needed most," Cantwell added.

40 percent of the NHSC's loan repayment funds go to the Internal Revenue Service. Because of this drain on funds, NHSC was forced to turn away nearly 60 percent of Washington state's applicants from 1999-2001. By removing those taxes, the NHSC program will be able to use more of its funding to provide loan repayment assistance, attracting up to 67 percent more healthcare professionals to rural and medically underserved communities.

Kenneth Green, the Director of the Community Health Center of Snohomish County, called the passage of Cantwell's proposal "great news."

Green said, "These changes will greatly enhance the attractiveness of the program and will help in our efforts to attract quality and qualified physicians to the community."

Judith Featherstone, Medical Director of the Community Health Centers of King County , said, "This will increase the number of loans available making it easier for us to support these young, energetic, caring physicians. The loans are a wonderful support to Community Health Centers. I hope these changes can be made to extend the amount of help they can give to our clinics."

Peg Hopkins, the CEO of Community Health Association of Spokane (CHAS), added, "These changes would proportionately enhance the NHSC incentive to work and possibly remain in communities where health care is needed the most."

Dr. Robert Merrill, a dentist from East Wenatchee, sees Cantwell's legislation as a solution to that difficult problem.

Merrill said, "This provides an incentive to doctors that makes practice in a rural community a viable choice. It also makes it possible for more doctors to participate in the program since more resources will be available. It's in the best interest of the health of our communities. This is a sensible solution to a problem that prevents many capable, caring health professionals from locating in rural areas."

Senator Warren Magnuson created the National Health Service Corps (NHSC) in 1970. Since then, NHSC has placed over 23,000 health professionals, including over 400 in Washington state. Nationwide, approximately 2,700 Corps program participants provide health care services to an estimated four million Americans. More than 70 percent stay in their jobs after fulfilling their Corps obligation and more than 80 percent stay in the community in which they were originally placed.

Thomas Trompeter, CEO of the Community Health Centers of King County, said, "Many loan repayment recipients remain in their positions long after the actual award has expired. Because they were able to begin a career working with the underserved, they learn the other rewards of this work and make it a permanent career. This is true for Community Health Centers of King County and it is true for health centers around the nation."

Dr. Jeff Smith, Medical Director for Community Health Care in Tacoma, said, "The primary attraction that brought me to Community Health Care was the availability of loan repayment whereby the federal government would help pay off my student loans if I would work in a community health setting for a certain number of years. My idea was to fulfill that obligation and go back to my private practice. I now know that I could not work anywhere else and have no desire to do so. My experience in working in this setting has convinced me that this is where my mission is and I fully expect to retire from the community health system some day."

Cantwell's legislation is endorsed by more than 25 organizations, including the Washington State Medical Association, American Medical Student Association, National Rural Health Association, and National Association of Community Health Centers.

Cantwell's legislation was included as an amendment to the Foreign Sales Corporation/Extra Territorial Income (FSC/ETI) bill. Passed by the House of Representatives and the U.S. Senate, the bill will now be sent to the president for his signature.

In August of 2002 Cantwell visited 17 counties on health care issues, touring clinics and holding community meetings as she discussed her loan repayment bill.

Cantwell is a member of the Senate Rural Health Caucus.