05.13.04

Cantwell's Bill Bringing More Healthcare Pros to Rural Communities Passes Senate

Big Boost for National Health Service Corps Lauded by Doctors, Dentists, from Around the State, Including King County, Spokane, Toppenish, and East Wenatchee

WASHINGTON, D.C. – Concerned about the availability of health care professionals in rural areas of Washington state, U.S. Sen. Maria Cantwell (D-WA) successfully pushed the Senate to exempt National Health Service Corps (NHSC) loan repayment grants from taxation. Cantwell's bill would allow more doctors the chance to repay their loans while providing healthcare to Washington state residents living in underserved areas.

"This is a great win for America's health system," Cantwell said. "We are facing a healthcare crisis in this country and the professionals of the NHSC breathe life into a community. It just doesn't make sense to tax to death a program that sends doctors where they are needed most."

Under current law, loan repayment grants awarded through the NHSC are taxed. As a result, forty percent of the NHSC's loan repayment funds go to the Internal Revenue Service. Partly because of this drain on NHSC funds, from 1999-2001, they were forced to turn away nearly 60 percent of applicants for loan repayment assistance in exchange for rural or underserved community service in Washington state.

The National Health Service Corps (NHSC), created by Senator Warren Magnuson in 1970, attracts doctors to rural and underserved communities by offering scholarships or loan repayment dollars. Since 1970, NHSC has placed over 22,000 health professionals, including over 400 in Washington state. 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 placed. Nationwide, approximately 2,700 Corps program participants provide health care services to an estimated 4 million Americans.

According to Thomas Trompeter, CEO of the Community Health Centers of King County, "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."

Cantwell's bipartisan legislation ("The National Health Service Corps Loan Repayment Act of 2002, S. 2654") would expand access to the National Health Service Corps program by exempting loan repayments from taxation. Under the Corps' current loan repayment program, doctors who agree to work in rural and underserved communities for two years receive loan repayment assistance of up to $25,000 annually. However, under a 1986 IRS decision, these funds are subject to the federal income tax.

According to Dr. Mark Koday, a dentist at the Yakima Valley Farm Workers Clinic in Toppenish, this complicates a working environment that is often already challenging.

Koday said, "We need to keep these providers feeling positive about their service to rural and underserved populations or we have no chance in getting them to stay. I think this amendment will simplify the loan repayment process and enhance a more positive experience for the recipients."

Dr. Mark V. Walker, a dentist from Kent and President of the Washington State Dental Association, agrees.

Walker said, "Sen. Cantwell's legislation will definitely help attract dentists to rural and other under-served areas in Washington. WSDA has placed a high priority on programs to assure that the future dental workforce continues to serve all areas of our state. WSDA appreciates Sen. Cantwell's responsiveness to this concern."

By exempting loan repayment dollars from taxation, Cantwell's legislation frees all Corps funds for their intended purpose: to attract doctors to rural and underserved communities. Under Cantwell's plan, the National Health Service Corps could attract up to sixty-seven percent more doctors to rural areas and underserved communities through its loan repayment program.

"Two out of every five dollars intended to bring doctors to rural and underserved communities are going to tax collectors," Cantwell said. "This common-sense change will ensure that our health care dollars are spent on health care, not taxes."

Cantwell's enthusiasm for removing the tax is shared by Judith Featherstone, Medical Director of the Community Health Centers of King County.

"I encourage making the loan repayment tax free," Featherstone 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, l hope these changes can be made to extend the amount of help they can give to our clinics."

Peg Hopkins, CEO of Community Health Association of Spokane (CHAS) also supported passage of the Cantwell's amendment. Said Hopkins, "These changes would proportionately enhance the NHSC incentive to work and possibly remain in communities where health care is needed the most."

In 2000 – before the economic downturn – there were 780,000 uninsured people in Washington state, including 155,000 children. In Washington's thirty-four least populated counties there are more than 20 percent fewer doctors than in the five largest counties. And it's not just that there are fewer doctors; in rural areas, people must travel further to get access to care.

This concern is shared by Dr. Robert Merrill, a dentist from East Wenatchee, who sees Cantwell's legislation as a solution to a 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."

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. It was included in the Foreign Sales Corporation/Extra Territorial Income (FSC/ETI) bill that passed the Senate Tuesday by a vote of 92-5.

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.