Hospitals could be dealt a devastating financial blow under congressional Republicans’ attempts to overhaul federal tax law due to increased taxes on employees and automatic cuts to Medicare.
The House version of the bill (H.R. 1), which the chamber approved Nov. 16, would remove tax exemptions for private activity bonds, a major source of infrastructure funding for nonprofit hospitals.
The bonds are used to “improve community access to new technological advances, improve and update the infrastructure of the hospital, and increase jobs with hospital expansion and which support the local economy,” John Washlick, a health-care attorney at Buchanan, Ingersoll & Rooney PC, told me. “Remove this funding tool, and many hospitals will not have access to needed capital to stay competitive and provide necessary medical services to their service community, which could result in the potential closure of hospitals or another ramp-up of consolidation in the market.” The Senate bill keeps the tax exemptions.
Taxation of the bonds and other changes, including lowering the corporate tax rate, might entice some nonprofit hospitals to seek for-profit status, Washlick added.
Meanwhile, in the Senate, lawmakers have moved forward with including repeal of the Affordable Care Act’s individual mandate in their version of the bill. The House bill does not include such a provision. Hospital groups have banded together in opposing the mandate repeal and said it would lead to higher levels of uncompensated care, which would cause greater financial hardship for hospitals.
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