Tennessee Hospitals Push to Revise Federal Tax Bill

As Congress works to resolve differences between Senate and House versions of federal tax reform legislation, Tennessee Hospital Association is urging the Tennessee congressional delegation to reconsider several components of the bills. These items include the Senate proposal to repeal the individual insurance mandate, changes to tax exempt bonds in both bills and repeal of itemized deductions for medical expenses in the House bill.

Unintended consequences for hospitals and health systems as a result of some provisions in the bills could have a major negative impact in numerous communities. THA President and CEO Craig Becker, in talking about the potential impact of the legislation, stated, “While the goal of promoting economic growth through tax reform has been made clear by members of Congress, there are real ramifications in the bills for hospitals that threaten economic viability, especially in rural areas of Tennessee where we have already seen eight facilities close since 2012.”

As the bill currently stands, there are certain provisions that would make it difficult for hospitals to operate in the black — both as healthcare providers and employers for thousands of Tennesseans – which threatens the future of healthcare across the state. Hospitals are often the largest employers in a county, and in some cases, can represent as much as 20 percent of a community’s employment and income.

Because of the potentially disastrous impact to hospitals, THA strongly believes the following provisions should be removed from the final bill.

Repeal of the tax penalties for the Affordable Care Act’s (ACA) individual insurance mandate, which would eliminate the tax faced by those Americans who choose to go uninsured. The Congressional Budget Office (CBO) analysis indicates the mandate’s repeal would create a cost savings of $330 billion over the span of 10 years — but the savings are based on the estimated loss of insurance for 13 million Americans as a result. This is certain to drive up uncompensated care for hospitals, adding the existing burden of charity care and financial challenges as a result of cuts to provider reimbursement contained in the ACA.

Repeal of the tax exclusion for interest on tax-exempt private activity bonds (PABs) and tax-exempt advance refunding bonds, which includes activities of 501(c) (3) hospitals. PABs and advance refunding bonds are a critical source of financing for hospitals and other types of infrastructure that stabilize local economies and make growth possible. Removal of the tax exclusion would deal another financial blow to nonprofit hospitals and further cloud the future of many facilities in Tennessee. In addition to nonprofit hospitals, the bond repeals would negatively impact airports, transportation, water and wastewater infrastructure, among others.

Repeal of itemized deductions for high medical expenses.
Tennesseans struggling with serious disabilities or terminal illnesses often spend their life savings while caring for themselves or a loved one. The deductibility of large medical expenses can provide greater financial stability for these individuals and families. In a time of high deductibles for the insured or out-of-pocket costs for those who still lack coverage, this tax deduction is critically important for Tennesseans.

About THA: The Tennessee Hospital Association was founded in 1938 and serves as an advocate for hospitals, health systems and other healthcare organizations across the state. The initiatives of THA support the efforts of Tennessee’s hospitals to ensure high quality care for the patients and communities they serve.

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