Hospital groups urge Congress to protect tax-exempt bond financing

The American Hospital Association and 11 other associations urged Congress to protect tax-exempt bond financing for public and private nonprofit hospitals, colleges and universities as part of the tax reform working group process, according to a statement sent Friday to the House Ways and Means Committee.

"A number of proposals are currently being considered by Congress to alter the tax treatment of tax-exempt bonds," the groups wrote, according to AHA News Now. "We believe a cap on the income tax exemption of tax-exempt municipal bond interest, or even a partial tax, will cause investors to demand higher returns, again leading to higher infrastructure costs."

The groups also urged support of qualified 501(c)(3) private activity bonds, and of considering direct pay bonds as complements and not alternatives to tax-exempt bonds.

In the official statement to the House Ways and Means Committee, the 12 groups urge Congress to consider how important it is for the federal government to invest in human capital and innovation--namely, "by granting tax-exempt status to hospitals, health clinics, colleges, universities, drug and alcohol treatment centers, and other charitable institutions whose health, public service, education and research missions provide a wide-range of societal benefits."

The groups also contend that higher borrowing costs would lower investment in infrastructure, jobs and public services, and result in higher charges and fees.

Meanwhile, the mayor of a faded Pennsylvania steel town who waged an unsuccessful three-year fight to prevent the University of Pittsburgh Medical Center from razing the local hospital, is arguing in a somewhat surprising op-ed in the Pittsburgh Post-Gazette that "soaking" UPMC and Pittsburgh's other large nonprofits for tax revenue is poor public policy.

 He was responding to an effort by Pittsburgh Mayor Luke Ravenstahl to challenge the tax-exempt status of UPMC and other large nonprofits.

"We must step back and objectively evaluate just how much UPMC and the other super nonprofits bring to the region as a whole," writes Braddock Mayor John Fetterman. "As the father of two small children (with Highmark insurance) if, God forbid, something should happen to them, I'm rushing them to UPMC Children's Hospital."

He adds that "eds and meds" provide tens of thousands of local jobs and word-class healthcare. "Take away UPMC, and we're Akron. Take away UPMC and Highmark, and we're Cleveland. Take away UPMC, Highmark, Pitt and CMU, and we're ... Detroit. Instead of the most livable city in the nation," he writes, referring to Pittsburgh.

To  learn more:
- read the news brief from AHA News Now
- read the official statement from the 12 groups (.pdf)
- read Fetterman's op-ed in the Pittsburgh Post-Gazette

Related Articles:
UPMC's tax-exempt status faces challenge from city mayor
States debate hospital tax exemption bills
Providers, state regulator at odds over hospital margins
Nonprofit hospitals get conflicting messages about tax exemptions

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