Recently, the House of Representatives voted 227-205 to approve the Tax Cuts and Jobs Act (H.R. 1), legislation to reform the tax code. Meanwhile, the full Senate voted 51-49 to approve its tax legislation. Among other changes, the House bill would eliminate hospitals’ ability to access low-cost capital financing through tax-exempt private-activity bonds and advance refunding bonds. The ability to obtain tax-exempt financing is a key benefit of hospital tax-exemption that works to make access to vital hospital services available in communities large and small across America. If hospital access to tax-exempt financing is eliminated, the result could be devastating for both patients and their communities. The AHA has urged Ways and Means leaders to reject proposals that would eliminate tax-exempt private-activity bonds, among other things.

Here is a quick breakdown of the two bills:

House Bill

Tax-exempt Bonds: The House bill would eliminate the tax-exemption for private-activity bonds (PABs), including qualified 501(c)(3) hospital bonds. In addition, the bill would eliminate the ability of hospitals to execute tax-exempt “advance refundings” of outstanding tax-exempt bonds. Tax-exempt advance refundings provide an option for refinancing outstanding debt at lower interest rates.

Senate Bill

Tax-exempt Bonds: The Senate bill does not include changes to tax-exemption for PABs. However, it does include the elimination of hospitals’ ability to execute advance refundings of outstanding tax-exempt bonds.

AHA member? Please see our Dec. 6 Action Alert for more on the individual mandate and watch for additional information and updates.

Additional Resources

AHA Statement on Tax Proposal

Letter to Ways & Means Committee

Letter to Congressional Leaders