GOP tax reform proposal includes provisions damaging to Washington’s non-profit and public hospitals

November 7, 2017

On November 2, House Republican leaders unveiled a sweeping tax plan that would affect non-profit hospitals/health systems and public hospitals districts and the patients they serve. We urge you to weigh in with your members of the congressional delegation. The most concerning provisions would:

  1. Eliminate the tax exemption for private-activity bonds, including qualified 501(c)(3) hospital bonds beginning January 1, 2018 (affects only 501(c)(3) hospitals); and
  2. Eliminate the ability to issue new tax-exempt bonds after December 31, 2017, to advance refund existing tax-exempt bonds (affects all hospitals.)

Next steps of the bill. Republican leaders want to move this bill quickly through the House and Senate and send it to the president by Thanksgiving. Earlier this week, the House Ways and Means Committee, on which Washington Reps. Dave Reichert (R) and Suzan DelBene (D) serve, began consideration of the measure, and hopes to finish by Thursday night. Floor action would come the week of November 13.

The Senate Finance Committee, on which Sen. Maria Cantwell (D) serves, hopes to introduce its version late this week and begin committee action on November 13 with floor action before Thanksgiving. Given the possibility of accelerated action, all members of the Washington congressional delegation need to be educated about the harmful impacts of this provision.

Contact your representative and senators and urge them to oppose the tax-exempt bond provision. Below are steps you can take to express your concern about the impact of these provisions:

  • Calculate the value of the tax exemption for any private activity bonds you have used for capital financing and share that with Washington’s senators and your House member. If possible, share the cost you would have incurred if you had not been able to use tax-exempt private activity bonds.
  • Remind your members of Congress that tax-exempt bonds play a critical role in helping not-for-profit hospitals and health systems access low-cost capital. Give examples of the ways patients in your community have benefited through services or programs added with bond financing.
  • Explain that the ability to advance refund existing debt on a tax-exempt basis after December 31, 2017 allows public issuers to take advantage of fluctuations in interest rates to realize considerable savings on debt service, which ultimately benefits taxpayers and patients needing services at the hospital.
  • Further remind them — in the absence of tax-exempt bonds — local and state governments would otherwise be called upon to provide these necessary services at taxpayer expense.
  • If hospital access to tax-exempt financing, such as qualified 501(c)(3) private-activity bonds, is limited or eliminated entirely, the result could be devastating for both patients and their communities. Stress loss of services and/or patient impacts from inability to modernize aging facilities.
  • Urge them to oppose this provision.

In view of the proposed House and Senate schedule, developments will be changing rapidly in Washington, D.C. Stay tuned for additional WSHA and AHA alerts in the coming days.


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