Reform Update: AHA warns against changing hospital tax rules

Already knee-deep in healthcare reform, the nation's hospitals this week waded into other deep policy waters that could have a serious impact on how they do business: tax reform.

Friday marks the deadline for members of the influential Senate Finance Committee to submit their policy recommendations to Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), the panel's chairman and ranking member, about their policy ideas to reform the nation's incredibly complex tax code.

Rick Pollack, executive vice president of the American Hospital Association (PDF), sent a nine-page letter and additional attachments laying out why certain healthcare-related policies exist in the tax code and why they're important to retain.

“The chairman and the ranking member said they were going to start with a blank slate,” said Mike Rock, senior associate director of federal relations at the AHA, explaining the volume of the association's submission.

Pollack's letter focuses on the community benefit standard, tax-exempt financing and the deductibility of charitable contributions. Emphasizing the importance of tax-deductible contributions, Pollack wrote lawmakers that community support for hospitals is solid, but that tax incentives are required for that support. He cited a recent Association of Healthcare Philanthropy survey of hospital and healthcare development professionals that found nine out of 10 agreed that proposed limits on charitable deductions would result in significant reductions in giving to their organizations.

“About 40% estimate that giving would decrease between 10% and 30% if significant changes are made to the current tax incentives for charitable donations, which conservatively could amount to a decrease of more than $1.07 billion in total annual giving to nonprofit hospitals and healthcare providers, based on AHP's FY 2009 giving statistics,” the letter said.

The AHA sent similar correspondence to Camp's committee earlier this year.

In a statement Thursday, Baucus said that lawmakers have received 10,258 comments from the public on taxreform.gov, a website that he and Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, created to hear from the public on this issue.

Rock said the AHA “absolutely” plans to follow its letter with a lobbying effort on Capitol Hill and among its members, and an AHA spokeswoman said tax reform will be one of the topics of discussion at the organization's “advocacy days” in Washington in September and October.

“I can repeat what Baucus said: He will mark up a bill in October. Camp said he intended to move tax reform through his committee this fall,” Rock said. “They've announced those intentions. We'll see if they follow through.”

A number of Republicans in both congressional chambers have indicated they won't support a continuing resolution to fund government operations after Sept. 30 if the measure includes money to implement the Patient Protection and Affordable Care Act. Sen. Mike Lee (R-Utah) said so on the “Fox and Friends” program early in the week, and Sen. Marco Rubio (R-Fla.) followed suit in a Friday interview on the Andrea Tantaros Show. Meanwhile, a spokeswoman for Rep. Mark Meadows (R-N.C.) said in an e-mail that the North Carolina Republican is spearheading a letter co-signed by 64 members that encourages House leadership to defund the Affordable Care Act through the appropriations process.

The House Energy and Commerce Health Subcommittee this week approved a draft bill to repeal Medicare's sustainable growth-rate formula, which now must move to the full committee. Still pending is a way to pay for the repeal. “Committee leaders remain committed to completing this bipartisan reform effort in a fiscally responsible manner and look forward to the swift consideration of the draft legislation by the full committee,” the panel said in a statement.

Before leaving for a five-week August recess, the full House Ways and Means Committee will convene a hearing on Aug. 1 examining the status of the Obama administration's efforts to implement the Affordable Care Act. “Members of Congress, from both sides of the aisle, have raised concerns about whether ObamaCare will be ready and will work on Oct. 1,” Committee Chairman Dave Camp (R-Mich.) said in a news release. “The administration's repeated promises that 'we'll be ready' is simply not a sufficient response.” The hearing is expected to explore efforts of HHS and the IRS to implement the law.

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