WASHINGTON - Senate Majority Leader George Mitchell's decision yesterday to pull the plug on health care reform efforts this year also killed off any hope of enacting a proposal to ease curbs on 501(c)(3) bonds.

The bond provision would have removed the $150 million limit on the amount of tax-exempt bonds that private, nonprofit organizations may have outstanding at one time. It was also designed to put 501(c)(3) bonds more on a par with governmental bonds by removing some of the private-activity restrictions placed on them by the Tax Reform Act of 1986.

Mitchell, a Maine Democrat, told reporters he had abandoned his drive for a health care reform bill because Senate Republicans successfully blocked consideration of any such bill. He said he still believes health care reform is needed, "but unfortunately an overwhelming majority of my Republican colleagues do not agree."

Mitchell was widely expected to announce last Friday that he was giving up on health care reform, but at the last minute reportedly decided to make one last effort to put a bill together over the weekend.

The bond provision was part of the health care reform bill passed by the Senate Finance Committee in July, and was retained by Mitchell in August when he crafted a hybrid measure containing elements of various committee bills.

The provision also appeared in some versions of a bill crafted by the socalled mainstream group of moderate senators who attempted to develop alternatives to the Mitchell bill. But it was not included in the House Ways and Means Committee's health care reform measure, nor in a subsequent House leadership bill.

When the health care reform effort began earlier this year, bond proponents also pushed two other proposals to ease health care bond curbs, but those provisions were not included in any of the Senate or House measures.

The Public Securities Association and a group of state health finance authorities urged Congress to permit additional advance refundings of hospital bonds in cases where health care facilities needed to change bond covenants to facilitate mergers or changes in services.

They also pushed a proposal to ease current law limits on bank deductibility for small health care facilities that pool their debt into a larger issue.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.