WASHINGTON - Tax law should not be written piecemeal.
That's why three proposals, now pending before the House Ways and Means Committee, to ease curbs on health care financings present a dilemma for lawmakers and municipal market participants.
The National Council of Health Facilities Finance Authorities, which represents 23 501(c)(3) authorities that issue tax-exempt bonds for health care facilities, and the Public Securities Association have been pushing Ways and Means to include the trio of bond provisions in health care reform legislation.
Changes are needed, the two groups argue, to pare the costs of institutional mergers and consolidations that will be necessitated by reform.
Several state and local government organizations have made it clear to the panel, however, that they will not champion the measures because they favor legislation, likely to be considered next year, that would relax a much broader range of bond curbs to the benefit of all issues, not just health care facilities.
Indirectly, the state and local groups raise a fundamental point.
If only the three provisions that would benefit health care facilities are changed, it would create distortions in the treatment of other issuers.
The proposal to ease or eliminate the $150 million limit on the amount of bonds that a non-hospital health care facility may have outstanding is unfair to private colleges and the other nonprofit organizations that don't provide health services but do benefit society.
The same point applies to the proposal to help health facilities by easing the $10 million limit on the bank deduction for small issuers and by extending the deduction to small issuers that pool their debt.
Why shouldn't the proposed easing apply to all small issuers, especially small local governments that provide basic public services?
A similar rationale holds for the third proposal that would ease the limits on advance refundings of hospital bonds. Granted, hospitals that have used up their allotment of refundings may still need to do another to change their bond covenants to facilitate mergers or change services. But why should hospitals be singled out for special treatment when other issuers also have good reason for wanting added refundings?
At the risk of espousing heresy, some would argue that it would be far better if the three health care bond proposals were considered next year when Congress debates broader proposals to ease bond curbs as part of President Clinton's infrastracture finance package.
It's certainly understandable why the health financing authorities want to push their three proposals this year as part of health care reform.
But the PSA should stay out of the fray this year. Otherwise, it runs the risk of being accused, as it was during the tax reform battles of 1985-86, of only pushing proposals that boost underwriters' business, rather than helping the entire bond community. Worse yet, it could hurt the opportunity to win more comprehensive changes next year.