WSU health school leaders protest provisions in tax reduction bill

December 20, 2017

The leaders of Wayne State University’s health sciences schools have sent a letter to ranking members of the U.S. House of Representatives and the U.S. Senate delineating language in the newly adopted federal tax legislation that will harm the university and its students.

Addressed to U.S. Reps. Kevin Brady and Richard Neal, chairman and ranking member respectively of the House Committee on Ways and Means, and U.S. Sens. Orrin Hatch and Ron Wyden, chairman and ranking member of the Senate Committee on Finance, the letter takes issue with language related to capital improvement bonds, medical education tax incentives and potential reductions in Medicare funding.

Signed by David Hefner, vice president of Health Affairs; Jack D. Sobel, M.D., dean of the School of Medicine; Laurie Lauzon Clabo, Ph.D., R.N., dean of the College of Nursing; and Deepak Bhalla, Ph.D., dean of the College of Pharmacy and Health Sciences, the letter claims these provisions in the tax bill will have a “damaging impact” on the university, its students and the people it serves.

“It’s very important to get on the record where your support and/or opposition is on this,” said James Williams Jr., WSU’s director of Federal Affairs. “This issue is going to come back because of the budget – one hasn’t been determined for the rest of this fiscal year – and the sequester, which mandates a hard spending cap and a mandatory 10 percent cut in all of the budgets of Congress. Those issues are separate from the Tax Cuts and Jobs Act.”

The letter, in its entirety, is below:

On behalf of the Wayne State University School of Medicine, College of Nursing, and College of Pharmacy and Health Sciences, I write to encourage you to reject in conference several provisions included in the House- or Senate-passed versions of H.R. 1, the Tax Cuts and Jobs Act. As outlined below, these provisions would have a damaging impact on our university and its students.

Wayne State University is a public research university located in Detroit, Michigan. Our university emphasizes urban clinical excellence and contributes to the revitalization of Detroit. Our health science-focused schools graduate a diverse group of nurses, pharmacists and physicians, with a focus on social responsiveness through innovative education, research and clinical care.

When taking both versions into account, we are concerned that the passed bills would have a negative impact on our educational, research and clinical missions. The following specific policies are of key concern:

Private Activity Bonds: PABs are a critical financing source for capital improvements, including new research facilities. As a large research university, WSU is concerned that without these bonds, including advanced refunding bonds, our critical educational, research and clinical facilities will suffer. Medical schools may need to plan for higher borrowing costs associated with future capital projects that would have included tax-exempt bonds or current projects that may have anticipated the future use of advance refunding bonds.

Medical Education Tax Incentives: These tax deductions help to ease the financial burdens of our medical students. The House-passed bill repeals these, while the Senate-passed bill retains them. Subjecting students to the added costs in the House-passed bill would add a significant financial burden to students attending medical school and other health science degree programs, because students will no longer be able to offset some of their education expenses and will be taxed for those benefits currently in place to make graduate education more affordable. WSU urges Congress to retain the Senate version in keeping these deductions.

Individual Mandate: Our medical school knows firsthand that patients without insurance are more likely to forgo preventative care, leading to potentially more complex and costlier treatment, when they eventually do seek the needed care. We urge Congress to retain the individual mandate in the final legislation.

Lastly, we are concerned for the potential cuts to Medicare that may take place in order to comply with the statutory Pay-As-You-Go Act of 2010 (PAYGO). Without an exemption waiver, the tax legislation would trigger a 4 percent reduction in Medicare, amounting to more than $25 billion in cuts. This cut would be devastating for the university’s ability to provide crucial services to the nation’s most vulnerable populations.

Wayne State University does not object to tax reform policies that seek to strengthen the opportunities our economy affords all Americans. However, the provisions discussed throughout this letter would have the unintended consequence of driving up the cost of health care, research and education. As the Conference Committee moves forward, we ask that it prioritize the recommendations outlined above in the final package.

David Hefner
Vice President of Health Affairs

Jack Sobel, M.D.
Dean, School of Medicine

Laurie Lauzon Clabo, Ph.D., R.N.
Dean, College of Nursing

Deepak Bhalla, Ph.D.
Dean, College of Pharmacy and Health Sciences