Some of the largest healthcare companies, including for-profit hospital chains, insurers and pharmaceuticals, will pay a combined $10 billion less in taxes for 2018 thanks to the corporate tax cuts passed by Republicans and signed into law by President Donald Trump, according to a report published by Sen. Ron Wyden, D-Oregon.
Wyden’s report was meant as an attack on the tax law, saying Trump and congressional Republicans gave 20 of the 37 Fortune 500 healthcare companies “sweetheart deals” by lowering the corporate tax rate from 35 percent to 21 percent, offering a tax break on offshore holdings and remeasuring deferred taxes on offshore profits at a lower rate of between 8 percent and 15.5 percent instead of the former 35 percent rate.
For 2018, the 20 companies examined in the report will pay a total of $10.1 billion less in taxes thanks to the permanent cut in the corporate rate. UnitedHealth Group will see the biggest cut at $1.7 billion, followed by AbbVie at $1.3 billion and CVS Health at $1.2 billion. The biggest winner among for-profit hospitals would be the Hospital Corporation of America (HCA), which will save $500 million.
“Millions of working Americans lie awake at night wondering how to make ends meet. Do they pay for their electric bill or their child’s prescription? Groceries or a visit to the doctor’s office?” Wyden said in a press release. “This report shows there are no sleepless nights for wealthy shareholders or high fliers in the health care industry. Their windfalls are raining down like manna from heaven.”
The report also noted the tax cuts have led to $28 billion in stock buybacks among five companies: AbbVie, Amgen, Baxter, Celgene and QuintilesIMS Holdings/IQVIA. Those same companies also have large gaps between what their CEOs and their median employees are paid, with QuintilesIMS Holdings/IQVIA having the largest difference at a 388-to-1 ratio.
The same tax cut legislation also zeroed out the individual mandate penalty from the Affordable Care Act for not having health insurance, which the Congressional Budget Office estimated would lead to 13 million fewer people being covered by 2027. Insurers had also warned it threaten their solvency by making the ACA exchanges’ risk pool sicker and more expensive to cover.
An earlier study from Moody’s Investors Service for-profit hospitals would reap up to a combined $800 million in aggregate tax savings thanks to the law this year. Analysts predicted companies would use that money to invest in capital projects or pursue mergers and acquisitions.
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.