Last September, I (Whaley) testified before the House Ways and Means Subcommittee on Oversight about something that should trouble every American who has ever paid a hospital bill or a health insurance premium: the nonprofit hospital tax exemption isn't delivering what it promises.
The premise of the exemption is simple enough. Hospitals that forgo profits and reinvest in their communities don't have to pay federal, state, or local taxes. It's a reasonable bargain, in theory. In practice, the data tell a different story.
Nonprofit hospitals collectively receive more than $37 billion annually in tax benefits. That number has grown steadily from $7.8 billion in 1994 and $24.6 billion in 2011. In return, the Internal Revenue Service requires these hospitals to primarily benefit their communities. Research suggests that community benefit spending falls short of the value of those tax exemptions by more than $25 billion per year. That's not a rounding error. That's a $25 billion gap between the deal Americans were promised and the deal they're actually getting.
Recently, the House Ways and Means Committee advanced the Tax-Exempt Hospital Transparency Act, legislation that would require nonprofit hospitals to disclose far more about how they're spending the public's money. The bill's ask is simple: show your work.
