Nonprofit Hospitals Claim Billions In Tax Exemptions While Failing To Provide Adequate Charity Care

By Consumers For Quality Care, on August 18, 2021

According to a column in The Denver Post, while nonprofit hospitals benefit from generous tax exemptions, they lack any guarantee they’ll provide community benefits, like charity care, for patients struggling to afford medical bills.

Currently, nearly 60 percent of hospitals in the U.S. have nonprofit status, meaning they get tax breaks to offer charity care to help lower income patients afford their bills. In 2015, this tax exemption was estimated to be worth $25 billion.

Yet, 71 percent of nonprofit hospitals charge uninsured patients at higher rates. Studies have found that only 20 percent of nonprofit hospitals provided charity care that exceeded the value of their tax exemption. In fact, for-profit hospitals – which pay taxes and receive no charitable contributions – provided 65 percent more charity care than nonprofit hospitals.

“Automatic tax exemption for nonprofit hospitals is a long-standing but poorly targeted policy that has outlived its sell-by date. In its current form, tax exemption provides no assurance that nonprofit hospitals will behave in accordance with their charitable mission,” according to Ge Bai, Associate Professor of Public Health at Johns Hopkins, and David Hyman, Professor of Health Law and Policy at Georgetown.

CQC urges nonprofit hospitals to hold up their end of the bargain and deliver care for patients when they need it most.