- Tax breaks for nonprofit hospitals have doubled over the last decade, according to a new study published in Health Affairs.
- Nonprofits received about $12.6 billion in tax exemptions at the federal, state and local level in 2002. In 2011, they received $24.6 billion.
- The study has fanned the flames of criticism surrounding nonprofit pricing. "These are companies that are being insulated from the marketplace [and that] makes them more inefficient, and the taxpayers are financing them to do it," Joe Antos, a health policy expert at the American Enterprise Institute, told The Washington Post.
The study reported that nonprofits spent a total of $62.4 billion on community benefits in 2011, which the AHA said "shows that what nonprofit hospitals provide in terms of benefit to their communities far exceeds the value of tax exemption hospitals receive," justifying their nonprofit status.
But is that $62.4 billion made up of the sticker price or the actual cost of care—often two very different numbers? Hospitals themselves disclose how much they spend on "community health improvement," and have been doing so uniformly only since 2009.
And is $62.4 billion enough? According to IRS data, spending at the community health improvement level only made up 8% of total benefits in 2011. The rest went towards charity care for indigent patients, Medicaid payment shortfalls, research and training, according to Modern Healthcare.
"If you double that, that would be huge for communities but still be a modest investment for hospitals," study author Sara Rosenbaum said.
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