There’s a rising push to strip nonprofit hospitals of their tax-exempt standing. Advocates declare it’ll make healthcare extra reasonably priced by holding hospitals accountable for prime out-of-pocket prices. In actuality, it’s a misguided, short-sighted proposal that might hurt communities, notably in rural America, with out fixing the underlying price issues within the healthcare system.
A lot of this scrutiny is fueled by healthcare particular pursuits who would like to shift the blame for rising prices away from themselves. It’s a intelligent political transfer, however a harmful one.
Rural hospitals nationwide have been closing at alarming charges — 153 since 2010, with tons of extra in danger. Taking away their tax exemptions may push many of those services over the brink and pressure them to shut, leaving communities with out native entry to care.
Critics typically level to “charity care” — free or discounted remedy for low-income sufferers — as the only real measure of whether or not nonprofit hospitals deserve tax advantages. Whereas charity care is significant, it’s just one a part of the worth these hospitals present. Nonprofit hospitals additionally soak up billions in Medicaid losses annually, function unprofitable however important companies, and make investments closely in neighborhood well being applications.
In 2020, nonprofit hospitals offered $129 billion in charity care and neighborhood advantages, 10 occasions the $13.2 billion worth of their federal tax exemptions. These advantages embrace dependancy remedy, housing for the homeless and illness prevention applications.
The push to revoke tax exemptions couldn’t come at a worse time. Lately handed Medicaid cuts imply that there could also be a $137 billion reduce in spending in rural areas over the following decade. In the meantime, Medicaid Disproportionate Share Hospital funds, which offset the price of treating the uninsured, face cuts of greater than 50% over the following few years. And post-pandemic workforce shortages have pushed hospital labor prices up by almost 30%.
This isn’t about defending a “loophole.” Nonprofit hospitals give again excess of they obtain. Stripping their tax exemptions most likely gained’t decrease affected person prices in a significant method, however it might probably pressure service cuts, shutter neighborhood applications, and speed up hospital closures.
Healthcare coverage must be guided by the precept of strengthening what works, not undermining it. Nonprofit hospitals work. They preserve companies out there in communities that for-profit suppliers gained’t contact. They function applications that tackle well being crises earlier than they escalate. They perform missions that serve the general public good, missions that might be not possible with out the sources offered by their tax-exempt standing.
Somewhat than punishing these establishments, policymakers ought to search for methods to bolster their function. Which means defending tax exemptions, defending vital funding streams, and guaranteeing that reimbursement insurance policies mirror the precise prices of care.
When nonprofit hospitals thrive, communities thrive.
Lori Klein, a Republican, is a former Arizona state senator/InsideSources
