There’s a rising push to strip nonprofit hospitals of their tax-exempt standing. Advocates declare it’s going to 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 will hurt communities, significantly 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 favor 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 amenities over the brink and drive them to shut, leaving communities with out native entry to care.
Critics typically level to “charity care” — free or discounted therapy for low-income sufferers — as the only measure of whether or not nonprofit hospitals deserve tax advantages. Whereas charity care is important, it’s just one a part of the worth these hospitals present. Nonprofit hospitals additionally take up billions in Medicaid losses annually, function unprofitable however important companies, and make investments closely in group well being packages.
In 2020, nonprofit hospitals offered $129 billion in charity care and group advantages, 10 occasions the $13.2 billion worth of their federal tax exemptions. These advantages embody habit therapy, housing for the homeless and illness prevention packages.
The push to revoke tax exemptions couldn’t come at a worse time. Just lately handed Medicaid cuts imply that there could also be a $137 billion reduce in spending in rural areas over the subsequent 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 subsequent 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 way over they obtain. Stripping their tax exemptions in all probability gained’t decrease affected person prices in a significant method, however it could doubtless drive service cuts, shutter group packages, and speed up hospital closures.
Healthcare coverage needs to be guided by the precept of strengthening what works, not undermining it. Nonprofit hospitals work. They maintain companies out there in communities that for-profit suppliers gained’t contact. They function packages that deal with well being crises earlier than they escalate. They perform missions that serve the general public good, missions that will be unimaginable with out the assets offered by their tax-exempt standing.
Quite than punishing these establishments, policymakers ought to search for methods to bolster their position. Meaning defending tax exemptions, defending important funding streams, and guaranteeing that reimbursement insurance policies replicate the precise prices of care.
When nonprofit hospitals thrive, communities thrive.
Lori Klein, a Republican, is a former Arizona state senator/InsideSources
