title: The Value Of The Nonprofit Hospital Tax Exemption Was $24.6 Billion In 2011.
abstract: The federal government encourages public support for charitable activities by allowing people to deduct donations to tax-exempt organizations on their income tax returns. Tax-exempt hospitals are major beneficiaries of this policy because it encourages donations to the hospitals while shielding them from federal and state tax liability. In exchange, these hospitals must engage in community benefit activities, such as providing care to indigent patients and participating in Medicaid. The congressional Joint Committee on Taxation estimated the value of the nonprofit hospital tax exemption at $12.6 billion in 2002--a number that included forgone taxes, public contributions, and the value of tax-exempt bond financing. In this article we estimate that the size of the exemption reached $24.6 billion in 2011. The Affordable Care Act (ACA) brings a new focus on community benefit activities by requiring tax-exempt hospitals to engage in communitywide planning efforts to improve community health. The magnitude of the tax exemption, coupled with ACA reforms, underscores the public's interest not only in community benefit spending generally but also in the extent to which nonprofit hospitals allocate funds for community benefit expenditures that improve the overall health of their communities.
authors.affiliation: Sara Rosenbaum (sarar@gwu.edu) is the Harold and Jane Hirsh Professor of Health Law and Policy at the Milken Institute, School of Public Health, the George Washington University, in Washington, D.C.
authors.forename: Sara
authors.initials: S
authors.lastname: Rosenbaum
authors.affiliation: David A. Kindig is an emeritus professor in the Department of Population Health Sciences, School of Medicine and Public Health, University of Wisconsin-Madison.
authors.forename: David A
authors.initials: DA
authors.lastname: Kindig
authors.affiliation: Jie Bao is a director in the data analytics practice at Avalere Health, in Washington, D.C.
authors.forename: Jie
authors.initials: J
authors.lastname: Bao
authors.affiliation: Maureen K. Byrnes is a lead research scientist at the Milken Institute School of Public Health, the George Washington University.
authors.forename: Maureen K
authors.initials: MK
authors.lastname: Byrnes
authors.affiliation: Colin O'Laughlin is a senior associate in the data analytics practice at Avalere Health.
authors.forename: Colin
authors.initials: C
authors.lastname: O'Laughlin
mesh_terms: D003159:Community-Institutional Relations; D006788:Hospitals, Voluntary / Q000191:economics*; D006801:Humans; D008484:Medicaid; D009939:Organizations, Nonprofit / Q000191:economics*; D058991:Patient Protection and Affordable Care Act; D019464:Tax Exemption / Q000191:economics*; D013660:Taxes / Q000191:economics*; D017664:Uncompensated Care / Q000191:economics; D014481:United States
keywords: Access To Care; Health Reform; Hospitals; Nonprofit/For-Profit Status