The American Hospital Association released a report last week that said the benefits that not-for-profit hospitals provide to their local communities far outweigh foregone federal tax revenue. But Axios’ Bob Herman talked to some experts who said the AHA’s report has flaws and omissions that exaggerate hospitals’ community roles and understate the power of their tax exemptions.
- The AHA did not account for the giant tax break hospitals get on their property, “which is just a joke,” said Craig Garthwaite, a health economist at Northwestern University.
- “Exclusion of property taxes would be a very major problem,” added Gary Young, a health policy professor at Northeastern University who has studied tax exemptions for not-for-profit hospitals.
- Calculating shortfalls from Medicare as a community benefit also raises a red flag. For-profit hospitals that pay taxes treat Medicare patients. The IRS doesn’t acknowledge Medicare shortfalls as a community benefit.
- Plus, research shows hospitals often lose money from Medicare because of their high fixed costs and inefficiency, not because payments are too low. “That’s really just trying to get that (community benefits) number as high as possible,” Garthwaite said.
AHA’s response: Mindy Hatton, the AHA’s top lawyer, responded with a statement to Axios. The report did not include property tax values, she said, because the analysis only covered federal exemptions, which “Congress has jurisdiction over.”