Hospitals that make profits should pay taxes

🌈 Abstract

The article discusses the issue of tax-exempt status for nonprofit hospitals in the United States, arguing that many of these hospitals are taking advantage of sick Americans and not providing sufficient community benefits to justify their tax-exempt status.

🙋 Q&A

[01] The IRS's Approach to Hospitals

1. What are the key issues raised about the IRS's approach to granting tax-exempt status to hospitals?

• The IRS uses a vague "community benefit" standard to liberally grant tax-exempt status to nonprofit hospitals, even as many of them are financially taking advantage of sick Americans with inflated medical bills.
• Some nonprofit hospitals sue and garnish the wages of low-income patients who can't afford to pay their medical bills, which goes against the idea of being compassionate and merciful.
• Many hospitals force patients to sign away their financial lives as a condition of treatment, make it difficult to contest bills, and do not comply with the federal hospital transparency rule.
• Nonprofit hospitals often report the difference between their high sticker prices and what they actually collect from patients as "charity care," which is not true charity.

2. What evidence is provided to show that nonprofit hospitals are not providing sufficient community benefits?

• A study found that for-profit hospitals provided 65% more charity care than nonprofit ones.
• Cedars Sinai in Beverly Hills had an income surplus of $750 million in 2022 and paid no federal taxes, while Memorial Sloan Kettering Cancer Center in New York had $400 million and also paid no federal taxes.
• The top three hospital administrators at Memorial Sloan Kettering made nearly $20 million in salaries.

3. What actions are being taken to address the issues with the IRS's approach to hospitals?

• A bipartisan group of U.S. senators demanded more transparency from the IRS after a report found the agency "did not have a well-documented process" to ensure hospitals met tax-exempt criteria.
• Bernie Sanders, the chair of the Senate Health, Education, Labor and Pensions committee, stressed the need to address the problem of nonprofit hospitals failing to provide affordable medical care to low-income Americans.
• A Pennsylvania judge revoked a hospital's property tax exemption after the local school district sued, arguing the hospital's tax-exempt status resulted in $900,000 less revenue for the school each year.

[02] The IRS's Approach to Direct Primary Care and Preventive Health

1. What issues are raised about the IRS's approach to direct primary care and preventive health?

• The IRS does not allow individuals or families who subscribe to direct primary care, a type of intensive primary care focused on prevention, to include the cost as a tax-deductible health savings account expense.
• The IRS has warned Americans that they cannot use their own health savings account to buy healthy foods as directed by their doctors.
• The article argues the IRS continues to propagate a reactionary approach to sickness rather than a proactive approach to health, despite chronic diseases being the leading cause of death in the U.S.

2. What is the author's perspective on the need for new approaches to health?

• The author suggests the country needs to try new approaches to health, instead of scolding Americans who sign up for direct primary care or want to eat healthier foods.
• The author argues the IRS should hold hospitals accountable for the taxes they should be paying, rather than restricting innovative approaches to preventive health.