Non-profit hospitals save more in tax exemptions than they provide in charity care

Non-profit hospitals have for years received tax breaks from local, state and federal governments in exchange for providing charity care within their communities.

A new analysis by the Kaiser Family Foundation finds that to be a pretty sweet return for hospitals. In 2020, non-profit hospitals (which totals three-fifths of all hospitals) in the United States claimed nearly $28 billion in tax exemptions. That same year, non-profits reported $16 billion in charity care costs, which included free or discounted services – a $12 billion difference!

Researchers also found that the amount of tax exemptions hospitals claim is growing at a rapid pace, from $20 billion in 2011 to $28 billion eight years later.

“The rising value of tax exemption means that federal, state, and local governments have been forgoing increasing amounts of revenue over time to provide tax benefits to nonprofit hospitals, crowding out other uses of those funds,” the KFF analysts wrote. “This has raised questions about whether nonprofit facilities provide sufficient benefit to their communities to justify this tax benefit.”

What does this mean to the average American?

Money that hospitals keep, rather than pay in local, state or federal taxes means those dollars are not available to pay for roads, schools or other government programs.

At the same time, a New York Times investigation in fall of 2022, found the non-profit Providence hospital system put increasing pressure on patients to pay for services, even patients who would otherwise qualify for charity care.

What do you think? Is it time to look at hospital tax breaks and charity practices? Do you have a personal story to share with Voices for Affordable Health?