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Defending the power of our states since 2009
Healthcare is a massive business, and that’s fine. Competition in the marketplace is what pushes quality up, prices down, and innovation forward. Unfortunately, some medical corporations use tax law loopholes to claim nonprofit status, which allows them to avoid paying federal income tax.
This is unfair in two ways. First, it gives them a massive advantage over their competitors. Why have big hospitals gobbled up so many smaller medical practices? This is one reason. A local doctor’s office is an ordinary “for-profit” business, like a pharmacy, plumber, or bakery. But a hospital that spends just one percent on charity care can claim to be a nonprofit, avoid federal taxes, and gain a competitive advantage.
This is also unfair to other taxpayers. When one business pays nothing, everyone else pays more. The fairest way to distribute a tax burden is evenly, spreading the costs to everyone rather than picking winners and losers.
Even if it’s unfair and leads to consolidation, giving a massive tax break to some hospitals might not seem like a big deal—until you see how they spend their money.
While pretending to be charities, major hospitals pay executives massive salaries, buy up expensive art collections, build the fanciest buildings—including overseas—and still wind up downsizing staff, settling abuse cases, and failing at basic medicine.
Healthcare is a business. That’s a good thing—it’s why American healthcare has produced countless innovations. It’s one reason why wait times are lower here than in other countries. A 2024 survey showed that 75 percent of Americans are satisfied with the availability of quality healthcare, while just 61 percent of Britons and half of Canadians say the same (despite those nations having socialist, government-run medical systems). Yet prices here are too high and continue to rise because of a lack of market forces and accountability.
Congress needs to reassess tax breaks for big hospitals. These are big businesses and they should exist on a level playing field with their competitors and other corporations.