It’s not just federal payment and regulatory policies that have driven consolidation of the hospital into massive health conglomerates, but also their federal tax exemption, which has given giant non-profit hospitals a huge advantage as their insatiable acquisition sprees roll on. This outrageous loophole in the tax code drives up costs for everyone and shrinks the tax base in many cities and towns.

This is a tax code scam that must end.

Phil Kerpen and Tomas Philipson, two of the co-chairs of our 501 (c)(4) partner organization’s Most Favored Patient initiative, explain in Real Clear Health:

Most of the public anger over the cost of American health care in recent years has been directed toward Congress, the insurance companies, and the pharmaceutical companies – but the latest national health expenditure data shows hospitals are by far the biggest driver of increased health care costs. As a result of government payment, regulatory, and tax policies, hospitals have evolved into enormous integrated “health systems.” Most of these systems are operated as tax-exempt non-profits despite vast commercial activities, eroding federal, state, and local tax bases.  Bringing market discipline to bear on these systems is a long overdue frontier for federal tax and health care policy.

This chart shows that more than 40% of the overall increase in health expenditures in recent years has gone to the hospitals. We hate the insurance companies as much as anyone, but clearly there is a major hospital problem that they, and everyone else, are dealing with.

The Most Favored Patient agenda focuses on expanding the health care supply side by fixing the payment, tax, and regulatory policies that have driven mass consolidation so that people have more choices of medical services, with transparent prices and with health care dollars controlled by individuals, not insurance companies.  This would also increase price competition in the “nonprofit” hospital market.