In this era of tight public funds afflicting virtually every state in the nation, there is one revenue source that has been all but neglected in the public debate: the subsidy of “not for profit” private hospitals by exemption from sales and property taxes being the typical form.
This has been reexamined by the remarkable Illinois supreme court decision in the Provena Covenant case: the Court ruled that the Provena hospital group failed to meet the charitable health care provision required to enjoy the property ands sales tax freedom they had enjoyed.
Illinois law requires non profit hospitals to provide charity care (free or reduced care) which eases the financial toll on government- and nothing less- to qualify for property tax exemption. When non profit hospitals fail to provide charity, some poor, uninsured, and underinsured patients find themselves in public hospitals funded by public dollars and stretched beyond capacity. This failure to meet legal requirements results in the loss of tens of billions of tax dollars across the nation at a time of great national need.
Other patients afraid to incur debt they can’t repay, delay their medical treatment, adding to its eventual cost and jeopardizing their health outcomes if not their lives.
In the current recession, budgets at every level of government are strained and people are in peril. The Illinois Supreme Court has decided that non profit hospitals must deploy the public funds they are given to support the public health safety net both the poor and the taxpaying public deserve.
Dr. Quentin Young is the Chairman of the Health and Medicine Policy Research Group



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Good decision. Claiming tax exempt status while taking a piece of their profits out of taxpayers’ pockets is particularly offensive.
We had much the same issues here in WA State ~ particularly in rural hospitals who went for-profit. It left many rural low income people bereft of any health care much less emergency health care. Some rural areas are now supporting the rich McMansion crowd who flee the city for their “estates” and who are pushing out land owners of several generations because the natives have land but little money.
These wealthy newcomers are also demanding more resources such as water and power, which drive up the cost and stress the grid while small towns are pouring money into those things rather than spending it on resources for their long-time residents who are lower-middle class. Some of these are elderly who not only have no way of getting around to the doctor or for supplies, they also were self-supporting and are not eligible for Social Security and Medicare. Most of their extended families have been forced out of the area and so these elderly do not even have family support.
My point is that resources of all types are being transferred to upper income people who can afford to dominate the resources instead of sharing them. Chief Sealth (for whom Seattle is named) warned of this when he saw the same happening to his people 100 years ago. We should have heeded his warning, because it is much the same now only using the poor as the annihilation target instead of the indigenous peoples. It is about sharing, it is about not hoarding and it is about knowing that, “what happens to the least of these will happen to you”
Chief Sealth said:
“The Great Chief in Washington sends word that he wishes to buy our land. How can you buy or sell the sky-the warmth of the land?
The idea is strange to us. Yet we do not own the freshness of the air or the sparkle of the water. How can you buy them from us? Every part of this earth is sacred to my people. Every shiny pine needle, every sandy shore, every mist in the dark woods, every clearing and humming insect is holy in the memory and experience of my people.
“We know that white man does not understand our ways. One portion of the land is the same to him as the next, for he is a stranger who comes in the night and takes from the land whatever he needs. The earth is not his brother but his enemy, and when he has conquered it he moves on. He leaves his father’s graves and his children’s birthright is forgotten.
“There is no quiet place in the white man’s cities. No place to hear the leaves of spring or the rustle of insect wings. But perhaps because I am savage and do not understand-the clatter only seems to insult the ears. And what is there to life if a man cannot hear the lovely cry of the whippoorwill or the arguments of the frog around the pond at night.
“The whites too, shall pass-perhaps sooner than other tribes. Continue to contaminate your bed and you will one night suffocate in your own waste. When the buffalo are all slaughtered, the wild horses all tamed, the secret corners of the heavy forest heavy with the scent of many men, and the view of the ripe hills blotted by talking wires. Where is the thicket? Gone. Where is the eagle? Gone. And what is it to say goodbye to the swift and the hunt, the end of living and the beginning of survival.”
Great post. There are so many subsidies (“tax expenditures”) that we forget they are even on the books. Or we accept them as the status quo, even when their reason for being has been forgotten.
Tax deductions (expenditures) for “charity”, including religious groups reduce individual Federal tax revenue by $50-60 billion per year, according to one source I’d read. Those taxpayers who don’t itemize (which usually requires having a large mortgage) get no benefit when they donate to their favorite charities. Taxpayers are supporting thousands of groups they would never countenance through legislative appropropiation.
These range from religious groups, including “megachurches” with their million-dollar pastor’s salaries and their 5,000 sq. ft. “parsonages”, to helping “settlers” in the West Bank. On the local level, the churches’ traditional exemptions from property taxes and other fees unfairly burden the localities they are located in.
Isn’t it time to ask whether these exemptions and “tax expenditures” are fair and necessary? Do they contribute to the common good? Why should government support religion in this fashion? Further, churches should be taxed on any revenue above that spent on genuine, demonstrable charitable activities.
Tax exempt insurers?? Providers?? Relieving a burden of government?
Now we coerce people via fear of a punitive financial tax penalty to enter into contracts with these very corporations who abuse tax exempt status. RICO!!!!!!!!!!!!!!!!!
Ruth take a look at the 990 Forms file by “tax exempt corporations” in the health service industry? Kaiser’s Mid Atlantic Health Plan, for one? This entire healthcare reform act is a rouse. Did anyone ever mention “tax exempt status” in the entire healthcare debate. This is textbook unequal protection. Corporation continue to profit just as slave owners profited off of the servitude of their property, called slaves.
We are all subordinate to corporations who buy law just as Jefferson feared!
Life and liberty subject to the dictates of corporate slime, who buy law!
So the fundamental question of equal protection and due process have again been gutted under the color of law just as slavery was once protected by the likes of a Taney! Nice job Scaglia? Meanwhile how much “value” will America squander today collectively right out the tailpipe?? Yup slaves exploited for energy?? Maybe the billion plus dollars squandered today by Americans using gasoline, could serve a better purpose than lining the pockets of corporate fascists!
Does the United Way of the Red Cross or BSOA have 11 million dollars to pay a executive like Blue Cross Blue Shield? HELL NO! SO the $1200 month premium paid to BCBS, under fear of tax penalty goes to a “TAX EXEMPT CORPORATION.”
What a deal for America?????????
Did some consulting for a medical specialty group in the late 1980s. They were being shaken down by a Catholic mercy hospital. The nuns had just built a 1000 bed hospital, paid cash. Now there was another building fund drive to eventually replace the brand new hospital.
I took the “building fund director” out for an expensive meal and drinks. He admitted that after the new hospital had been paid for in cold hard cash, the building fund still had enough money to build another hospital for cash.
The american people are being ripped off in so many ways that the only solution to the “medical crisis” is to hire Switzerland to run the entire medical care system.