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Population Health and Tax-Exempt Hospitals: Putting the Community Back into the 'Community Benefit' Standard

Jessica Wilen Berg

Case Western Reserve University - School of Law

August 1, 2009

Georgia Law Review, Winter 2010
Case Legal Studies Research Paper No. 08-22

Disputes about tax-exemption are occurring all over the country. The IRS and CBO are engaged in national studies of non-profit hospitals and community benefits. State governments are considering whether to legislate minimum amounts of charity care in exchange for tax-exemption. Congress is debating whether hospitals should remain a part of the non-profit sector at all. At the same time, uninsured individuals are suing hospitals for unfair billing and collection practices. Creative accounting and expansive definitions of "free" care have led to a variety of non-ideal practices by hospitals in order to balance their bottom line, while at the same time maintain tax-exempt status. This article argues that the longstanding focus on providing individual charity care to meet the community benefit standard for tax-exemption is misguided. Instead, I determine that there are conceptual and practical arguments for requiring hospitals to provide population or public health benefits. I offer a detailed analysis for implementing a new standard, and a framework for quantifying community benefit under that standard. The suggestions set forth should result in better, more expansive benefits for communities; clearer guidance for health care institutions and tax authorities; and fewer problematic incentives for tax-exempt hospitals attempting to meet their community benefit obligations.

Number of Pages in PDF File: 43

Keywords: Hospitals, Tax-exempt, Charity Care, Community Benefit

JEL Classification: K23, K32, K34

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Date posted: August 22, 2008  

Suggested Citation

Berg, Jessica Wilen, Population Health and Tax-Exempt Hospitals: Putting the Community Back into the 'Community Benefit' Standard (August 1, 2009). Georgia Law Review, Winter 2010; Case Legal Studies Research Paper No. 08-22. Available at SSRN: http://ssrn.com/abstract=1243963 or http://dx.doi.org/10.2139/ssrn.1243963

Contact Information

Jessica Wilen Berg (Contact Author)
Case Western Reserve University - School of Law ( email )
11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-6363 (Phone)
216-368-2086 (Fax)
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