Does Nonprofit Ownership Matter?
Jill R. Horwitz
UCLA School of Law; National Bureau of Economic Research (NBER)
Yale Journal on Regulation, Vol. 24, Winter 2007
U of Michigan Law & Economics, Olin Working Paper No. 07-004
In recent years, policymakers have increasingly questioned whether nonprofit institutions, particularly hospitals, merit tax exemption. They argue that nonprofit hospitals differ little from their for-profit counterparts in the provision of charity care and, therefore, should either lose their tax-exempt status or adhere to new, strict, and specific requirements to provide free services for the poor. In this Article, I present evidence that hospital ownership - whether it is for-profit, nonprofit, or government owned - has a significant effect on the mix of medical services it offers. Despite notoriously weak enforcement mechanisms, nonprofit hospitals act in the public interest by providing services that are unlikely to be offered by the other types of hospitals. Imposing onerous charity requirements or limiting nonprofit tax exemptions may have severe and unintended consequences for all patients, including the well-insured.
Number of Pages in PDF File: 62
JEL Classification: L31, H20
Date posted: February 26, 2007