Hospital Consolidation and Tax Exemptions Are an Overlooked Health Care Crisis

REALCLEARHEALTH

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.

Hospital prices have been by far the fastest rising component of inflation over the last two decades, outpacing even university tuition, which is number two.  What these sectors have in common is that they are dominated by non-profit, tax-exempt organizations that are not accountable to shareholders and susceptible to market pressures.  They have high barriers to entry, and they are heavily subsidized with taxpayer dollars.

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