In 2020, the value of nonprofit hospital tax exemptions reached an estimated $27.6 billion, up nearly 40.8 percent since 2011 and outpacing the cost of charitable care by more than 42 percent, an analysis of data by the Kaiser Family Foundation (KFF) finds.

The survey, which used data provided by RAND Hospital Data, found that the aggregate value of tax exemptions to nonprofit hospitals across the United States rose by 16.5 percent between 2019 and 2020—accounted for by increased aggregate net income fueled by federal spending during the COVID-19 pandemic—and by 8.7 percent between 2019 and 2018. In 2020, federal tax exemptions to nonprofit hospitals totaled $14.5 billion and state exemptions totaled $13.2 billion. The survey found that the value of tax exemptions in 2020 outpaced the aggregate $16 billion cost of charitable care—an $11.7 billion (or 42.4 percent) differential.

The rising value of tax exemption means that federal, state, and local governments have been forgoing increasing amounts of revenue over time to provide tax benefits to nonprofit hospitals, crowding out other uses of those funds, the KFF analysis noted. "This has raised questions about whether nonprofit facilities provide sufficient benefit to their communities to justify this tax benefit. Federal regulations require, among other things, that nonprofit hospitals provide some level of charity care and other community benefits as a condition of receiving tax-exempt status.”

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