THE HEARING
On April 28, the chief executives of four of the nation’s largest hospital systems sat in front of the House Ways and Means Committee and tried to explain why care in America costs what it costs. Sam Hazen of HCA Healthcare. Brian Donley of New York Presbyterian. Wright Lassiter of CommonSpirit Health. Robert Reilly of UPMC. Two for profit, two tax exempt, all enormous.
Committee Chairman Jason Smith opened by calling their prices “borderline extortion.”  He was not playing for applause. He was playing for a policy fight that has been simmering for two decades and is now coming to a boil.
The fight is about a question most Americans have never thought to ask. Why is your local hospital tax exempt? And what is it actually doing with that tax break?
The structural answer is the community benefit standard. To qualify as a 501(c)(3) charitable organization, a nonprofit hospital must provide a meaningful public benefit. Originally that meant charity care for people who could not afford to pay. Over the decades it has come to mean almost anything a hospital decides to call a community benefit. Research subsidies. Health education. Bad debt write offs. Money spent on programs the hospital was going to spend money on anyway.
The data is striking. KFF estimated that nonprofit hospitals collectively enjoyed $28.1 billion worth of tax exemptions in 2020, $14.4 billion from federal taxes and $13.7 billion from state and local.  Meanwhile nonprofits provide charity care at 2.3 percent of operating expenses, relative to an estimated value of the tax exemption of 4.3 percent of operating expenses.  That is the $12 billion gap that gave the hearing its energy.
And then there is the texture. The nation’s largest tax exempt corporations admitted to investing $718 million and earning $134 million gain on those securities, among questionable expenses including $21 million compensation for its prior CEO, $14 million compensation for the current CEO, and $163,703 for board meetings in foreign countries.  Stadium naming rights. Political activism. Real estate portfolios. These are not the kinds of expenses anyone associates with the word “charity.”
A March 30 CRS report formalized the policy question and laid out what Congress could actually do about it. Minimum charity care thresholds. Tougher IRS oversight. Even direct taxes on hospital assets. None of these are radical ideas. They have been kicking around think tanks and legislative staff offices for years. What is new is the political will.
THE THREE LENSES
For patients. This is where the abstraction gets concrete. A 300 percent rise in hospital prices over two decades is not a graph. It is a person at a discharge desk being handed a bill they cannot pay. Lown Institute analysis found that more than 1,350 nonprofit hospitals have “fair share” deficits, meaning the value of their community investments fails to equal the value of their tax breaks.  The five largest deficit hospitals include Kaiser Permanente and Providence, each topping $1 billion. These are not obscure operators. They are household names. And the patients getting hounded by collection agencies in their parking lots are subsidizing the executive compensation packages.
For hospitals. The industry’s defense is real, even when the framing strains. The American Hospital Association argues that charity care is only one slice of community benefit, that hospitals deliver $9 in community benefit for every $1 of federal tax avoided, and that focusing narrowly on free care misses the broader public good. There is genuine substance here. Hospitals are absorbing rising labor costs, malpractice insurance, drug shortages, and the financial pressure of Medicaid funding reductions and the expiration of enhanced premium tax credits, with many operating at or below breakeven financial levels.  Rural hospitals are closing. Workforce shortages are real. The fear that crude tax reform could push struggling community hospitals into closure is not manufactured.
For taxpayers and the IRS. This is the lens nobody talks about and the one that actually matters. The community benefit standard, as currently written, is one of the least enforced major tax rules in the federal code. The IRS does not audit hospital community benefit reporting. It does not define what counts as community benefit. It does not set thresholds. And it almost never revokes tax exempt status. The 2010 Affordable Care Act imposed additional community benefit mandates, requiring tax exempt hospitals to conduct community health needs assessments at least once every three years and establish written financial assistance policies.  Those rules have produced binders. They have not produced enforcement.
MY TAKE
The thing worth saying out loud is that this is not actually a partisan issue, even though it is being staged as one. Bernie Sanders has been hammering nonprofit hospitals for years. So has Elizabeth Warren. Chuck Grassley led oversight letters on this in 2023. Bill Cassidy has signed them. When Jason Smith calls hospital prices borderline extortion, he is using a Republican vocabulary to make a complaint that progressives have been making for a decade. There is no other major healthcare issue in 2026 with that kind of cross ideological consensus. That alone is the story.
What that consensus has not produced, and what this hearing did not produce, is a clear answer to the harder question. If you tightened the community benefit standard, who actually closes? Because some hospitals would. Rural ones. Safety net ones. The ones that are technically failing the math test but functionally providing care to populations no one else will serve. Crude reform would punish exactly the institutions whose existence is the point of the tax exemption in the first place.
The right answer is probably some combination of three things: A real minimum charity care floor. A redefinition of community benefit that excludes things any reasonable person would recognize as marketing or finance, like stadium naming rights. And, a separate, protected category for genuine safety net institutions.
Whether Congress will get there is another question. But the hearing on April 28 was the first time in a long time it looked possible.