Commentary: Hospital Tax-Exempt Policy: A Comparison of Schedule H and State Community Benefit Reporting Systems

Abstract

In Hospital Tax-Exempt Policy: A Comparison of Schedule H and State Community Benefit Reporting Systems, Rosenbaum et aldescribe the numerous variations between current state law in 24 states and federal requirements regarding nonprofit hospitals’ community benefit activities. The potential for nonprofit hospitals to help shape community health is great, and how states choose to address requirements regarding community benefit, and potentially reinforce the new federal requirements to incentivize hospital participation in addressing root causes of poor health, should be of significant interest to the public, policy makers and public and population health experts, given the large percentage of hospitals in the US that are nonprofit. Criteria that states may wish to examine when determining whether to add or retain separate reporting requirements include: 1) Is there a state policy interest in listing or further defining additional examples of community benefit investments beyond federal requirements, for instance specific public health activities or in mandating statutory percentages/minimums for community benefit overall and also among specific sub-categories of benefits, such as the percentage for uncompensated care versus community-building activities, and, 2) Is there a state policy interest in continuing to include ‘bad debt’ as a part of ‘charity care’ even after implementation of health care reform? For the 24 states that address community benefit reporting in state policy, and the other 26 that do not, key policy debates will include how nonprofit hospitals can continue to meet divergent state and federal reporting and activity requirements, what fundamental values are articulated by Schedule H that could be replicated by states to serve their own tax and other policy needs, how state action may reinforce federal requirements and encourage nonprofit hospital engagement in addressing community health, and whether states may have unique or additional policy interests beyond federal requirements that should be included in separate reporting requirements. Rosenbaum’s analysis provides a helpful start to acknowledging the varying state and federal interests at play.