Is Federal Tax-Exemption Policy for Nonprofit Hospitals Moving to a Clearer Quid pro Quo Basis?

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The question of whether federal tax-exemption policy for nonprofit hospitals is moving to a clearer and more robust quid pro quo basis is examined. The question is important because heretofore the basis for federal exemption has been vague and fluid. Utilizing a quid pro quo rationale for federal tax-exemption of nonprofit hospitals as a framework, the chronological record of policy in this area is organized into three major periods: (1) A Simple Quid pro Quo: Early Federal Tax Policies for Nonprofit Hospitals; (2) A Changing Quid pro Quo: The Modern Era of Federal Tax Policy for Nonprofit Hospitals; and (3) An Emergent, Clearer Quid pro Quo: Recent Congressional Activism on Exemption Policy, including relevant provisions of the ACA. The article concludes with discussion of continuing vagueness and ambiguity in federal corporate income tax policy for nonprofit hospitals. The importance of enhanced clarity and specificity in the information upon which policy in this area is based is discussed, as are actions needed by Congress and the Internal Revenue Service to accomplish improved exemption policy.