Hospital Price Transparency Starts With Tax Exempt Hospitals

Patients should not have to guess what medical care will cost before receiving treatment. Yet many of the nation's largest tax exempt hospitals continue to resist a basic principle of a competitive marketplace: price transparency.

That resistance is difficult to justify given the substantial public benefits these institutions receive. Tax exempt hospitals receive billions of dollars each year in federal, state, and local tax advantages in exchange for fulfilling charitable missions. Increasingly, however, some of the largest hospital systems operate more like hedge funds with hospital beds than community charities. They acquire competitors, expand investment portfolios, generate significant financial surpluses, and protect those advantages while opposing reforms that would give patients clearer pricing information. Recent enforcement actions by the Trump administration underscore why greater accountability remains necessary.

Price Transparency Benefits Patients

During President Donald Trump's first administration, hospitals participating in Medicare and Medicaid were required to publicly disclose their prices. Compliance has lagged for years, but the Centers for Medicare & Medicaid Services has recently intensified enforcement. Hundreds of hospitals have received warning notices or corrective action requests for failing to comply with federal price transparency requirements, and the largest systems may face penalties of up to $2 million per year.

Transparent pricing gives patients the ability to compare providers before receiving non-emergency care. It also helps employers, insurers, and consumers identify higher-value care while encouraging providers to compete on both price and quality. Competitive markets function more effectively when consumers have access to meaningful pricing information.

Some policymakers have proposed government price controls as an alternative. Conservatives have consistently supported a different approach: requiring transparency so market competition, rather than government rate setting, can help reduce costs and improve value for patients.

Tax Exempt Status Requires Accountability

Price transparency is only one part of a broader accountability issue.

Tax exempt hospitals receive generous public subsidies because they are expected to provide measurable benefits to the communities they serve. Taxpayers should be able to evaluate whether those institutions are fulfilling that obligation.

The Center for a Free Economy has worked alongside Congressional Republicans and a broad conservative coalition to support H.R. 9504, the "Tax Exempt Hospital Transparency Act." The legislation would strengthen reporting requirements for tax exempt hospitals, providing policymakers and the public with better information about how these institutions use the significant tax benefits they receive.

Greater transparency is not a burden for hospitals that are meeting their charitable obligations. Instead, it helps distinguish organizations that prioritize patient care and community service from those that increasingly resemble large corporate enterprises.

Transparency Should Extend Beyond Pricing

The need for greater transparency extends beyond hospital pricing.

The Center for a Free Economy has previously highlighted concerns involving tax exempt hospitals that promoted birth tourism while continuing to benefit from favorable tax treatment. Other large hospital systems have faced criticism for opaque financial reporting, aggressive business practices, and expanding commercial operations that appear increasingly disconnected from the charitable purposes that justify their tax exempt status.

Viewed together, these issues reflect a broader concern. Some of the nation's largest tax exempt hospital systems have benefited from substantial public subsidies while resisting reforms designed to improve transparency and accountability.

CFE Takeaway

Tax exempt status carries public responsibilities along with public benefits.

Hospitals that receive billions of dollars in tax advantages should be transparent about their prices, their finances, and the community benefits they provide. Greater transparency strengthens competition, helps patients make informed decisions, and allows taxpayers to determine whether tax exempt institutions are fulfilling the charitable missions that justify their special status.