Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals are Spending Your Tax Dollars

Health Care Costs and Drug PricingHouse Ways and Means Subcommittee on Oversight · 2025-09-16 · 119th Congress
The House Ways and Means Subcommittee on Oversight convened this hearing to examine whether tax-exempt nonprofit hospitals are meeting the "community benefit" standard required for their federal tax privileges, weighing charity care and community investment against spending on items such as DEI programs, gender-affirming care for minors, executive compensation, and marketing. Begins at 0:10:42
Transcript
Highlights

Title

Nonprofit hospital tax exemption, community benefit, and political spending

Purpose

The House Ways and Means Subcommittee on Oversight convened this hearing to examine whether tax-exempt nonprofit hospitals are meeting the "community benefit" standard required for their federal tax privileges, weighing charity care and community investment against spending on items such as DEI programs, gender-affirming care for minors, executive compensation, and marketing. Four witnesses — William Hild (Consumers Research), Dr. Stanley Goldfarb (Do No Harm), Dr. Ge Bai (Johns Hopkins Bloomberg School of Public Health), Dr. Christopher Whaley (Brown University), and Dr. Jill Horwitz (Northwestern University) — testified on tax-exemption valuations, 340B and rural-classification loopholes, hospital consolidation, and the adequacy of IRS reporting requirements. Democrats used the hearing to raise the expiration of enhanced ACA premium tax credits and Medicaid cuts in the recent reconciliation law. Begins at0:10:42

Who spoke

Chairman David Schweikert (R-AZ)0:10:42: Opened by noting roughly 17% of the US economy is now in the tax-exempt space and framed the hearing around understanding the value of community benefit0:10:42; closed by citing a projected $140 billion Medicare trust fund shortfall by 2033, growing $30–40 billion annually, and announced plans to send written questions on redesigning IRS Form 9901:59:432:01:22.

Ranking Member Terri Sewell (D-AL)0:11:14: Argued nonprofit hospitals deliver more community benefit than their forgone tax revenue0:11:40; said Republican Medicaid cuts and expiring premium tax credits will make 4.2 million more Americans uninsured, including 100,000 in Alabama, with a 60-year-old couple's costs rising over 300% (~$20,000)0:12:270:13:18; later, citing 16 Alabama hospital closures since 2011, pressed Dr. Horwitz on how tax exemption sustains rural hospitals0:48:181:04:03.

William Hild, Consumers Research0:16:00: Said his organization documented major nonprofit systems (Cleveland Clinic, Vanderbilt, Henry Ford, Memorial Hermann) directing resources to DEI, gender ideology, and environmental activism instead of price transparency and charity care0:18:07; called NYU Langone's ~$8 million Super Bowl ad an "egregious abuse" of tax-exempt status1:18:17.

Dr. Stanley Goldfarb, Do No Harm0:20:00: Cited Massachusetts General scaling back child-abuse reporting, Duke's $1 billion in federal funding amid a hiring-bias complaint, Corewell's mandatory DEI pledge, and Mayo Clinic's $100 million DEI initiative0:22:010:22:47; said nearly 14,000 minors received gender-affirming interventions from 2019–2023, including 5,700 surgeries, at hospitals like Boston Children's and CHOP0:23:44.

Dr. Ge Bai, Johns Hopkins Bloomberg School of Public Health0:25:00: Said total nonprofit hospital tax benefits reached $37.4 billion in 20210:25:28, with hospitals holding nearly half a trillion dollars in investment assets and $180 billion in tax-exempt bonds, generating roughly $10 billion in "tax arbitrage profit" in 20220:26:19; said three-quarters of urban hospitals were dually classified as rural in 2023 to access 340B benefits, including New York Presbyterian and Cleveland Clinic0:26:48.

Dr. Christopher Whaley, Brown University0:30:51: Said hospital prices average 250% of Medicare rates0:31:51 and that nonprofit tax exemption value exceeds community benefit spending by over $25 billion per year0:32:44; said his research found 340B savings are not passed to patients0:33:56.

Dr. Jill Horwitz, Northwestern University0:35:49: Said nonprofits operate at negative margins on average yet are more likely than for-profits to offer unprofitable services like obstetrics and psychiatry0:37:110:38:16; warned that financial pressure could push struggling nonprofits toward sale to private-equity buyers, citing Steward Healthcare's bankruptcy affecting 31 hospitals0:39:37.

Chairman Jason Smith (R-MO), full committee chair0:40:58: Cited 12 Missouri hospital closures, including loss of maternity care in the "Bootheel" since 20180:41:14; pressed Dr. Bai on urban hospitals reclassifying as rural for 340B benefits0:44:08 and Mr. Hild on the gap between charity care and tax benefits0:46:44.

Subcommittee presiding member (chair pro tempore)0:53:22: Argued the community benefit standard is too vague, citing hospital spending on stadium naming and executive pay, and questioned Dr. Goldfarb on Mayo Clinic DEI training materials0:55:18.

Rep. Judy Chu (D-CA)0:58:10: Said the reconciliation law cuts $1.5 trillion from health care, including nearly $1 trillion from Medicaid, and that nonprofit hospitals deliver about $10 in community benefit for every $1 in tax exemption0:59:111:00:11; asked Dr. Horwitz how Medicaid cuts would affect crisis response, citing Huntington Hospital's Eaton fire relief1:00:34.

Rep. Nicole Malliotakis (R-NY)1:04:03: Said her Staten Island district's nonprofit hospitals contributed over $300 million in community benefits in 2023 and asked Dr. Bai how oversight could avoid overburdening well-performing hospitals1:04:541:07:12.

Rep. Delaney (D-WA)1:09:36: Argued the reconciliation bill cuts $500 billion from Medicare and asked Dr. Horwitz how hospitals will absorb rising uncompensated care1:11:22; noted the IRS has not revoked a hospital's tax exemption for insufficient community benefit in over a decade1:12:28.

Republican member from Indiana1:14:30: Cited St. Joseph Health System's mobile medical unit funded by tax savings1:14:58 and asked Dr. Bai whether Schedule H reporting requirements are adequate, drawing a "no" because many systems report only at the conglomerate level1:16:13.

Rep. Tom Suozzi (D-NY)1:24:45: Noted 11 Republicans and 6 Democrats, including himself, back extending ACA premium tax credits at least a year, citing Sen. Tillis and Reps. Kiggins and Fitzpatrick1:26:351:27:57; pressed all five witnesses on whether the credits should be extended1:28:27.

Rep. Bean (R-FL)1:30:48: Cited tax exemption value rising from $19 billion (2011) to $28 billion (2020) against only $16 billion in charity care1:31:34, and an IRS-data study finding 80% of 2,400 evaluated nonprofit hospitals spent less on assistance than their tax-break value1:32:55.

Republican member from East Texas1:35:11: Pressed Dr. Goldfarb on whether gender-affirming care spending meets the community benefit standard, calling it "disgusting"1:37:13, and asked Mr. Hild whether it counts as an extraneous cost1:38:29.

Dr. Murphy (R)1:40:36: Called premium tax credits "a boondoggle for insurance companies"1:40:36; pressed Dr. Goldfarb on accreditation bodies (LCME, ACGME, AAMC) enforcing DEI in medical education and argued nonprofit status should be revoked for hospitals with gender-affirming care or DEI programs1:41:581:42:43.

Mr. Davis (D)1:45:46: Said the reconciliation law strips health coverage from over 15 million Americans1:46:15 and asked Dr. Horwitz to explain community benefit beyond free care1:47:46.

Rep. Max Miller (R-OH)1:19:24: Cited northeast Ohio hospitals providing about $2 billion in community benefits in 2023, including diabetes and cancer-screening programs1:19:43; asked Dr. Whaley how transparency requirements could be strengthened1:21:08.

Rep. Carol Miller (R-WV)1:49:51: Raised concern about urban hospitals reclassifying as rural, citing Dr. Bai's research showing three-quarters of dually-classified hospitals were nonprofit1:51:30; asked Dr. Goldfarb about the growing "fair share deficit," estimated at $11.5 billion per year from 2020–20221:52:31.

Rep. Stacey Plaskett (D-VI)1:54:12: Described Virgin Islands hospitals reimbursed at only about 45% of costs and capped Medicaid funding limiting care1:55:241:56:20; asked Mr. Hild and Dr. Horwitz how Medicaid/Medicare cuts would affect territories lacking mainland-style charitable structures1:57:591:58:36.

Key moments

Hild said research found major nonprofit systems — Cleveland Clinic, Vanderbilt, Henry Ford, Memorial Hermann — devoted resources to DEI, gender ideology, and environmental activism0:18:07.

Goldfarb cited specific allegations: Massachusetts General scaling back mandatory child-abuse reporting over "structural racism" concerns, Duke's $1 billion in federal funding amid a race-based hiring complaint, and Mayo Clinic's $100 million DEI pledge0:22:010:22:47.

Goldfarb said nearly 14,000 minors underwent gender-affirming medical interventions from 2019–2023, including more than 5,700 surgeries, at hospitals including Boston Children's, CHOP, and Seattle Children's0:23:44.

Bai testified total nonprofit hospital tax benefits reached $37.4 billion in 2021, with hospitals holding nearly half a trillion dollars in investments and generating roughly $10 billion in "tax arbitrage profit" in 20220:25:280:26:19; three-quarters of urban hospitals, including New York Presbyterian and Cleveland Clinic, were dually classified as rural in 20230:26:48.

Whaley said hospital prices average 250% of Medicare rates and that nonprofit tax exemption value exceeds community benefit spending by over $25 billion annually0:31:510:32:44.

Sewell said the reconciliation law's $1.5 trillion in health cuts would push 4.2 million more Americans off coverage, including 100,000 in Alabama, with a 60-year-old couple's premiums rising more than 300% (~$20,000)0:12:270:13:18.

Suozzi highlighted a bipartisan bill (11 Republicans, 6 Democrats) to extend enhanced ACA premium tax credits, citing Sen. Tillis and Reps. Kiggins and Fitzpatrick warning of "shocking cost increases" if credits lapse December 311:26:351:27:57.

Bean cited tax exemption value rising from $19 billion (2011) to $28 billion (2020) against only $16 billion in charity care, and an IRS-data analysis showing 80% of 2,400 evaluated nonprofit hospitals spent less on assistance than the value of their tax breaks1:31:341:32:55.

Bai and Whaley disagreed with Suozzi on extending premium tax credits: Bai said "I don't think we should extend" because insurance coverage doesn't equal affordable care, while Horwitz warned expiration would push more people uninsured1:29:491:30:34.

Schweikert closed by citing a projected $140 billion Medicare trust fund shortfall in 2033, growing $30–40 billion per year, and announced he would send written questions to witnesses on redesigning IRS Form 990 reporting1:59:432:01:22.

Metadata

CommitteeHouse Ways and Means Subcommittee on Oversight
Chamber / CongressHouse · 119th Congress
Date2025-09-16
TypeHearing
Witnesses
(none listed in event metadata)
Videoyoutube
Transcript327 caption blocks · 17,346 words · 2:03:32 runtime
EventCongress.gov 118607