Health Affairs

Health Affairs, 25, no. 4 (2006): w312-w315 (Published online 20 June 2006) doi: 10.1377/hlthaff.25.w312 © 2006 by Project HOPE	New Online   Getting Health Reform Done   After the State of the Union   Incremental Reform   E-Health in Developing World   Most-Read Articles in 2009

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Subsidizing Health Care Providers Through The Tax Code: Status Or Conduct?

David A. Hyman and William M. Sage

The merits of tax exemption for nonprofit health care providers have been hotly debated for decades. Mark Schlesinger and Brad Gray provide a useful, dispassionate meta-analysis of past research; they conclude that there are real differences in the performance of nonprofit and for-profit hospitals and nursing homes, although they vary along several key dimensions. Unfortunately, their findings offer no insight on whether these differences are large enough to justify a sizable subsidy and whether it makes more sense to use an undifferentiated subsidy tied to status (current practice), or a graduated subsidy tied to quantifiable and objective measures of performance.

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