The House Ways and Means subcommittee opened a hearing examining whether nonprofit hospitals provide community benefits that justify federal tax-exempt status, with witnesses and members trading sharply different views about charity care, reporting, and how hospitals spend money saved by exemptions.

The question before the panel, in the chair’s words, was whether the value of the “community good” produced by nonprofit hospitals matches the privileges they receive. The hearing drew testimony from consumer advocates, physicians, and academic researchers who urged clearer reporting and tighter oversight, while other witnesses and members warned that rural hospitals and safety-net services depend on the current system.

Why it matters: Nonprofit hospitals receive substantial tax advantages and access to programs such as the 340B drug-pricing program. Witnesses offered conflicting evidence about whether those advantages translate into measurable community benefit (charity care, uncompensated care, emergency and rural services) and whether current federal reporting and enforcement—via IRS Form 990 and Schedule H—is adequate for audit and public accountability.

Several witnesses cited large, aggregate figures. Dr. Bai (Johns Hopkins Bloomberg School of Public Health) and Dr. Christopher Whaley (Brown University) and others referenced estimates that annual tax advantages to nonprofit hospitals exceed tens of billions of dollars (for example, a $37.4 billion estimate for 2021 mentioned in testimony) and that in some years the value of tax benefits has exceeded reported charity care by billions. Dr. Jill Horwitz (Northwestern University) and other experts said nonprofit hospitals also provide non-monetary community benefits — such as maintaining services in rural areas, offering unprofitable but essential services (psychiatric, obstetrics, trauma) and supporting medical education — that are not fully captured by charity-care line items.

Advocates for stricter oversight urged clearer, itemized disclosures. William Hild, executive director of Consumers' Research, told the subcommittee, “Congress could require line item disclosure and outcome measures for any equity spending that is claimed as community benefit.” Hild and Dr. Stanley Goldfarb (chairman, Do No Harm) criticized spending on diversity, equity and inclusion programs, climate initiatives, advertising and naming rights, and said such expenditures should not be counted as community benefit unless linked to measurable improvements in care.

Researchers flagged a set of recurring issues: (1) Schedule H is sometimes filed at a system level rather than by individual hospital, making local auditing difficult; (2) some urban hospitals are dually classifying as rural to access rural-only perks such as 340B eligibility; and (3) community-benefit categories are broad and can be used in different ways across systems. Dr. Whaley and Dr. Bai said policy changes could include more granular Schedule H reporting, closing “dual classification” loopholes for 340B and similar programs, and strengthening antitrust scrutiny to address consolidation that drives prices up.

Members from both parties raised the potential downstream effects of federal coverage cuts. Several members and witnesses warned that reductions in Medicaid or expiration of enhanced ACA premium tax credits would increase uncompensated care and threaten the viability of rural and safety-net hospitals. Representative _____ (ranking member Sewell) and others said that cuts already proposed in recent federal legislation would push more people uninsured into emergency rooms and increase financial pressure on hospitals that operate on thin margins.

Areas of disagreement were stark. Witnesses such as Hild and Goldfarb urged legislative action to tighten definitions and reporting and to limit the types of activities that can be counted as community benefit. Other witnesses, particularly Dr. Horwitz, emphasized that nonprofit hospitals deliver vital services that are difficult to quantify and that blunt cuts or overly prescriptive rules could harm rural and specialist services. Multiple members asked the witnesses to propose changes to Form 990/Schedule H to produce actionable, auditable data.

The subcommittee did not vote on any legislation. Members concluded by saying they would submit detailed questions for the record and pursue follow‑up work, including potential changes to reporting requirements and enforcement by the IRS.

Looking ahead: The committee chair said staff will send written questions to witnesses and suggested a future hearing focused on proposed reporting reforms and specific metrics that could make community-benefit reporting comparable across hospitals. That follow-up will likely shape whether Congress seeks changes to Schedule H, 340B eligibility rules, or IRS enforcement resources.