The House Ways and Means Subcommittee on Oversight held a Sept. 16 hearing titled “Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals Are Spending Your Tax Dollars.” The AAMC submitted a statement for the record underscoring the essential role academic health systems and teaching hospitals play in their communities. The statement highlighted that tax-exempt status allows these institutions to invest in not only charity care but also critical services (PDF) such as physician training, advanced patient care, medical research, and community outreach. The AAMC also emphasized the slim margins and financial challenges that its member institutions continue to face.
During the hearing, Republican members and several witnesses raised concerns that nonprofit hospitals misuse tax benefits and devote resources to activities other than patient care. Some suggested reforms to narrow or condition tax-exempt status, tighten reporting requirements, and increase transparency around community benefit spending. Democratic members emphasized the vital services nonprofit hospitals provide, particularly in rural and underserved areas, and argued that attacks on tax-exempt status overlook hospitals’ razor-thin margins, rising costs, and disproportionate role in delivering unprofitable but essential care. The debate underscored ongoing partisan divides over how to measure and report hospitals’ community benefits.