The Idaho Hospital Association wants to set the record straight about proposed changes to property tax exemptions for non-profit hospitals from Ada County Commissioners.
In a Dec. 10 opinion piece, they suggested that giving themselves more power to increase taxes on hospitals will somehow increase transparency and make the law fairer to other non-profits. They miss the mark on both and leave out some important information about hospital tax exemptions.
Ada County officials claim hospitals benefit from “special rules” when it comes to property tax exemptions. The fact is hospitals currently have more requirements than other non-profits when it comes to their tax-exempt status. Hospitals are required to annually report their community benefit compliance to the IRS and their charity care costs to the federal government. Failure to meet those requirements can result in financial punishments and loss of tax-exempt status.
Hospitals aren’t eligible to seek property tax exemptions from the county until they have met a long list of federal requirements. Idaho law already sets clear criteria as to when a hospital property is exempt from taxes and when it is not. If a property does not meet specific criteria, the county may deny the request for exemption. It’s worth noting that not all buildings bearing a hospital name are exempt from taxes. What is true is that Idaho’s hospitals pay millions of dollars each year in property taxes for those parcels that do not meet the already established criteria for exemption.
What is also true is that Idaho hospitals contribute millions of dollars in charity care and community benefits back into the communities they serve. They also invest resources to increase access to care in Idaho, one of the nation’s fastest growing states. All the while, rules and regulations continue to increase for hospitals, including the requirements for tax-exempt status.
In addition, in 2021 the law related to funding indigent care was changed to do away with the county’s legal financial responsibility to cover the cost of this care and shifted that responsibility to hospitals. Now commissioners want to increase taxes on those hospitals too.
Ada County officials want to split hairs between different parts of hospital buildings, arguing that emergency rooms get a pass but outpatient clinics and parking spaces should be taxed. This simplification misses how these pieces work together for vital healthcare services.
Their approach would only serve to incentivize hospitals to concentrate services in one building rather than locations where communities need the services most. Instead of putting administration and billing services in more cost-effective locations, providers would be pressured to take up valuable hospital space that could be used for patient care. This could also mean the difference between opening a new cancer clinic or holding back other investments due to the lack of financial certainty.
Healthcare providers need a consistent set of rules when planning for the needs of their community. A policy that puts a hospital’s tax liability into question each year will impact a hospital’s ability to provide essential community benefits and discourage healthcare investments in new or expanded services and programs to meet growing community needs. Your tax bill shouldn’t be based on the whims of commissioners in 44 different counties. We need clear and consistent criteria that apply to all hospitals fairly and allow them to fulfill their community service missions.
Ada County’s proposal increases the risk of politicians arbitrarily picking winners and losers with no set criteria that applies consistently from county to county. However, their plan does include one concept that is consistent across the state: Raising taxes on hospitals does not decrease the cost of healthcare.