How hospitals got richer off Obamacare

A decade after the nation’s top hospitals used all their advertising and lobbying clout to keep their tax-exempt status, pointing to their vast givebacks to their communities, they have seen their revenue soar while cutting back on the very givebacks they were touting, according to a POLITICO analysis. Hospitals’ behavior in the years since the Affordable Care Act provided them with more than 20 million more paying customers offers a window into the debate over winners and losers surrounding this year’s efforts to replace the ACA. It also puts a sharper focus on the role played by the nation’s teaching hospitals – storied international institutions that have grown and flowered under the ACA, while sometimes neglecting the needy neighborhoods that surround them.

And it reveals, for the first time, the extent of the hospitals’ behind-the-scenes efforts to maintain tax breaks that provide them with billions of dollars in extra income, while costing their communities hundreds of millions of dollars in local taxes. One example of the hospitals’ efforts to remain tax-free: the soaring, minutelong TV commercial that popped up on stations across Western Pennsylvania in 2009 by the University of Pittsburgh Medical Center, the area’s flagship hospital and one of the largest teaching hospitals in the country.

“UPMC is proud to be part of our city’s past, present and, more importantly, its future,” the narrator enthuses, as the camera pans around Pittsburgh scenes of priests, grocery-store workers, even a ballet dancer before coming to rest on the sprawling medical campus — one of the five largest in the world.

At the time, Congress was considering not only whether to remove tax-exempt status for teaching hospitals, a cause of Sen. Chuck Grassley (R-Iowa), but also whether to add requirements forcing hospitals to do more for the low-income, urban communities in which so many of the top hospitals are located. And local leaders in many states were attempting to claw back billions of dollars in forgone tax revenue — a battle that would soon break out between UPMC and the mayor of Pittsburgh, too.

But the hospitals, aided by their good-neighbor initiative, prevailed. The ACA did nothing more to force the hospitals to share their revenue with their neighbors or taxpayers generally.