Most of the public anger over the cost of American health care in recent years has been directed toward Congress, the insurance companies, and the pharmaceutical companies – but the latest national health expenditure data shows hospitals are by far the biggest driver of increased health care costs. As a result of government payment, regulatory, and tax policies, hospitals have evolved into enormous integrated “health systems.” Most of these systems are operated as tax-exempt non-profits despite vast commercial activities, eroding federal, state, and local tax bases. Bringing market discipline to bear on these systems is a long overdue frontier for federal tax and health care policy.
