Rising Costs for Nonprofits Overlooked in Healthcare Proposals

Nonprofit organizations are upset that Congress and the Obama administration have not addressed their rising healthcare costs in the healthcare reform proposals being floated on Capitol Hill, the New York Times reports.

The main bill proposed in the House would award a tax credit to small businesses that provide their employees with health insurance. But because nonprofits do not pay income taxes, they would not benefit from the credit. Some nonprofit groups have called for a subsidy along the lines of the Earned Income Tax Credit in which money would be returned to organizations that demonstrate they have contributed to an employee’s health care. “In this administration, there are so many people who came from the nonprofit community, but they don’t really seem to think about the unique laws and rules that govern it,” said Diana Aviv, president and CEO of Independent Sector.

As a group, nonprofit organizations are the nation’s fourth-largest employer, and many nonprofit groups were hoping the president would mention them in his speech to Congress. Advocates for the sector argue that policy makers know little about the workings of nonprofits, which pay payroll taxes — and, in some instances, taxes on unrelated business activities — but are exempt from taxes on their income. A recent survey of nonprofit groups by the Johns Hopkins Listening Post Project found that the impact of rising healthcare costs was “mammoth.”

When nonprofit leaders raised their concerns in a conference call after the president’s speech last week, representatives from the White House offices of Public Engagement and Intergovernmental Affairs appeared taken aback, and nonprofits have reported similar reactions from staff members in the House and Senate. “We had our nonprofit lobbying day on Capitol Hill in July, and our members spoke to their elected officials about this issue,” said Tim Delaney, CEO of the National Council of Nonprofits. “We heard a constant refrain: ‘Gee, we never thought about nonprofits as employers before.’ “

Strom, Stephanie. “ Nonprofit Groups Upset at Exclusion From Health Bills.” New York Times 9/13/09.