The aim of this paper is to examine the determinants of interests rates on tax-exempt hospital bonds. The results highlight the potential and actual roles of Federal and state policy in the determination of these rates. The shift to a Prospective Payment System under Medicare has subsidized the...

Tax-exempt hospitals receive millions of dollars worth of tax breaks each year, yet there is little evidence that they operate much differently than their for-profit counterparts. When a hospital does not meet the federal standard for exemption, the IRS currently has two enforcement options: (1)...