Thursday, September 10, 2009
While President Obama made clear in his speech last night that a public option is his first choice as a new, affordable insurer for the currently uninsured, he also left the door open for a private, nonprofit alternative: "Others propose a co-op or another nonprofit entity to administer the plan. These are all constructive ideas worth exploring." And while Mr. Obama did not mention new requirements for nonprofit hospitals, he did cite two nonprofit healthcare systems for their successful efforts to "offer high-quality care at costs below average." Interestingly, both organizations he named are best known among tax-exempt organization attorneys for their unsuccessful battles with the IRS: Intermountain Healthcare in Utah and the Geisinger Health System in Pennsylvania. As many readers will recall, IHC lost a case seeking Code section 501(c)(3) status for three subsidies that IHC formed to operated HMOs as part of an integrated delivery system (see IHC Health Plans, Inc. v. Commissioner, 325 F.3d 1188 (10th Cir. 2003). Geisinger lost a series of cases that raised similar issues (see Geisinger Health Plan v. Commissioner, 30 F.3d 494 (3d Cir. 1994); Geisinger Health Plan v. Commissioner, 985 F.2d 1210 (3d Cir. 1993)). Perhaps innovative tax thinking also indicates innovative thinking in other areas.