Journal of Economic Perspectives: Vol. 8 No. 4 (Fall 1994)


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Nonprofit Organizations in the Health Sector

Article Citation

Frank, Richard G., and David S. Salkever. 1994. "Nonprofit Organizations in the Health Sector." Journal of Economic Perspectives, 8(4): 129-144.

DOI: 10.1257/jep.8.4.129


Government appears to both promote and mistrust nonprofit organizations in the health sector. Tax exemptions, subsidies, and preferential treatment in contracts support these organizations. Legislation that links the supply of charity care to tax exemptions demonstrates mistrust. In this paper, the authors argue that information asymmetries lie at the heart of the current discomfort with tax policy toward nonprofit health-care providers. The authors examine current policy in terms of the rationale for the exemption of nonprofit health-care organizations from taxes as well as the ability of government to monitor performance of these organizations.

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Frank, Richard G. (Harvard U)
Salkever, David S. (Johns Hopkins U)

JEL Classifications

I11: Analysis of Health Care Markets
L31: Nonprofit Institutions; NGOs


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