At first glance, the case has nothing to do with politics. The legal dispute centers on Memorial Hermann Accountable Care Organization, or MHACO, a Texas-based nonprofit founded in 2012. “Accountable care organizations” like MHACO are the product of the Affordable Care Act’s changes to certain Medicare programs. They are formed by healthcare providers and aim to reduce costs by coordinating care for certain groups of patients. In exchange for reduced costs for Medicare and commercial insurers, ACOs receive a share of the savings.

Congress has adopted various tax-exempt statutes in the Internal Revenue Code. Among them is 501(c)(4) status, reserved for an organization that is “not organized for profit but operated exclusively for the promotion of social welfare.” Generally speaking, the Internal Revenue Service defines a social welfare organization as one that works to benefit society as a whole, rather than a business or entity that only benefits a certain group of people, such as the shareholders.

Charities and civic groups are perhaps the archetypal example of a 501(c)(4) group. But tThe IRS’s prevailing standard is that these groups can also spend funds on political and electoral activities provided that it is not their “primary purpose” – in other words, provided that a simple majority of their expenditure is spent on something that would be eligible for the program. exemption. Consequently, IIn recent years, 501(c)(4) groups have become the preferred vehicle for wealthy Americans to shape political discourse, elections, and more.