When Midwest Startups Sell, Their Hometown Schools Often Lose
Cities keep handing tax incentives to local companies, even after they’ve cashed in.
City officials in Columbus, Ohio, could hardly believe their luck. In less than a decade, $850,000 worth of state dollars for local startup CoverMyMeds appeared to have paid off many times over. Drug distribution giant McKesson Corp. acquired the company for $1.3 billion, a state record. At each stage of its development, CoverMyMeds, which makes software that automates insurance approvals for prescription drugs and sells it to doctors and pharmacists, had been nurtured by public money. The deal seemed to vindicate the local boosters who’d steered millions of dollars’ worth of public funds into tax incentives and other support for Ohio’s fledgling startup scene.
That was two years ago. Today roughly 1,000 of Columbus’s 4,300 public schoolteachers are spending part of their summer vacation near CoverMyMeds’ downtown headquarters, protesting the property tax abatements that followed. Since McKesson acquired CoverMyMeds, in 2017, it’s received an additional $55 million worth of tax breaks from the city, even as Columbus was slashing its education budget and programs to reckon with mounting deficits. The teachers say that their politicians shouldn’t have taken the company’s threats to move CoverMyMeds and its 1,000 employees to the suburbs so seriously, and that McKesson, which reports about $2 billion in profits most years, can afford to pay its own way.