The Thing That No One Talks About
July 27, 2009 by Anne Hancock
Healthcare dialogue is everywhere. We have heard endlessly about the fact that Medicare will run out by 2017, about the 50 million uninsured Americans, about the “ills” of physician-owned hospitals. Every day, we’re being inundated with details about the massive, ever-changing reform bills being proposed in Washington to “extend health coverage and eliminate waste from the system”. And, we learned last week from the CBO that we’re looking at $239 billion in deficit spending over 10 years to make reform (HR 3200) happen. The subject of how we pay for that is another camp of rhetoric.
Interestingly, the thing that no one talks about is what happens to our nation’s 4000-some not-for-profit hospitals if one of these reform bills pass. Or to be more specific, what happens to their tax-exempt status, which equates to $93.5 billion annually in lost taxes?
Take a look at the mission statements, purpose or values of just about any not-for-profit hospital, and you will see words like:
“XXX Hospital exists to create and deliver superior health care solutions by providing our patients and other customers with optimal clinical and economic outcomes. As a public entity, we must make the best use of our financial and human resources so we can care for patients without regard for their ability to pay. We must also function as the community’s leader in upgrading the level of health and wellness in the community.” – Hospital in Indiana
“Consistent with its spiritual foundation, XXX Hospital is dedicated to providing high-quality, cost-effective, compassionate healthcare services to all, regardless of religion, creed, race or national origin, including, as permitted by its resources, charity care to those in need.” – Hospital in Florida
“Faithful to the sponsorship mission, philosophy and values, the Health System's mission is to provide healthcare and related ministries for the people served, especially the sick, the poor and the powerless.” – Hospital in Oklahoma
There is no doubt that not-for-profit hospitals, like these, do a great service to their patients and their communities. They are, in fact, the foundation of our healthcare system and a key to quality of life in our nation.
However, it’s no secret that lawmakers have been debating for years whether not-for-profit hospitals can really justify their non-taxpaying status with the amount of community benefit they provide. Especially since their for-profit, tax-paying counterparts also – by law – take care of any patient in need, regardless of ability to pay.
Sen. Charles Grassley (R-Iowa) has led the charge on this issue for the past couple of years. His latest proposal is for non-profit hospitals to prove they spend a minimum of 5% of expenses annually on charity care in order to remain tax-exempt. Some would say that makes sense in today’s healthcare environment, with 50 million uninsured.
But, what about when/if either of the proposed bills are passed, and every American suddenly has health coverage? If my calculations are correct, no uninsured = no charity care = harder justification for tax-exemption. It’s interesting that in the midst of this massive discussion on health reform and extending coverage to all Americans that this major, very relevant issue is not being discussed.
Could this be a possible way pay for a $200+ billion overhaul? I can’t imagine it won’t be explored.
