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Community Benefit: Holding Non-Profit Hospitals Accountable

30 Jan

With all of the recent scrutiny of Mitt Romney’s tax returns, here’s something you might not know: non-profit hospitals are exempt from paying any federal income taxes. The rationale behind this is that these hospitals deserve a break because they provide significant benefits to their communities. This community benefit can be thought of as consisting of the sum total of a number of things like the amount of uncompensated care the hospital provides, the number of lives it saves, the number of jobs it provides, and the impact it has on residents’ quality of life. If a hospital is creating jobs, restoring people’s health, saving people’s lives, and providing a health care safety net for the community, then perhaps it shouldn’t have to pay federal taxes. Similar to the case for making employer-based health insurance tax-free, this is a way for the federal government to effectively subsidize something that it considers to be beneficial to the public.

Hospitals certainly enjoy their tax exemption, but the bigger question is: Do they deserve it? For more than 40 years, the rhetoric of community benefit has been bandied about without actually defining what it includes, establishing criteria for the amount of community benefit that must be provided to merit non-profit status, or evaluating the extent to which non-profit hospitals are doing so. What has been done is research showing that more often than not, non-profit hospitals behave a lot like for-profit hospitals. And who can blame them? After all, why not take the tax break with one hand and attempt to maximize profits with the other hand? In fact, the former bolsters efforts at the latter.

Since 2009, however, the IRS has required non-profit hospitals to document the dollar amount of the community benefits they provide. In the February issue of the American Journal of Public Health, Karen Principe and colleagues consider what effect health reform may have on the provision of community benefit. For example, as more Americans are covered by insurance, the amount of uncompensated care a hospital provides can be expected to decrease. The authors report that some have called for an end to non-profit status for hospitals. One way to think about this is that the federal government would be shifting its subsidy from the hospitals to the individuals as it helped them to purchase insurance. The authors disagree, however. They argue that hospitals will still need to provide uncompensated care for individuals who move in and out of coverage, and that coverage expansions under the Affordable Care Act will strengthen the financial position of hospitals, leading hospitals to allocate community benefits differently. That is, they will provide less uncompensated care, but more of the “other” stuff that constitutes community benefit.

I like their optimism, but without strong enforcement to hold non-profit hospitals accountable, I think hospitals are about to win big: They’ll keep their tax-exempt status, provide even less uncompensated care, see their revenues increase, and laugh all the way to the bank. And who can blame them? After all, they’ve no incentive to do otherwise.

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1 Comment

Posted by on January 30, 2012 in Hospitals

 

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One response to “Community Benefit: Holding Non-Profit Hospitals Accountable

  1. jacksmith

    January 30, 2012 at 3:12 pm

    REALITY!! And A Fix for Unemployment, Homelessness and Hunger

    In addition to fixing healthcare the right way we need a NewDeal. We need a permanent and updated FDR WPA (Works Progress Administration). A Full employment act requiring the government to provide a job for everyone able to work that wants to work at a living wage or better. At safe, meaningful work where they live. Guaranteed by the US government. With free or very affordable excellent healthcare and free or very affordable education and training for advancement or just personal enrichment.

    ( http://my.firedoglake.com/iflizwerequeen/2011/05/16/how-about-a-little-truth-about-what-the-majority-want-for-health-care/ )

    ( Gov. Peter Shumlin: Real Healthcare reform — http://www.youtube.com/watch?v=8yFUbkVCsZ4 )

    ( Health Care Budget Deficit Calculator — http://www.cepr.net/calculators/hc/hc-calculator.html )

    ( Briefing: Dean Baker on Boosting the Economy by Saving Healthcare http://t.co/fmVz8nM )

    START NOW!

    As you all know. Had congress passed a single-payer or government-run robust Public Option CHOICE! available to everyone on day one, our economy and jobs would have taken off like a rocket. And still will. Single-payer would be best. But a government-run robust Public Option CHOICE! that can lead to a single-payer system is the least you can accept. It’s not about competing with for-profit healthcare and for-profit health insurance. It’s about replacing it with Universal Healthcare Assurance. Everyone knows this now.

    The message from the midterm elections was clear. The American people want real healthcare reform. They want that individual mandate requiring them to buy private health insurance abolished. And they want a government-run robust public option CHOICE! available to everyone on day one. And they want it now.

    They want Drug re-importation, and abolishment, or strong restrictions on patents for biologic and prescription drugs. And government controlled and negotiated drug and medical cost. They want back control of their healthcare system from the Medical Industrial Complex. And they want it NOW!

    THE AMERICAN PEOPLE WILL NOT, AND MUST NOT, ALLOW AN INDIVIDUAL MANDATE TO STAND WITHOUT A STRONG GOVERNMENT-RUN PUBLIC OPTION CHOICE! AVAILABLE TO EVERYONE.

    For-profit health insurance is extremely unethical, and morally repugnant. It’s as morally repugnant as slavery was. And few if any decent Americans are going to allow them-self to be compelled to support such an unethical and immoral crime against humanity.

    This is a matter of National and Global security. There can be NO MORE EXCUSES.

    Further, we want that corrupt, undemocratic filibuster abolished. Whats the point of an election if one corrupt member of congress can block the will of the people, and any legislation the majority wants. And do it in secret. Give me a break people.

    Also, unemployment healthcare benefits are critically needed. But they should be provided through the Medicare program at cost, less the 65% government premium subsidy provided now to private for profit health insurance.

    Congress should stop wasting hundreds of millions of dollars of taxpayer money on private for profit health insurance subsidies. Subsidies that cost the taxpayer 10x as much or more than Medicare does. Private for profit health insurance plans cost more. But provide dangerous and poorer quality patient care.

    Republicans: GET RID OF THE INDIVIDUAL MANDATE.

    Democrats: ADD A ROBUST GOVERNMENT-RUN PUBLIC OPTION TO HEALTHCARE REFORM.

    This is what the American people are shouting at you. Both parties have just enough power now to do what the American people want. GET! IT! DONE! NOW!

    If congress does not abolish the individual mandate. And establish a government-run public option CHOICE! before the end of 2011. EVERY! member of congress up for reelection in 2012 will face strong progressive pro public option, and anti-individual mandate replacement candidates.

    Strong progressive pro “PUBLIC OPTION” CHOICE! and anti-individual mandate volunteer candidates should begin now. And start the process of replacing any and all members of congress that obstruct, or fail to add a government-run robust PUBLIC OPTION CHOICE! before the end of 2011.

    We need two or three very strong progressive volunteer candidates for every member of congress that will be up for reelection in 2012. You should be fully prepared to politically EVISCERATE EVERY INCUMBENT that fails or obstructs “THE PUBLIC OPTION”. And you should be willing to step aside and support the strongest pro “PUBLIC OPTION” candidate if the need arises.

    ASSUME CONGRESS WILL FAIL and SELLOUT again. So start preparing now to CUT THEIR POLITICAL THROATS. You can always step aside if they succeed. But only if they succeed. We didn’t have much time to prepare before these past midterm elections. So the American people had to use a political shotgun approach. But by 2012 you will have a scalpel.

    Congress could have passed a robust government-run public option during it’s lame duck session. They knew what the American people wanted. They already had several bills on record. And the house had already passed a public option. Departing members could have left with a truly great accomplishment. And the rest of you could have solidified your job before the 2012 elections.

    President Obama, you promised the American people a strong public option available to everyone. And the American people overwhelmingly supported you for it. Maybe it just wasn’t possible before. But it is now.

    Knock heads. Threaten people. Or do whatever you have to. We will support you. But get us that robust public option CHOICE! available to everyone on day one before the end of 2011. Or We The People Of The United States will make the past midterm election look like a cake walk in 2012. And it will include you.

    We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for profit medical industrial complex that threatens the security and health of the entire world. They have already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.

    Spread the word people.

    Progressives, prepare the American peoples scalpels. It’s time to remove some politically diseased tissues.

    God Bless You my fellow human beings. I’m proud to be one of you. You did good.

    See you on the battle field.

    Sincerely

    jacksmith – WorkingClass 🙂

     

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