Viewpoint

Abstract

FigureThe government is spending $24.6 billion every year on tax breaks for approximately 2,100 nonprofit hospitals in the United States. (Washington Post, June 17, 2015; http://wapo.st/1BjGCnG.) But in return, these nonprofit hospitals are spending only three percent of their budgets on charity care. (N Engl J Med 2015;373[18]:1687.) Seventy-one percent of these nonprofit hospitals charge uninsured patients more than insured patients for the exact same services. Sixty-six percent of these nonprofits neglect to tell patients when they are eligible for charity; instead, they send them full bills. Seventeen percent of nonprofit hospitals aggressively collect debt from uninsured patients by reporting them to creditors, filing lawsuits against them, or putting liens on their property. Patients seeking emergency care, a sizeable portion of whom do not have health insurance, remain vulnerable to hospitals' charity care policies or lack of it. More than 80 percent of the uninsured are part of working families, and more than half are low income, earning less than 200 percent of the federal poverty level (FPL) or $40,180 for a family of three. As the Affordable Care Act has been implemented, charity care has become increasingly important in states that have not expanded Medicaid, where higher uninsured rates persist due to the Supreme Court decision that allowed states to avoid expanding Medicaid eligibility levels to 138 percent FPL ($27,724 for a family of three). The majority of these nonexpansion states are in the South, and a coverage gap now exists for 3.1 million Americans who are ineligible for private marketplace subsidies or public Medicaid coverage. (The Henry J. Kaiser Family Foundation, Jan. 21, 2016; http://kaiserf.am/1FUROTX.) Nonprofit hospitals in these nonexpansion states currently offer less charity care than nonprofit hospitals in states expanding Medicaid. The eligibility threshold needed to qualify for charity care, averaged across nonprofit hospitals in all expansion states, is 179 percent of the FPL ($35,961 for a family of three), but the average is 202 percent FPL ($40,582 for a family of three) across nonprofit hospitals in nonexpansion states. (Office of the Assistant Secretary for Planning and Evaluation, Sept. 3, 2015; http://bit.ly/270R1ks.) A small but statistically significant difference also exists in other elements of charity care: In nonexpansion states, three percent fewer nonprofit hospitals have written charity policies, eight percent fewer notify patients they are eligible for charity, four percent fewer offer free care, seven percent fewer offer discounted care, and four percent more use aggressive debt collection techniques. It is easier for patients to obtain Medicaid coverage and to qualify for charity care in states that expanded Medicaid under the Affordable Care Act. The Affordable Care Act places new requirements on hospitals to keep nonprofit benefits such as tax-exempt status. (Internal Revenue Service, June 3, 2016; http://bit.ly/2aixupv.) These requirements went into full effect in 2016. Hospitals can't charge the uninsured more than the insured, must notify the uninsured of available charity, and must stop aggressive debt collection. Based on their behavior in 2012, these new rules will require major changes to current policy for more than two-thirds of nonprofit hospitals. The new rules also require nonprofit hospitals to conduct community needs assessments every three years and maintain a written policy for financial assistance for care. This could be a tremendous opportunity for emergency physicians to help improve access to care in their communities. The rules do not require, however, that financial assistance be generous or that hospitals change their policies based on their communities' needs. These new policies don't have much teeth to improve provision of charity care. Nonprofit hospitals are getting large tax breaks while many actively avoid helping the uninsured. Unfortunately, the new tax rules are only going to provide partial relief for communities in need of charity care, particularly in nonexpansion states. Share this article on Twitter and Facebook. Access the links in EMN by reading this on our website or in our free iPad app, both available at www.EM-News.com. Comments? Write to us at [email protected].