How are Hospitals Handling Charity Care and Health Insurance?

medical-bills-credit-score-351x253Vancouver    For my money, one of the least examined impacts of the Affordable Care Act is how hospitals, many of whom are required by law or tax exempt status, to deliver some level of charitable care to lower income patients, will handle the new world of mandatory health coverage.

There are still somewhere close to 170 hospitals constructed with Hill-Burton federal monies that are required to provide a “reasonable volume” of free care including 10 facilities in Texas, 4 in Mississippi, 3 in Louisiana, and 2 in Arkansas for example.  More significantly, there are 2,894 tax-exempt hospitals, which are required to publicly report spending on free and discounted care in order to justify keeping their tax breaks.  So we should all ask, how are they handling the new world where in many areas more of the poor have coverage and since coverage is mandatory, how are they making decisions about charity to the poor who are uninsured?   Given the usual lack of transparency and accountability of hospitals, this should be a concern for all of us.

An industry news source, Modern Healthcare, tried to survey some institutions without a lot of success, but they did summarize some of the strategies that hospitals are debating and in some cases already implementing.  These included:

  • Fining patients who don’t sign up during open enrollment
  • Reducing the level of charity care, including requiring patients to pay more of their bill
  • Postponing elective procedures until patients get coverage
  • Offering financial aid to cover high cost-sharing under the exchange plans
  • Revising financial aid to make it less preferable to buying coverage

Some of these so-called strategies are plainly punitive.  There will already be financial penalties imposed by the government through the terms of the Act for not obtaining insurance, so the notion of hospitals, especially tax exempt institutions piling on with more “fines” just sounds whack.   Forcing lower income patients to pay more in healthcare emergencies, especially in the states where millions have been left holding the bag in the gap because of their governor’s refusal to expand Medicaid, also seems determinedly abusive.  Health crises are already a leading cause of bankruptcies and weighing down people forced into the hospital with even more debt because of harsher charity procedures sounds just like something Simon Legree would do, if he were running a hospital rather than a plantation.

At the same time how can one argue with hospitals pushing the date forward on elective procedures until patients enroll in the Obamacare marketplaces?  And, there’s no question that some of the cost-sharing could still use a boost from hospital charity accounts, and that it is in the interest of overall public health to have full health care coverage a better financial deal than the hope of getting some of the hospital’s charity dollars.

Nonetheless the range of options in the hands of healthcare institutions with overwhelmingly self-centered financial interests in the outcome just seems to be a catastrophe in the making that won’t end well, especially for the lowest income patients limping through their emergency rooms.  The history of Hill-Burton and 501c3’s trying to escape their charitable obligations is already well known and extensively documented.  From the Modern Healthcare survey the range of choices is already ranging from abysmal to maybe all right, so there should be huge reasons to worry that this problem is already in the wrong hands with no real sense of accountability to the public, government, or the lord above.

We need a better plan for charity in healthcare than prayer and the government looking the other way.

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