The American Hospital Association has urged constituents to oppose a proposal by the Senate Finance Committee that would require hospitals to provide “a minimum annual level of charitable care” in order to obtain or keep their tax-exempt status as charitable organizations.
The proposal would prevent tax-exempt hospitals from refusing service to those unable to pay for it, and require them to follow specific procedures before initiating collection activities against patients.
Hospitals found to violate the rule could lose their tax-exempt status or be slapped with excise taxes by the government.
Currently non-profit hospitals pay no federal income tax, and can access government-issued tax-exempt bonds. They can also receive tax-deductible contributions. The Congressional Joint Committee on Taxation believes these tax breaks are worth more than $6 billion per year.
“Ask your senators to oppose the charity care proposal,” read the bold type in an AHA bulletin released last week.
“A formulaic, one-size-fits-all charity care standard will hamstring hospitals’ efforts to respond to the unique needs of their communities,” it continued.
“It would penalize children’s, teaching and research hospitals and those in rural areas because they provide community benefit in a variety of forms other than just charity care.”
The new standards were floated by Finance Committee chairman, Max Baucus, a Montana Democrat, and Iowa’s Charles Grassley, the senior-ranking Republican on the Committee.
Mr. Grassley reasoned that hospitals received “a tremendous advantage” from their tax-exempt status, but don’t always provide enough charity care to justify it.
Grassley, for the life of him, couldn’t see why the AHA was raising such a ruckus on the matter. “If, as a result of health care reform, everyone has health insurance, presumably hospitals should see a steep decline or the elimination of uncompensated care,” Grassley reasoned to the New York Times.