Illinois hospitals papered over charity care problems
There's a bill sitting on Illinois Gov. Pat Quinn's desk intended to change how the state's hospitals charity care provisions are calculated. It's an impressive achievement. Not the bill itself, but the fact that Quinn's desk hasn't collapsed under its weight.
The first 44 pages of text pertain to levying a new $1-a-pack cigarette tax to try and close a gap in the state's Medicaid budget. In California, voters just turned down a ballot proposition to raise the tobacco tax to fund cancer research. That proposition was five pages long. Its opponents successfully argued that approving the tax would create an incomprehensible bureaucracy.
I've pored over the entire 2,000-plus pages of the Patient Protection and Affordable Care Act. Put it alongside the Illinois bill and it reads like "Goodnight Moon." And I know from long experience that nearly incomprehensible legislation gets conjured up not because its authors are illiterate. It's because they're trying to hide something.
The charity care provisions of the bill are meant to provide dollar-for-dollar offsets against property tax exemptions not-for-profit providers in Illinois enjoy. Many industry observers say the Illinois bill could serve as a nationwide blueprint for other hospitals falling short on their charity care obligations. However, it's more like a terrific linguistic design for a colander or sieve. Here's why:
• Hospitals could make in-kind or financial contributions to their own affiliated facilities or another provider to offset the tax burden.
• Hospitals could make donations of any sort of supply to offset the tax burden.
• Hospitals could argue that any effort they make in terms of community outreach or education could be used to offset the tax burden.
• For-profit hospitals could use charity care to offset their property tax burden.
• For the purpose of tax assessment, the hospital buildings could be depreciated based on age. If they're more than 40 years old, they are essentially deemed worthless for tax purposes.
My house celebrates its 52nd birthday this year. I suspect asking for a tax exemption based on its age would receive a less than amused response.
Then again, there's little to find amusing in a bill that pumps steroids into every sleight-of-hand hospitals use to make it seem they're generous with uninsured patients.
That the Illinois Hospital Association (IHA) all but crammed copies of this bill into the lapels of every lawmaker in the Land of Lincoln suggests I'm not off base. Even Bloomberg BusinessWeek--not exactly a province of liberalism--blasted the IHA's tactics in getting this bill passed. It included radio commercials suggesting children would drop dead because hospitals would be forced to close.
Despite the IHA's questionable conduct, it secured for its members exactly what they wanted. After Provena Health and a handful of other facilities lost their tax exemptions in recent years, they had no choice: Either spend more on charity care, or get the regulators off their backs. One is easier and cheaper--a lot cheaper.
Quinn said he intends to sign the bill. Assuming his desk hasn't yet pinned his knees, he should read it all the way through. It will certainly leave him confused and will likely make him angry--just like every one of his uninsured constituents who has ever received a staggering hospital bill. - Ron (@FierceHealth)