The Wisconsin Hospital Association bashes the free market in its latest community benefits report, claiming that only tax-exempt, non-profits are willing to provide charity care.
“Wisconsin hospitals also use their non-profit, tax-exempt status to stretch their resources for services that would otherwise never be delivered in a ‘free market.’ Think of the importance of a pharmacy in a rural community or an emergency department open in the middle of the night that treats everyone, regardless of their ability to pay,” the report claims.
Multiple studies show that is not at all true. In fact, academic research has repeatedly demonstrated that the opposite of WHA’s claim is true. For-profit hospitals proportionately provide more charity care than non-profits, and when the non-profits’ tax-exempt benefit is considered, the comparison is not even close.
For example, in 2021 John Hopkins researchers found that Wisconsin’s for-profit hospitals provide proportionately more charity care than non-profits. “For every $100 of expense incurred, nonprofit hospitals spent less on charity care ($2.3) than for-profit hospitals ($3.8),” according to the study.
Georgetown University researchers in 2019 found that non-profit hospitals in Wisconsin enjoy a higher Medicaid reimbursement rate than for-profit hospitals. The unreimbursed rate at for-profit hospitals was 4.13%, while at non-profits it was 3.13%. Unreimbursed Medicaid expenses is charity care.
The LOWN Institute reported in 2021 that 87% of non-profit hospitals in Wisconsin are net-takers with a “fair share deficit.” That means they get more from their tax-exempt benefits from the public than they provide in charity care to the public.
Finally, the Journal of General Internal Medicine reported in 2020 that large for-profit hospitals provide more charity care than large non-profit hospitals across the country. They concluded that “our analysis demonstrates that nonprofit hospitals may not be providing the level of charity care warranted by their tax exemption status, and in some cases may be spending relatively less than their for-profit counterparts.” Not surprisingly, 96% of Wisconsin hospitals are non-profit.
These studies provide ample evidence that non-profit hospitals are trailing for-profit hospitals in providing charitable care in their communities, despite their claims to the contrary. What’s worse is that non-profits are required by law to provide that care in order to maintain their tax-exempt status.
The IRS specifically points out that this includes “Operating an emergency room open to all, regardless of ability to pay.”
WHA’s bragging about its members providing charity care seems a lot less impressive after realizing that they’re required by law to do so. And despite that legal requirement, they still provide proportionately less charity care than their colleagues at for-profit hospitals. Perhaps altruism is far more likely to be found in the free market than the left would like you to believe.
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