Scroung­ing for rev­enue

Cash-strapped states are in­creas­ingly scru­ti­niz­ing hos­pi­tal tax ex­emp­tions

Modern Healthcare - - Opinions Editorials -

Notes on the news:

In our March 21 cover story (p. 6), re­porters Joe Carl­son and Me­lanie Evans ex­am­ined new dis­clo­sures of com­mu­nity ben­e­fits by tax-ex­empt hos­pi­tals. This in­for­ma­tion was in­cluded in the first and lim­ited roll­out of In­ter­nal Rev­enue Ser­vice Sched­ule H filed with an­nual Form 990 dis­clo­sures.

The re­sults were un­der­whelm­ing. On av­er­age, each hos­pi­tal de­voted 2.5% of all its ex­penses to pro­vid­ing char­ity. If losses on Med­i­caid and other sub­si­dies were in­cluded, the fig­ure rose to 8.3%. Over­all, nine out of 10 re­spon­dents failed to pro­vide enough free and dis­counted care to earn tax breaks un­der a con­gres­sional pro­posal that would have forced hos­pi­tals to de­vote 5% of their ex­pen­di­tures to care for the poor.

Later, on this page (March 28, p. 24), we pre­dicted that eco­nomic con­di­tions would put more pres­sure on hos­pi­tals to sub­stan­tially in­crease char­ity care or risk un­wel­come scru­tiny. Re­in­force­ment of that point came last month in Illi­nois when the state Rev­enue Depart­ment moved to yank the tax ex­emp­tions of three fa­cil­i­ties (Aug. 22, p. 14). The depart­ment added that it is re­view­ing the ex­empt sta­tus of as many as 15 other hos­pi­tals.

Look for more such ac­tions from cash-strapped state and lo­cal gov­ern­ments des­per­ately seek­ing rev­enue. The Great Re­ces­sion, the deep­est and long­est down­turn since the Great De­pres­sion, has sapped tax rev­enues while the need for so­cial ser­vices such as Med­i­caid is in­creas­ing. High un­em­ploy­ment lingers as a mill­stone on an econ­omy that is com­posed 70% of con­sumer spend­ing. But out-of-work con­sumers have less to spend and many oth­ers are afraid to part with money be­cause they may lose their jobs.

In bet­ter times, gov­ern­ments wouldn’t press the tax-ex­emp­tion is­sue. But when the pub­lic and the politi­cos note that hos­pi­tals are en­gaged in huge con­struc­tion projects, that their prices are among the high­est in the world, and that their doc­tors and ex­ec­u­tives are com­pen­sated well above the char­ity cases in the wait­ing rooms, it’s hard not to de­mand a greater re­turn on tax sub­si­dies.

If state and lo­cal politi­cians are un­sym­pa­thetic to provider com­plaints about job­less­ness and un­com­pen­sated care, don’t ex­pect a bet­ter re­cep­tion from fed­eral law­mak­ers and of­fi­cials. They are obliv­i­ous to any­one else’s plight. That’s how they could spend months ar­gu­ing about debt ceil­ings, deficits and dec­i­mat­ing so­cial insurance pro­grams while polls in­di­cated the pub­lic was over­whelm­ingly more con­cerned with jobs and the econ­omy.

A re­cent Gallup poll shows one rea­son why un­em­ploy­ment gets lit­tle more than lip ser­vice in the na­tion’s cap­i­tal. There’s an old joke that says a re­ces­sion is when your neigh­bor loses his job and a de­pres­sion is when you lose your job. In of­fi­cial Wash­ing­ton, there is nei­ther a re­ces­sion nor a de­pres­sion. The once-sleepy metro area has mor­phed into a boom­ing po­lit­i­cal-in­dus­trial com­plex of gov­ern­ment con­trac­tors, com­pa­nies with big in­ter­ests in gov­ern­ment reg­u­la­tion and/or sub­si­dies, trade as­so­ci­a­tions, lob­by­ists, pub­lic re­la­tions spin fac­to­ries and lawyers. Even though some deeply poor neigh­bor­hoods lie in the shadow of the Capi­tol build­ing, pro­fes­sional, af­flu­ent D.C. never min­gles with these peo­ple.

The Gallup poll showed that of all the states and the District of Columbia, only D.C. reg­is­tered a pos­i­tive score on pub­lic con­fi­dence in the econ­omy. It posted an in­dex read­ing of +11 while all the states ranged from -13 down to -34. Mary­land and Vir­ginia, in the D.C. or­bit, while show­ing neg­a­tive out­looks still fell in the top 10 for eco­nomic op­ti­mism.

Ane­mic econ­omy? Un­em­ploy­ment? Un­com­pen­sated care? You can’t see those from Wash­ing­ton.

NEIL MCLAUGH­LIN Man­ag­ing Editor

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