Republicans Attack Health Care From a New Direction
by Gary Votour
Across the country, Republican lawmakers at the federal, state and local levels are now waging a war on the largest providers of uncompensated care to the poor… nonprofit hospitals. Nonprofit (charitable) hospitals are tax-exempt entities that provide health care just like for profit hospitals but use the money they make to offset the cost of providing care to those who can not afford it. Ranging from free screenings and clinics to uncompensated care, nonprofit hospitals provide a social safety net for those with no health insurance. In exchange, they get the same benefits other nonprofits like churches get… they are exempt from federal and state taxes as well as local property taxes. Now, with states, cities and counties facing budget shortfalls, Republican lawmakers are attempting to rewrite the rules that allow them their status as nonprofits and demanding more in return.
Not only do nonprofit hospitals provide higher amounts of uncompensated care than their for-profit counterparts, a recent report by the American Hospital Association emphasized that they do far more for their communities. This includes health improvement programs, health professions education, medical research, in-kind donations and grants to community groups. Also, they are a significant source of employment, as hospitals need not only doctors and nurses but also support level staff like aides, cleaners, maintenance and security. (1) Now, in places like Illinois and North Carolina, politicians are attempting to revoke their status as nonprofits, a move that could put them out of business and allow for expansion of large, for-profit health care providers to take over. When we consider the large amount of money that many politicians get while working as paid lobbyists for profitable hospitals, it should bring their agendas concerning nonprofit hospitals under even greater scrutiny.
Statewide Attempts to Shut Down Nonprofit Hospital in Illinois
In Illinois, the struggle is statewide. Democrat Governor Pat Quinn finds himself in a face-off between Republican politicians and the needs of his state. Last week he lifted a moratorium he had placed on denying tax exempt status to nonprofit Illinois hospitals, giving in to pressure from Republicans who want to begin closing them. The moratorium was implemented to allow time for legislators to define clearly what the expectations are for hospitals to hold this status.
While many Illinois lawmakers want these changes to go forward, the state is also primed to make cuts to its Medicaid program. Rather than try and take both issues into consideration, Republicans are trying to keep the issues separated. This would impact Medicaid recipients two-fold… while cutting their benefits, the state would be closing the very hospitals most likely to provide their care. In fact, nonprofit hospitals in Illinois have increased the amount of charitable care they provide to communities in recent years. The Illinois Hospital Association (IHA) released a report recently showing that the 100 or so non-profit hospitals in Illinois provided $561 million in free and discounted care in the most recent fiscal year. This is an increase of 124 percent since 2005. Their report also says these hospitals contributed another $4 billion in other community benefits, including costs to educate medical professionals and costs of subsidizing money-losing services such as emergency departments. (2)
Despite this obvious connection, Republican state Rep. Patti Bellock, a member of a bipartisan committee charged with cutting the state’s Medicaid budget, says “They may try to use it in the discussion when they work with the hospitals. . . .I really think (the two issues) should be kept separate.” (3)
Local Efforts to Control How Nonprofit Hospital Give to Communities in North Carolina
Local politicians in the Winston-Salem, North Carolina area, which has become a center of healthcare delivery, services and research in the Southeast, are questioning the tax-exempt status of local hospitals and demanding they provide more financial support for the cost of governmental services. One local hospital under such attack is the N.C. Baptist Hospital, which last year provided $237 million in community benefits to their local area and beyond. Dr. John McConnell, the chief executive of Wake Forest Baptist Medical Center, which owns N.C. Baptist Hospital, said the hospital is just one of three components within the larger medical group. The other two components are research and medical training. All three represent the medical group’s effort to provide community benefits. “Nonprofits exist to reinvest in their mission,” McConnell said. “We have a simple mission, and that mission is to improve health — in our city, our region, our state and our nation.”
Despite these massive benefits to the local area, Republican politicians are trying to limit their ability to gain the financial benefits all non-profits are entitled to, such as their tax-exempt status. Republican State Representative Dale Folwell continues to push for a cap on the sales tax exemptions that nonprofit hospitals receive from the state.
“I appreciate the role our hospitals play as employers and as providers of health care, but the cost of their operations are understated because they do not pay what other businesses pay, which is sales taxes, real estate taxes and income taxes,” Folwell said.
Local officials eye the very land the hospitals own as a new source of revenue. Because of their status as nonprofits, hospitals like the N.C. Baptist Hospital do not pay property taxes to the city or county. Neither do churches or other nonprofits that own real estate.
“This problem is going to continue to get bigger and bigger,” said Robert Clark, a Republican council member, referring to the amount of property in the city owned by tax-exempt organizations like the hospital. (4)
South Carolina Governor (A Former Hospital Lobbyist) Denies Freedom of Information Request
In South Carolina, Tea Party favorite Republican Governor Nikki Haley continues to come under scrutiny for possible ethical violation during her time in State senate before she was elected as Governor. The SC House Ethics committee is currently investigating whether Haley illegally lobbied while she was a SC State Representative. A public hearing has been set for June 28, 2012. Charges have been made by both Republicans and Democrats that she was still accepting fees as a “consultant” from the Lexington Medical Group while she voted on legislation to allow them to expand their facility in Columbia, SC. Despite a campaign that promised transparency and openness, she is now refusing to release emails requested by the ethics committee as part of it’s investigation.
The Post and Courier reports that their request, made under the S.C. Freedom of Information Act, was a legitimate request records and correspondence from Haley’s office that related to the S.C. House Ethics Committee and its investigation of the governor. Despite the fact that the emails in question are regarding her time as a SC State Representative before she was elected Governor in 2010, her office has refused the request, claiming attorney-client privilege. Their claim extends not only to the governor but also the vast majority of her staff.
Jay Bender, an attorney for the S.C. Press Association, has stated that he believes the denial is an abuse of the law. “It’s another instance where we have a public body overreaching to try to hide records that are part of the public record… They are acting like people who have something to hide.”, he said. (5)
Health care is a huge industry in this country, and one of the largest employers in cities from coast to coast. Nonprofit hospitals turn what would be profit in other hospitals into benefits for the community they reside in, yet Republican politician at all levels of government are attacking their nonprofit status saying that they do not give enough.
When will those same politicians demand that for profit hospitals start giving as well? Currently they just make a profit, that goes into the pockets of shareholders and investors. For nonprofit hospitals the shareholders are the people they serve and the investors are the communities they reside in, and that is where their “profit” goes. As long as those same politicians are allowed to take money from hospitals before, after and sometimes even during their time as elected officials, we should all be thinking hard about who these people truly serve. We elect them, they should serve us.
It is unethical for those we elect to serve anyone but us… and in some cases it is illegal as well.
(1) Results of the 2009 Schedule H Project, prepared for the American Hospital Association by Ernst % Young, LLP. Link at http://www.aha.org/content/12/09-sche-h-benchmark.pdf
(2) Report: Illinois hospitals’ charity care growing. The Rockford Register Star by the Associated Press. Jan. 11, 2012. Link at http://www.rrstar.com/news/x1312985261/Report-Illinois-hospitals-charity-care-growing
(3) Delay in hospital tax status cases costing taxpayers millions. Chicago Health Care Daily. May 9, 2012. http://www.chicagobusiness.com/article/20120509/NEWS03/120509734/berrios-delay-in-hospital-tax-status-cases-costing-taxpayers-millions
(4) Nonprofit exemptions for hospitals worry local leaders facing tax increases. Winston-Salem Journal by Bertrand Gutierrez, May 26, 2012. Link at http://www2.journalnow.com/news/2012/may/26/11/nonprofit-exemptions-for-hospitals-worry-local-lea-ar-2311886/
(5) Report: Haley administration won’t release emails by the Associated Press. The State and the Post and Courier. June 11, 2012. Link at http://www.thestate.com/2012/06/11/2311332/report-haley-administration-wont.html#storylink=misearch#storylink=cpy