Question of the day
Wednesday, Feb 1, 2006 - Posted by Rich Miller
First, read this. Here’s an excerpt:
Attorney General Lisa Madigan Monday unveiled an initiative to require not-for-profit hospitals to funnel 8 percent of their annual operating costs to fund charity care for poor or uninsured patients.
Madigan said current state law gives not-for-profit hospitals freedom from paying taxes in exchange for providing charitable care to the poor, although no set amount is specified. […]
Most of the state’s 200 hospitals are not-for-profit, with the average amount spent on charity care in 2003 tallying less than 1 percent of operating costs, Madigan said. Her office released a list of charity-care percentages for individual Illinois hospitals, but those figures did not include other community benefits hospitals provide that would count toward their percentage under her proposal. […]
A spokesman for hospitals statewide disagreed.
“Many hospitals in Illinois are hanging by a financial thread, and imposing a rigid formula for charity care could permanently damage our already fragile health care system,” IHA president Ken Robbins said in a written statement.
He also noted that one out three Illinois hospitals is losing money on overall operations.
Are hospitals already overburdened, or should Madigan’s idea get a full hearing in the General Assembly?
- Tessa - Wednesday, Feb 1, 06 @ 6:48 am:
I think it depends on where the money is going. Today, it seems a lot of not-for-profits have for-profit outcomes. I’m not implying that hospitals are doing this, but it deserves to be looked at.
I heard her speak on this and she makes a very good case for it.
- Hello - Wednesday, Feb 1, 06 @ 6:51 am:
Hey, how come taxing non-profit hospitals wasn’t on yesterday’s list of untapped revenue streams? That sounds like a good one to me.
Why is the Attorney General’s office “unveiling initiatives”? Is everyone in this state allowed to legislate us around by fiat? As if the legislature isn’t doing enough of that, here comes the AG’s office. With all the government corruption, fraud, waste and abuse going on, she decides to target non-profit hospitals. Classic.
My (revised) list of overrated Illinois politicos:
1. Tammy Duckworth
2. Lisa Madigan
3. Barrack Obama
ps. What ever happened to her suit with the people that were selling cell phone records? That was white hot for a day or two and burned itself out into nothing. Did she rescue us from that evilness? She had the cameras rolling hard for that one too.
- Cassandra - Wednesday, Feb 1, 06 @ 7:16 am:
Isn’t this another backdoor way of taxing the middle class for the health care of those who don’t want to pay for health insurance. After all, the poor are covered by Medicaid, the elderly and disabled by Medicare/Medicaid, the kids by Kidcare and, potentially Allkids. And there are low cost health insurance plans available to the rest.
How many people will drop their coverage, or not get coverage they can afford, knowing they can rely on their local hospital’s charity care.
And, if this plan is implemented, how will the hospitals pay for it? By raising prices, of course. So the middle class insured will bear the brunt, as usual.
Sounds like Ms. Madigan will be a typical Robin Hood governor.
- Former MC - Wednesday, Feb 1, 06 @ 7:18 am:
The IHA president is correct - many hospitals are hanging on very precariously. Some, however, are not. Nevertheless, a rigid charity care standard will have the same effect as a healthcare tax on hospitals, which means private health insurers and businesses will simply pass those mandated charity costs to the insured. The initiative seems to be a heavy-handed way to impose the equivalent of a progressive healthcare tax on suburban Chicago hospitals.
- DOWNSTATE - Wednesday, Feb 1, 06 @ 7:59 am:
If they do this the state needs to make sure hospitals are paid on time.How much is owed to hospitals by the state for thier services?
- Ron - Wednesday, Feb 1, 06 @ 8:10 am:
typical liberal socialism attitude from lisa. why doesn’t someone take a look at a special tax on profits from lawsuits to help fund the health care for the poor. a lawyer in metro east area made $1.7 BILLION on the tobacco suit case. seems like he could spare a little change.
- anon - Wednesday, Feb 1, 06 @ 8:25 am:
“charity care” is simply political puffery for dealing with the problem of the uninsured. hospitals provide much more to a community in terms of economic development, health clinics, etc than just taking on the burden of the uninsured. this is just another attempt by the state to shrug its responsibilities off on their target industry of the month.
- BolingbrookElephant - Wednesday, Feb 1, 06 @ 8:44 am:
Once again Lise shows her socialist side. Is it not enought that these hospitals are non-profit? Now she wants to tax them to contribute more. And what charities? Its easy to throw out buzz words like charity, needy, poor, under-privilaged. Sounds like some feel good legislation on the backs of our healthcare system.
- Nearly Normal - Wednesday, Feb 1, 06 @ 8:49 am:
Hospitals get reimbursed based on fees set by the government or insurance companies. It is always less than what they normally charge. Reimbursement is always less if it is from the government. Plus there are services that aren’t covered. If the patient can’t pay and the collection agency can’t make them, the hospitals absorb that amount. Depending on how many nonpayment cases, this can be a huge amount for the hospital.
That’s why you see some hospitals in low-income areas in Chicago looking at closing or merging with others.
So, three people could have the same operation, stay, food, medicines, and other medical services. There could be three different bills based on who’s paying–the government, insurance company, or the individual. If each patient had a different insurance company,there could be a difference in the charges based on the contracts with that particular hospital.
First thing they ask you is for your insurance/medicare/medicaid cards or how are you paying for their services? The form you sign promises that you will pay all fees not covered by insurance/medicare/medicaid. God help you if you don’t have some sort of insurance or government aid.
- Reddbyrd - Wednesday, Feb 1, 06 @ 8:50 am:
The GA should give the idea a full and fair hearing — then pass it into law. Hospitals have been winking at helping the poor and the under insured for decades It is about time someone called their bluff.
- Eye Doc - Wednesday, Feb 1, 06 @ 8:51 am:
What’s the definition of “charity care” anyway? Does it mean free care,discounted care etc. There are uninsured patients who can pay for some or all of their care. Setting an arbitrary target for “charity care” makes no real sense to me. Every hospital needs to be looked at on an individual basis, and every patient needs to be looked at on an individual basis as well.
But besides all of that, Medicare and Medicaid pay sharply discounted rates to hospitals already. One could argue that Medicare and Medicaid are already a form of charity care, and many hospitals are already struggling due to cuts in those programs.
- Bill Baar - Wednesday, Feb 1, 06 @ 8:53 am:
A Socialist would at least tax everyone 8%.
It’s illegal to drive in Illinois without car insurance. It should be illegal to go without health insurance.
Check some of things Mit Romney is talking about for Mass.
- Wildcat - Wednesday, Feb 1, 06 @ 8:54 am:
If Lisa, Voices for Illinois Children, Healthy Illinois, and others get their way we’ll be that much closer to socialism - which, despite what many apparently think, is not a system upon which this country was founded.
- Bill Baar - Wednesday, Feb 1, 06 @ 8:55 am:
Charity is your write off for bad debts. Medicare cost accounting rules define it. Someone should check how the Feds will treat these bad debts in Medicaid and Medicare. It stiff Illinois.
- Pat Collins - Wednesday, Feb 1, 06 @ 8:58 am:
A great idea. Make it law just AFTER you get lawyers to kick in 8% of THEIR annual costs for low income legal stuff.
- Taxman - Wednesday, Feb 1, 06 @ 9:08 am:
The law already requires non-profit hospitals to do charity to keep their tax exempt status. The problem with the status quo is that it’s unclear how much “charity” a hospital must perform to meet its obligation. One of the big hospitals in Champaign-Urbana (Carle, I think) had its property tax-exempt status revoked last year, for this very reason.
It looks to me like Madigan is trying to clarify a threshhold level. Partly, this makes sure society gets what we’ve bargained for in exchange for exempting non-profits from taxation. But also, this helps hospitals by removing the tax uncertainty they’re currently facing.
Maybe the percentage Madigan proposed is too high, maybe not. Either way, the requirement already exists, and Madigan’s proposal would provide clarity where it’s desperately needed.
- anon - Wednesday, Feb 1, 06 @ 9:11 am:
Hospitals today…churches tomorrow
- grand old partisan - Wednesday, Feb 1, 06 @ 9:12 am:
Thanks for this thread Rich. I thought this “initiative†was ridiculous when I first heard about it, and I wanted to post something on Illinoize about it, but never found the time.
First off, what is the actual mandate: 8 percent of their annual operating costs, or providing full charity care to families with incomes at or less than 150 percent of the federal poverty level?
Secondly, what part of not-for-profit does the Attorney General not-understand? All of the money collected by these hospitals is used to cover their operating costs. If you increase their operating costs by 8%, from where does she think the money to cover this mandate is going to come? The non-existent profits of these hospitals? I think the Former MC is right, this will essentially establish a backdoor, progressive healthcare tax. And employers who want to provide healthcare to their employees will find another state where they don’t have to pay this quasi-tax to set up shop.
- grand old partisan - Wednesday, Feb 1, 06 @ 9:17 am:
Taxman, that is a very good point. However, think about it this way:
Non-for-profit means that all of the money collected by the hospital is put towards their operating expenses. By not charging more in order to meet a profit margin for shareholders at the expense of their patients, aren’t those hospitals providing a form of charity?
- the Patriot - Wednesday, Feb 1, 06 @ 9:29 am:
Great idea Lisa, I hope you have a traveling hospital to come to rural IL to treat all the people downstate after you impose an 8% tax hike on them. Wake up people, really sick people do not get turned away because they are poor. Even the poor in America get better healthcare then anywhere in the world. Don’t believe me, as the middle and upper class citizens of Canada and the UK who come to the US for major illness.
- zatoichi - Wednesday, Feb 1, 06 @ 9:43 am:
What is this sudden emphasis on nonprofits in the last several days? Are you surprised to find nonprofits actually can exceed their expenses and make a profit? If a Hospital wants to install a MRI or another expensive device, where does that money come from? Without a reasonable financial base for expected repayment the loan/bond for that equipment is not coming. Many Hospitals and huge numbers of other nonprofits function with 1%-4% margins just like thousands of for-profits. There are others (non and for profit)deeply in the red. Others are doing very well. Hit my local hospital for 8% operating and they will drop to 4% loss. How many years will they survive? Love the arguement of “I want that expensive proceedure when I need it but do not make me pay for it.” Well, someone has to pay so it is around when you need it. When Medicaid, Medicare, and no-pays pay cost or less where does the money come from to provide the service? No margin = no mission.
- Former MC - Wednesday, Feb 1, 06 @ 9:51 am:
Enjoyed Reddbyrd’s comments - hold a fair hearing and then convict them.
- Cashflowpro - Wednesday, Feb 1, 06 @ 10:22 am:
As a 25-year veteran in health care finance this is the most insidious piece of cost shifting legislation I’ve ever seen.
Watch the definitions from the bill:
“Effective date of eligibility” means the later of the date on which medically necessary services are rendered or the date of discharge from the hospital.
“Resident” means a person living in the State of Illinois, regardless of United States citizenship status, with the intention of remaining in Illinois indefinitely. A resident is not required to maintain a fixed address.
According to Section 15 “each tax-exempt hospital MUST PROVIDE charity care to eligible Illinois residents”
Section 15(b)(3) “Timing of charity care application. A patient may submit a charity care application to a tax-exempt hospital WITHIN 60 DAYS AFTER THE EFFECTIVE DATE OF ELIGIBILITY.”
Section 15(b)(4) “A tax-exempt hospital MUST NOT DELAY PATIENT CARE while a patient’s application for charity care is pending.”
The catch: if hospital don’t provide charity care they risk their exempt status for all taxes (property, sales, income, etc.). If they do, then ANYONE can present for care with impunity. So, if I’m a company that wants to eliminate retiree health care benefits, hey, just send them to an Illinois hospital.
If I live somewhere else and want the best care from a top-notch Illinois hospital, just show up and say I live in Illinois. The hospital can’t even check until 60 days after I’m discharged.
If I live in Chicago, but don’t want to go to Stroger, no problem: any Illinois hospital has to take me in.
- illrino - Wednesday, Feb 1, 06 @ 12:02 pm:
A solution in search of a problem!
- Anon. - Wednesday, Feb 1, 06 @ 12:21 pm:
Non sequitur alert:
“Even the poor in America get better healthcare then anywhere in the world. Don’t believe me, as the middle and upper class citizens of Canada and the UK who come to the US for major illness.”
You’re praising health care for the poor by describing health care for the wealthy. If you think that’s the same, then you aren’t all that quick.
- Dan - Wednesday, Feb 1, 06 @ 12:25 pm:
Hmmmm…. I wonder exactly what it is that is causing all these care centers to experience financial hardship?…. Hmmmm…. Ya think it could be the same thing inflicting the LA County system, as well?…. Do you think having SEVERAL HUNDRED THOUSAND (if not more) CRIMINAL (read, illegal) ALIENS in our midst could have something to do with a health care system going down the crapper…. Ya think, Richie boy?!…. Or is it just to politically incorrect (read: truthful) to discuss?
- Hospital GC - Wednesday, Feb 1, 06 @ 4:42 pm:
Lisa has really missed a key obstacle to providing charity care. DOCTORS !!! How many doctors do you know who are willing to provide free surgery to an indigent patient ??? Can’t find them at our hospital. Take on the risk of med mal suit for no pay? HA HA… This bill is not only an onerous 8% tax on hospital, but it completely misses the fact that physicians on an independent medical staff will not work for free… this is not doable unless you can solve the physician part of this equation…indentured servitude?
- BIG R.PH - Wednesday, Feb 1, 06 @ 5:06 pm:
Here is what you are all missing!! The hospitals already provide more than 8% in charity care. It is called financing the slow paying state of Illinois!!! Every day that there are no checks coming in means that the hospital ( or other health care provider) has to come up with money to pay salaries, overhead etc. Lisa wake up and clean up your own house before foisting anymore stupid mandates on the health care system.
- Emily Booth - Wednesday, Feb 1, 06 @ 6:40 pm:
Under the Hill-Burton Act, hospitals that received federal funding to renovate their facilities are required to provide emergency medical care to persons living in their area without regard to their ability to pay. There are 3 things the government can do to lift people out of poverty: 1. raise the minimum wage; 2. provide child care benefits to working families and 3. offer national health insurance. The state has no. 1 and no. 2 and is pretty close to no. 3. The federal government offers more than 100 medicaid programs to the states and the states pick and choose which ones they are willing to administer. We have a patchwork of health insurance programs. I know doctors and they would rather see their patients get the medical care they need than suffer. Most doctors are willing to work out some kind of payment plan if someone is unemployed. The biggest medical player in Chicago is Resurrection. Anyone from Resurrection care to comment on your business model?
- Anon Tax Guy - Wednesday, Feb 1, 06 @ 7:58 pm:
Cashflowpro’s comments are on the money, if you’ll pardon the expression. It’s nice to see an insightful analysis rather than the partisan blather that seems to be posted here all too frequently.
Having reviewed his analysis, it appears that, unfortunately, the Attorney General may be doing nothing more than some election year grandstanding. If so, that’s unfortunate. While I’m no Democrat, I always thought she was above that sort of thing.
Rich - how about asking the AG’s office to response to Cashflow’s analysis?
- steve schnorf - Wednesday, Feb 1, 06 @ 8:14 pm:
I think the debate is interesting. There are probably parts of the proposal that need to be modified, or even deleted (or strengthened). That’s why you would have hearings; hear the input from all sides.
I think the AG has given us a vantage point from which to take another look at availability of healthcare. The GA and the Governor may not end up going where she proposes, but full and open debate will harm no one, and might result in helpful legislation.
Most hospitals don’t have losses year after year, or they would close. In other cases, their losses are subsidized by other, profitable members of a health care system. And, in some cases , hospitals are extremely profitable, although usually not from operations, as Mr Robbins says.
I think most of us, including the AG, understand that health care is not free, and for each hospital there is a nut that needs to be covered. Costs that are not covered by one payer must be recovered from some other payer, or eliminated.
But, I think most of us agree that our current health care system, in Illinois and other states, needs improvement. Almost anything that forces the dialogue and debate forward is good.
- Elder - Wednesday, Feb 1, 06 @ 9:42 pm:
There are some horrible profiteering hospitals out there, such as Evanston Northwestern, and they have socked away BILLIONS in “excess revenues” (can’t call them “profits”, can they?) Some of the cash fat ones (Advoacate and Resurrection) are playing hardball with the unions, refusing cardcheck nuetrality, and now their greed is coming back to bite them. Go Lisa!! Bite hard!!
- Fed up - Thursday, Feb 2, 06 @ 2:16 pm:
Does anyone truly believe that this bill is anything more than Madigan keeping the SEIU dollars rolling in to her coffers ?? Please read the book “Labor Pains” and educate yourselves about the SEIU tactics ala Scruggs v. Resurrection, Provena, Advocate and their other strategies to unionize Illinois hospitals.
- Jill Stanek - Friday, Feb 3, 06 @ 3:37 am:
Were nonprofits like Advocate and Resurrection (the two largest hospital systems in Chicago) unionized, Lisa wouldn’t be doing this. The SEIU and AFSCME have been hounding them for awhile. The unions are behind this.