By Harriet Blair
Rowan August 12, 2019
California
hospitals are providing significantly less free and discounted care to
low-income patients since the Affordable Care Act took effect.
As a
proportion of their operating expenses, the state’s general acute-care
hospitals spent less than half on these patients in 2017 than they did in 2013,
according to data the hospitals reported to California’s Office of Statewide
Health Planning and Development.
The
biggest decline in charity care spending occurred from 2013 to 2015, when it
dropped from just over 2% to just under 1%. The spending has continued to
decline, though less dramatically, since then.
The
decline was true of for-profit hospitals, so-called nonprofit hospitals and
those designated as city, county, district or state hospitals.
Health
experts attribute the drop in charity care spending largely to the
implementation of the federal Affordable Care Act, popularly known as
Obamacare. The law expanded insurance coverage to millions of Californians,
starting in 2014, and hospitals are now treating far fewer uninsured patients
who cannot pay for the care they receive.
With
fewer uninsured patients, fewer patients seek financial assistance through the
charity care programs, according to the California Hospital Association.
Cori
Racela, deputy director at the Western Center on Law & Poverty, countered
that many people still need financial assistance because — even with insurance
— they struggle to pay their premiums, copays and deductibles.
“The
need for charity care has changed,” she said, “but it still exists.”
The
data on charity care comes from most of the state’s general acute-care
hospitals but does not include Kaiser Permanente hospitals, which are not
required by the state to report their charity care totals. (Kaiser Health News,
which produces California Healthline, has no affiliation with Kaiser
Permanente.)
For
2017, California Healthline used data from 177 nonprofit hospitals, 80
for-profit hospitals and 54 city, county, district or state hospitals. The
breakdown was similar for the other years, with slight fluctuations.
Nonprofit
hospitals, whose charity care spending dropped from 2.02% of operating expenses
to 0.91% over the five-year period, are required by state and federal law to
provide “community benefits” in exchange for their tax-exempt status.
They
can meet that requirement beyond providing free and discounted care in a
variety of ways: They can offer community public health programs, write off
uncollected patient debt and claim the difference between what it costs to
provide care and the amount that they are reimbursed by government insurance
programs.
Nonprofit
“hospitals get tax-exempt status, but they don’t get it for free,” said Ge Bai,
associate professor of accounting and health policy at Johns Hopkins
University. Charity care “is part of the implicit contract between hospital and
taxpayers.”
Bai
sees the reduced spending on charity care as part of a trend of nonprofit
hospitals acting more like their for-profit counterparts.
Many
nonprofit hospitals “no longer consider charity care their primary mission,”
she said. “They are making more and more money but they are dropping their
charity care.”
The
state and federal governments set no minimum requirements for charity spending
by hospitals, although the California Attorney General has created standards for
a few nonprofit hospitals that have changed ownership in recent years.
Jan
Emerson-Shea, a spokeswoman for the California Hospital Association, said
hospitals are giving back to their communities in ways beyond charity care.
“You
see charity care declining, but Medi-Cal losses are increasing,” Emerson-Shea
said. She pointed to the growing shortfalls many hospitals report from caring
for more patients covered by the public insurance program. “Every Medi-Cal
patient we treat we lose money on.”
Medi-Cal,
the state’s Medicaid program for low-income residents, increased its rolls by 5.6 million
— or about 70% — from 2013 to 2017.
Racela,
of the Western Center on Law & Poverty, would like to see changes in
California’s charity care rules to address high out-of-pocket costs.
And she
wants hospitals to abide by the state law that requires them to inform patients that
they may be eligible for charity care based on their income.
“There
is still a big unmet need for charity care across the state,” Racela said.
Harriet
Blair Rowan: hrowan@kff.org,
@HattieRowan
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