Alternative Funding Policies for the Uninsured: Exploring the Value of Hospital Tax Exemption

Kane, Nancy M.; Wubbenhorst, William H.

doi:10.1111/1468-0009.00168

Cited by 23 publications

(24 citation statements)

References 8 publications

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“…Equating uncompensated care cost with community benefit, for comparing to taxes or tax exemptions, is a standard approach in this literature. 10 Under both definitions, the specialty hospitals we studied provided more net community benefits than their not-for-profit competitors as a share of total revenues: 5.5 percent versus 2.5 percent under the first definition, and 1.0 percent versus -0.4 percent under the second. We did find particularly low uncompensated care percentages for not-for-profit hospitals in cities with a publicly owned hospital.…”

Section: S P E C I a L T Y H O S P I T A L Smentioning

confidence: 97%

Specialty Versus Community Hospitals: Referrals, Quality, And Community Benefits

Greenwald¹,

Cromwell²,

Adamache³

et al. 2006

Health Affairs

100

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In this paper we compare physician referral patterns, quality, patient satisfaction, and community benefits of physician-owned specialty versus peer competitor hospitals. Our results are based on evidence gathered from site visits to six markets, 2003 Medicare claims, patient focus groups, and Internal Revenue Service data. Although physicianowners are more likely than others to refer to their own facilities and treat a healthier population, there are rationales for these patterns aside from motives for profit. Specialty hospitals provide generally high-quality care to satisfied patients. Uncompensated care plus specialty hospitals' taxes represent a greater burden, in percentage terms, than community benefits provided by nonprofit providers. [Health Affairs 25, no. 1 (2006): 106-118] A s pa rt o f t h e m e d i c a r e p r e s c r i p t i o n d ru g, Improvement, and Modernization Act (MMA) of 2003, Congress established an eighteenmonth moratorium on the development and expansion of new physicianowned specialty hospitals. The central concern among policymakers is whether these hospitals enjoy an unfair competitive advantage relative to other community hospitals. During the moratorium, Congress required the Medicare Payment Advisory Commission (MedPAC) and the Centers for Medicare and Medicaid Services (CMS) to report on two different aspects of this issue. At issue is whether specialty hospitals' physician-owners are able to control the referral of patients, choosing between their own facilities and other hospitals in the community, in a way that results in favorable selection. Other related issues are whether specialty hospitals provide high-quality care, how their patients perceive care, and what types of community benefits they contribute in their markets. Although the con-1 0 6 J a n u a r y / F e b r u a r y 2 0 0 6

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Section: S P E C I a L T Y H O S P I T A L Smentioning

confidence: 97%

Specialty Versus Community Hospitals: Referrals, Quality, And Community Benefits

Greenwald¹,

Cromwell²,

Adamache³

et al. 2006

Health Affairs

100

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“…In addition, charities fund hospice care (Goh and Shaw, 1994). In the United States, with a predominantly market-based health care system, the cost of health care insurance is rising faster than wages; consequently there is a rise in the number of uninsured Americans and greater need for health care funded by charitable or philanthropic health care providers (Dobie et al, 2005;Kane and Wubbenhorst, 2000;Silverman, 2006;Young, 1999).…”

Section: Discussionmentioning

confidence: 99%

NHS and charitable funding for children and young people with cancer in England and Wales

Linck

Tunnage

Hughes

et al. 2008

J Child Health Care

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In 2005 the National Institute for Health and Clinical Excellence Guidance on Cancer Services: Improving Outcomes in Children and Young People with Cancer, identified the need to quantify the substantial contribution made by charities to NHS provision to this group of patients. This article quantifies the contribution in England and Wales. It identifies 51 charities established specifically to assist this patient group, estimates that 340 charities made some financial contribution and 28 organizations administered charitable funds for hospices. The financial contribution to services by charities was estimated to be between pound25 million and pound38 million in 2003, representing between one-third and a half of the total resources directed to the treatment and support of children and young people with cancer in specialist centres across England and Wales. Reliance on the substantial charitable funding of health care in England and Wales raises concerns over government responsibility, and the potential misalignment between NHS priorities and those of the charities.

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“…Researchers have noted that the bulk of uncompensated care in the nonprofit sector is provided by government or teaching hospitals rather than private nonprofits (Simpson and Strum 1991;Morrisey, Wedding, and Hassan 1996;Mann et al 1997) and that what charity care is provided often does not measure up to the value of taxes forgone by exemption (Simpson and Strum 1991;Gilbert 1994;Morrisey, Wedding, and Hassan 1996;Kane and Wubbenhorst 2000). Even one supporter of the nonprofit form and associated tax exemption concluded that "research on the gap between for-profit and not-for-profit provision of uncompensated care cannot support arguments in favor of the not-for-profit sector" (Horwitz 2003(Horwitz : 1354.…”

Section: Quality Price and Charity Carementioning

confidence: 99%

“…These exemptions have been estimated by commentators to be worth in the billions of dollars per year (Kane and Wubbenhorst 2000;Gentry and Penrod 2000). Tax exemption, however, is a peculiar kind of subsidy in that it targets only a portion of the health delivery system -specifically, nonprofits.…”

mentioning

confidence: 99%

The Role of Tax Exemption in a Competitive Health Care Market

Colombo

2006

Journal of Health Politics, Policy and Law

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The Federal Trade Commission and Department of Justice 2004 report on competition in health care raises the issue of nonprofit versus for-profit form in several contexts, including their relative financial performance, pricing behavior, and role in caring for the uninsured poor. The report, however, does not discuss in detail the connection between tax exemption and the nonprofit/for-profit debate. Is tax exemption, for example, "buying" charity care for the poor, and would withdrawal of exemption negatively impact health care for the uninsured poor? Or is tax exemption justified on the grounds of other nonprofit behavior outside the financial realm and thus not considered by the report? If nonprofit status does not result in differential financial behavior (as the report concludes) and if competition will end the ability of hospitals to cross subsidize free care for the poor (as the report speculates), is there any reason to retain tax exemption for nonprofit hospitals? This article summarizes the debate on these issues and offers some alternatives to the current structure of tax exemption for nonprofit health care providers.

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Alternative Funding Policies for the Uninsured: Exploring the Value of Hospital Tax Exemption

Cited by 23 publications

References 8 publications

Specialty Versus Community Hospitals: Referrals, Quality, And Community Benefits

Specialty Versus Community Hospitals: Referrals, Quality, And Community Benefits

NHS and charitable funding for children and young people with cancer in England and Wales

The Role of Tax Exemption in a Competitive Health Care Market

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