Why Not Charity Care?

With healthcare prices and medical debt skyrocketing, it’s not surprising to see headlines calling for the government to expand Medicaid programs to help poorer patients. Another approach exists, however, that would cover low-income patients, avoid Medicaid’s lackluster health outcomes, and cost taxpayers much less.

Though few may be aware of it, nonprofit hospitals offer a private safety net that Americans can opt into right now. It’s called charity care—and nonprofit hospitals should take it more seriously. If government can give hospitals clearer guidelines, Americans could benefit from lower taxes, while fewer low-income patients would get sent to debt collectors.

IRS Section 501(r) requires all nonprofit hospitals exempt from federal and state taxes to set forth a “financial assistance policy”—that is, to establish charity programs that offer free or discounted care to low-income patients. Considering that 76 percent of U.S. community hospitals are nonprofits, charity care should be accessible to many Americans. One study even found that one in three hospitals offers comprehensive charity care to patients earning less than 200 percent of the federal poverty level—if this were an industry standard everywhere, nearly 90 million Americans could qualify for charity care.

Read the full commentary at City Journal.