I belatedly saw your March 21 issue with the cover story (“Short of the mark,” p. 6) stating that most not-for-profit hospitals would not pass “draft tax-exemption standards.” Modern Healthcare did a service in compiling data from the Schedule H community benefit reports of 20 hospital systems, but the headlines are peculiar. Sen. Chuck Grassley (or his staff) indeed proposed a 5% charity-care standard some years ago, but, as the article indicates, the senator himself has backed away from it. A uniform charity-care requirement would make little sense in a country where the percentage of uninsured people ranges from under 3% (Massachusetts) to more than 25% (Texas). In a state as small as Maryland, the household poverty rate at the county level varies from 5% to 20%. My published study in Health Affairs showed that in recent years, charity care accounts for about 2.3% of Maryland hospitals' operating expenses, just below the amount reported in Modern Healthcare's 20 systems (2.5%). The Maryland numbers are noteworthy because that state, which has a slightly below average uninsured rate (about 14%), has the nation's only all-payer hospital rate-setting system. Charity-care costs are built into the rates that hospitals are paid, giving them no economic reason to avoid charity-care patients. I'm surprised that Modern Healthcare found that the average community benefit expense of 8.3% of total expenses was, in the words of your headline, “Short of the Mark.” What mark would that be?
Bradford H. GraySenior fellowThe Urban InstituteWashington