U.S. healthcare is a national failure

By David Whitsett

Last month, the Service Employees International Union (SEIU) scored a major victory when they enrolled 80,000 Chicago residents in Care for All, a program that teaches low income, uninsured families and individuals how to apply for charity care at local tax-exempt hospitals. Care for All not only holds private, nonprofit healthcare providers like Chicago’s largest, Advocate Health Care, to their legal obligation to provide charity care in return for the millions of dollars they receive in tax-exemptions each year, but it also ensures that its indigent patients can receive emergency treatment without being charged exorbitant hospital fees.

Unfortunately, the local triumph of Care for All points to the national failure of the American health system by raising a basic question: Why did a separate, independent agency like the SEIU have to inform citizens of their right to free health care, instead of the hospital that was obligated, under law, to provide it?

The simple answer is that Advocate is exceptional among nonprofit hospitals for its decidedly profit-oriented practices and thus avoids mentioning the topic of charity care to its patients in order to avoid losing the millions they receive in tax exemptions to pay for it. A more complicated answer is that Advocate’s practices are but one example of a larger national trend toward nonprofit hospitals withholding charity care from uninsured, low-income patients, a shift that reveals a dark yet familiar undercurrent tainting the national health system. The lowest stratum of hospital patients is increasingly unable to afford healthcare within a nonprofit hospital system that is operating more and more like a for-profit business.

Like all businesses, hospitals—even, private, non-profit ones—have to make money in order to survive. But many, like Advocate, cut charity costs not out of economic necessity but to further boost profit margins at the direct expense of its uninsured patients. Last year, for example, Advocate accrued a profit of $124 million from its money-making hospitals but spent less than one percent of its earnings on charity care in its low-income hospitals.

Another common alternative for wealthy, nonprofit hospitals seeking to preserve their profit margins is to simply privatize themselves or disassociate themselves from charitable, community-based health alliances. This practice effectively removes them of their expensive obligation to provide charity care at the expense of the communities that depend on them for affordable health care. Nowhere is this more evident than in the recent efforts of Cincinnati’s Christ hospital—a successful, nonprofit hospital that serves primarily wealthy, insured patients. It is also, however, the economic engine behind many charitable community health programs, as it is the leader of The Health Alliance, a nonprofit organization of six hospitals which sponsors these programs. In order to both consolidate its wealthier patients and minimize its costly obligation to provide charitable health care to its poorer ones, Christ hospital is attempting to disassociate itself from the Health Alliance and the charitable, community-based principles on which it was founded. The same trend has been reported in states across the country, including New Jersey, Pennsylvania, and Georgia, and has resulted not only in the severing of many low-income citizens from their traditional health care providers, but also in an increased financial burden on the remaining, charitable nonprofits. We will soon be left with a two-tiered health system, where the bottom tier is at increasing risk of disintegration and bankruptcy as the top tier follows the money trail.

Though Care for All was a local success, it is not a national solution. In an increasingly business-driven healthcare industry, the enforcement of charity care often increases nonprofit hospitals’ incentive toward for-profit practices—or simply bankrupts them. Instead of economically disadvantaging hospitals attempting to provide for uninsured patients, we need to empower the low-income patients with expanded insurance entitlements that allow the hospital to be reimbursed. As Michael Campbell, executive director of the Pennsylvania Health Law Project, observes, “Morally, it’s to figure out ways to get more insurance entitlements, through state Medicaid reform, into the hands of people and stop making them beg at the E.R. door.” Without insurance reform, healthcare will be become just another trade-able commodity, provided by business savvy hospitals that reserve care only for those who can afford it.