Alternative funding policies for the uninsured: Exploring the value of hospital tax exemption

The tax exemption accorded private, nonprofit hospitals is being subjected to more scrutiny as the numbers of uninsured grow; meanwhile, charity care competes with marker-driven priorities. Current public policies tie hospita l tax exemption to the provision of charity care, but there is a gap in the size and distribution of values between tax exemption and the charity care that: is provided. Most hospitals, in a study reported here, provided free care at a level below the value of their tax exemption, even when 50 perce nt of bad debt was included in the care value. However, hospitals in the po orest communities offered considerably more care than the value of their ta x exemption, whereas those in wealthier communities offered considerably le ss. Policies at local, state, and federal levels should be designed to exer t leverage on hospitals to provide free care at a level commensurate with t he value of their tax exemptions.