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California Hospitals Halved Charity Care Spending Following ACA

Stethoscope on white clothHospitals in California have been spending significantly less on charity care for low-income patients since the Affordable Care Act went into effect, California Healthline, a service of the California Health Care Foundation and Kaiser Health News, reports.

Based on data reported to California's Office of Statewide Health Planning and Development by general acute-care hospitals, Healthline found that spending on free and discounted care as a percentage of operating expenses fell by more than half between 2013 and 2017. The biggest decline, from more than 2 percent to less than 1 percent, occurred between 2013 and 2015, coinciding with the state's implementation of ACA, which expanded insurance coverage to millions of previously uninsured Californians starting in 2014.

The 2017 data comes from a hundred and seventy-seven nonprofit hospitals, eighty for-profit hospitals, and fifty-four city, county, district, and state hospitals, with similar breakdowns for the earlier years. Nonprofit hospitals, whose charity care spending fell from 2.02 percent of operating expenses to 0.91 percent over the five-year period, are required by state and federal law to provide "community benefits" in exchange for their tax-exempt status. According to the California Hospital Association, with fewer uninsured patients, fewer patients seek financial assistance through the charity care programs, while hospitals continue to give back to their communities in other ways.

"You see charity care declining, but Medi-Cal losses are increasing," said CHA spokesperson Jan Emerson-Shea, pointing to the growing shortfalls many hospitals report from caring for more patients covered by the state's Medicaid program for low-income residents, which increased its rolls by 5.6 million, or about 70 percent, between 2013 and 2017. "Every Medi-Cal patient we treat we lose money on."

However, Ge Bai, associate professor of accounting and health policy at Johns Hopkins University, told Healthline that many nonprofit hospitals "no longer consider charity care their primary mission....They are making more and more money but they are dropping their charity care."

Western Center on Law & Poverty deputy director Cori Racela noted that many people still need financial assistance because, even with insurance, they struggle to pay their premiums, co-pays, and deductibles. "The need for charity care has changed but it still exists," said Racela, who would like to see the state legislature address high out-of-pocket costs and hospitals inform patients that they may be eligible for charity care, as required by law. "There is still a big unmet need for charity care across the state."

This news item is reprinted from Philanthropy News Digest.

"Charity Care Spending by Hospitals Plunges." California Healthline 08/12/2019.

Topics: Affordable Care Act Health Care