Academic journal article Health and Social Work

Increasing Access to Health Care: Examination of Hospital Community Benefits and Free Care Programs

Academic journal article Health and Social Work

Increasing Access to Health Care: Examination of Hospital Community Benefits and Free Care Programs

Article excerpt

For low-income, uninsured individuals who cannot afford to pay for their medical care, free care, also known as charity care, may be the only means to receive medical treatment. The problem is that the existence of this safety net is virtually unknown.

Free care is medical care provided by a hospital without the expectation of payment. Sometimes it includes discounted services for patients who are able to pay some of the cost of their care (Community Catalyst, 2002). In exchange for this service, nonprofit hospitals are classified as charities and receive millions of dollars in tax benefits. This concept, with its roots in colonial charity and public responsibility concerns, was reflected in the first U.S. hospitals and embedded in those established by religious orders in the 18th and 19th centuries (Sultz & Young, 2001). An important piece of legislation that relates to the provision of free care is the 1946 Hospital Survey and Construction Act (P.L. 79-725), also known as the Hill-Burton Act, and its amendments, including the 1975 Public Health Service Act, initiation of a substantial compliance review process in the 1980s, and Charitable Facility Compliance Alternative (CFCA), which was added in the mid-1990s (Health Resources and Services Administration [HRSA], 2003). Under Hill-Burton some hospitals and other health facilities were provided money for construction and modernization. The facilities that received these funds agreed to provide a reasonable volume of services to people unable to pay and to make their services available to all people residing in the facility's area (HRSA, 2003). Granting hospitals 501(c)(3) nonprofit status is another mechanism designed to encourage the provision of charity care. Of the 4,915 U.S. community hospitals, 3,003, or 61 percent, are classified as 501(c)(3) nonprofit, tax-exempt organizations (American Hospital Association, 2002). These organizations enjoy significant financial advantages from their tax-exempt status. For example, Ott (2001) explained that

   tax-exempt organizations do not pay corporate
   income taxes and in most states also are
   exempt from a variety of state and local taxes,
   including, for example, property, sales, franchise,
   and use taxes. Many tax-exempt organizations
   also are eligible for lower U.S. Postal Service
   rates. Individuals and corporations who donate
   money and other items of value to 501(c)(3)
   non-profit organizations are entitled to deduct
   the value of their gifts from their federal income
   taxes and, in most states, also from state
   income taxes. (p. 143)

The idea of granting tax-exempt status originated in 1917, three years after inception of the federal personal income tax by the 16th Amendment. The notion was based on nonpublic agencies providing services that the government would have been required to furnish (Internal Revenue Service [IRS], 2000). In exchange for this favorable tax status, however, all nonprofit organizations, including hospitals, are required to provide "community benefits," namely unreimbursed goods and services that address local community-identified health needs and concerns. Thus, in addition to any moral suasion of social responsibility to provide health care for those unable to pay, tax rulings and federal and state health department regulations engender the obligation of hospitals to provide charity services (Health Care For All, 2002; Noble, Hyams, & Kane, 1998).


In 1999, 42.1 million non-elderly people were without health insurance in the United States (Hoffman & Pohl, 2000). Certainly, this casts a blight on the American ethos of fairness and justice. Although more white, non-Hispanic people are uninsured in terms of total numbers because they make up a greater percentage of the population, as a group they are less likely to be uninsured. Among Hispanic Americans, 35 percent are uninsured; among non-Hispanic African Americans, 22. …

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