Rural Healthcare/Tax Exempt Hospitals and Community Benefit Standard

Finance Health: Improving Health Care Access in Rural Communities: Obstacles and Opportunities, May 17, 2023

The access to healthcare theme for rural hospitals in the post-Dobbs world seems especially relevant.

The ultimate answer for rural healthcare is to send people from rural areas to medical school and nursing school (and to develop career ladders to both) and have the local hospital systems pay the tuition and living expenses in exchange for a period of service. This solves the human capital problem in healthcare, but not the general loss of rural population which is the story of the last 100 years. 

Employee-ownership of companies who provide healthcare services directly rather than through third party insurance will assure everyone has care, however this may or may not save rural areas if there is nothing to keep people there.

What we should not do (and stop doing) is to force vulnerable low-skilled workers into the healthcare field at low levels just because we have the power to do so. There is a term for that. Slavery.

In prior years, when religious organizations ran hospitals… They were trusted to provide for the poor. In some cases, it was in the name of the religious order, such as The Sisters of Charity or The Sisters of Mercy…

WM Oversight: Tax-Exempt Hospitals and the Community Benefit Standard, April 26, 2023

While there is no reporting data to show whether non-profit hospitals measure up in providing charity care during the pandemic, had they not been doing so, it would have been noticed as the entire sector was under a microscope.

Regardless of whether the IRS has audited these hospitals, they are still required to have internal compliance audits as to their financial stability and integrity, which would include meeting legal requirements.

In prior years, when religious organizations ran hospitals, the need to monitor charity care performance was not required. They were trusted to provide for the poor. In some cases, it was in the name of the religious order, such as The Sisters of Charity or The Sisters of Mercy.

With the decline in vocations, many of these hospitals are under professional management. Certain hospital CEOs at Catholic hospitals have been reported as having CEO level salaries, which many have considered scandalous, especially given how they have been run. Although independent auditing will review legal requirements, the CEO culture is known for hiding inconvenient information.

It is important to add a further check on charitable compliance, as professionalism in business is often synonymous with amoral behavior. This is why our recent CEO president failed so miserably in an office that requires moral authority rather than the seeking of personal gain by the executive class.

This need is all the more reason why the IRS needed, and still needs, a larger enforcement budget. Even with additional budget authority, the agency is short staffed.

As far as community service...

... the recent Dobbs Case reminds us of the exemption granted under law to Catholic Hospitals regarding certain kinds of women’s health care. When only Catholic hospitals are left in some states, due to consolidation, it makes this policy that more acute. In order for such hospitals to fully serve women, the drama of abortion politics must settle into compromise. There are proposals on both sides for a federal solution - either a federal law banning most abortions or permitting it in all cases. At some points, electoral stunts need to recede and real compromise must be sought.

In both scenarios, the need to take the issue away from the states is obvious. Justice Alito ignored the problems of both slavery and Jim Crow as reasons why there should not be abortion states and anti-abortion states. The respondents relied on the question of rights rather than on the question of powers. Had they examined the competencies of federal and state government on the question of who makes the rules on personhood, the answer is obviously that this responsibility must be federal. 

A ruling along those lines would have ended the issue at the status quo - with no regulation of abortion unless Congress recognized the rights of the unborn as reservoirs of positive rights. They are already recognized as having the right to life against government action. It is the same as the right to life for adults - the right to not be executed without due process. It is why we do not execute pregnant women, as well as the right to seek redress for outside injury. 

What they cannot claim is a right against the welfare of its mother - especially if the child is doomed due to a fatal defect. In such cases, termination is the only ethical solution - even in Catholic hospitals. Especially if the Catholic hospital is the only hospital for miles around.

For the larger issue, the right to an abortion in the very early stages should be federally guaranteed. After the embryo becomes a fetus - a little person in Latin - then pregnancies should be ended in a live birth, but with no medical intervention required to save the child (other than baptism or other religious blessing). This form of termination should have no upper limit. No one has a right to NOT be born.

Regardless, the Catholic Health Association should have been asked to present testimony on this issue. Since they were not included, their comments should be specifically invited on the issue of charitable care. Ambushing them with an abortion discussion would be rude.

Finally, in a cooperative economy, where companies are owned by their employees and also provide cooperative (democratically chosen) consumption options - especially healthcare - the need for both outside insurance and charitable care will be eliminated. That day may be sooner than you realize, as capitalism’s flaws are showing. 

A few simple steps will quicken the process, such as allowing insured personal accounts for Social Security holding corporate preferred and voting stock (not shares in the Wall Street Casino) and giving holders of public stock the same capital gains exemption given to private company owners when selling to a qualified broad-based Employee Stock Ownership Plan. While the first option is unlikely to ever pass, the second should attract bipartisan support.

Attachment: Asset Value Added Taxes Video