“Charity Care” and Hospital Bottom Lines

Insured people are helping to offset the spending on "charity care" at hospitals.

Photo: Shutterstock

While we tend to think of charity as an entirely positive thing, there are times when it can actually harm the giver.

Charity care,” in hospital parlance, refers to covering patients who don’t have insurance, or who can’t or won’t pay for their hospital care. It gets expensive, but the Affordable Care Act has helped that problem immensely by expanding insurance coverage to millions of Americans who wouldn’t otherwise have it. This means more people are able to go to the hospital or the doctor and not have to break the bank to do so.

It also means that hospitals have been paying less out of pocket to help people who need it, which means they can help more people. There has been in increase in the so-called “Medicare shortfall,” which is when a hospital loses money because Medicare doesn’t cover 100 percent of costs, but at least in Ohio, the increase in the shortfall has been covered by the increase in patients covered due to the Affordable Care Act.

Charity, in this case, was something that hospitals did, and still do, despite the fact that it’s a financial loss, which certainly falls into the purview of charitable giving. But it’s also a kind of giving that, frankly, shouldn’t be necessary.

Even with the Affordable Care Act helping to cover millions of Americans, the United States still lags behind many other countries when it comes to health care costs and insurance coverage.

Republican presidential candidate Donald Trump has vowed to repeal and replace the Affordable Care Act. This would affect 30 states, plus Washington, D.C., which have expanded Medicaid coverage under the ACA.

Even if Trump is not elected and the ACA remains in place, the Supreme Court has left Medicaid expansion up to individual states. Ohio legislators are going to have to decide whether the state will pick up some of the Medicaid expansion costs, and thus expand the affordability of health insurance.

Medical care is definitely an area where charity is needed, but hospitals still need to be able to pay their staff and their bills. Ohio has shown that the Affordable Care Act can offset losses from the “Medicare shortfall,” and perhaps they will be able to convince their state legislators that ACA expansion could benefit hospitals as well as individuals.

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