Why do tax-exempt hospitals bill for charges that aren't owed?

Aug 14, 2020 at 10:00 am by robmtchl


In 2018, the global healthcare sector's revenue was $1.853 trillion, an increase of 4.5% on a year-on-year basis. When it comes to healthcare expenditures, the US tops the list, spending $10,224 per person. By the end of 2019, Americans will spend $3.65 trillion on health, which amounts to 17.8% of the country's GDP

Firms and households in the United States spent 10 percent of GDP on health care in 2018. Despite widespread coverage—as of 2018, 91.5 percent of Americans had either private or government health insurance for all or part of the year (Berchick, Barnett, and Upton 2019)—many people still face large and variable out-of-pocket health-care costs.

In 2017, more than 1 in 50 Americans who interact with the health-care system have out-of-pocket costs in excess of $5,000, and 1 in 200 have costs over $10,000. At the other end of the distribution, roughly one in seven have no out-of-pocket costs at all in a given year.

Thank God for Not-for Profit, Tax Exempt healthcare institutions who will provide free or low-cost insurance, right? They provide such a valuable benefit to our local communities that in Tennessee we give them tax-exempt status without even vetting their numbers or claims. Why should we? They are associated with a religious institution, and they would never be dishonest, right? Friends, that could not be further from the truth.

As you can see from the attached Explanation of benefits (EOB) and a bill from a local tax-exempt hospital, the insurance carrier clearly states that the insured does not owe these charges. Yet, the hospital continues to bill for the services. Why? They do not pay any local property taxes, and they are exempt from most federal taxes (if they pay any at all), Yet this religious, tax-exempt hospital employs collection agencies to pursue full payment of fees they want to charge. These fees even exceed the negotiated fee for services with insurance companies.

One may ask "why do the hospitals agree to these fees if they are so much lower than the bill?" That is because the insurance company agrees to suggest their policyholder go to these providers so the providers make more money. The cost to provide the service is still sufficient for the hospital to make a profit at the agreed upon schedule of payments. Why do they bill the person having a health crisis additional money? Especially when they pay no property taxes? I believe it is greed. Pure and simple greed.

Unless and until our local Tennessee General Assembly and our U.S. Congress decide to put an end to this charade the most vulnerable in our community will still fall victim to the outdated and deceitful practices of tax-exempt hospitals! Tennessee has no process in place to assure these tax-exempt hospitals actually live up to their mission and deserve the exemptions they claim.

Rob Mitchell

Tags: Healthcare
Sections: Voices