Stopping Profiteering in "Not-for-Profit" Hospitals

Stopping Profiteering in "Not-for-Profit" Hospitals

Thursday, April 10th, 2008


Stopping Profiteering in "Not-for-Profit" Hospitals

It's counter-intuitive, but many US not-for-profit hospitals have bigger profits than their for-profit counterparts.  Last week, a Wall Street Journal article discussed the growth of profits in the not-for-profit hospital sector and the welcome attention this is garnering from federal policymakers.  As reported, the combined net income of the 50 largest not-for-profit hospitals across the US increased nearly eight-fold from 2001 to 2006 to a staggering $4.27 billion. 77% of the 2,033 not-for-profit hospitals in the US routinely make money, compared with 61% of for-profit hospitals.

In return for their not-for-profit status and $12.6 billion in tax exemptions, these hospitals must provide a "community benefit".  Many people assume this means charity care, or free care for the uninsured and indigent, but the term is so loosely defined that some hospitals have been reporting the wages they pay to employees as a community benefit.  Another problem is that ostensibly non-profit hospitals have entanglements with for-profit subsidiaries that line the pockets of staff and affiliated professionals affiliated with these supposedly non-profit hospitals.

To shed light on not-for-profit hospitals and the community benefits provided, the IRS will require hospitals to break-down their community benefit contributions starting in 2009.  The new reporting standards are welcome, but minimum standards for providing charity care are a must next step.

What Can States Do? All of Maine's community hospitals are non-profit.  However, as highlighted by a report from Consumers for Affordable Health Care, concerns that the hospitals were generating consistent profits even while hospital costs were increasing in Maine at rates far above regional and national rates, helped lead to enactment of Chapter 249.  This 2005 law requires Maine hospitals to disclose financial information about each tax exempt entity as well as for-profit entities in which a hospital has a controlling interest.  

To ensure communities are getting value for the tax exempt status of not-for-profit hospitals, Community Catalyst's Hospital Accountability Project offers research, fact sheets, and model legislation for state policy .  Resources include:

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Voter Identification Laws: The Specter of Fraud Helps the Right Wing Shape the Electorate

Since the federal Help America Vote Act (HAVA) established the requirement that first time voters present some form of identification before voting in a federal election, voter identification requirements of all sorts have been enacted across the country.  Currently 26 states have laws that are more restrictive than the HAVA mandate, and 21 states require ID from voters every time they vote.  These laws have been passed by arguing they are necessary to prevent voter fraud, even though all evidence suggests that such fraud is extremely rare and poses no threat to the integrity of our voting systems.  Instead, these fraud arguments have merely been a partisan tool, used for decades, to suppress turnout among new groups entering the electorate in large numbers and threatening the power of those currently in charge, whether they be minorities, immigrants or students.

Evidence of Suppressed Voter Turnout: Sadly, the evidence suggest that these efforts to reduce turnout and shape the electorate for partisan gain are most likely effective and have the greatest impact on poor, less educated, elderly and minority voters. One scholar has estimated that requiring photo identification from all voters would disenfranchise 20 million people.  Indiana and Georgia currently have such a photo identification requirement in order for a vote to be counted.  A challenge to the Indiana law has been heard by the US Supreme Court and a decision is expected by June.

Voter identification laws have also become a favorite tool of anti-immigrant forces and in the 2007-2008 legislative sessions 18 states have introduced bills to require that voters prove they are US citizens.  Fortunately for voters, the only one of these bills to be passed into law so far applies to just one town in Delaware.

Defeating Bad Bills: Legislators in many states are still pushing to impose new voter ID requirements in states that lack them, and continue to argue for making existing requirements more stringent by narrowing the types of ID that can be used.  Happily, it seems that at least temporarily the wave of new voter ID laws in waning as more bills are being voted down than up.  However, we expect that if the Supreme Court rules as expected, and allows Indiana’s photo ID requirement to stand, there will be an even stronger push from conservative forces on this issue in the coming legislative session.  Here’s what has been active in the current session:

  • Kansas is poised to pass Senate Bill 169 which will require photo ID at the polls.  The bill has passed both houses in different versions and now goes to conference committee for reconciliation. One good feature of the bill passed in the House is that it includes anti-Voter Intimidation language to attempt to prevent vote suppression of legal voters using the provision.
  • In Oklahoma the Senate has passed SB 1150 creating a photo ID requirement for voting.  A similar measure, HB 2956, has also passed the House.  Even though passage of one or other of the measures seems assured, Democratic lawmakers have strongly opposed the bill.
  • In Mississippi voter ID has been a contentious issue throughout the session, and has even prompted the Republican caucus to propose loosening felony disenfranchisement rules as a compromise to get it passed.  But while Republican lawmakers have managed to revive the bill by waiving the normal deadline for action, the bill appears dead for now.
  • A bill in Wisconsin, AJR 17, would have amended the state constitution to require ID when voting.  The bill passed the house last year but died in the Senate last month amidst very contentious debate when lawmakers refused to suspend the rules and release it from committee.
  • In Maryland lawmakers defeated HB 1355, which would have required ID to vote, in committee.
  • Consideration of a Colorado ID bill, HB 1039, was postponed indefinitely in February.
  • Legislation put forward by the California Secretary of State requiring ID to vote, SB 173, was defeated in committee.
  • Virginia Senators defeated SB 554 which would have required ID to vote.  A more restrictive bill in the House, HB 65, requiring voters provide valid, state-issued photo ID has been carried over to the 2009 session on a voice vote in committee.

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Victories on National Popular Vote, Paid Family Leave and Overseas Voting

A few key legislative victories in the last week worth noting:

  • Illinois Governor Signs National Popular Vote Bill:  Illinois became the third state after Maryland and New Jersey to enact National Popular Vote (NPV) interstate compact into law, which when a sufficient number of states approves it, will ensure that the Presidential candidate receiving the majority of votes nationally becomes President.  This follows legislative victories of NPV in the Maine and Vermont Senates in recent weeks.  A total of 16 legislative chambers have now approved NPV.
  • New Jersey Approves Paid Leave:  Following a vote in the Assembly last month, the New Jersey State Senate approved a bill, NJ S 786, to provide six weeks of paid leave to care for a new child or a sick relative, a bill Gov. Jon Corzine has said he will sign.  38,000 workers are expected to take advantage of the program each year, receiving two-thirds of their pay or up to $524 a week, paid for by a new payroll tax of $33 per year per worker.   New Jersey joins California and Washington state in providing paid leave for its working families.
  • Minnesota Moving to Make Overseas Voting Easier:  Addressing the problem, devastating for military abroad, that 80% of all overseas ballots are not counted, the Minnesota House voted unanimously for a bill, MN HF1259, authored by Rep. Jeremy Kalin and Sen. Sharon Erickson Ropes, that will allow overseas voters to receive their ballots electronically, deliver a second ballot to them if their cast ballot is lost in the mail, and will professionalize local procedures for counting absentee ballots in general.   The state Senate has supported similar legislation and the governor is expected to sign the bill. If finally enacted, Minnesota will join fifteen other states that have passed similar policies to help overseas voters.

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Research Roundup

Rising Inequality: In a state-by-state analysis of rising income inequality, the Center on Budget and Policy Priorities finds that since the late 1990s, incomes of the bottom fifth of families has declined by 2.5% among the bottom fifth of families, even as the top fifth has seen a 9.1% increase.  In recent years, Mississippi, Alabama, New Mexico, Connecticut and Indiana have seen the greatest increases in income inequality.

Costs of E-Verify:  In a major study of the E-Verify pilot project to verify the eligibility of Americans to work, the Congressional Budget Office found that expanding the program to cover every workplace would cost $40 billion over ten years, largely in enforcement costs and lost tax revenue due to employers paying more undocumented immigrants under the table and no longer withholding taxes for the government.  The implications are that expanded E-Verify use will cost states a similar magnitude of state income, unemployment and other payroll tax losses.

Business Costs of Health Insurance:  A new Rand study finds that health insurance costs for small business are rising faster than for larger ones, with small businesses seeing a 30% increase in percentage of payroll going to health care costs between 2000 and 2005.   Surprisingly, few smaller firms dropped coverage in the period studies, although it's unclear whether they can sustain coverage if costs continue to rise.

Gains from Drug Treatment: Expanding drug treatment for arrestees would yield $46 billion in benefits to society, according to a new study by the Urban Institute. Unfortunately, current rules in most states limit eligibility for most arrestees participation in community-based treatment programs, so policy changes are needed to achieve these cost savings.

Rural School Needs:  Low-income rural students are more at risk of becoming high school dropouts than their city and suburban peers, but rarely get the media or policy attention to address their needs, according to a new study by the Center for American Progress.

Trying to Make Ends Meet:  A new study by the NC Budget and Tax Center finds that a typical North Carolina family with children must earn $41,184 to actually afford needed housing, food, childcare, health care, transit and other necessities-- yet 37% of families in the state fall below that income threshold, usually because they are paid a living wage at work.

Closing Corporate Loopholes Doesn't Cost Jobs:  Two useful state reports countering the myth that tax giveaways are key to job creation:

  • The Iowa Fiscal Partnership highlights in a new report that many of the businesses that complain about corporate tax reforms like combined reporting already comply with such legislation in other states.
  • A new analysis by the Oregon Center for Public Policy finds that venture capital investments doubled from $153 million in 2006 to $302 million in 2007, without any of the tax breaks special interests were calling for.  In fact, the top states for venture capital, Massachusetts and California, tax capital gains as much or more than ordinary income.

Pioneering Renewable Energy in the Rocky Mountains:  Colorado has become a leader in clean energy investment, generation and use and a new report by Alice Madden, the state's General Assembly Majority Leader and sponsored by the Center for American Progress, details those successes and how the state achieved this leadership in recent years.

Please email us leads on good research at


Stopping Profiteering in "Not-for-Profit" Hospitals

Community Catalyst - Hospital Accountability Project

The Access Project - Hospital Billing and Collection, Recommendations for Non-Profit Hospitals' Provision of Uncompensated Care

Consumers for Affordable Health Care - Off the Charts: Unsustained Hospital Cost Growth in Maine

Voter Identification Laws: The Specter of Fraud Helps the Right Wing Shape the Electorate

Brennan Center for Justice ”“ Voter ID

Brennan Center for Justice ”“ Policy Brief on Alternatives to Voter ID

Demos ”“ Challenges to Fair Elections ”“ Voter ID

Brennan Center for Justice ”“ The Truth about Voter Fraud

American Prospect (April 2008) ”“ The Republican War on Voting

Social Policy (Fall 2007) ”“ History of Partisan Attacks on the Voting Process

NCSL ”“ Requirements for Voter Identification

Cal Tech/MIT Voting Technology Project ”“ Research Materials on Voter Identification

Lonna Rae Atkeson et al. ”“ New Barriers to Participation: Application of New Mexico’s Voter Identification Law

Victories on National Popular Vote, Paid Family Leave and Overseas Voting

IL National Popular Vote

Progressive States Network - National Popular Vote - A Voter Turnout and Civil Rights Issue

FairVote - The Electoral College  

National Popular Vote - Every Vote Equal: A State-Based Plan For Electing The President By National Popular Vote  

NJ Paid Leave

Progressive States Network - Paid Sick Days & Paid Leave Bills Approved in D.C. and New Jersey

New Jersey Time to Care

NJ S 786, New Jersey Paid Leave Act

Minnesota Overseas Ballot Reform

MN HF1259 - Minnesota overseas ballot reform bill

New PSN Resources

Progressive States Network has begun producing issue-specific updates in some of our key policy areas.  These updates are designed to give legislators and advocates especially interested in particular policy areas more information on legislative moving in the states, new resources being published, and other news to help you in your work. In recent weeks these updates have included:

Additional resources produced by PSN staff in recent weeks include:


Young Elected Officials National Convening

April 23th
Little Rock, Arkansas - William J. Clinton Presidential Library

The largest gathering of young progressive elected leaders in the country will meet.  On April 23rd, PSN's Policy Director, Nathan Newman, will be participating in two training sessions, one on building progressive tax structures at the state and local level and a second on immigration reform.

Good Jobs First Conference

May 7th & 8th
Baltimore/D.C. area

Registration is now open for Good Jobs First's national conference on May 7 and 8 near BWI Thurgood Marshall Airport, located between Baltimore and Washington, DC. Come meet the nation's top campaigners, researchers and experts on economic development accountability and smart growth for working families.


The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
J. Mijin Cha, Policy Specialist
Julie Schwartz, Policy Specialist
Christian Smith-Socaris, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Operations Manager
Marisol Thomer, Outreach Coordinator

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