Harris County has the highest number of uninsured people in Texas (approximately 740,000), according to Legacy Community Health.
The large uninsured population in Harris County may be limiting the ability of Texas Medical Center (TMC) institutions to spend funds on community health improvement or subsidized health services, according to a new issue brief by experts at Rice University’s Baker Institute for Public Policy.
The issue brief summarizes a study comparing the community benefit expenditures of two sets of Harris County hospitals -- TMC and non-TMC hospitals -- and proposes strategies that can better justify the tax exemptions the institutions enjoy.
“Community Benefit Spending and the Tax-Exempt Status of Nonprofit Hospitals”was co-authored by Marah Short, associate director of the institute’s Center for Health and Biosciences; Vivian Ho, the James A. Baker III Institute Chair in Health Economics and director of the center; and Alex Alexander, health policy intern for the center.
“Although TMC hospitals spend more on community benefit provision than non-TMC hospitals, over 80 percent of that community benefit spending goes toward charity care, unreimbursed costs of means-tested government programs, health professions education and research,” the authors wrote. “Although these expenditures do provide a benefit and correspond to the TMC’s mission to ‘serve the health, education and research needs of Texas and the world,’ they leave little room for spending on community health improvement and subsidized health services, which would likely provide more direct benefit to the local community.”
TMC hospitals spend 41.7 percent on average of total community benefit expenditure on charity care, while the national average is just over 25 percent, the authors found.
Most hospitals in the United States operate as nonprofit entities, which exempts them from federal taxation in recognition of the benefits they provide to the community. Concerns about the justification for this large tax exemption prompted Congress to include community benefit requirements in the Patient Protection and Affordable Care Act (ACA) -- requirements that most hospitals would have needed to comply with by 2013.