HAP Report: The Medical Crisis in Indianapolis

Excerpt from the Executive Summary:

The Hospital Accountability Project is working to ensure that nonprofit hospitals in Indianapolis earn the tax breaks they receive by providing an adequate amount of charity care to underinsured and uninsured citizens. This report is the first in a series and examines the impact of hospital debt on individuals and families in Indianapolis and provides an overview of Federal and State statute related to charity care and community benefits.

Nonprofit hospitals receive significant federal, state, and local tax breaks and are expected, in return, to provide “benefit to the community.” These community benefits include a certain amount of care to uninsured and/or underinsured patients in the form of charity care. Charity care - also called free care or financial assistance - is care that is offered at no cost or a reduced cost to individuals who are unable to pay. Charity care and community benefit programs are important components of the health care safety net, often serving as the only alternative for low- and moderate-income individuals who lack affordable health insurance coverage to receive appropriate care.

National studies have found a link between families’ financial health and medical debt. For example, a study published in the American Journal of Medicine concluded that medical bills and illness contributed to 62 percent of all US bankruptcies, and bankruptcies attributed to medical problems rose almost 50 percent between 2001 and 2007. For most, hospital bills were the largest medical expense. A Commonwealth Fund report also shows the growing impact of medical debt on bankruptcies. It states that "…the proportion of working-age Americans who struggled to pay medical bills and accumulated medical debt climbed from 34 percent to 41 percent, or 72 million people, between 2005 and 2007. "At the same time, national uninsured and underinsured rates remain high. According to Families USA, one in four people in Indiana under age 65 were uninsured for all or part of 2007-2008. Remarkably, most of the uninsured are in working families.

The high number of uninsured and underinsured in the state and the strong connection between medical debt and bankruptcies demonstrates the need for effective, wellcommunicated and well-structured hospital community benefit programs – including free or reduced-cost care. Both Indiana statute and Federal law set requirements for nonprofit hospitals to provide charity care and community benefits. For example, Indiana’s community benefit law (IC 16-21-9) sets parameters and requirements that nonprofit hospitals must meet for providing free and/or reduced cost care to patients, conducting community assessments to identify health care needs, creating community benefit plans for meeting those needs and evaluating the effectiveness of the community benefit plan. But while the requirement to provide community benefits is clear, it is not clear how Marion County nonprofit hospitals – St. Vincent, Indianapolis; St. Francis; Community Hospital East, South and North; and Clarian Health (Indiana University, Riley and Methodist) – are fulfilling these requirements.

Click here to read the entire study:
The Medical Crisis in Indianapolis: A Snapshot