May 21, 2009 | Read Time: 1 minute
Sen. Charles E. Grassley, senior Republican on the Senate Finance Committee, raised a question last week about whether tax exemptions for hospitals will still be needed if the nation revamps the health-care system.
“Over the last 40 years, with the creation of federal and state insurance programs such as Medicare and Medicaid, and the growth of private insurance, it has been increasingly difficult to distinguish the activities of for-profit hospitals from the activity of charitable hospitals,” Mr. Grassley said at a discussion on health-care issues held by his committee.
If plans by President Obama and Congress to overhaul the country’s health-care system wind up giving everyone health insurance, “presumably hospitals should see a steep decline or the elimination of uncompensated care,” Mr. Grassley said. If so, the senator asked, “does it make sense to retain tax exemption for hospitals?”
Jonathan Gruber, professor of economics at the Massachusetts Institute of Technology, told Mr. Grassley that he agreed with the “spirit of the question.”
But he added: “I will say that there will be, under any reform, some remaining need for uncompensated care. About one-third of uncompensated care today goes actually to the insured who don’t pay their co-payments and deductibles. And the number of uninsured is not going to go to zero” under any changes fashioned by Congress and the president.
