Charity care at tax-exempt hospitals: how much is enough? for the IRS? for Sen. Grassley?

The IRS’s interim report on hospitals and community benefits was released last week, one day after the latest missive from Sen. Chuck Grassley.

One interesting point of comparison: Grassley would condition hospitals’ tax-exempt status on spending 5% of annual patient revenues or operating expenses (whichever is greater) on charity care.  The survey shows that a quarter of all hospitals provide only 1% and over half of hospitals provide only 3%; only about 20% of hospitals provide more than 10%.

The WSJ Health Blog asks whether the IRS should be in the business of setting a 5% charity care threshhold.  Some say yes; some say no. 

Truth is, the IRS has been wrestling with this for a long time and has not come up with a bright-line test; it seems that instituting one will create at least as many problems as the current more diffuse test has engendered.

— David Harlow