Monday, March 01, 2010

Why Charities are Dying

With the growth of government intervention over the last decade, the empty suggestion that private charities could step in and take back the role of helping the less fortunate is laughed at. Why does it have to be this way?

My mom was born in a charity hospital. Today there are no more charity hospitals left in my state. Were they forced out by giant corporations or an aggressive medical industry? Were they closed due to lack of funding or excess regulation?

Over the years, charity hospitals closed due to the Great Society legislation of Lyndon Johnson. In this legislation and expanding legislation since, the government can treat all hospitals like charity hospitals through programs like Medicaid. This isn't all bad on paper. A person can go to a hospital and get treated and if they qualify for a subsidy, they can get it. The hospital gets paid no matter if it's a county hospital or a Presbyterian hospital.

Charities are having a hard time competing against the government primarily because a charity can only spend what it collects as a foundation. The government can spend more than it collects and pretends that everyone enrolled in their programs are treated just like all citizens. Of course this isn't true.

Charities, unlike corporate businesses, are not allowed to have a learning curve for raising and allocating funds. A business is allowed to adjust their business model and even deny their investors a profit to shape their business. The first hint that a charity is not releasing a certain percentage of their funds and they're on the radar of their state's Attorney General. Perhaps a new taxable non-profit status would allow new charities to build powerful foundations for causes without the fear of unreasonable regulation.

Many doctors resent taking patients that are on government assistance. They know in advance they're not going to get paid for their costs. My mother who was born in the charity hospital and received treatment for polio in that same hospital today finds herself having problems finding a doctor who can treat her with post-polio syndrome under medicare. Her choices for doctors are very limited due to location and their acceptance of the insurance she is forced to have as a retired American citizen. How is that charitable? Most elderly people out there don't have children who insist that so-called government assistance is never an option for them.

There are charities out there battling away trying to help her and many have...but any shortfall is made up privately. And by privately I mean it's ME competing against bottomless government dollars.

Charities are slowly dying because they must compete against a government that doesn't even bother to count receipts anymore when they spend money on these programs that are designed to help people. Only when charities are able to forcefully make you donate to them, or print their own money will they ever play a significant role in America again. That's very sad and very true.


Don said...

A sad story. But a quick point: Nobody is forced to take Medicare. Private plans are absolutely available for those over 65. You can bet when Jerry Jones hits the doctor, it is not a Medicare card he pulls out of his wallet. These plans are not, of course, affordable. Nor should they be, from a business perspective. It's like selling car insurance to someone who has been in a few accidents and will, with absolute certainty, be in a couple more within the next couple of years. You might sell it, but the risk of payout is so high, the premiums must reflect that.
And I'm afraid I don't agree with your facts. According to this, Non-government, non-profit hospitals outnumber government run hospitals 3-to-1.

I think you are probably witnessing the nationwide drawdown of smaller, non-urban hospitals in general, with perhaps more nonprofit hospitals closing near you.

Tracy said...

Don, your point is well taken...and my mom has supplemental insurance which is ridiculously regulated...there are only two plans in this state that she can use...where she pays an extra 200 bucks a month to save 300.

I guess my point about charity hospitals and non-profit hospitals was poorly made in the framework of a blogpost. The non-profit hospitals in this state are still subsidized pubicly through the government programs of many of the paitents they treat. To call them charity hospitals is a stretch...the distinction is there. Is the private art school up the street who receives their tuition money largely from government subsized loans really private? Hillsdale College would say no. The Great Society made the distinction between charity and government program almost invisible to the patient. I'm a business analyst and I see these numbers every day. Whether single-payer or third party payer...both non-profit and for profit hospitals treat them the same...but on a happier note...I have a friend who did work with a non-profit hospital to get over $100,000 knocked down by over half...alot of people don't know that this option is available to them. This was one AWESOME example of private foundation and private citizen worked it out together. I have another family friend who, like Jones, enjoys the highest marginal tax rate at age 78...he carries no insurance at all. He considers himself self-insured.