Exempt Health Care Debt Collection Practices Are Charitable: A Proof

Out in Colorado, there is another story about a tax-exempt health care system suing the pants off anybody who doesn’t pay ridiculously inflated medical bills.  Fifteen thousand lawsuits over a five year period averages out to 8 lawsuits a day, according to the report.  You can listen via the YouTube video above but you already know the story.  In this case, it’s the University of Colorado Health System suing a patient for $24,000 arising from an MRI that took about an hour to complete.  The story proves again that tax exemption as a means to universal health care is probably an exercise in great futility.  Health care, as a “mixed market” is like Alice in Wonderland, full of all sorts of surprising ironies and contradictions.  It may seem a contradiction that a nonprofit health care system would sue somebody for not paying a hospital bill.  But health care is a mixed market, comprising able [to pay] as well as unable [to pay] consumers on the demand side.  Profit seekers and altruists on the supply side.  Able patients patronize nonprofit health care because they understand that the first priority of nonprofit health care is to cure the disease and make the community better.   They assume the profit motive will not have any impact on their treatment and are able to pay for that luxury [an ironic contradiction].  The unable to pay patronize nonprofit health care because they know the profit motive will have an impact on their treatment if they go elsewhere.  In mixed markets, nonprofits and for-profits serve both able and unable patients, primarily because the law says they have to. 

So in nonprofit health care, able customers pay a premium attributable to the halo of expertise and caring that characterizes a university hospital, for example.  Fine.  But having made their selection, the able should and need to pay because their payment cross-subsidizes the treatment of the unable and the nonprofit’s ability to find cures that eventually reduce health costs for everyone.  When the able don’t pay, they are just free-riding.  And free-riding eventually increases the cost for everyone.  Free-riding reduces the store of healthcare available to those unable to pay.   We know, in our heart of hearts, that healthcare is a human right that shouldn’t be dispensed according to ability to pay.  So — and here is another ironic contradiction — nonprofit tax exempt health care pursues a charitable purpose when it sues patients able to pay.  There is no charity in giving free stuff to those able to pay.  We should not reflexively “tsk-tsk” when exempt hospitals insist that able consumers pay what they are able.  It’s just that nonprofit health care needs a more accurate method of distinguishing the able from the unable. 

darryll k. jones