State misspends $1.1B charity-care fund, study finds

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A billion-dollar state program to reimburse hospital charity care is having a reverse Robin Hood effect, shortchanging hospitals that serve poorer patients to the benefit of those that serve more affluent populations, according to a new analysis by Empire Center health policy director Bill Hammond.

New York’s $1.1 billion Indigent Care Pool (ICP) was created under the 1996 Health Care Reform Act to reimburse hospitals for care provided to patients without health insurance, using funds raised by the state’s taxes on health insurance policies along with federal aid. But after years of modifications, Hammond found, the amount of money a hospital received from the program last year bore little relation to how much charity care it delivered.

Hammond found a negative correlation between the overall poverty of a hospital’s patients and how much funding is received from the ICP, meaning hospitals that treat fewer poor patients are being reimbursed more generously. He also noted that ICP made payments to four hospitals that sustained no net loss on treating uninsured patients, in part because the program does not differentiate between patients who can’t pay their bills and those who pay cash. Among them was the world-famous Memorial Sloan Kettering Cancer Center in Manhattan, which received almost $12 million.

“The limited public resources available for hospitals that provide free care to the poor should be distributed in a fair and rational way, and that’s not happening now,” Hammond said. “Money in the Indigent Care Pool should be following patients, not politics.”

The Empire Center, based in Albany, is an independent, not-for-profit, non-partisan think tank dedicated to promoting policies that can make New York a better place to live, work and do business.