What do you know? Our call to the Illinois Attorney General Lisa Madigan was returned rather quickly a week or so ago. The spokesperson worked on the investigation of the Illinois hospitals that led to the proposed legislation.
Recall that February 15, 2006 press release from AG Madigan’s office indicated...
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that the matter had been reviewed by a task force. Guess what? There is no report or study available to the public. That’s because AG Madigan’s office has been conducting investigations of Illinois nonprofit hospitals, collecting data. In AG Madigan's judgment, the 8% number is the right number. Did any independent economists examine this major change in state law? We will never know.
Let’s see, the Internal Revenue Service is not permitted to release information about specific taxpayers. That, however, has not kept the IRS from releasing data in the aggregate. But why should Mom Madigan trouble the children with the details? She is so busy safeguarding children, advocating for woman, preserving the environment, helping crime victims, building better charities, protecting consumers, ensuring open and honest government—whoops maybe open when it comes to others. Hard to see how bringing in independent health care economists or releasing findings that could be evaluated by independent experts wouldn’t contribute to an open discussion of this important issue. Under the ruse of cleaning up Illinois property tax exemption, AG Madigan plans to push for Illinois' version of nationalized health care. The problem is that she is punishing those who are already trying to serve those without health insurance. We are willing to bet that if she gets her way, the nonprofits operating at a surplus will convert to for-profit status and those operating in a deficit will limp along, applying for the annual exemption from the new regime.
The Illinois Hospital Association is openly opposed to AG Madigan’s charitable hospital proposal. We should note that the representative from AG Madigan’s office informed us that the IHA was working with AG Madigan’s office on putting the proposal in a form that would be acceptable to the IHA and its members. IHA may be attempting to temper the legislation as a protective measure, but its Web site makes very clear that IHA opposes the legislation. IHA correctly points out that the proposed legislation focuses exclusively on “charity care” as the basis for exemption, while ignoring many community benefits that nonprofit hospitals provide to the community, including unreimbursed costs of training physicians and nurses and unreimbursed medical research.
IHA also provides some very interesting statistics. AG Madigan’s proposal would require 133 Illinois charitable hospitals to spend $739 million more on charity care –with that number based on 2003 data. That would result in 45 charitable hospitals moving from positive operating results to operating deficits. It would also increase the losses of 28 hospitals operating at deficits, driving their combined operating deficits to $411 million. John Q. Public might view this as someone else’s problem. However, IHA notes that to cover the impact of AG Madigan’s proposal, these hospitals may be forced to adjust their overall rates, with some of the cost being shifted to the private sector. Here is where an economist would be helpful, providing an assessment of the degree that the new costs would be shifted to the private sector through increased health insurance premiums. If these hospitals have pricing power, a lot of the cost may ultimately be shifted to private employers. That could lead more employers to increase deductibles, co-shares, or eliminate health care coverage altogether. The result could mean more uninsured people. On the other, if the charitable hospitals lack pricing power, paying the cost of AG Madigan’s proposal will be their problem. We would expect to see fewer charitable hospitals.
IHA's Web site also confirmed our prior concerns regarding access to the capital markets. They note that some bond insurers have already reacted to AG Madigan’s proposal by “holding off on insuring Illinois hospital bonds.” They also point out that hospitals may not be able to obtain the necessary legal opinions that are a condition to bond issuance because being able to opine that a hospital is in compliance with the law will be “nearly impossible.”
IHA concludes its March 2, 2006 statement with the following observation:
Providing access to health care for Illinois’ 1.8 million uninsured citizens is a complex challenge that requires the involvement of all stakeholders...state government, employers, insurers, and health care providers. HB 5000 imposes an untested, myopic, and flawed solution.
That observation is dead on. AG Madigan is proposing radical legislation without any public accountability. She has the data, but nobody can review, test, or evaluate it. That ain’t open government in our book. And that is what bugs us most about AG Madigan’s behavior.
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