Tax Exempt Status for Not for Profit Hospital
Let's assume a not for profit hospital provides $100 in uncompensated care, on the premise that this care is in return for no obligation tax-wise to the state and federal government. Let's also assume that no cost shifting occurs, that is, private insurance rates do not increase appreciably. I propose to model the impact of uncompensated care as an increase in the expenditures locally on all other goods and services, by the income category of the household most likely to receive the benefit. But I believe I should offset the gain to the area (in increased spending) by the loss of tax revenues to government. Is there a catch-all category for government, or do I have to break it down by non-defense, defense, etc?
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My understanding from your posts is that non-reimbursed care is being provided which is essentially being paid for by tax breaks. So there is economic activity created by the hospital which does have direct, indirect and induced effects; however, this is offset by income foregone by the local/state governments. There is a net effect. The loss of revenue by state and local government can be modelled by importing the state and local government non-education spending pattern and setting the activity level equal to the tax revenue foregone.0
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