Tuesday, June 19, 2012

Nonprofit Health Care vs. Wall Street Securitizations

The business of packaging debt and reselling tranches could remain tax free, while nonprofit, community hospitals become taxable.  The Illinois State Legislature passed a bill specifying levels of charity care for hospitals to remain tax exempt.  Illinois S.B.3261 requires for most nonprofit, community hospitals a:

Charitable discount of 100% of its charges for all medically necessary health care services exceeding $300 in any one inpatient admission or outpatient encounter to any uninsured patient who applies for a discount and has family income of not more than 200% of the federal poverty income guidelines.
That's free care.  How many uninsured people in Illinois are at less than 200% FPL?  Governor Quinn's news piece refers to an unsustainable Medicaid.  That's before PPACA adds another 30 million people to Medicaid rolls.  Might the state shift the cost of low income care further onto hospitals?

Consider what is universally tax free in the U.S., packaging and reselling debt through asset backed securities:.

.... (consider) principal types of asset-backed securities and the ways in which the issuer-level tax problem has been addressed.. In brief, such a tax may be avoided by using an issuer that is considered transparent for tax purposes and allocating its income to holders of ownership interests in the entity, by paying out income in the form of deductible interest on debt, or by moving the issuer offshore.
 Wall Street activities may remain tax exempt while community hospitals pony up.  It's a longtime vision for Senator Chuck Grassley (R-IA).  Who knew two Chicago Democrats would help Chuck's vision become reality.  That includes tax free political 527 plans.  Who benefits from tax free securitizations and political donations?  Might it be Chuck and friends?