May 2, 2013

The Honorable Mike Gatto Chair, Assembly Appropriations Committee State Capitol, Room 2114 Sacramento, CA 95814 SUBJECT: AB 975 (Wieckowski/Bonta) - OPPOSE Dear Assembly Member Gatto: The California Hospital Association (CHA), on behalf of its more than 400 hospital and health system members, regrets to inform you of our opposition to AB 975 (Wieckowski/Bonta). This bill imposes vague and unrealistic standards on nonprofit hospitals. AB 975 is unnecessary and the latest iteration directly conflicts with provisions of the Affordable Care Act (ACA). This measure should be strongly considered for the Suspense File. Current Law Ensures Nonprofit Hospitals are Accountable Please consider these facts: • Current law already holds nonprofit hospitals accountable to ensure they operate under the requirements to receive tax-exempt status, and it already provides a strong remedy if a hospital does not operate as required. Current law also already requires full transparency by nonprofit hospitals. Community benefit plans are public documents available for inspection at any time. They include a local needs assessment and the programs to meet those needs. The plans are updated every three years to ensure they address issues in real time. The California State Auditor has concluded that nonprofit hospitals are complying with all applicable federal and state laws regarding their tax-exempt status. AB 975 supporters misrepresent the report, which did not directly call for any change to current law absent legislative prerogative.

AB 975’s Serial Unrelated Amendments Since its introduction AB 975 has faced bipartisan opposition. It was scheduled to have been considered in the Assembly Revenue and Taxation Committee, but new changes in what has become an ongoing series of last-minute amendments saved it from scrutiny and tough questions in that committee, and moved it to the Appropriations Committee. Multiple, unrelated amendments and legislative ‘committee shopping’ prove that AB 975 is not a genuine health care issue. That is why the California Hospital Association, SEIU-UHW, community groups, and health care providers from across the state have countered the attack with facts.

The Honorable Mike Gatto May 2, 2013

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Conflict with the ACA The recent amendments put California in direct conflict with federal guidelines of ACA. California’s current law was the model for the ACA’s community benefit and charity care guidelines, with state and federal laws now in close alignment. AB 975 breaks this bond with punitive and expensive mandates that no hospital can reasonably meet. Mistakes like those included in the fourth version of AB 975 severely compromise a nonprofit hospital’s ability to expand services, meet the needs of its community and comply with the ACA. Unrealistic and Expensive Mandates As you review the details of AB 975, consider the fact that the community benefits section is completely rewritten. Instead of the current system where communities collaborate with nonprofit hospitals to tailor a realistic community benefit plan, AB 975 now says that hospitals must address every identified need, regardless of cost and demonstrate that they are achieving measurable results. If a community, for example, has a challenge with juvenile obesity, the nonprofit hospital would be responsible for fixing that problem irrespective of any other factor. Aside from the incredible logistical challenges, the incredible cost associated with this effort would by itself be virtually impossible. This would be the standard for every community need. It’s expensive, unrealistic and beyond the scope of what a nonprofit hospital should be required to do. The Impact to Working Families and Access to Health Care At least four million Californians may be able to obtain health care coverage for the first time, meaning significant new demands for health care services. Hospitals are facing the challenge of ensuring there are enough beds and services, and health care professionals, to meet this demand. Now is not the time to play politics with California health care policy. AB 975 is a solution desperately searching for a problem for which none exists. It should be rejected. For all of the above reasons, we urge you to vote “NO” on AB 975 and respectfully urge that this bill be placed on the Suspense File. Sincerely,

Martin Gallegos Senior Vice President and Chief Legislative Advocate MG:tm cc: The Honorable Bob Wieckowski The Honorable Rob Bonta The Honorable Members of Assembly Appropriations Committee Debra Roth, consultant, Assembly Appropriations Committee Michelle Baca, consultant, Assembly Republican Caucus

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