A rural hospital in Washington, located close to the Idaho border, is feeling the financial strain due to a law mandating free healthcare services for low-income patients, irrespective of their residency or immigration status.

Newport Hospital sits just a stone’s throw away from the Washington-Idaho state line and is more than an hour’s drive from Spokane, the nearest major urban center.

Justin Peters, the hospital’s interim CEO, shared with the Spokesman-Review that providing charity care to out-of-state patients over the past year has significantly impacted the hospital’s finances.

“Our margins are already razor-thin,” Peters explained. “Offering charity care to our local community is one matter, but extending it to individuals from other states puts considerable pressure on our resources.”

In 2025, the hospital’s expenditure on charity care surged by 43 percent compared to the previous year, with nearly half of these funds allocated to out-of-state patients. Notably, families of four earning up to $124,800 annually qualify for substantial discounts on healthcare costs at specific hospitals.

Charity care typically refers to complimentary or reduced-price healthcare provided to uninsured individuals who fall within a certain income range. While most states have their own regulations guiding charity care, federal laws apply in states lacking specific legislation.

Washington’s charity care law has been around since 1989 and for decades, hospitals could draw their own geographical limits for charity care. 

In 2022, state legislators passed a new law overhauling charity care and vastly expanding eligibility. The state Department of Health implemented it in 2023 and banned hospitals from drawing geographical limits, something not explicitly stated in the language of the statute.

Newport Hospital in Washington is struggling financially with the major increase in charity care it has provided in the last year

State law mandates that all Washington hospitals provide free healthcare to people under certain income limits, regardless of their residency or their citizenship status (Pictured: Hopsital workers in Seattle wheel a patient out of a COVID unit on May 7, 2020)

The Department of Health argued that the language of the statute now made it so that charity care eligibility can only be determined by income, not by where a person lives or even whether they are a citizen of the United States.

And the income restrictions put in place by the 2022 law make Washington one of the most generous states in the country.

And unlike many states where hospital financial assistance is largely discretionary, Washington now requires hospitals to reduce or eliminate out-of-pocket costs for patients under the income limits — even if they have insurance. 

In practice, a family of four with an income of less than $93,600 per year will have no out-of-pocket costs for a visit to a Tier 1 hospital – which refers to facilities within a large hospital system.

If that same family of four went to a Tier 2 hospital – generally considered to be a smaller hospital – they would get a 50 percent discount.

It is much easier for Tier 1 hospitals to eat the costs of providing charity care because they typically generate far more revenue than Tier 2 hospitals, often in rural areas or mid-sized cities with fewer patients and less complex procedures being offered.

For Tier 2 facilities such as Newport Hospital, this charity care law is directly eating into their bottom line.

State Representative Andrew Engell, a Republican, introduced a bill last month that would limit nonemergency charity care to people who live in Washington.

State Representative Andrew Engell, a Republican, wants to limit nonemergency charity care to people living in Washington to save rural hospitals money so they can keep operating

Engell said there was some disagreement from his fellow members over how his proposal was worded, but he told the Spokesman-Review he was hopeful he could get it passed next year.

‘The real concern for me that I was trying to fix is about Newport Hospital on the Idaho border,’ Engell said.

This issue is seemingly a bipartisan one, with state-level Democrats taking the position that other states should be providing more care to their residents so they don’t come over the border to Washington and burden the system.

‘This is another example of what happens with national politics at our state level,’ State Senator Manka Dhingra told the Spokesman-Review. 

‘Over and over again, what we are finding is that the state has to spend more resources taking care of people that should have access to health care in their own state.’

Idaho, for example, does not have a statewide charity care law and instead follows federal law. In practice, nonprofit hospitals must adopt financial assistance policies, but income cutoffs and discount levels are largely set by the hospitals themselves.

The inconsistency in Idaho’s system could be creating an incentive for low-income patients in the state to cross the border into Washington to get guaranteed discounts.

Hospitals in Washington are also worried that they’ll have to provide even more charity care after last year’s passage of President Donald Trump’s One Big Beautiful Bill Act.

Various analyses have shown the law will cause at least 10 million people to lose their health insurance over the next decade, largely due to Medicaid cuts and changes to Affordable Care Act marketplaces.