Elsewhere on this page, we publish a letter by Karen Heller of the Greater New York Hospital Association responding to an editorial in which we suggested that allowing for-profit hospitals in New York state might lead to more cost-effective care than the current nonprofit system. We questioned whether the $1.6 billion uncompensated-care figure cited by the hospitals was inflated. Ms. Heller writes, “If you had contacted the New York State Department of Health, you would have been told that the $1.6 billion figure reflects the actual cost of the services delivered and not a marked-up price for the services.”

Well, we took Ms. Heller’s suggestion and contacted the Department of Health. A department spokesman, Robert Kenny, told us that the Health Department provides $847 million a year in reimbursements to hospitals for the uncompensated care they provide. He said the total cost of uncompensated care is between 50% and 30% higher than this number because the department reimburses between 50 and 70 cents on the dollar.

By our lights, this means the hospitals inflate the total cost of the uncompensated care they provide by a whopping $847 million. The entire $1.6 billion that New York’s nonprofit hospitals supposedly spend on “uncompensated care” is not, in fact, uncompensated. Anywhere from 50% to 70% of the cost is compensated by the state government. This means New York’s nonprofit hospitals act more like government contractors than charitable institutions.

It’s true that the $1.6 billion figure isn’t based on the inflated prices charged to uninsured patients. Rather, the department bases its estimate of the actual costs of uncompensated care on cost reports submitted by the hospitals. The hospitals estimate “what they believe their actual cost was,” in Mr. Kenny’s words, as opposed to the prices they charge.

But it turns out that the “uncompensated care” statistic is even more inflated than we originally argued, since more than half of it is covered by a massive government reimbursement.