Government-sponsored nonprofit health care may seem like a worthy alternative to the public option – but it doesn’t really guarantee lower costs for anybody.

Much has been made in this raging cacophonic health care debate about how there is no need or desire to emulate the Canadian or British health care systems, that what we need is an American way – which presumably means a mixed public-private system with a heavy emphasis on the latter. With an almost perfect storm of partisanship, corporate money and fearmongering coming together in Congress, chances for a purely public-run health care provider to come to fruition were always going to be slim at best.

What is evident is that now there is little chance of blowing back against the zeitgeist of health care reform – things will never be the same and justifiably so, as thousands of the tired, poor, huddled masses line up for days just to receive basic health care as if Los Angeles had been under siege.

Even the skeptics acknowledge that the time for reform – no matter how trivial or revolutionary – has come, even with the question of the public option still left unanswered. The Blue Dog Democrats and moderates will have you believe that the public option is wasteful and anti-competitive, and that creating nonprofit health providers with government funds would be far more productive.

Productive, that is, if you’re looking to maintain the status quo, or at least come as close to it as possible. A story in the Wall Street Journal last year revealed how Carilion Health System, a “nonprofit” health care provider in Roanoke, Virginia, has emerged to have a near-monopoly status in the region:

Carilion’s market clout is manifest in other ways. With eight hospitals, 11,000 employees and $1 billion in assets, the tax-exempt hospital system has become one of the dominant players in the Roanoke Valley’s economy. Its dozens of subsidiaries include businesses ranging from athletic clubs to a venture-capital fund.

The power of nonprofit hospital systems like Carilion over their regional communities has increased in recent years as their incomes have surged. Critics charge this is creating untaxed local health-care monopolies that drive the costs of care higher for patients and businesses.

The Feds have been trying to use antitrust legislation to combat the growing trend of hospital mergers, which have played an instrumental role in more than doubling the cost of health care in the last decade alone. In fact, only about 16 percent of hospitals in the U.S. claim a purely for-profit status, which leads us to believe that those in favor of a “nonprofit option” in lieu of a public one are really just putting lipstick on a pig – and a poor job of doing so at that.

In recent years, “nonprofit” health care providers have hardly been behaving like nonprofit organizations with a mission to serve, which led the IRS to launch a far-ranging investigation into the practices of nonprofit hospitals in 2006. The investigation asked questions ranging from whether hospitals denied care to those without insurance or provided charity care, and was intended to help determine if some of these nonprofit providers still deserved their tax exempt status based on how much they actually benefited their respective communities.

One of the criticisms that was highlighted in the results of the IRS report released earlier this year was the corporate-style level of executive pay at many of the 489 nonprofit hospitals examined. Top executives at these hospitals made an average salary of $490,000, though compensation packages reached into the millions.

The underlying problem here is that the terms of receiving 501(c) tax exemptions allow too much wiggle room for supposedly “nonprofit” organizations to act more like their for-profit counterparts. The diversity of budgets and revenue of organizations all grouped under the nonprofit label also makes it difficult – and perhaps unjust – to have just one level of tax exemption covering everything from big-city hospitals to rural clinics, a problem the report is keen to acknowledge.

Furthermore, there’s a lack of quantifiable guidelines about exactly what it means to provide services that benefit a community. While only about one-quarter of nonprofit hospitals provide enough uncompensated care to at least equal the amount of tax exemptions they receive, their levels of innovation and quality of care are often considered to be higher than purely for-profit health care providers.

Certainly, there are lessons to be learned from well-run nonprofit health care organizations. Having guidelines such as paying doctors a set salary instead of on a per-visit basis and being both an insurer and provider of care can only serve to increase accountability and quality of care. But any government-sponsored health care plan – “nonprofit” or otherwise – should contain more specific guidelines as to how care and costs will be considerably different than what exists today. Without locked-in measures that guarantee more effective spending to lower costs and enable those with preexisting conditions to participate, health care in this country will continue to smell like a pig – no matter how much lipstick you put on it.

- Kai Hsing