The Shriver Brief : Poverty Law Commentary & Insights : Sargent Shriver National Center on Poverty Law : Affordable Housing, Healthcare Reform

The Dodd-Frank Wall Street Reform and Consumer Protection Act,  which passed in June 2010, aimed to provide oversight and new regulations to protect consumers from predatory financial practices. Among its many provisions, the so-called Durbin Amendment authorizes the Federal Reserve to regulate the fees that debit card issuers may charge retailers at the point of sale.

Plastic is king in American society, and debit cards play a significant role in today’s economy. The use of debit cards has grown more than any other form of electronic payment over the past decade, increasing to $37.6 billion in 2009.  Interchange fees from debit card purchases totaled over $16.2 billion.

On October 1, 2011, the final rule implementing the Durbin Amendment became effective. Since then, the interchange fees that issuers can charge are capped at 21 cents per swipe, however, issuers with assets under $10 million are exempt from this cap. Recent data show that fees for exempt institutions have stayed around 43 cents, about the same as they were back in 2009 before the law was enacted. This exemption expired April 1, and all institutions, regardless of size, will now be subject to the cap. In the meantime, fees at institutions that are covered by the regulations, dropped from 43 cents in 2009 to 24 cents in the fourth quarter of 2011, a 43% drop.

As stated under the law, issuers may only charge fees that are “reasonable and proportional to the cost incurred by the issuer,” which the Federal Reserve determined in its rulemaking is no more than 21 cents, plus 1 cent for fraud-prevention services. From the start, the financial industry has complained that the cap is too low. Yet, the Federal Reserve defended the cap last month saying it “acted within its discretion.” Nevertheless, the National Association of Federal Credit Unions (NAFCU) and eight other groups, which have opposed the Durbin Amendment from the beginning, recently filed an amicus brief arguing this point.  

While the banking industry may be correct that the fees are too low and should be raised, the bottom line is that consumers need protection. Thus, if the Federal Reserve ultimately raises the interchange fee cap, it should only do so to the extent that such an increase will be reasonable and proportional to actual costs, and even then the costs to consumers must be considered.   

This blog post was coauthored by Alison Terkel. 

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If your mom is anything like mine, she’s part doctor, part cheerleader, part chef, part justice of the peace, and all-knowing. Being a mother is a tough job (and one we can’t outsource).  However, things are starting to get a little better for mothers across the country. The United States just moved up six places in the annual Save the Children State of the World’s Mothers report – to the 25^th best country in which to be a mother.  Norway, Iceland, and Sweden take the top three spots, while Yemen, Afghanistan and Niger rank at the bottom. Our leap in the rankings was mostly due to educational improvements for mothers, but we still have improvements to make in many policy areas, especially health. For instance, we must face the sobering reality that a mother in the United States is fifteen times more likely to die of pregnancy-related causes than a Greek mother, and a child in the United States is four times more likely to die than a child in Iceland. We also lag behind in maternity leave policies, since the United States is the only developed country that does not guarantee paid maternity leave.  

Luckily for mothers, the Affordable Care Act is at work to improve maternal health! The Affordable Care Act cares for moms many ways, with more improvements on the way. 

Some provisions of the law are already helping mothers.

• Right now, the ACA mandates that most companies provide nursing mothers time and a private place to express milk, allowing mothers to return to work and still ensure their children enjoy the benefits of breast milk. While the benefits to the baby are numerous, mothers also benefit from breastfeeding, with decreased sick days and lower incidences of postpartum depression, obesity, and breast and ovarian cancers.        
• Children up to age 26 can now be covered on their parents’ insurance plans, creating peace of mind for parents of young adults. 
• Currently, free preventative services, like mammograms and cervical cancer screenings, help moms stay healthy for their families. Pregnant women can now also receive a screening for gestational diabetes.  

And there will be major improvements in August of this year!

• Beginning August 1 of this year, most women will have access to the full-range of FDA-approved contraceptives without co-pays or deductibles.  Contraception obviously allows women to choose when to become mothers, resulting in healthier parents, children and communities. Other benefits include a reduced risk of ovarian cancer, endometrial cancer, and osteoporosis. 
• Also beginning this August, nursing mothers will also receive nursing support, supplies, and counseling from their insurance companies when they give birth.

And looking to the future, 2014 will also bring great things for mothers!

• When the health insurance exchanges begin functioning in 2014, maternity coverage will be a mandatory component of insurance sold on those exchanges.

Mothers do so much work that goes unrecognized and un-thanked, so let’s make sure we do right by our 85.4 million mothers. The Affordable Care Act recognizes that healthy mothers are essential to raising the next generation of healthy Americans and works hard at providing them with the resources they need to do so.    

Watch out Norway—with the Affordable Care Act, we are coming for your title!

Happy Mother’s Day, Mom!

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Illinois’s state budget deficit still stands at over $13 billion, including over $6 billion in unpaid bills. The state’s unpaid public worker pension liabilities exceed $83 billion and this could reach an estimated $140 billion by 2030 if nothing is done to close this deficit. 

In March 2011 Governor Quinn signed the Internet Tax Law, Public Act 096-1544, or so called “Amazon Tax Law”, which requires online retailers that work with affiliates in the state to collect sales tax on items purchased by Illinois residents and businesses. Before this the law was enacted, online companies only had to charge sales tax if they had a brick and mortar location within the state. For example, Sears was required to collect taxes because it is both headquartered and also has retail stores in Illinois. Amazon.com, on the other hand, did not have to collect sales taxes because it had no physical presence in the state.  By expanding the definition of “physical presence” beyond warehouses, factories and offices, and including affiliate companies (i.e., companies that are typically associated with coupon website generators), the state now has the authority to require online sellers to collect these sales taxes.  

Illinois was also one of the first states to offer an amnesty program to allow residents to retroactively pay sales taxes on items they had previously purchased online. However, the program only brought in $10 billion of the estimated $150 billion that potentially could have been paid. 

Illinois is not alone in its efforts to collect sales taxes on Internet sales. New York was the first state to pass legislation requiring online retailers to collect sales tax in 2008, and North Carolina and Rhode Island followed suit in 2009. States such as Iowa, Maryland, Mississippi, New Mexico, and Tennessee and many others have also introduced similar legislation. California even cut a deal with Amazon.com where the company agreed to drop a lawsuit challenging the pending legislation in return for the push back of the tax collection date by one year. 

Although the Illinois law could have brought in millions of dollars in tax revenue for the state, dramatically decreasing the budget deficit, it was recently ruled unconstitutional by Cook County Circuit Judge Robert Lopez Cepero. The complaint, which was filed by the Performance Marketing Association against the Illinois Department of Revenue, alleged that the law violated the Commerce Clause and the Federal Internet Tax Freedom Act (IFTA). The suit also claimed that the tax would be burdensome on Internet retailers, which was the defense for catalogue companies’ years ago, but thanks to technology is no longer a valid excuse. The judge held that the law was superseded by the Internet Tax Nondiscrimination Act, which prohibits taxes on electronic commerce until the end of 2014, and was therefore unconstitutional. 

When the law initially passed Amazon cut ties with all of its Illinois-based affiliates, and it is unclear whether or not it will enter into new contracts with such affiliates.  

While Internet retailers are applauding the ruling, the state is still reeling from the economic downturn and trying to climb out of a deepening budget deficit. In response to the ruling, the Department of Revenue said “We respectfully disagree with the court's ruling and are reviewing our appeal options with the Attorney General's office, and we need to protect ‘brick and mortar’ stores from an unlevel playing field and we need to recoup some of the estimated $153 million that was not paid by online merchants prior to the law being implemented.”

All over the country, legislators are taking steps to ensure that online consumers pay state sales taxes during these times of economic uncertainty. Illinois may have hit a roadblock, but advocates will not stop fighting big business to get the revenue that the state is entitled to.  

For more information on the “Amazon Tax Law” see our previous Shriver Brief posts here and here. 

This blog post was co-authored by Alison Terkel.

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Illinois Governor Pat Quinn recently offered a proposal to increase the cigarette tax by one dollar. This proposal is a triple win for the state−the tax would be a budget win, a health win, and a political win. Research shows that cigarette taxes raise revenues, decrease the negative health effects associated with smoking, and are widely supported by voters across the spectrum. 

Illinois’s Medicaid program is facing deep and painful cuts, and raising the cigarette tax to help pay for Medicaid seems like a no-brainer. The U.S. Centers for Disease Control and Prevention estimate that smoking-caused health costs total $10.47 per pack sold and consumed in the U.S.  $10.47 a pack! For a pack-a-day smoker, that adds up fast. In fact, it adds up to $3,811 in yearly health costs for that smoker. Illinois spends nearly $5 billion treating smoking-related illness, and $1.8 billion of that is paid for by the Medicaid program. 

This tax will incentivize people to quit smoking or not to start at all, but the decrease in consumer numbers will be more than offset by the dollar tax increase. From 2002-09, twelve states increased their cigarette taxes by one dollar or more. Every single one of these states saw both a decline in sales (indicating fewer consumers were smoking) but also a spike in revenue ranging from 36% to 193%. There will certainly be people on the margins who can evade the tax by purchasing outside of Illinois, but most smokers will either quit or pay the increased costs of smoking. Currently, Illinois’s cigarette tax rate is only 98 cents a pack—the 18^th lowest state cigarette tax, with Massachusetts being the highest at $2.51 per pack. Professor Frank Chaloupka of the University of Illinois estimates that a $1 per pack cigarette tax increase in Illinois would raise $377 million.  

Although opponents of the law claim that it will decrease overall revenue as people decrease their purchases, Illinois has enjoyed substantial revenue increases every time it has raised the tax on cigarettes. Nor will Illinoisans simply leave the state in droves to purchase their cigarettes.  Professor Chaloupka notes that when Illinois last increased its cigarette tax rates, the state’s cigarette revenues increased over 38%, while increases in neighboring low-tax state of Missouri were only 6.4%.  

But the benefits of the tax include more than just the money. Tobacco’s burden on statewide health and budget concerns is widespread: in addition to costs for ailments directly attributable to tobacco use, like lung cancer or emphysema, tobacco use also increases state expenditures via decreased productivity and premature deaths. 

A $1 per pack tax increase would actually increase the health of Illinoisans by changing people’s smoking habits. The tax is expected to prevent 78,000 young Illinoisans from taking up the habit, encourage almost 60,000 Illinoisans to quit, and prevent up to 59,000 deaths caused by smoking. Young people in particular are very price sensitive; an extra dollar is expected to prevent thousands of young people from paying the price to get hooked in the first place.

Plus, this tax has amazingly high support from Illinoisans. Seventy-four percent of Illinois voters support a $1 increase per pack to pay for the associated health costs and to reduce the budget deficit. Without the revenue raised from the cigarette tax, the State of Illinois would have to look to other areas in the budget to make up the shortfall. Governor Quinn stated "[I]f we don't succeed in the area of raising the price of cigarettes, then there will be pressure on cutting reimbursements or, perish the thought, trying to reduce education. I think that would be a very bad way to go."   

I agree with the Governor and I bet you do, too. Taxing cigarettes to help pay for the health consequences they cause or cutting important services? This triple-win seems like a clear-cut choice to me.  

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When patients seek emergency medical treatment, they expect to speak to doctors and nurses—not debt collectors. But hundreds of documents released last week by the Minnesota Attorney General reveal that at least one medical debt collector, Accretive Health, has been working on the front lines in hospitals, often demanding that patients pay before receiving medical treatment.

According to the New York Times, the documents show that the embedded debt collectors may appear to be hospital employees and may even discourage patients from seeking emergency care. They follow scripts, just like debt collectors on the telephone, only they speak to patients in person at a time when they have immediate medical needs.

In addition to its scrutinized work at Fairview Health Services in Minnesota, Accretive Health holds contracts for “revenue cycle operations” with Henry Ford Health System in Michigan, Intermountain Healthcare in Utah, and Catholic Health East, which runs hospitals in eleven states. All of these hospital systems are nonprofit corporations, meaning that the Internal Revenue Service allows them to operate tax-free in exchange for providing certain benefits to the communities they serve. The tax savings realized by nonprofit hospitals aren’t peanuts—$4.3 billion in 2002 alone. Nonprofit hospitals make up less than 2 percent of nonprofit organizations, but they receive 41 percent of federal nonprofit tax benefits.

Many nonprofit hospitals meet their “community benefit” obligations by providing charity care, also known as “financial assistance,” which helps fill a gap in health coverage for many uninsured and underinsured Americans. But measuring and monitoring hospitals’ community benefit efforts has been a challenge. In fact, in 2005, the IRS noted the prevalence of abuse of the amorphous “community benefit” standard, saying it had difficulty distinguishing between nonprofit and for-profit hospitals in their operations.

As Corey Davis of the National Health Law Program and Jessica Curtis and Anna Dunbar-Hester of Community Catalyst explain in their recent article in Clearinghouse Review, Congress responded to this abuse by including in the Patient Protection and Affordable Care Act amendments to sections of the tax code that govern nonprofit hospitals. These changes protect low-income and self-pay patients through new billing and collection standards that nonprofit hospitals must follow to maintain their tax-exempt status. Unlike some parts of the new health care law, these changes went into effect immediately. According to Section 9007(a) of the Patient Protection and Affordable Care Act, nonprofit hospitals now must:

• refrain from engaging in “extraordinary collection actions” unless and until they have made “reasonable efforts” to determine if a patient is eligible for financial assistance,
• limit charges for emergency or other medically necessary care for patients qualifying for financial assistance to the lowest amount charged to insured patients, 
• refrain from applying “gross charges” to patients who qualify for financial assistance, 
• have a written policy to provide emergency medical care regardless of a patient’s ability to pay, and
• have a written financial assistance policy describing eligibility criteria, whether free or discounted care is available to low-income patients, how the hospital calculates charges, how it will publicize financial assistance, and how patients can apply for financial assistance.

To monitor and enforce compliance with the new law, the IRS recently revised the Schedule H form that nonprofit hospitals must file with their Form 990 tax returns. Schedule H, the vehicle for reporting community benefit activities, now includes questions reflecting the new requirements from the Patient Protection and Affordable Care Act.

But the IRS isn’t the only one paying attention to this issue. After the Minnesota Attorney General’s report, a California congressman asked for an investigation of Accretive Health to probe whether its practices violated other federal laws. Last week a North Carolina newspaper ran a weeklong series highlighting questions around hospital profits, and NPR’s All Things Considered featured a story on nonprofit hospitals’ “stinginess” with charity care.

Whether the new health care law will prevent scenes such as those described in the New York Times article from recurring in nonprofit hospitals remains to be seen. Davis, Curtis, and Dunbar-Hester note in their Clearinghouse Review article that the Treasury Department is developing regulations that should define exactly what constitutes an “extraordinary collection action” and will elaborate on other sections of the health care law that could curb such behavior. By anyone’s definition, embedding debt collectors among medical staff seems, at a minimum, “uncharitable.”

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There’s no debating that Illinois could use some healthcare help. The state is ranked the 29^th healthiest state—not the absolute bottom, but nowhere near the top. A recent poll also listed Illinois as the 31^st most obese state and 25^th for diabetes—not exactly stellar statistics. The same source noted that ,while Illinoisans benefit from high usage of early prenatal care and a comparative availability of primary care doctors, the state faces severe challenges, including prevalent binge drinking, high pollution levels, and a high rate of preventable hospitalizations. 

These problems are not insurmountable. However, we all know the state is in a budget crisis.  Governor Quinn has announced a plan to drastically reduce spending and raise revenues for Medicaid. We understand the state budget crisis, but obviously, people in Illinois need medical services, and the state is currently struggling to provide them.  

Luckily, the Affordable Care Act is there to throw a lifeline out to health service providers and state agencies and especially to the real people who need healthcare. Thanks to the ACA, the states will spend about $90 billion less on healthcare with the implementation of the law than they would have spent without it. Thousands of people will still be getting the increased services mandated by the Act, but much of the funding will be federal rather than state. 

It’s important to note that these benefits are not in the distant future; Illinoisans from birth to retirement are already benefitting from the Affordable Care Act.  

Assistance from the ACA starts when kids are young; the ACA has already provided:

• $10.3 million for Maternal, Infant, and Early Childhood Home Visiting Programs. These programs bring health professionals into individual homes to connect families to the services they need to raise happy and healthy kids. These services include prenatal care, pediatric care, education, and parenting skills.   
• $191,000 for Family-to-Family Health Information Centers, organizations run by and for families with children with special health care needs.
• $4.9 million for expanding and improving school-based health centers. Illinois funds 38 school-based clinics that provide screenings, physicals, exams, and more to students.
• $555,000 to support the Personal Responsibility Education Program, which educates youth on abstinence and contraception to prevent teen pregnancy and sexually transmitted infections, including HIV/AIDS.

The ACA is also spending money putting people to work at improving healthcare! Illinois has received:

• $400,000 to support the National Health Service Corps, by assisting Illinois in repaying educational loans of health care professionals in return for their practice in health professional shortage areas. This program is designed to help medical, dental, and mental health providers who choose to work in needy communities to repay their student loans. This is a particularly critical program because these professionals provide medical and dental care that individuals desperately need; the program allows professionals to provide care to needy individuals without worrying about their reimbursement rates or their ability to pay back debt.
• $5.1 million for health professions workforce demonstration projects. This program is designed to supplement the workforce in areas that are either already short-staffed or expected to be in the future. The Illinois Workforce Investment Board’s report noted  shortages of both registered nurses and licensed practical nurses in Illinois. 

And the ACA helps elderly Illinoisans, too!

• $457,000 to support Aging and Disability Resource Centers (ADRCs). ADRCs help seniors and people with disabilities understand long-term care options including community care. 

So far, Illinois has received $170.7 million in grants due to the Affordable Care Act.  These grants are creating tangible improvements to the physical and fiscal health of our state.  Thanks, Affordable Care Act!

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For over a year, three minor criminal offenses have kept Ms. K – a single working woman with mental health disabilities – out of housing that would otherwise bring her closer to both her daughter and free transportation to work.  Considering that her most recent offense – theft of a library book – took place over four years ago, it is no wonder that Ms. K’s employer entrusts her to handle confidential financial documents. And yet, her criminal record remains a relentless obstacle to federally subsidized housing.  

To help people like Ms. K, the U.S. Department of Housing and Urban Development (HUD) has taken the first steps toward what advocates hope will be a long-term plan to increase housing access for people with criminal records.  In two letters issued over the past year (one last June and the other last month), HUD Secretary Shaun Donovan reminded public housing authorities and project owners of the discretion they have to admit people with criminal records in the federally subsidized housing programs.  Contrary to popular belief, a person is not barred from these programs simply because of a past criminal record.  Rather, as Secretary Donovan recognized, “people who have paid their debt to society deserve the opportunity to become productive citizens and caring parents, to set the past aside and embrace the future.”   

These reminders are sorely needed, as the Shriver Center’s “When Discretion Means Denial” report has shown. For example, more than half of the written admissions policies in Illinois gloss over the fact that applicants could—and in some cases, have the right to—present mitigating circumstances after being denied based on criminal history. Additionally, PHAs and project owners do not consistently follow HUD regulations requiring them to consider the time and nature of a public housing applicant’s conduct.  

Noting that upwards of seven and half a million people leave prisons or jails in the United States each year, Secretary Donovan acknowledged that many intend to return to their families, some of whom reside in federally subsidized housing.  Policies that ban people with criminal records from these housing programs not only prevent family reunification, but they also put people at greater risk of recidivating, thus straining the community.

To prevent these results, Secretary Donovan urged PHAs and project owners to engage in thoughtful consideration of various factors. In particular, he noted, these housing providers should “seek a balance between allowing ex-offenders to reunite with families that live in HUD subsidized housing, and ensuring the safety of all residents.”  

To make this type of balancing a reality, however, HUD needs more than a strongly worded letter. HUD should take active steps to ensure that discretion does not become synonymous with denial.  For instance, PHAs and project owners need specific guidance on the limited value of relying on arrest records or unreasonably long look-back periods. This is especially important considering the significant risk that use of these screening devices violates the Fair Housing Act because of their disparate impact on minority applicants.  Without additional affirmative steps, hard-working people like Ms. K will not be able to access the housing they need to pull themselves away from their past and out of poverty.

This post was coauthored by Shannon Flaherty.

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With 35.7 percent of America’s adults and one third of America’s youth qualifying as overweight or obese, we’re all getting a lot of advice about how we should be eating. This question becomes particularly tricky for low-income Americans who receive food assistance through the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as food stamps. Traditionally, SNAP recipients have been restricted from using their benefits for alcohol, tobacco, household products (i.e., cleaning products or pet food), medicines, prepared food, and restaurant meals.

There is one major exception to the restaurant meal restriction, however. As Barbara Jones described in her recent Clearinghouse Review article titled Should States Allow Poor People to Use Supplemental Nutrition Assistance Program Benefits at Fast-Food Chains?, the U.S. Department of Agriculture’s Restaurant Meals Program allows elderly, disabled, and homeless SNAP recipients to use their benefits in restaurants. Fast-food restaurants would like to receive the extra revenue provided by the Restaurant Meals Program, but only a few states currently allow SNAP participants to use their benefits at fast-food restaurants. 

Some anti-hunger advocates argue that Restaurant Meals Program participants should be able to spend their benefits at fast-food outlets because many low-income Americans—particularly homeless ones—lack the food preparation and storage space necessary to cook for themselves. Moreover, some low-income communities only have fast-food restaurants and do not have any supermarkets. In these "food deserts," fast food might be the only option for many people.

Health experts argue against expanding the Restaurant Meals Program to include fast-food outlets, citing the many diseases linked to fast-food consumption. In fact, many of the diseases related to fast-food consumption (diabetes, hypertension, and cardiovascular disease) are pervasive in the disabled and elderly populations to begin with. Unsurprisingly, many advocates scoff at the idea of allowing people to use SNAP benefits to eat food that is dangerous for their health.

The Restaurant Meals Program is only one strategy being used to help feed hungry Americans. Communities across the country are trying to develop alternative programs that will increase low-income Americans’ access to healthy food. From farmers’ markets to urban gardens, creative advocates are thinking of new ways to help low-income Americans eat healthfully. That’s not to say that federal, state, and local governments are not thinking outside the box as well. The New York City Department of Health’s Healthy Bodegas Initiative is trying to increase the amount of healthy options in New York City’s food deserts, and the Robert Wood Johnson Foundation recently awarded $12 million to the New Jersey Food Access Initiative.

Clearinghouse Review will explore innovation and conflicts related to food and hunger policy in its 2012 special issue, which will be published in the fall. With articles about SNAP benefits, low-income seniors’ access to food, fairness in food production, using food banks effectively, and many other topics, the 2012 special issue of Clearinghouse Review will be a must-read for advocates looking for new ways to help low-income Americans feed their families. 

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This post is part of a weekly “Did You Know” blog series that highlights important, but not well known features of the health reform law about prevention, wellness, and personal responsibility for our health. 

Did you know that the Affordable Care Act contains preventive health provisions that will improve the health of Medicaid recipients and help control costs?

If you’ve been tuning in to our weekly blog series on preventive health measures in the Affordable Care Act, you are well-aware of the many wonderful preventative care provisions that the national health reform law has set in motion. These measures range from community and nationwide preventive and public health programs to timely reforms in the private health insurance market and Medicare that are increasing access to affordable coverage and preventive health care services. What you may not know about are the many important initiatives the ACA is putting to work to prevent chronic diseases among the Medicaid population. These programs are improving the health of vulnerable populations and saving money for the Medicaid program. 

Today, chronic health conditions like Type 2 diabetes, heart disease, stroke, and cancer combine to cost our nation billions of dollars in health care expenditures annually and account for 70 percent of all American deaths each year. Medicaid, the second largest health insurer in the United States, insures one-fifth of Illinois residents. The program covers a population that is disproportionately affected by chronic health conditions, and is certainly picking up its share of the costs for treating and managing preventable chronic diseases. Treatment and management of chronic diseases are crucial to controlling Medicaid costs and health, an important point to remember as budget cuts loom in Springfield. It has been proven that for every dollar spent on effective preventive and public health initiatives, $5.60 is saved.

Take a look at just some of the several steps the ACA is taking to cut unnecessary health care costs for the Medicaid program and help low-income individuals and families stay ahead of costly chronic health conditions:

• The Affordable Care Act is increasing access to preventive health care services for Medicaid recipients at no extra cost to recipients or the states. Access to basic preventive health care services is critical for preventing chronic health conditions, and will save individuals as well as the Medicaid program a lot of money if states choose to provide these services. Starting on January 1, 2013, the federal government will provide states with a one-percent increase in federal matching rates for the specified expanded set of preventive health services.
• The ACA is increasing access to primary care physicians by boosting Medicaid payments to primary care providers from January 1, 2013, to the end of the 2014, with the increase paid for by the federal government. Payment rates will rise to match Medicare rates during this time period, incentivizing primary care physicians to take on Medicaid patients and, in the end, getting more Medicaid recipients the basic preventive health care they need.
• Among many other wonderful things the ACA is doing is the effort to help people quit smoking and live healthier lives. The health reform law is requiring states’ Medicaid programs to fully cover counseling and pharmacotherapy services for tobacco cessation for pregnant women. Healthy pregnancies lead to healthy babies and a head start for preventing costly chronic health conditions down the road.
• The ACA is providing grant money for states that participate in the Medicaid Incentives for Prevention of Chronic Diseases Program, which began in January of 2011. States receiving grants must develop initiatives that provide incentives to Medicaid recipients who participate in a healthy lifestyle program that addresses chronic disease prevention goals. The Medicaid Incentives Program will evaluate the effectiveness of the states’ initiatives and analyze the changes in health risk and outcomes, with the goal of improving health and lowering health care costs.
• Finally, effective January 1, 2014, the Affordable Care Act is expanding the Medicaid program to cover an additional 16 million people (700,000 of them in Illinois) who are uninsured today by changing the standards for eligibility to include almost all persons living at or below 138 percent of the federal poverty level. The states will not have to foot any part of the initial bill for the “newly eligible” Medicaid population; the federal government is covering 100 percent of the cost until 2017; after that, federal payments will slowly decrease to 90% of the cost by 2022. Recent research shows that newly covered individuals seek cost-effective primary care more often, use emergency room and in-hospital admissions less, and, in effect, cut health care costs for everyone.

By putting effective preventive health initiatives to work for the Medicaid program, the Affordable Care Act is making the second largest health insurer in the United States more cost-effective, saving taxpayers money, and improving the health and well-being of millions of Medicaid recipients. For more on what the ACA is doing for preventive health, check out the Shriver Center’s “Did You Know” blog series online, or visit healthcare.gov.

This blog post was coauthored by Rachel Gielau.

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Last week, House Republicans approved a budget plan titled The Path to Prosperity: A Blueprint for American Renewal.  In his introduction to the budget plan, House Budget Committee Chair Paul Ryan argues “[t]he social safety net is failing society’s most vulnerable citizens and poised to unravel in the event of a spending-driven debt crisis.”  Unsurprisingly, the Republican budget contains many cuts to the social safety net, including cuts to the Supplemental Food Assistance Program (SNAP), formerly known as the Food Stamp Program.  The Ryan budget would cut 17 percent of the SNAP budget over ten years, beginning in fiscal year 2013. 

Despite the draconian nature of the SNAP cuts, the Ryan budget proposal is notably short on details regarding how exactly the cuts would be structured.  The only concrete proposal the Republicans offer is to convert the SNAP program into a block grant “tailored for each state’s low-income population” beginning in 2016, with benefits “contingent on work and job training.”  Block grants are fixed sums of money that the federal government gives to the states. These grants are unresponsive to changes in need and fail to provide a stimulus during economic slowdowns.

It is worth reading some of Ryan’s critique of SNAP in detail. Ryan acknowledges that SNAP “serves an important role in the safety net by providing food aid to low-income Americans,” but criticizes the program’s growth.  Ryan writes:

“Enrollment grew from 17.3 million recipients in 2001, to 23.8 million in 2004, to 28.2 million in 2008, to 46.6 million today.  According to the U.S. Department of Agriculture, “The historical relationship between unemployment and SNAP caseloads diverged in the middle of the decade … As the unemployment rate fell 1.4 percentage points between 2003 and 2007, SNAP caseloads increased by 22 percent.” The trend is one of relentless and unsustainable growth in good years and bad.  The large recession-driven spike came on top of very large increases that occurred during years of economic growth, when the number of recipients should have fallen.”  

According to Ryan, the “unsustainable growth” in SNAP participation has been driven by the program’s structure. In Ryan’s view, because states receive money in proportion to how many people they enroll, they have an incentive to enroll as many people as they can, with no incentives to make sure that SNAP recipients are working or participating in job training programs.

Let’s unpack Ryan’s assertions.  First, where is Ryan getting his numbers?  His numbers describing the relationship between unemployment and SNAP caseloads come from a March 2012 article titled ”What’s Behind the Rise in SNAP Participation?” in the U.S. Department of Agriculture’s magazine, Amber Waves.  Ryan’s quotation from the article is selective, to say the least; immediately after the language Ryan quotes describing the decline in unemployment between 2003 and 2007, the authors write that during the same time period, “[t]he number of people in poverty rose by 4 percent, indicating that economic need remained high even as unemployment declined.” 

But Ryan left that part out.

Second, do the article’s authors come to the same conclusion that Ryan does?  Not really.  It is true that, over the last decade, several pieces of legislation allowed states to be more flexible in how they administered SNAP.  As the states improved their application processes and it became easier for people to apply, more people participated in the program.  But there have also been changes in federal policy that have increased SNAP participation. As the Amber Waves authors note, several agricultural bills expanded categories of exempt assets—allowing people with retirement and educational accounts, as well as car owners, to receive SNAP benefits. Ryan also ignores the 2009 increase in benefits that was a part of the American Recovery Reinvestment Act of 2009—an increase that was always intended to be temporary and will expire in November 2013.

As the New York Times pointed out in an editorial about Ryan’s budget plan, “[a]lready, most people who get SNAP benefits use them up in the first two weeks of a month, and many turn to food banks by month’s end. Cutting benefits so sharply would lead to a significant increase in hunger, particularly among children, which would quickly create dangerous ripples through the health and education systems.” Indeed, almost half of SNAP recipients in fiscal year 2010 were children. That fact might be particularly important in Ryan’s analysis. After all, children don’t vote.

The Center on Budget and Policy Priorities has excellent resources for advocates concerned about the Ryan budget’s impact on SNAP, including a comprehensive analysis of the budget’s effects on SNAP recipients and a table describing the cuts’ state-by-state impact.  For example, in Ryan’s home state of Wisconsin, 844,000 people are currently scheduled to receive SNAP benefits in 2013.  That’s 844,000 people who would feel the belt-tightening effect of these cuts.

Clearinghouse Review: Journal of Poverty Law and Policy recognizes the importance of SNAP to legal aid lawyers and other advocates for low-income people, which is why the Review is dedicating its 2012 special issue to hunger and food insecurity.  Historically, the Review has prioritized helping advocates stay current with trends in SNAP advocacy.  The Review recently published articles about the use of SNAP at fast food restaurants and the legality of subjecting participants to new identification requirements such as fingerprinting.  The 2012 special issue will examine SNAP’s past, present, and future, as well as physical, employment-related, and environmental aspects of low-income communities that limit access to nutritious food and affect people’s overall health.  Look for the 2012 special issue of Clearinghouse Review in the fall. 

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The Consumer Financial Protection Bureau (CFPB) is well on its way to exercising its full power under its newly confirmed director Richard Cordray. Although the CFPB has been active since July 2011, it was until it had a confirmed director that it could exercise jurisdiction over nonfinancial institutions, payday lenders and other fringe financial markets.  

One new initiative the CFPB launched last week is the “Ask CFPB” page where consumers can post questions and read answers to 350 basic financial questions in categories such as credit cards, mortgages and vulnerable populations. This database will help further the CFPB’s mission to promote financial literacy and engage consumers on how to better protect themselves from fraudulent and predatory financial services and products. The answers, which are easy to understand and are written in a simple, concise language, also includes definitions, explanations, and situations in order to educate consumers about financial products and services. The page is interactive and users can rate whether the answers were “helpful”, “too long,” or “confusing.” 

Another step the CFPB has taken to improve consumer protection is filing its first annual report to Congress on complaints and enforcement actions under the Fair Debt Collection Practices Act (FDCPA). Complaints about debt collectors totaled over 27% of all the complaints received by the FTC in 2011. The FDCPA was created to protect individuals from abusive practices in the debt collecting industry; however, the market has changed substantially since its enactment 35 years ago. Players such as debt buyers and collection law firms have entered the scene and technological advances allow collection firms to use more sophisticated methods to identify and reach debtors. According to the report, approximately 30 million individuals, or 14% of American adults had debt subject to the collection process.  

To address the rise in debt collection complaints the CFPB has proposed a rule that would cover debt collectors with more than $10 million in annual receipts from debt collection activities. The CFPB estimates that this rule would cover 175 firms that collect over 63% of the annual receipts from debtors. The CFPB is in the process of reviewing over 10,000 comments from the public, including advocacy groups, elected officials, trade groups and consumers on the proposed rule and will issue the final regulations shortly. In the meantime, consumers can also turn to the “Ask CFPB” page for answers about debt, including what times debt collectors can and cannot call your home, what information debt collectors are required to give you and are forbidden from giving to others. 

This blog post was coauthored by Alison Terkel.

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Illinois Governor Quinn and the state General Assembly are proceeding on a track to make $2.7 billion in cuts to the Medicaid program in the state’s budget for July 2012 thru June 2013. That’s a huge percentage of the Medicaid budget, and Medicaid is nearly 1/3 of the state budget. As Governor Quinn’s Senior Health Advisor Michael Gelder said of the budget crisis: “I'd say 'inconceivable,' but we have to begin to conceive this.”

Not everything about Medicaid is on the table. Under the Affordable Care Act’s “Maintenance of Effort” requirements, Illinois cannot alter the eligibility requirements for Medicaid and CHIP by changing who is eligible or by making it more difficult for those people to apply and be approved. The state is also not allowed to touch the mandatory services set out by the federal government, which include services like outpatient care, X-rays, children’s vaccinations, and pediatrician visits. 

Of course, there are some reductions still available to the states. States are permitted to reduce optional benefits. The Illinois Department of Health and Human Services (IDHHS) has issued a list of legally possible cuts to the program. Although items like fraud reduction and correcting clerical errors may save the state millions, the real money is to be found in cutting other pieces of the Medicaid program. Or is it?

Cuts are not easy to make, and making cuts in something as complex as Medicaid is not quite the same as cuts to the Department of Natural Resources (although for the record, I love the DNR!). But when the DNR’s funding is cut, the beavers and deer don’t show up at the hospitals as emergency patients and incur huge bills.  

As legislators examine the Medicaid program, they need to be aware that health care hangs in a delicate balance, like a mobile dangling over a child’s crib. When you pull on one string, the whole system wobbles.   

For example, eliminating dental coverage for adults would save $51 million initially. Great news for Illinois, right? Of course, adults with severe dental issues usually end up in the emergency room, costing the state much more money than preventative care would have cost. In fact, a presentation to Illinois legislators by Joy Wilson of the National Conference of State Legislatures noted: “Most states that cut adult dental care — a Medicaid option — quickly reinstate the program, because untreated dental problems too often lead to more costly hospitalization, boosting states’ Medicaid costs.”

Another example would be eliminating pharmaceutical benefits from Medicaid. The program spends more than $1 billion annually covering prescriptions for 2.7 million Illinois residents. Seems like an easy place to trim some fat, right? Wrong. Look a little farther down the line and think about what happens when people don’t get vital medications like blood thinners, asthma inhalers, and antipsychotics. Those people end up extremely ill and with nowhere to turn except the already overcrowded emergency rooms. 

The state also spends $100 million on hospice care, and we could cut that. Of course, hospice is a program for individuals who have significant medical issues and are approaching the end of their lives. If these individuals can’t be cared for at home (and remember, they are in severely declining health), they will end up in hospitals. Since hospital care is a mandatory service, the Medicaid program will still be responsible for these patients, just in a less comforting and cost-effective setting.  

Another option is cutting the rates paid to providers. According to IDHHS’s list, a 6% rate cut would save the state $550 million. But some hospitals say a 6% rate cut would push them out of business. We also need to consider the fact that the federal government matches certain Medicaid expenditures. Cutting spending in these areas is a double whammy, as it may not only increase spending down the line, it will actually cut the funds coming into Illinois right now.     

When Ms. Wilson recently addressed the Illinois Senate, she told them that the desired quick reduction in Medicaid costs was a daunting task. She explained that other states have taken two years to make similarly substantial reductions. Wilson also told the Senate Committee of the Whole: "Over a year or over two years, those are hard numbers to get out of the Medicaid program as it's currently constituted. It is very hard to get savings in the Medicaid program in real time. It just is.”  

Significant reforms in the Medicaid program were enacted last year, but it takes time to improve such a complex system. Preventative care programs and coordinated care programs will save the state money, but they are slower to create savings than the quick fix of cutting a few million dollars from programs that provide medical care to torture victims and hemophiliacs. It’s wrong to look at cuts in the Medicaid program as the solution to Illinois’ budget woes—Medicaid improves health, creates jobs, and brings federal dollars into the state

Ultimately, legislators should consider slowing down in their rush to squeeze all the possible “savings” (many of which may in fact cost more in both dollars and suffering) from the Medicaid program this year. This debt was certainly not created in a year, and it’s only logical that it might take more than one year to dig our way out from underneath it. Reductions in spending are certainly possible, but the Illinois legislature needs to proceed with caution to ensure that the Medicaid program is balanced, or it risks bringing the whole mobile crashing down on the baby.  

Future blogs will offer a more detailed picture of Illinois medical assistance program and cover developments in the General Assembly on funding it. 

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In 2004, Wal-Mart began installing “Money Centers” for shoppers to cash checks, pay bills and make wire transfers.  None of these products, however, help unbanked customers gain access to bank accounts and avoid unnecessary fees. 

Recently, Wal-Mart launched another new program to compete with online giant, Amazon, that, to no surprise, does nothing to benefit the unbanked except lure them into buying more Wal-Mart products.   Amazon was trumping Wal-Mart in online sales due to lower prices and the ability to avoid paying sales taxes in some states. The new initiative, “Pay with Cash,” is targeted at customers without a credit card who wish to shop online.  Under the program, consumers can select items from Wal-Mart’s website then pick them up at their local Wal-Mart store and pay with cash. The program, which goes live next month, is targeted at the 20% of Wal-Mart shoppers who do not have bank accounts or credit cards and are currently unable to online shop.  

Wal-Mart is also trying to compete in the rapidly evolving consumer payment market where new technologies allow customers to “scan and scram,” meaning they scan a bar code of an item at a Wal-Mart, or any other store, and are able to see where it is sold cheaper, most likely online.  Amazon even offers its own application, “Price Check” to entice brick-and-mortar shoppers to make purchases online. 

While Wal-Mart may be helping streamline the process of online shopping for the unbanked, the company is not doing them any favors when it comes to access to mainstream financial services and inclusion. To the contrary, Wal-Mart is making it easier for people to stay unbanked, rack up high fees in the fringe financial system, and miss out on building assets and credit, which is crucial in getting ahead in today’s economy. 

Initiatives such as BankOn USA exist to meet the need that Wal-Mart and others like it are ignoring.  In BankOn programs, financial institutions partner with community organizations to provide low-cost checking and savings accounts along with financial education in order to bring the un/underbanked into the financial mainstream and prepare them for success.  While Wal-Mart’s “Pay with Cash” program may help it remain competitive in the online retail market, it is not a way to improve the economic lives of the customers they serve. 

This blog post was coauthored by Alison Terkel.

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Two years ago, President Obama joined a long line of American leaders like Franklin Delano Roosevelt and Bill Clinton in working to pass comprehensive health reform. Well, today we are grateful that those efforts paid off and all Americans can enjoy the benefits of a bouncing, baby (health care) bill!

The Affordable Care Act turns two years old today and, like all toddlers, it’s been very busy!  While other toddlers can go through a “terrible twos” stage, the ACA is just embarking on its “terrific twos.” All children are wonderful, but I can’t think of another two-year-old that has so dramatically changed American’s lives.  

In fact, other youngsters already are benefitting dramatically from the ACA’s provision that prohibits health insurance companies from denying coverage to children on the basis of pre-existing conditions.  Before the passage of the ACA, health insurance companies could refuse to insure children with pre-existing conditions as common as an ear infection, leaving parents to pay out of pocket for all medical care or to forgo it all together. Now, children with pre-existing conditions like ear infections or asthma cannot be denied coverage, which allows their parents to rest easier knowing that their children have access to affordable care when they need it.

Although even healthy births and healthy children can be costly medical events, children born with severe medical issues in the past have often come close to or surpassed their insurance’s lifetime (or annual) limit on coverage when they are quite young.  The ACA has now eliminated the lifetime caps on insurance (and put restrictions on annual limits).  Almost 28 million children will benefit from this change.    

Of course, that’s not all the law has already done. We’ve done some significant blogging on the steps that ACA is making in the area of preventative care, explaining how the law is working to control and reduce the epidemic of chronic diseases like diabetes, heart disease and obesity in order to improve health and reduce spending.  The law has also set in place a significant measure for the health of low-income families by requiring states to maintain their current CHIP and Medicaid eligibility requirements, which is keeping kids covered and healthy until the ACA kicks in completely in 2014. Additionally, the ACA allows children to remain on their parent’s health insurance until age 26,  is reducing the cost of seniors’ medications, and has made insurance companies responsible for justifying premium increases to their clients, among other fantastic reforms.

So, what should we expect as the ACA matures?  We have a lot to look forward to!  In 2014, all health insurance plans will cover pregnancy and prenatal care, resulting in healthier moms and babies. Also that year, children’s vision and dental services will be covered by all policies. Covering children’s oral care is a multi-faceted issue that affects academic performance and self-image, as well as preventing expensive emergency care.  

Of course, the benefits are not just for children.  Subsidies that will make insurance much more affordable for working people will also become available in 2014.  More affordable insurance equals more insured people and greater access to care. Also in 2014, Medicaid will be expanded to everyone under 133% of the Federal Poverty Level.  

So take a moment today to enjoy a piece of birthday cake and this short ACA birthday song!  After your cake, you can check out more milestone developments in the ACA here!     

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