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

“The high cost of health care is killing us.” So testified John Arensmeyer, the founder and CEO of the Small Business Majority, before a congressional committee regarding its health care reform draft proposal. The Small Business Majority (SBM) is a nonprofit, nonpartisan organization representing 27 million Americans who are self-employed or business owners of less than 100 employees. SBM is supporting comprehensive health care reform efforts that control the skyrocketing cost of health care to make coverage affordable and improve the competitiveness of small businesses.   A significant portion of the SBM membership is uninsured: of the 45 million uninsured Americans in 2007, almost 23 million were small business owners, employees or their dependents.

At the hearing, Arensmeyer testified that the crushing cost of health care was reported to be the biggest overall problem by 78% of small businesses responding to a Robert Wood Johnson Foundation survey-outranking even fuel and energy costs and the weak economy. A telephone survey of small business owners in 16 states furtherrevealed that 72% are struggling to afford health insurance and 69% say reform is necessary to save the economy. The results are not partisan; 68% of respondents identified as Republican or independent. 

“Health care reform is not an ideological issue—it’s an economic one,” said Arensmayer. Small businesses are the economic engine of our country; when they struggle, our entire economy struggles. Health insurance companies charge the self-employed and small businesses much higher rates than larger companies. Consequently, small businesses are forced to either drop coverage for their employees, charge employees a higher share of the premiums or dramatically scale back health care coverage. 

“It’s common to hear about double-digit premium increases each year, eating into profits and sometimes forcing staff reductions,” Arensmeyer testified. He called for:

• guaranteed availability of coverage
•  no exclusions for preexisting health conditions
•  health insurance rating rules that prohibit adjustments for health status
•  a cap on premiums and out-of-pocket spending
•  marketplace transparency
•  affordability credits to ensure that small business employees can actually participate without financial hardship

Health care costs are growing faster than the overall economy and without comprehensive health care reform, small businesses will pay nearly $2.4 trillion dollars over the next 10 years in healthcare costs for their workers, according to MIT economist Dr. Jonathan Gruber. Further, without reform, 178,000 small business jobs are estimated to be lost by 2018 as a result of healthcare costs.

Comprehensive health care reform is essential for the health of American small business, which is essential for the American economy and is a cornerstone of the American notion of opportunity and growth. We all need a health care system that controls costs, restores a sense of control and choice, and gets out of the way of individual enterprise.

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Most people rejoice when they find out they are getting a raise. But for low-income people, that joy may quickly turn to frustration when they realize the modest increase in income may cause a loss of hundreds of dollars in food stamp benefits. 

People across the country faced this challenge when the $25/week increase in Unemployment Insurance contained in the American Recovery and Reinvestment Act (the federal stimulus bill) took effect in March. For some, this modest increase in income pushed them off the “cliff” of aid programs as the extra money was more than offset by a loss in food stamp benefits.

Low-income families face similar challenges each day, with their steps toward independence cancelled by a loss of a work support such as food stamps. Ideally, working families are phased off of aid programs, with their benefits gradually decreasing while their incomes increases. This approach rewards work and provides the support necessary for a family to sustain its success.

But, eligibility for food stamps for most families is strictly capped at 130% of the Federal Poverty Level, or $1907/month for a family of 3. As a result, a household whose gross income exceeds this amount is ineligible--regardless of how much the family actually has available to purchase food after allowable expenses for rent, utilities, and child care. For example, a family of 3 whose monthly income increases by $100, from $1850 to $1950 per month, may lose over $300 in food stamps. Rather than being rewarded for its accomplishment, the family is left less financially secure.

Fortunately, states have the option of raising this cap, bringing more federally funded food stamps to needy families and their communities. Through a policy maneuver known as “categorical eligibility,” the “cliff” can be reduced so that families are eased off of assistance as their earnings increase. Such a policy reduces the number of families who earn too much to receive assistance but not enough to survive. By raising the gross income limit for food stamps, a state can prevent families from being penalized for their successes.

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During the past eight years, almost 100,000 units of public housing have been approved for demolition, and fewer than 40,000 units of public housing have been constructed, meaning that over 60% of public housing units demolished have not been replaced. In 2007, the U.S. Department of Housing and Urban Development (HUD ) approved a request from the San Diego Housing Commission “to get out of the public housing business” by vouchering out its entire stock of over 1,300 units. Vouchers allow residents to rent a unit in the private market. In 2008, the housing authorities in Las Vegas and Atlanta submitted applications to HUD to dispose of all their public housing units.

While most displaced residents receive Housing Choice Vouchers in which to move, the vouchers do not compensate for the loss of public housing to a community. Public housing is a commitment from the government that there will always be a housing resource for our most vulnerable populations—a commitment that the private sector cannot make. Even though vouchers are an important part of the nation’s affordable housing supply, they are not a permanent replacement for hard public housing units. 

On June 15, 2009, the Chairman of the U.S. House Financial Services Committee, Representative Barney Frank, and the Chairwoman of the Subcommittee on Housing and Community Opportunity, Representative Maxine Waters, sent a letter to HUD Secretary Shaun Donovan asking him to impose a one-year moratorium on the approval of applications for demolition or disposition of public housing units. The Committee noted that, “Until such time as housing authorities are required to replace demolished or disposed units on a one-for-one basis, we risk losing the crucial investment and significant asset these units represent.”

We applaud the decision of Representatives Frank and Waters in making this request and in working on legislation to require one-for-one replacement of demolished public housing units.  In order that the nation not lose any more public housing units, it is imperative that HUD Secretary Donovan declare a one-year moratorium on public housing demolitions so that legislation can be enacted to preserve the nation’s supply of low-income public housing. 

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The Illinois General Assembly meets this week to attempt to resolve the budget.  Failure carries with it incalculable costs that prolong the recession and hit every legislative district. 

The impending cuts directly impact hundreds of thousands of children, seniors, people who are sick and hurt, the unemployed, and workers.  The costs to them are staggering, but there are other costs:

• The state will get sued repeatedly.  Some of the cuts would violate federal or state laws.  Some would violate existing court orders and consent decrees.  The Attorney General’s office must defend all these cases, but it has its own shrunken budget and would be swamped.
•  Proposed cuts violate the condition in the federal stimulus law that states not cut Medicaid.  This will cost us billions in federal stimulus funds.    
• The state would also lose massive sums of federal matching funds and block grant dollars across a range of programs.
• These lost federal funds come out of the Illinois economy – it is money not spent on goods and services in our state.
• The Department of Human Services estimates that the cuts to its budget would cause a loss of 170,000 jobs outside of state government.  These are entrepreneurs, independent caregivers, and employees of non-profit or for-profit businesses that provide or support the programs in various ways.
• Legislators have spent their careers building important programs that will be gutted or eliminated by this process.  Time, talent, and hard-won accomplishment would be wasted. 

The General Assembly’s budget would prolong the recession and hurt the state, not just those who need the programs.  We need to fund the government and not bring about all of the above incalculable costs.

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The effects of domestic and sexual violence are not checked at the door when a survivor of violence enters her place of employment. Oftentimes individuals who experience domestic or sexual violence report missing work due to the violence in their lives, enduring harassment by the abuser at work, suffering health problems that affect job performance, or losing employment due to the violence. A study by the U.S. Department of Justice found that, during a 12-month period, more than half of stalking victims lost five or more days of work, and about 130,000 stalking victims reported that they were fired or asked to leave their jobs because of the stalking. Yet, according to a survey conducted by the Bureau of Labor Statistics, over 70 percent of U.S. workplaces have no formal program or policy that tackles workplace violence.

It’s time for the federal government to act, following Illinois’ example, where late last month the Illinois General Assembly passed an important piece of legislation that is a notable victory for survivors of domestic and sexual violence, their families, and advocates. The Illinois Senate voted unanimously to concur with House Amendments No. 1 and No. 2 on Senate Bill 1770, an amendment to the Victims’ Economic Security and Safety Act (VESSA). Originally enacted in 2003 with then–State Senator Barack Obama as principal sponsor, VESSA provides unpaid, job-guaranteed leave and nondiscrimination protections for eligible employees who are survivors of domestic or sexual violence or who have a family or household member who is a survivor of domestic or sexual violence.

Since its enactment in 2003, VESSA has provided significant benefits and workplace protections for Illinois employees. VESSA allows a covered employee to take up to 12 weeks of unpaid time off from work to deal with the violence in her lives without losing her job during a 12-month period. VESSA also prohibits an employer from discriminating, harassing, or retaliating against an employee who is exercising her rights under this law.

Once signed into law, the amendment will expand VESSA to cover more employees in the private sector by decreasing the private employer threshold number of employees from 50 or more to 15 or more. The amendment adds language providing that an employee who works for an employer with at least 15 but not more than 49 employees may take up to 8 work weeks (rather than 12) of unpaid, job-guaranteed leave to deal with domestic or sexual violence during a 12-month period.

VESSA has proven to be a lifeline for employees coping with domestic or sexual violence. While VESSA allows for several weeks of leave, most employees who take leave take significantly less. And, of the 107 complaints that have been filed since enactment, most VESSA claims notably allege discrimination by the employer.

With the recession being a perpetual reminder of the crucial nature of job preservation and economic stability, the passage of S.B. 1770 is a surefire victory that will help more survivors of domestic and sexual violence maintain their employment and economic stability as they strive to remain safe and ultimately escape a violent situation. Action on the federal level is more pressing than ever.

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States across the country are wrestling with budget crises.  In that context attention always turns to Medicaid, just because it is a large budget line, and it is therefore an attractive mark for anti-tax advocates who do not really have viable alternatives to taxes but like to speak vaguely about cutting spending.  The Illinois budget mess offers a lesson in why these folks have the germ of a good idea but are missing the most promising way to achieve it.

Most knowledgeable people concede that there is no way out of the huge Illinois budget deficit but to raise revenues.  Of course, many of those same people do not support raising the necessary revenues.  The opponents disingenuously cry out that Illinois must never increase revenues until it has made “cuts” to the spending side.  Tellingly, they have been unwilling or unable to specify exactly where they would cut the billions needed to balance the budget without increased revenues.  Accountability is not their strong suit.

But there is nevertheless an interesting modest overlap between this “cuts” position of the opponents of revenue increases, and the position of the proponents. Led by the Governor, the proponents are committed to making reductions in state spending, as part of the overall budget package that includes the revenue increases.  Greater efficiency is always a good and desired goal, and it is even more important in such difficult times. Moreover, revenue increases are more palatable, more fair, if state government is making efficiency improvements at the same time.  

So both sides are focusing on ideas for cuts.  One of the centers of attention for this kind of brainstorming is all of the state’s publicly supported health care coverages, popularly lumped together under the term “Medicaid”.  The programs cover children, low income working parents, people with disabilities, and the elderly. The opponents of revenues, citing old and sloppily done consultants’ reports, say that Illinois could be saving $1 billion or more on Medicaid, mostly by imposing hardcore HMO-style managed care, insisting that people use generic instead of costly brand name drugs, and caring for more people in the community instead of nursing homes. The proponents of revenues, citing actual experience in Illinois that shows the state is already realizing significant savings from care management, generic drugs, and community based care, say that they are willing to try any reasonable new ideas, but estimate savings in the tens of millions. The fact is that Illinois is already among the lowest in per person Medicaid expenditures.

Both sides are missing the most likely source of significant Medicaid savings that will neither limit coverage nor impair care. It is not a Springfield initiative, but a Washington DC initiative that will get this done. As should be obvious, Medicaid is just one part of the larger health care system, most of which is in the private sector. Medicaid suffers from the same system-wide phenomena that are driving the dizzying upward spiral of health care costs for all of us – profiteering across the board, inefficiencies, lack of focus on prevention, loss of consumer choice and control, and so forth. It is this increase in cost, decrease in control, and loss of peace of mind that is driving the anger in the American people that in turn is driving the move towards comprehensive reform being led by President Obama. 

These problems in the larger health care system fuel the trend in Medicaid spending. Thankfully, every year Medicaid spending (known as Medicaid “liabilities”) grows at a rate that is smaller than the overall consumer price index for medical related goods and services. Medicaid is a more efficient system. Yet Medicaid costs are necessarily directly related to the larger health system market. When health care costs go up generally, they also go up for Medicaid.

All those folks in Springfield looking for ways to spend less on Medicaid should realize that they are looking in the wrong town. The action on this is in Washington, where the battle over comprehensive reform is playing out right now. Just a couple of days ago, President Obama asked Congress to produce ideas for overall health system reforms to bring down the cost of care, or at least the rate of growth of the cost of care. He noted that in so doing, they would also be helping to produce $200-300 billion in savings for Medicare and Medicaid. 

For those truly interested in controlling the growth in Medicaid spending, the most promising course is to help make sure that the drive for national comprehensive health care reform is successful this year.  Meanwhile, the Springfield folks should tend to the knitting and vote for the revenues needed to fund state government.

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The most recent season of NBC’s Biggest Loser just ended. Rather than waiting for next season, viewing audiences can watch a rip-off of the show right now. The new show, The Biggest Loser: American Consumers, features real Americans who have lost their financial security due to the current economic meltdown.

In the real Biggest Loser contestants vie to see who can lose the most weight, but in the American Consumer version the contestants have already lost their money.

The real Biggest Loser season always begins with contestants’ previous unhealthy diet and lifestyles being replaced with healthy foods and reduced portion sizes. The American Consumer version is the same. Instead of being force feed diets of huge portions of subprime mortgages, mortgage-backed securities, credit default swaps and predatory loans that were sautéed in a reduction of regulatory oversight sauce and served with a side of wilted consumer protection laws, consumers will receive solid financial products garnished with pro-consumer policies. They’ll even get dessert – a sundae bar from which the consumers can create their own sundaes of jobs, savings, investments and retirement accounts, complete with whipped cream and a cherry on top.

While real Biggest Loser contestants are forced to endure grueling, back-breaking, marathon workout sessions designed by their trainers, American consumer contestants will be the ones conducting “workout sessions.” During these workout sessions, or interrogations, the contestants will question the financial regulators, such as the Federal Reserve Board, the Office of the Comptroller of Currency, the Office of Thrift Supervision, the Federal Finance Agency, and the Securities and Exchange Commission, whose job it was to ensure consumer protections. Instead of the contestants being kicked off because they are below the yellow line in weight loss, regulators who failed to do their consumer protection duties will be eliminated each week.

Since we already know that none of the regulators actually protected consumers, and therefore will be kicked off, the last few shows will be special episodes. The most anticipated of these final episodes is the “Financial Products Safety Commission.” In this special episode the American consumers get to create a plan for a new federal agency committed to ensuring that the financial system places people before profits. Viewers call-in votes, rallies, support letters and voices will help determine the winning plan. Numerous guest stars are already scheduled to appear including: Elizabeth Warren, the chair of the TARP task force who first noted that Americans toasters have more consumer protections than their mortgages; Illinois Sen. Dick Durbin who already drafted proposed legislation that would create such a financial product safety commission; and a myriad of former bankers singing “Bye Bye American Pie.”

At the end of this star studded spectacular finale, the Biggest Loser: American Consumer’s grand prize will be awarded: financial stability for all Americans.

So check your local TV listings and don’t miss an episode of what will be the most exciting reality TV series yet.

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What’s the state of health care reform now that Congress has begun seriously grappling with the topic? Are we likely to see a comprehensive health care reform bill this year, as promised? Key developments in the past few weeks offer some encouraging signs.

There are five Congressional committees that will be involved in drafting health care reform legislation (three in the House, two in the Senate), and consensus among them will be vital for passage of any major bill. The House committees involved - Ways and Means, Education and Labor, and Energy and Commerce – have announced that they will propose a single bill, although probably not until mid-July (a leaked Energy and Commerce Committee PDF offers some hints as to what that bill might look like). 

Things get more complicated on the Senate side. The two important Senate committees – Finance and Health, Education, Labor and Pensions (HELP) – have a shorter timeline, promising bills by the end of June. That deadline is likely to be met, but probably because the two committees are drafting legislation independent of one another. Senator Kennedy (chairman of the HELP Committee) and Senator Baucus (chairman of the Finance Committee) have released a joint letter stating their intention to create legislation that can be “quickly merged into one bill” (which will be necessary before the Senate can vote on it) but so far the two committees have their differences. 

On the Finance side, Chairman Baucus and Senator Grassley (the highest-ranking Republican) are committed to bipartisan reform, and the committee’s recently-released report outlines proposals that may not be as aggressive as some advocates would prefer. The public plan option (guaranteeing a government-run plan as an affordable option for all Americans, at all times) is mentioned but not required in the outline, while many advocates are convinced such a plan is necessary to keep private insurance honest and efficient. And there’s not a lot of talk about protecting low-income consumers from big out-of-pocket costs like deductibles and premiums. On the other hand, Senator Kennedy’s plan will likely include stronger safety-net provisions and the requirement of a public plan, along with a requirement that all employers either offer their employees insurance or pay into funds that help cover the uninsured. 

Furthermore, Senator Baucus has come out in opposition to passing reform through a procedure called budget reconciliation. Reconciliation would make the health care legislation filibuster-proof, allowing it to pass without any Republican votes at all. Many high-ranking Democrats favor using this procedure if necessary, while Senator Baucus wants to keep it bipartisan by coming to an agreement with at least some Republicans. The fact, though, that affirmations of support and good-faith effort have been made in writing by all committee chairmen, and the degree to which all stakeholders have been involved in the legislative process so far, are good signs. The legislation for health care reform will be drafted and proposed this year, perhaps by August. At that point it is up to us, advocates and consumers alike, to make sure it passes. 

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Recently, business leaders were warned that Chicago could not simply incarcerate its way out of its current violence epidemic. That warning came from an unlikely source – United States Attorney Patrick Fitzgerald. 

Better known for putting felons behind bars than putting them into jobs, the prominent federal prosecutor emphasized that law enforcement is only part of the solution of the crime problem, not the entire solution. Indeed, he said that businesses must do their part to usher people with criminal records back to being productive members of society. If they did, police and prosecutors would be better able to focus their resources and efforts on the worst of the worst, and not on the people struggling to better their lives.

For law enforcement officials like Mr. Fitzgerald to do their jobs better, therefore, businesses must seriously reconsider their policies against hiring people with criminal records.

The current state of the economy might cause employers to balk at these suggestions, Mr. Fitzgerald acknowledged, but that reaction only ignores the bigger picture. The business community has an opportunity to help prevent crime and violence by giving people who want to work a chance to do so. We as a community are negligent, he explained, if we don’t give them that chance. 

Mr. Fitzgerald’s words should be taken not only as an appeal to business leaders, but also a reminder to advocates to engage businesses in practical discussions on reentry. The reasons for this absence vary. Sometimes, businesses don’t understand the long-terms effects of their decisions not to hire based on a criminal records. Other times, employers are already hiring, but they fear negative reactions from their consumers and their competitors. Hopefully, Mr. Fitzgerald will inspire other law enforcement officials to see the connections between their work and reentry as well as convince businesses to re-assess their role in promoting public safety.

*To view Mr. Fitzgerald’s speech that prompted this blog post please click here.

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