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

In 2014, health insurance marketplace exchanges will be up and running in every state across the United States. As a major part of the Affordable Care Act (ACA), these exchanges will provide an easy and consumer-friendly place for people to find and buy affordable health insurance. Perhaps the best feature of the health insurance exchanges is the federal assistance that will be offered through tax-subsidies and cost-sharing to individuals and families to help pay for insurance premiums and out-of-pocket expenses. People with household incomes less than 400 percent of the federal poverty level, or $74,124 for a family of three, will qualify for the subsidies and out-of-pocket help in the exchanges.

Looking ahead to 2014, authors of a recent study released by The Commonwealth Fund set out to see just how affordable health insurance might really be once these insurance marketplace exchanges are up and running. Using survey data, the authors determined how much “room” people have in their budgets, after covering costs of household necessities, to determine whether the federal tax-subsidies and cost-sharing offered in the exchanges will actually create affordable coverage options for most Americans. The results were cause for cautious optimism.

According to the study, an overwhelming majority of individuals and families will be able to find affordable health insurance in the 2014 exchanges. Thanks to those premium tax subsidies and help with out-of-pocket costs, around 90 percent of households will have enough room in their budgets to pay for the health insurance they need. This is promising news for folks struggling with the burden of run-away health care costs and a private insurance market too expensive to enter.

As to the remaining 10 percent who may not be able to find affordable health insurance, the study’s authors point out three major factors worth addressing: out-of-pocket health care costs, family structure, and place of residence.

The authors predict that high out-of-pocket costs will be the most common reason why some people will run out of money to pay for their medical bills. High out-of-pocket costs double and sometimes nearly triple the percentage of households that can’t afford to meet their health care needs. Because of the way the cost-sharing structure is set up in the exchanges, the financial burden of high out-of-pocket costs will hit individuals and families with household incomes from two to three times the federal poverty level the hardest. These are households with $37,060 to $55,590 annual income for a family of three. Unless states address this when creating their exchanges, one in four families in this income range with high out-of-pocket costs will not have enough money left in their budget to cover their health care expenses.

Family structure is also a significant factor in determining affordability of health insurance on the exchanges. When looking at family size, the study reveals that single individuals, compared to childless couples and families, have less room in their budgets to pay for health care. Regardless of income level, single individuals may find themselves unable to pay for their health care more often than childless couples and families in the 2014 exchanges.

Geography plays a role as well. The study’s authors pooled the states into three different categories: high cost of living, middle cost of living, and low cost of living. It turns out that households in higher-cost states have less room in their budgets for health care than households in lower-cost states.  So, for instance, a family of two making $22,068 a year will find health insurance less affordable in a high-cost state like California when compared to a low-cost state like Oklahoma.

States can address all of these factors when setting up their exchanges. They can give exchanges an active role in finding and negotiating health plans with insurance companies so that the coverage options offered are of the highest quality and at the lowest prices. They can create strong conflict-of-interest rules so that the decision-makers in the exchanges have the public interest at heart rather than profit. They can pass laws making the rules for insurance companies inside and outside of the exchanges the same so that the exchange marketplaces can attract enough insurers and consumers to offer competitive and affordable insurance plans. With rules like these in place, most people will be able to find affordable health insurance, giving our families and our children a real chance for healthy futures.

This blog post was coauthored by Rachel Gielau.

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Consumers and advocates had better beware. Last year, in response to the harmful financial practices that caused unforgettable pain to millions of families across the country, Congress passed comprehensive financial reform and consumer protection legislation.

Central among these reforms was the creation of a new agency, the Consumer Financial Protection Bureau (CFPB). Previously, enacting consumer protections rules, performing compliance reviews, and enforcement activities were conducted by multiple federal agencies, each of whom failed horribly at their jobs. Under the CFPB, all consumer protections laws would, for the first time, be the sole focus of one federal agency with the power to actually make consumer protection a priority.  

The CFPB is supposed to be up and running by July 1^st, but Congress, in its infinite attempts to please and protect Wall Street, is attempting to eviscerate the CFPB before it even becomes functional. Specifically, several bills have been introduced that, if passed, would substantially undermine the CFPB’s ability to stop abusive financial practices. 

H.R. 1315, which was approved in the House Financial Services Committee by a vote of 35-22, would allow a simple majority of bank regulators and others on the Financial Services Oversight Council (FSOC) to veto CFPB rules they deem to be “inconsistent with safe and sound operations of financial institutions.” In other words, the very banking regulators who failed to fulfill their roles as consumer advocates before would have the ability to stop the CFPB from doing the same job that they refused to do. This vague “deemed to be inconsistent” standard will certainly be used by these agencies to stop any consumer protection measures that might affect the profitability of financial institutions.

H.R. 1121, which also passed in the House by a vote of 33-24, would alter the leadership structure of the CFPB from that of a single director to a five-member commission. Thus, instead of one agency solely focused on consumers, there would be multiple agencies whose priorities are split between protecting consumers and pleasing financial institutions. The CFPB already faces unprecedented restrictions on its powers. For instance, nowhere else in federal law can one set of regulators—in this case two-thirds of the members of the FSOC—veto the actions of another agency. The amount of funding provided to the CFPB is capped, a statutory limit imposed on no other financial regulator, and the CFPB is the only financial regulator that must comply with the federal Regulatory Flexibility Act, which allows small businesses to see proposed rules before the public does, adding months to the already lengthy rulemaking process.

Finally, H.R. 1667, approved by a 32-26 House vote, would require that the CFPB’s Director be confirmed by the Senate before the CFPB could exercise its authorities. This follows a letter from 44 Senate Republicans stating their intent not to confirm any CFPB director until the legislative reforms weakening the CFPB have been adopted.

As the Consumer Federation of America’s press statement in response to the Republican senators’ letter stated: “Enactment of these measures would virtually guarantee that the CFPB would be a weak and timid agency without the will or ability to curb the kind of financial abuses that caused the nation’s worst financial crisis since the Great Depression.”

To prevent another economic disaster and stop banking regulators from throwing consumers under the bus once again, the CFPB’s authority and autonomy must be safeguarded. Attempts to weaken it will just return us to the status quo. And isn’t that how we got into this mess in the first place?

Call or send a message to your legislators today urging them not to support these bills. The Switchboard's number is 202.224.3121. The operator can connect you to your legislator's office.

This blog post was coauthored by Ji Won Kim.

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There is an intense debate over Rep. Paul Ryan’s (R. WI) proposal to scrap Medicare and turn it into a voucher program shifting costs to seniors, a debate that became even more intense when it was passed by the Republican-controlled House of Representatives. The Senate has not passed it, and the President has registered his opposition. The American people are also firmly opposed. 

But that debate has taken news focus away from the substantial improvements to the Medicare program that have been accomplished in just the last year under the Affordable Care Act, with more improvements soon to come. Costs are lower and care is better for seniors all over the country.

Here is what happened in 2010 and is about to happen in 2011 in Medicare under the Affordable Care Act. The numbers apply to Illinois, but the same impact is happening everywhere in America.

1. Prescription drugs are more affordable. In 2010, 152,170 Illinois residents hit the Medicare prescription drug “donut hole” and received at $250 rebate check to defray their costs. Across the state, this came to $38 million in savings for seniors. In 2011, everyone in Illinois who hits the donut hole will receive a 50% discount on their brand name and generic prescription drugs. As of March, Illinois Medicare beneficiaries who had triggered into this benefit were getting about $800 a month in savings.
2. Preventive services are free. In 2010, when this section of the new law had not yet taken effect, Medicare charged co-pays for preventive services like mammograms and other cancer screenings. In 2011 all of the 1.9 million Medicare beneficiaries in Illinois now get all recommended preventive services with no out-of-pocket costs.
3. The annual checkup is free. In 2010, when this section of the new law had not yet taken effect, Medicare charged a co-payment for the annual checkup. Starting in 2011, Medicare beneficiaries can go to an annual wellness visit with no out-of-pocket cost. As of April 20, 17,508 Illinoisans have had a free wellness visit. 
4. Premiums are lower. Under the new law, in 2010 Medicare Part B premiums were nearly $8 less per month than projected by the Medicare trustees. In 2011, the premiums are almost $5 less per month than projected by the Medicare trustees. The lower premium translates to $107 million in savings for Illinois Medicare beneficiaries in 2011.
5. Medicare Advantage. In 2010 and 2011 all beneficiaries still retain the option of joining a Medicare Advantage plan if they so desire.

This is a story typical of many things in the Affordable Care Act. Improvements to the system are constantly rolling out, but the general public remains unaware of them. In part, this is because the subject matter is complex and hard to absorb unless you are directly affected. And in part it is a deliberate strategy of the opponents to keep the focus elsewhere and downplay the accomplishments of the law as they endeavor to repeal it and roll back its benefits. The intense reaction to Rep. Ryan’s proposal shows that at least the people directly affected – seniors who depend on Medicare – are well aware of the increasing quality of their program. 

An earlier version of this blog post inadvertently referred to Rep. Paul Ryan as "Jack" Ryan.  This has been corrected, and we apologize for the mistake.

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In honor of Americorps week, the Shriver Center would like to recognize the role that Americorps*VISTA members play in helping us to be creative and effective, and to highlight the significant contributions VISTAs make in the Shriver Center’s work to advance social and economic justice.

As a cost-sharing partner to the federally-funded Americorps*VISTA program, the Shriver Center currently has seven ”volunteers in service to America,” each of whom dedicate themselves for one year to building the Shriver Center’s capacity to develop real-world solutions to poverty. Because the needs of low-income people are constantly evolving, the Shriver Center's understanding of the policy environment must be current, and its advocacy efforts must constantly evolve. Through research and outreach, VISTAs help the Shriver Center generate a dynamic information loop in which current information from direct service providers and the low-income people they support is analyzed and applied to help decision makers formulate meaningful approaches to addressing poverty. VISTAs also help the Shriver Center build coalitions with key stakeholders, provide valuable train-the-trainer sessions, and generate reports, websites, and other tools that advocates can use to implement solutions. In addition, VISTAs help raise funds for the Shriver Center, recruit volunteers, and help the Shriver Center improve its advocacy and communication programs.

The VISTAs are currently working on seven projects designed to help the Shriver Center make progress on improving school performance and high school graduation rates, increasing employment and other economic opportunities, increasing financial stability for families, improving access to safe and affordable housing, ensuring healthy futures, and enhancing the capacity of advocates to delivery legal services to low-income people. Each VISTA brings his or her own skills and passion to furthering the Shriver Center’s mission. Here is a snapshot of our current Americorps*VISTA members and the many ways in which they are contributing to the Shriver Center’s success.

Ensuring safety, academic success, and school completion for children and youth who are parents, expectant parents, or survivors of domestic or sexual violence
Hannah Green, the VISTA for the Women’s Law and Policy Project, works on a variety of issues that affect women and children. One of Hannah’s main projects is the Ensuring Success in School Initiative. Under this project, she coordinates a coalition of educators, social service providers, students, and advocates who are working to address barriers to school success and completion faced by students who are parents, expectant parents, or survivors of domestic or sexual violence. Hannah is also helping to develop curricula for school personnel on how to recognize and respond to these students. 

Promoting housing justice
The recent housing crisis has shown Americans the importance of preserving affordable and safe housing and protecting low-income homeowners and renters from foreclosure. As the VISTA for Housing Justice, Eli Wade-Scott’s projects are focused on safeguarding quality, affordable housing for low-income families. Eli serves as a principal researcher of local, state, and national housing policies and their potential impact on the housing needs of low-income households. In support of the Safe Homes Initiative, Eli also develops user-friendly materials for advocates and survivors of violence so that they can use state and federal laws to protect their housing and safety. 

Bringing attention and financial support to the issue of poverty in America
Our External Affairs VISTA, Alexandra Seabrook, advances the Shriver Center's capacity by building a Shriver Center social and mainstream media program that serves policymakers, media, and other advocates with information on issues affecting low-income people. Alexandra also helps conceptualize, plan, and coordinate fundraising and community outreach events. From a grassroots Facebook campaign to a large-scale raffle, Alexandra has helped raised over $20,000 in the few months she has worked at the Shriver Center. 

Training direct service providers and advocates
Since the 1960s, the Shriver Center has provided advocates around the country with the information and training they need to ensure social and economic justice for their low-income clients. Kathleen McNally, our VISTA for Communication Programs, develops content and provides editorial assistance for the Shriver Center’s bimonthly journal, Clearinghouse Review: Journal on Poverty Law and Policy. Kathleen also assists with marketing and outreach efforts designed to increase advocates’ access to the important resources available from the Shriver Center. 

Addressing barriers to financial stability
One in five American households is asset poor, meaning they lack the resources to sustain themselves at the Federal Poverty Level for three months if all sources of outside income ceased. The current recession has revealed how many Americans will fall into asset poverty in the absence of strong policies to increase financial stability and asset building opportunities. Kelly Ward, the VISTA for the Asset Opportunity Unit, works to advance emerging strategies focused on asset building. Kelly is also involved with coordinating and writing recommendations for the Financial Education Workgroup to increase financial literacy among Illinois students. 

Ensuring health care equity
Rachel Gielau, the Healthy Futures VISTA, works with the health care advocates at the Shriver Center to promote quality, affordable, and accessible health care for all. Rachel’s projects take her into the community as she educates consumers about health care reform and gathers personal stories from people who have had difficulty accessing care. Rachel also contributes to Shriver publications describing the effects of the Affordable Care Act on low-income families.  

Investing in our workforce
As the Employment and Training VISTA, Jessica Palek works to ensure access to employment and career advancement opportunities for people living in poverty. Jessica partners with the Chicago Jobs Council to develop the Illinois Works for the Future Campaign, which seeks to align state strategies in workforce development and economic development and to ensure that these policies and programs are responsive to the needs of disadvantaged populations. Jessica researches and drafts communication on innovative job training and education strategies for people with barriers to employment. She also contributes to the development of an unemployment insurance manual resource tool aimed at assisting individuals apply for these benefits. 

The collective work of the Americorps*VISTA members strengthens and supplements the work of the Shriver Center’s staff. In addition to moving the Shriver Center advocacy agenda forward, the VISTAs help to build partnerships and internal capacities that are strengthening the Shriver Center's financial and staff resources and helping us make progress towards our organizational goals for long-term sustainability. The Shriver Center is grateful for the excellent work of all of the VISTAs who work in service to America to advance social and economic justice.

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Experts from the National Senior Citizens' Law Center exposed the flimsiness of this argument in a blog for the American Constitution Society yesterday.

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In a case currently before the Illinois Supreme Court, the Illinois Department of Corrections (IDOC) is suing one of its own inmates to recoup the costs of his incarceration. Although the inmate has only $11,000 to his name, IDOC’s bill comes out to nearly half a million dollars. Despite having already garnished 3% of his $2-a-day wage for the past three decades, IDOC now wants to go after the savings he accumulated during his time in prison and had hoped to pass on to his daughter.

Capturing the unfairness of the IDOC’s actions, one of the justices put it best when he asked incredulously, “Is this court honestly to believe that punishing more diligent, hardworking and responsible inmates is what the legislature intended?”

There are several reasons why going after people in the criminal justice system for money makes bad policy. First, suing for the costs of incarceration discourages inmates from participating in prison employment programs, in direct opposition to rehabilitation efforts. These programs provide inmates with something constructive to do with their time, valuable job training, and technical skills. There is also an economic incentive for participation in the form of wages, however modest they may be. If inmates feel the wages they earn while working in prison will be taken to pay for their incarceration, this important incentive disappears. IDOC sues only if they believe the prisoner has assets to seize, so prisoners may feel it is in their best interest to not generate any income at all.

Second, even if an inmate decides to participate in prison employment, IDOC’s policy discourages them from saving, one of the most basic components of financial empowerment. Studies have shown that incarceration reduces an individual’s post-prison earnings by about forty percent annually. In addition to reduced wages, serving time greatly reduces a person’s ability to move up the economic ladder; only two percent of formerly incarcerated individuals are able to advance from the bottom fifth of earnings to the top fifth, as compared to fifteen percent for the general public. Faced with such harsh economic prospects after release, prisoners in employment programs should be encouraged to save so they can begin practicing the positive financial habits necessary for future economic stability. IDOC’s policy sends the wrong message to inmates and ignores how financial literacy can be an essential part of successful rehabilitation.

Finally, the money that IDOC collects from inmates is a drop in the massive bucket that is Illinois’ correctional budget. It costs a little over a billion dollars each year to keep people in prison in Illinois, almost all of which will never be reimbursed. Out of a prison population of over 45,000, only about twenty cases a year are filed to seek reimbursement from defendants whose assets exceed the $10,000 limit. In 2010 IDOC received $9,876 in court-ordered reimbursement payments. Seizing prisoners’ savings will do little to cover incarceration costs and will only further disenfranchise people who have left prison.

Illinois’ criminal justice system seeks not only the costs of incarceration, but also fines, fees, and other financial obligations. These obligations range from $5 to $200, some of which have nothing to do with the costs of the person’s involvement with the criminal justice system. For example, a person convicted of the lowest level drug offense must automatically pay $100 to fund hospital trauma centers and $50 to a performance-enhancing drug testing fund. Limited consideration is given to the inmate’s ability to pay these fines, creating increased economic hardship and debt. Such debt follows prisoners after they have been released, affecting their income, credit score, and ultimately their ability to reintegrate.  

In the case of IDOC’s lawsuit, the inmate’s frugality caused a $455,000 judgment to be entered against him, suggesting that IDOC should reconsider its incentives. Good criminal justice policy should incentivize long-term planning and rehabilitation, and incarcerated individuals should be encouraged to—not punished for—saving and being financially responsible.

This blog post was coauthored by Kelly Ward.

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Wider Opportunities for Women (WOW) is hoping to change the way we think about economic security for families. Through its Basic Economic Security Tables (BEST), WOW has created a more accurate poverty measure. 

It is widely agreed that the traditional method for calculating poverty, namely the federal poverty measure, no longer provides an accurate assessment of poverty nor is it relevant to the particular constructs and circumstances of today’s families. The federal poverty measure is a decades-old relic that is based on the price of food. At the time the measure was developed, families of three or more persons spent about 1/3 of their after-tax income on food. However, currently food is only 1/7 of a family's budget, while the costs of housing, child care, and health care, none of which are taken into consideration in the federal poverty measure, have all risen disproportionately to the cost of food. Additionally, the current federal poverty measure uses pre-tax income, but the federal poverty thresholds were established using after-tax income, so while a family may not be officially “poor” they may actually fall below the federal poverty threshold once they pay taxes on their income.

The BEST tables include basic living costs, such as the costs of housing, utilities, child care, food, health care, transportation, personal and household items, and taxes into its calculations for determining its self-sufficiency or poverty thresholds. BEST does not provide for entertainment costs, like cable television or movie tickets, or other “middle-class amenities” like family vacations and dining at restaurants that so many Americans take for granted. WOW also took into consideration different household sizes and types and is working to create measurements that will reflect regional differences in the cost of living. For example, a household without small children will not have to pay for child care, and someone living in an urban community may pay more for housing but less for transportation.

WOW’s goal with BEST is to accurately reflect the particular circumstances of families across the country, something the federal poverty measure fails to do.

Based on BEST’s calculations, a family of four (two adults and two small children) needs to be earning almost $68,000 annually to make ends meet. That means that each worker in the family has to make $16.00 an hour, more than twice the federal minimum hourly wage of $7.25. The federal poverty threshold is far below the BEST calculation at $22,312 annually for a family of four. What makes WOW’s BEST self-sufficiency calculations different than other poverty measures is that it includes savings. Monthly allotments for both retirement and emergency savings are included in its formula so that economic security becomes more than just basic survival. According to WOW, a family of four should be saving about $226 each month ($170 for emergencies and $56 retirement). As WOW correctly notes, true economic stability occurs when families have some savings to support themselves during financial setbacks and to provide for themselves later in life. Building assets, such as savings, is essential to intergenerational security and is the only way families can move up the socioeconomic ladder and break the cycle of poverty.

WOW’s report is just one of the ways in which advocates and policymakers have begun to move toward anti-poverty strategies that are comprehensive and not singularly focused on income. The United States has also been experimenting with alternative methods to measure poverty. The Census Bureau’s Annual Social and Economic Supplement and the newly created  Supplemental Poverty Measure are both used to paint a more accurate picture of poverty in the U.S. but neither have been adopted officially by any federal agencies.

The United Kingdom and other European Union countries take a different approach to economic stability that is based on social inclusion. Social inclusion is a way of addressing poverty beyond the traditional discussion of how much income a person needs to get by. For example, in the U.K. an individual is considered to be “poor” if the individual’s income is below a certain percentage of median income, not if his or her income is below some artificially calculated threshold. Proponents of social inclusion claim that this approach addresses the multiple barriers that prevent many individuals from participating fully in society.

No matter the measurement, calculation, or definition used, poverty and lack of economic opportunity are serious problems in the United States and around the world. By including realistic analysis of current costs and including savings, anti-poverty advocates and researchers, like those at WOW, are providing innovative and useful ways to discuss poverty and develop solutions.

Kelly Ward coauthored this blog post.

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As millions of consumers struggle through one of the most difficult financial times in American history, debt collectors continue to expand their traps. Previously, the Shriver Center reported on the use of fake courts by debt collection companies to highlight the industry’s fraudulent and abusive practices. The latest fraudulent debt collection practice is the repeated reselling of debt that has already been collected upon. 

Consumers Union and the East Bay Community Law Center’s February report on the debt buying industry revealed that debt collection abuses are on the rise. More debt is being bought and sold—industry estimates suggest that in 2005, debt buyers purchased debt portfolios valued at $110 billion, a dramatic increase from just $6 billion in 1993. There has also been an exponential growth of lawsuits against debtors. Debt collection agencies file thousands of lawsuits each month using automated software. Encore Capital Group, one of the largest debt buyers in the nation, filed 245,000 lawsuits in 2009 alone. In New York City, more than 450,000 debt-collection affidavits were filed by debt buyers from January 2007 to July 2008, resulting in over $1.1 billion in judgments and settlements.

Many of these lawsuits are filed without any proof to back up the debt collection company’s claims. Frequently, loan or other debt documentation is lost in during the passage of debts from one seller to another, and debt collectors take advantage of such situations to profit. Some debt collection agencies therefore use “robo-signers” who sign affidavits swearing that they have personally reviewed and verified the debtor’s records without actually having done so. This allows debt collectors to sue on debts that they claim are too old to verify.

Moreover, consumers rarely receive timely notice that they have been sued, which prohibits them from defending themselves. Even with appropriate notice, many of these individuals do not know their rights nor can they afford an attorney to argue on their behalf.

In fact, the Federal Trade Commission (FTC) received more complaints from consumers about debt collectors than about any other industry in 2009. Nearly half of those complaints involved debts that were not owed, amounts in excess of what was actually owed, debts that had been discharged in bankruptcy, or impermissible fees, interests, or expenses.

In its 2011 Fair Debt Collection Practices Act Report, the FTC reported receiving 140,036 debt collection complaints in 2010, an increase from the 119,609 complaints received in 2009. The top three categories of complaints were:

• calling repeatedly or continuously;
• misrepresenting the character, amount, or status of the debt (including demanding a larger payment than is permitted by law); and
• failing to send consumers a statutorily required written notice about the debt and their rights.

The FTC is investigating the debt buying industry and will issue a report with its findings and recommendations. The Consumer Financial Protection Bureau, will also need to utilize is authority to issue rules under the Fair Debt Collection Practice Act (FDCPA) to continue to rein in abusive debt collection practices.

The FTC’s animated video explaining consumer rights regarding debt collection is available on the agency's website and on YouTube.

This blog post was coauthored by Ji Won Kim.

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