Shriver Center: February 2006

Perspective: The Real Crisis in Health Care, Something Has Got to Give

2008-01-08T15:46:58Z

by John Bouman

Forty-six million Americans have no health insurance. About 1.8 million of them are here in Illinois. The facts are painful. The uninsured are sicker and die sooner. They have trouble on the job because they are frequently “sick at work” or preoccupied with family health issues. They have crushing medical debt, which is the second leading cause of family bankruptcy and a leading cause of family stress and breakdown. And the cost of their emergency care is built into hospital rates charged to insured patients, whose insurance is therefore $1,000 more each year in Illinois. In addition to this human and social cost, the financial cost of the uninsured is now a major part of the cost of doing business in America. Something has got to give.

The public sector in Illinoishas stepped up admirably. Through Medicaid, KidCare, FamilyCare, and the new All Kids program, Illinois offers publicly supported health coverage to about two million Illinoisans who are elderly, have disabilities, or are in working families with children. Even with this strong performance, Illinois’s uninsured population grows every year due to losses in the private sector, mostly in small businesses. Middle-class families and people without children (mostly younger and lower paid) are now the bulk of the uninsured.

Illinois Sen. Debbie Halvorson and Rep. Mary Flowers have a promising idea that would go to the heart of this issue. It is the Healthy Illinois Program, now pending in the General Assembly. It would decrease the cost of private-sector insurance for small employers and their employees and provide public subsidies to ensure affordability for lower-paid workers not eligible for any current public health coverage program. Healthy Illinois asks every sector to agree to changes—hospitals, insurance companies, doctors, and consumers. Healthy Illinois is one idea that offers relief for the health coverage crisis on a scale that would have a significant impact.

President Bush’s proposals to expand Health Saving Accounts and health insurance tax breaks may help a little. However, the help appears mostly targeted to the healthy and wealthy and does little to curb health care costs. It may even raise the cost of employer-based coverage on which sicker workers will still have to rely. Even if Bush’s ideas were helpful, they are small-scale, nibbling at the edges of the country’s health care crisis. The public is desperate for strong action, and the political potency of the health coverage issue is perhaps unsurpassed. The true crisis lies not in the rising cost of health care but in the impending social and human costs of neglecting real solutions. Something has got to give.

A Growing Poverty Trend Earns Illinois the Unfavorable Distinction of Being the Worst in the Midwest

2008-01-08T15:46:58Z

by Amy Rynell

Illinois has the worst poverty rate in the Midwest and ranks last on 14 other economic, health, housing, and education indicators despite being one of the richest states in the region. This information and much more can be found in the 2006 Report on Illinois Poverty, newly released by Heartland Alliance. The report explores poverty in Illinois in order to foster dialogue and promote policy changes that aid the most vulnerable Illinoisans.

The growth of Illinois poverty is startling. Since 1999, there has been an increase of 342,716 new people living in poverty. The poverty rate has climbed from 10 percent to 12.4 percent, meaning that over 1.5 million Illinoisans live in poverty. Thirty-one Illinois counties had an increase in the rate of poverty from 2002 to 2003, and one in four Illinoisans lives near poverty—enough people to fill Montana, Idaho, North Dakota, and South Dakota combined.

These disturbing poverty trends and Illinois’s bleak standing in the Midwest have been exacerbated by the state budget crisis which has resulted in a $387 million decrease in state human services funding from 2001 to 2004. Over time, the cumulative impact of the state’s failure to keep up with inflation combined with real program cuts has significantly increased pressure on local providers and service delivery systems to do more with diminishing support from the state.

Behind these trends, numbers, and rates are real people who have very real struggles and are discovering that work is no longer a guarantee to living without poverty. Illinoisans have suffered from the most mass layoffs in the nation, and nearly 25 percent of all Illinois workers are making the equivalent of poverty-level wages for a family of four. Illinois minority workers are watching their wages continually fall behind those of white workers, and the number of employers offering health insurance and other benefits to their workers is declining.

In addition to declining wages and the lack of meaningful work opportunities for Illinoisans, the report highlights that many Illinoisans have few to no assets. One in every five Illinoisans is asset-poor with Illinois women and minorities experiencing much higher rates of asset poverty. Despite the accepted notion that assets are vital for economic stability, assets are becoming increasingly difficult for Illinois families to accumulate. Median value for owner-occupied units in Illinois rose 20.8 percent from 2000 to 2004, tuition and fees for four-year public Illinois universities have skyrocketed 47 percent, and the bankruptcy rate in Illinois has doubled in the last 10 years.

The problem of poverty in Illinois spans racial, ethnic, age, gender, familial, and geographic boundaries. No group is immune, and no region is without hardship. While 9 percent of Illinois seniors live in poverty, nearly half would be in poverty without social security benefits. Over a half-million Illinois children live in poverty, and 31.4 percent of Illinois women live near poverty. Although some positive change has occurred, 34 of Illinois’s 102 counties were placed on either the Poverty Watch or Warning lists indicating serious struggles with critical indicators including high school graduation rates, teen birth rates, unemployment rates, and poverty rates across the state.

Illinois has yet to make comprehensive changes to ensure that each Illinoisan lives free from poverty. However, encouraging signs on the horizon illustrate how Illinois can construct a pathway out of poverty.

Illinois has raised its minimum wage above the required federal level, has committed to ensuring that each Illinois child has access to affordable health insurance, and will soon launch the largest state-run rent subsidy program in the nation. Further investments in policies such as these, those that reward work, provide stability, and expand asset-building opportunities for all, are necessary to afford opportunities to vulnerable Illinoisans, strengthen the Illinois economy, and ideally move Illinois from worst in the Midwest to best in the Midwest.

A downloadable copy of the 2006 Report on Illinois Poverty is available here.

For more information contact Amy Rynell at Heartland Alliance.

Poverty Action Report
February 2006

Announcements

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Get our 2005 Clearinghouse Review’s special issue at a reduced price!

How are adolescents coping with poverty? What can advocates do? Find out in Clearinghouse Review’s special issue on “Our Commitment to Youth.”

Featuring: “The Ensuring Success in School Act: Promoting School Success and Safety for Young People Who Are Expectant Parents, Parents, or Victims of Domestic or Sexual Violence,” By Wendy Pollack, Aleeza Strubel, and Jennifer Lee. “The Sargent Shriver National Center on Poverty Law has been seeking to understand the barriers that youth who are expectant parents, parents, or the victims of domestic or sexual violence face in order to address their needs adequately and enable them to complete their education. The Shriver Center undertook research to develop the Ensuring Success in School Act (ESSA), presents the significant provisions of the legislation, and describes its ongoing ESSA campaign in Illinois.”

Single copies of the 2005 special issue are on sale at $30 a copy for nonprofit entities and $60 a copy for others. To purchase this issue or for information on subscribing to Clearinghouse Review, email Nancy Carey.

Journal Preview for March–April 2006: Clearinghouse Review: Journal of Poverty Law and Policy

Featuring: “The Path to Universal Health Coverage for Children in Illinois,” By John Bouman

“As other states and Congress consider whether to pursue the All Kids strategy for health coverage to all children amidst persistent state and national fiscal troubles, the path to All Kids in Illinois may be a useful case study. The path to All Kids in Illinois demonstrates, however, that the development of the policy environment and the assertion of political leadership on health coverage are not artifacts of circumstances unique to Illinois but are possible in other states and on the national level.”

For information on subscribing to Clearinghouse Review, email Nancy Carey.

Poverty Action Report
February 2006

Chicago Low-Income Housing Trust Fund's Rental Assistance Will Expand with New State Resources

2008-01-08T15:46:58Z

by Doug Dobmeyer

About $12 million, or 40 percent, of the $30 million estimated annual proceeds from Illinois’s rental assistance program, set to start this summer, will come to the Chicago Low-Income Housing Trust Fund and enable the trust fund to expand its current rental assistance work. The new Illinois program will be funded by recordation fees of documents in real estate transactions in the state.

This year the housing trust is funding a program that Chicago has developed to house homeless men and women staying in Chicago’s parks and other outside spaces. This pilot seeks to house 100 people in 2006. The challenge here is that this group tends to be the hardest of the homeless to place in housing.

The beginnings of the trust fund date to the late 1980s—a noisy time. Chicago’s building boom included the Presidential Towers on the west edge of the Loop. Street protests raged against the destruction of single room occupancy (SRO) housing while luxury housing went up in its place. I was a leader and president of the Chicago Coalition for the Homeless and helped lead the protests at the Presidential Towers. This was a site where 1,200 units of SRO housing were demolished.

Fast-forward to 1987 when McHugh, Shannon and Levin, the Presidential Towers’ owners, agreed to donate an initial $3.1 million to a fund to provide housing for homeless people. Fast-forward again to 1989. Mayor Harold Washington had died and Mayor Eugene Sawyer was fast becoming a memory. Richard M. Daley became mayor that year and quickly followed through with an ordinance that established the Chicago Low-Income Housing Trust Fund.

By 1990 the housing trust fund had been launched. The fund’s board appointed by the mayor and confirmed by the City Council worked closely with Chicago’s Department of Housing. During the past 16 years the fund distributed over $113 million to provide almost 26,000 units of housing for low-income families and single people.

The rental assistance program represents the largest use of this money. The fund has used $73 million to provide 24,000 apartment units. Today the fund is providing over 2,000 units a year with rental subsidies. The average cost per unit during the past 16 years has been $3,060 annually or $255 a month in subsidies. The $73 million has funded all sizes of apartments from SRO units to six-bedroom units.

The balance of the fund—$40 million—has been used to write down development costs in exchange for rental units for low-income families. The trust has also funded some units to house homeless families. From 1999 to 2001 the trust provided the Salvation Army with funds for people who were on the state’s General Assistance program and faced assistance cutoff and losing their housing.

The trust fund provides rental assistance directly to landlords through yearly contracts. The landlord is responsible for maintaining safe and sanitary housing that meets Chicago’s building codes. Each unit is inspected by the Department of Housing before any agreement is signed with landlords.

Chicago’s contracts with landlords benefit tenants. For example, if tenants can afford only $250 a month for a two-bedroom apartment and the rent is $750, the trust fund will pay the $500-a-month difference or $6,000 annually. Tenants’ portion of the rent is targeted to be capped at 30 percent of the tenants’ income—the same as Section 8 rents. The trust fund seeks to limit subsidized tenants in larger buildings to no more than one-third of the total number of tenants.

Tenants are eligible if they have incomes of no more than the amounts for the family size in the following chart. This income equals between 0 and 30 percent of the median income for the Chicago area.

GROSS HOUSEHOLD INCOME LIMITS

Household Size	Maximum Income
1	$15,850
2	18,100
3	20,350
4	22,600
5	24,450
6	26,250
7	28,050
8	29,850

Either landlords or tenants may bring a unit or number of units in a building to the trust fund for possible subsidy. While subsidies depend on available financial resources, the trust will fund as many units as its dollars allow. Unless an eligible tenant moves, the units fail to meet building codes, or the landlord opts out, the subsidies may be renewed annually. There is no time limit on how long a subsidy may go to a unit or tenant.

Tom McNulty, the trust fund’s president, said, “The past 16 years has been an example of what local government can accomplish working with the private sector and those committed to ending homelessness.”

The Chicago Low-Income Housing Trust Fund may be reached by calling Nora Saldivar at 312.742.0290

Doug Dobmeyer has been a member of the board of directors and secretary of the Chicago Low-Income Housing Trust Fund since 1990.

Poverty Action Report
February 2006

Housing Counselors at Risk Under New Laws and Rules

2008-01-08T15:46:59Z

Housing counselors are at risk of legal action and insufficient compensation under the proposed rules of the Residential Real Property Disclosure Act (H.B. 4050). The Illinois General Assembly passed the Act, effective January 1, 2006, implementing a four-year pilot program requiring designated mortgage applicants living in certain neighborhoods on Chicago’s Southwest Side to seek housing counseling. Housing counselors are required to submit applicant financial information into a new Predatory Lending Database and to offer a series of “recommendations” indicative of the future of the proposed transactions. However, any person violating this statute commits “an unlawful practice within the meaning of the Consumer Fraud and Deceptive Practices Act” (Section 765 ILCS 77/70(j)).

As the law currently reads, if a counselor receives inaccurate financial information from a borrower and then misevaluates the quality of a loan or lender, or even fails to realize that a borrower is “precipitously close to not being able to afford the loan” (Section 765 ILCS 77/74 new), the counselor could be exposed to liability under the Illinois Consumer Fraud and Deceptive Business Practices Act. Whether or not the housing counselor’s error is negligent or an innocent mistake, the counselor may still face liability. This overly broad provision not only limits the flow of important information to borrowers but also could prevent borrowers from obtaining mortgage loans or negatively affect a seller’s ability to sell property in the designated neighborhoods.

Not only does the Act fail to provide adequate legal protection for housing counselors, but also the Act fails to provide a uniform compensation amount to ensure that lenders pay for the full cost of the counseling. Currently the Department of Financial and Professional Regulation rules state that “reasonable and customary costs associated with credit counseling provided under the Act shall be paid…” (Chapter 2, DFPR Section 346.30), but the rules do not specify the amount to be paid or the system of collecting fees and paying counselors. The rules were passed last month but are awaiting an implementation date.

Housing advocates, including Housing Action Illinois, Neighborhood Housing Services of Chicago, Lakeside CDC, the Woodstock Institute, the Resurrection Project, LUCHA, the Spanish Coalition for Housing, the Legal Assistance Foundation of Metropolitan Chicago, the Rogers Park Community Development Corporation, and the Sargent Shriver National Center on Poverty Law are calling on the state to establish legal protections for housing counselors and to administer a sufficient, consensual, and centralized payment system. A state-administered centralized collection and payment system and a clear compensation structure will ensure that needed housing counseling is available to borrowers.

For more information, contact Brenda Grauer, Housing Action Illinois, 312.939.6074 ext. 2, or Dan Lindsey, Legal Assistance Foundation of Metropolitan Chicago, 312.347.8365.

Poverty Action Report
February 2006

Let's Talk TANF: Congress Gets Around to It

2008-01-08T15:46:59Z

The federal budget reconciliation bill for federal fiscal year 2007 (which began on October 1, 2006) passed in early February. That bill included the long-awaited reauthorization of the Temporary Assistance for Needy Families (TANF) program. Congress was originally scheduled to reauthorize the TANF program four years ago and had been operating the program on stopgap resolutions since then.

Many details will emerge over the next few months, but here are the main provisions:

The TANF block grant will stay at the same level. This is a federal fund that the states must spend on programs for low-income families with children. In Illinois this amounts to $535 million a year. It has been at this level since 1997 and thus has lost substantial value because it has not kept up with the annual increase in the cost of living.
Child care funding will go up $200 million per year nationally for five years, or about $8.8 million per year in Illinois. This is not a block grant fund but a matching fund that the states will have to draw down by spending state funds. This is far below the amount needed to keep up with inflation and with the child care needs of the added numbers of TANF cases that must meet work requirements under the new provisions outlined below.
Effective October 1, 2006, states will have to have 50 percent of their TANF caseloads engaged in 30 hours per week of activities countable under federal rules as “work activities.” Separately they will have to have 90 percent of two-parent families engaged in 30 hours per week of countable work activities.
Work participation rates will be reduced only by the amount that the state’s TANF caseloads decrease since the base year of 2005. Since Illinois caseloads were at an all-time low in 2005, Illinois is unlikely to get any benefit from this new caseload reduction credit. The work requirement in Illinois will most likely be 50 percent for the foreseeable future. Current estimates are that 46 percent of the Illinois TANF caseload meets the work requirements.
Financial penalties against states that do not meet work participation rates remain the same as under prior law. The initial penalty is up to 5 percent of the block grant, and the state maintenance-of-effort requirement will increase, for a total penalty of about $25 million.
For the first time, the bill requires that the federal TANF agency produce regulations defining what activities count as “work activities,” how recipients must report their hours of work activities, and what documentation will be required to verify those activities. The regulations will define what kinds of TANF families are “child only” families. These rules must be published and in effect by June 30, 2006. There is potential for difficulty in these rules.

Illinois officials have a number of options for implementing these new statutory provisions. We will continue to cover both state and federal implementation activities over the next months.

For more information, contact John Bouman.

Poverty Action Report
February 2006

Federal Budget Hurts the Poor, Grows the Deficit

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The complex and seemingly interminable federal budget battle continues toward a possible conclusion in February. Each house of Congress has passed a “budget reconciliation” bill that includes many different provisions that would resolve the federal budget for federal fiscal year 2006 (October 2005 to September 2006). The most recent Senate version was passed just before Christmas and is slightly different from the version previously passed by the House. Now it must go back to the House for another vote. That vote is currently scheduled for February 1.

The reconciliation bill is a faithful, somewhat scaled-down expression of the Bush administration’s priorities. It contains many budget cuts in important programs, including Medicaid, for low-income people. It also uses that “saved” money from those cuts, plus additional money that the government does not have to provide tax cuts for the wealthiest few, thus expanding the already-record federal deficit. (Details can be found at www.cbpp.org.) Those who oppose the reconciliation bill can and should press their representatives, especially the Republicans who control the outcome, to vote “no” in February.

It is extremely difficult to understand the rationale for this budget. The government has immense and important jobs to do that require adequate funding. These jobs include extraordinary ones such as managing the Iraq and Afghanistan wars, the larger war on terror, and administering hurricane relief. However, many observers say that these tasks are more expensive because of mistakes made by the administration.

On a larger and ongoing scale, poverty in general, and child poverty in particular, is increasing. The incidence of poverty has less and less to do with whether a family’s income comes from employment—the fastest-growing poor population is employed. More and more people, especially employed people, have no health insurance or have inadequate coverage. All health care is becoming prohibitively expensive.

A smart and proactive government role, including investments, is necessary to attack these problems and deliver a measure of support to families experiencing hardship. However, the Bush administration was loyally obeyed (or exceeded) by its congressional allies who proposed a $20,000 a year raise (through tax cuts) to millionaires who each have already received something like $100,000 a year in tax relief under the first Bush budget. Now they want that $100,000 raise be made permanent. As a result of this largesse to the wealthiest, the administration claims the government cannot afford to address important tasks adequately.

There is no moral or values-based argument that can sustain this approach, and none is really offered by its proponents. Indeed, the approach seems closer to a bald and polarizing assertion of power in support of “ours” (businesses and individuals who already have the most money) over, and at the expense of, “theirs” (individuals and families who have less). There seems to be an attempt to turn this assertion of power into a virtue, but it falls flat. There is not much moral difference between the power rationale—“I can do it, therefore I will do it”—and the attempt to turn it into a virtue—“I can do it, therefore I should do it.”

The Bush/Republican budget approach is dressed up not in a values-based argument but an economic one: If those with the most money have more money, then all will be well. We hope they will invest the added money. When they invest, it is theoretically possible that there will be more jobs (although this must remain theoretical— there is no duty or obligation or statistically certain job creation outcome—market forces will decide). If, in the end, there are more jobs, then it is theoretically possible that some of the jobs will pay wages that allow families to escape poverty. A smaller number might receive wages that enable them to support a family. Meanwhile, because we have given away all the money to the wealthiest few, the budget will defund programs that help the working poor make ends meet and satisfy basic needs such as health care.

This is a budget for the economic elite. It is not a budget for the vast majority of working families, and certainly not for the less fortunate among us. It is a budget largely made by those ideologically opposed to a constructive role for government in solving large social and economic problems. People with a different vision and a different moral frame of reference should urge their representatives to vote no on the reconciliation bill.