Shriver Center: January 2008

CLEARINGHOUSE REVIEW Authors to Moderate Discussion Group

2008-01-18T16:24:12Z

Two authors will moderate an online discussion of affirmative advocacy strategies following publication of articles on the topic in the March–April 2008 issue of CLEARINGHOUSE REVIEW: JOURNAL OF POVERTY LAW AND POLICY. The article and discussion group will be open to all, subscribers and non-subscribers alike.

Ross Doloff, National Training Director at the Center for Legal Aid Education, writes that advocates often feel overwhelmed and stifled by heavy caseloads and daily demands. Doloff proposes that organizations reprioritize and allow for more structural, proactive approaches to advocacy. A companion piece coauthored by Rachel Shannon Brown, an advocate with Legal Assistance Corporation of Central Massachusetts, expresses frustration over newer advocates’ experiences in legal services and what they view as inflexible, highly stratified organizations that are resistant to change. Brown asserts that more open leadership structure will foster more dynamic organizations.

Seeking to encourage dialogue and debate over these provocative articles, the Shriver Center will sponsor an online discussion group on affirmative advocacy that will be moderated by Ross Doloff and Rachel Brown. Readers will be invited to post comments, suggestions, and questions for the authors. Registration and participation is free, and there is no requirement that participants be subscribers to the REVIEW.

Look for more information to come at www.povertylaw.org, future issues of Poverty Action Report, and in the March–April issue of CLEARINGHOUSE REVIEW. For more information or to sign up early, please email martinstainthorp@povertylaw.org.

Illinois Braces Itself for a Change in Public Health Care System

2008-01-18T16:24:03Z

Beginning as early as mid-January 2008, a change in Illinois’s health insurance programs will affect all people enrolled in Medicaid, All Kids, and FamilyCare. Once this change is put into effect, patients wishing to seek medical care (such as treatment from a specialist) outside their “medical home” must first receive a referral from their regular doctor.

The “medical home” model ensures that all are connected to a regular doctor or clinic aware of their medical history and therefore able to coordinate the best possible medical care for them. Although this change is essentially a positive one in that it offers a system of accountability and creates more reliable patient-physician relationships, people must be well informed of this upcoming change in order to avoid problems.

If patients do not get proper referrals from their regular providers, they may be refused care from doctors outside their “medical home.” Doctors must check the referral status of any new patients coming into their offices, particularly in the case of specialists. Once this system change is put into effect, doctors will be denied payment by the state for treatment of patients seen without referrals.

How the Program Will Work

Patients enrolled in Medicaid, All Kids, or FamilyCare are simultaneously enrolled in a program called Illinois Health Connect. Patients choose a health plan and primary care provider (PCP) to act as their regular doctor. The PCP’s office is the patient’s “medical home,” the place where the patient goes for all basic medical needs and necessary referrals to other physicians and specialists.

Patients living in Cook, Madison, Perry, Randolph, St. Clair, and Washington counties may choose from two different kinds of health plans. The first is a fee-for-service plan under which the state pays doctors back for every service provided. The second is a Managed Care Plan where doctors receive a flat rate for each patient regardless of the treatments they provide.

In the other 98 counties in Illinois, people enrolled in state health insurance programs will receive fee-for-service care.

How to Avoid Noncompliance

According to representatives from the Illinois Department of Healthcare and Family Services (IDHFS), state computers as early as mid-January will begin rejecting claims if they are not accompanied by a PCP referral. In order to make a referral, a PCP must register the referral with Automated Health Systems—the administrator contracted by Illinois to recruit doctors, enroll patients with a “best fit” provider, and track referrals to ensure that appropriate payments are made. Doctors can register referrals via the Internet, phone, or fax. PCPs should give the patient’s name, ID number, address, and phone number and the PCP’s IDHFS provider number and that of the referred doctor. Once a referral is made, the patient has the responsibility of following up with the specialist and making an appointment. The PCP must include a date range for the referral. When a referral expires, patients must renew it with their PCP or risk being denied care.

Referrals Not Required for All Services

Some services do not require referrals and are considered direct access services. Health care needs that necessitate immediate care such as emergency room and ambulatory services or direct inpatient admissions to hospitals may be served without first obtaining a PCP referral. Family planning, obstetrics and gynecology visits, mental health care, substance abuse care, and sexually transmitted disease treatments do not require referrals from PCPs because they are considered personal health care. Visit www.illinoishealthconnect.com for more information on which services do not require referrals.

Providers will receive notice from IDHFS when the official start date of the “no-referral, no-payment policy” is determined. According to IDHFS representatives, there may be a month-long test period to ensure that things run smoothly. However, this is unconfirmed. The state has been rolling out this new system for over a year, matching people up with regular doctors or clinics and getting them used to the idea that they need to start getting referrals to see any doctor who is not their primary care physician. IDHFS has implemented this new system such that patients in Illinois can continue to count on their doctors for coordinated, appropriate health coverage focused on primary care, prevention, and appropriate treatment.

For more information, contact Melissa Cubria at 312.368.1168

American Consumers Continue to Carry the Burden of Rising Health Care Costs

2008-01-18T16:23:56Z

In a Commonwealth Fund–supported study in the January/February 2008 issue of Health Affairs, researchers at the Center for Studying Health System Change and the federal Agency for Healthcare Research and Quality found that rising health care costs, a slowed economy, and stagnant incomes created greater financial burdens for U.S. families. The study found that in 2004 one in six Americans lived in families that spent more than 10 percent of their after-tax income on health care—approximately 18 percent of the nonelderly population, up from 16 percent in 2001. This means that consumers will continue to struggle to pay medical bills and subsequently incur medical debt that could begin to affect other areas of their lives. Some may even forgo necessary care as costs skyrocket and employers and private insurance companies continue to shift costs and provide inadequate coverage.

In the first part of this decade, health care costs began to grow faster than inflation. Employers shifted more of their expenses to workers through a combination of higher premiums, deductibles, and co-payments. Families strapped with this added burden of health care faced another problem—economic pressures due to slowed income growth. Poverty rates increased, and the ranks of the uninsured swelled. Today approximately 47 million people live without insurance in the United States.

According to this informative report, the rising cost of health care is no longer just a problem for people living in poverty. Although poor and low-income people face a greater prevalence of high financial burdens, middle-income families are also at risk of becoming the next group of consumers to struggle with medical expenses and insubstantial coverage.

To learn more about the effects rising health care costs on middle and lower income consumers, as well as those receiving private versus public coverage, visit please visit: http://www.commonwealthfund.org/.

Black-White Income Gap Grows

2008-01-18T16:23:48Z

Income inequality between black and white families increased over the past three decades, according to a 2007 study, Economic Mobility of Black and White Families, by Julia Isaacs of the Brookings Institution. The study examined the economic success and income mobility of black and white families from the late 1960s to the early 2000s.

In 2004 the typical family income of blacks in their 30s was 58 percent of that of white families in the same age bracket—down from 63 percent in 1974. While median family income had increased for whites and blacks since the late 1960s, this was largely attributed to more women joining the workforce. Inflation-adjusted income for black men declined by 12 percent over the past three decades.

Most striking, the data indicate that middle-income black families did not pass on higher incomes to their children. Only one in three black children from middle-income families achieved a higher income than their parents, while 45 percent fell into the lowest income category.

The study used census statistics as well as survey data that tracked 2,367 people over more than thirty years. It compared the incomes of parents in their 30s in the late 1960s and early 1970s with the incomes of their children when they reached the same age. The results show that, at each income level, black children were less likely than white children to grow up to have higher incomes than their parents.

This study is part of a series of reports on poverty for the Economic Mobility Project. It is available online.

New Resource: Spotlight on Poverty and Opportunity

2008-01-18T16:23:39Z

An initiative of the Annie E. Casey Foundation, Eos Foundation, and other major national foundations, Spotlight on Poverty and Opportunity is a Web space that aims to build momentum for national action on poverty in 2009.

In order to stimulate a nationwide dialogue on poverty and opportunity, Spotlightonpoverty.org offers information on the presidential candidates’ positions, current press coverage, debate, and commentary including a recent video from Los Angeles Mayor Antonio Villaraigosa, chair of the U.S. Conference of Mayors Taskforce on Poverty, Work and Opportunity. Recent reports, analyses, and data on poverty and opportunity are profiled on the site and readily available to policymakers, thought leaders, and the public. The site also has links to the latest research, data, and organizations working on poverty and opportunity.

To find out about breaking news from Spotlight on Poverty and Opportunity, visit www.spotlightonpoverty.org.

Teen Bank Model Generates Interest in Philadelphia

2008-01-18T16:23:31Z

The idea of teen- or student-run banks has been met with great enthusiasm and support. Operating student banks in underserved communities provides financial education, positive role models, workforce development, and exposure to educational opportunities.

Dory Rand, supervising attorney of the Shriver Center’s Community Investment Unit, recently gave a presentation to a group of potential bank partners at a “Banking on Our Youth and Our Community” meeting sponsored by the Philadelphia High School, the Kensington International Business/Finance and Entrepreneurship High School, and the Federal Deposit Insurance Corporation (FDIC). Representatives from the FDIC and North Fork Bank also gave presentations. Eileen Maicon Weissman, principal of Kensington, shared her proposal to develop a student-run bank in the mostly minority and low-income high school.

Rand discussed why teen banks represented a viable solution to many of the problems that face students in largely unbanked and underbanked communities. As the lead coordinator of the student-run Curie Branch of Park Federal Savings Bank in Chicago and as a consultant on teen-run banks that have since opened in the Bronx, New York, and in Fresno, California, Rand has seen just how positive the results can be for students, schools, communities, and banks involved in the project.

Rand cited the Cardinal Branch of Mitchell Bank in Milwaukee, Wisconsin, the first-ever student-run bank, as laying the foundation for the concept and feasibility of student-run banks in predominantly unbanked and underbanked communities. The Milwaukee branch, which opened in August 2000, has over $800,000 in deposits and has successfully integrated itself into the predominantly Hispanic and immigrant community.

Rand has given presentations to hundreds of people across the country and created a video and a complete guide to establishing student-run banks. Rand continues to advise on the importance of student-run banks as a means to financial education, positive role models, workforce development, and exposure to educational opportunities.

For more information on student-run banks, contact Kelly E. Slay at or Dory Rand at .
To view A Guide to Establishing Bank Branches in High Schools and the video Branching Out, visit http://www.povertylaw.org/advocacy/community-investment.

Reactions to the Foreclosure Crisis: Bush Announces Mortgage Rate Freeze

2008-06-16T16:28:19Z

In a move to protect the economy from a foreclosure crisis, the Bush administration recently unveiled a plan to freeze subprime adjustable mortgage interest rates for homeowners meeting specific criteria. The plan, crafted after weeks of discussions with mortgage lenders, servicers, and investors, is coordinated by Treasury Secretary Henry Paulson and members of the Hope Now Alliance, a coalition created by the U.S. Department of the Treasury in 2004. The alliance helps families keep their homes and prevent possible harm due to a weakening housing market.

The rate-freeze plan, however, will likely affect only a small group of borrowers. In order to qualify for the five-year freeze on interest rates, homeowners must be current in their loan payments and the first rate adjustment must take place between January 1, 2008, and July 31, 2010. The interest payments must reach at least 10 percent, and the homeowners must be living in the home. The plan applies only to those subprime adjustable rate mortgages taken out between January 1, 2005, and July 31, 2007.

These conditions place severe limitations on eligibility and do not adequately deal with the endemic problems of the lending industry. According to the Mortgage Bankers Association, 0.78 percent of mortgages went into foreclosure in the third quarter, and 5.59 percent were behind in payments. Neither of these groups would qualify under the Bush plan. Approximately 100,000 to 600,000 borrowers will be eligible out of over 2,000,000 homeowners facing subprime adjustable-rate interest increases over the next two years.

The Shriver Center finds that the Bush plan is insufficient and that stronger action is needed to solve the housing market crisis. Moving in this direction, Sen. Christopher Dodd (D-Conn.) recently introduced legislation to improve housing market regulations and the accountability of brokers, lenders, and investors. Dodd’s bill, the Homeownership Preservation and Protection Act of 2007 (S. 2452), takes on such lending problems as excessive mortgage broker fees, inadequate underwriting, inflated appraisals, abusive payment penalties, and fraudulent servicing practices.

Along with the National Community Reinvestment Coalition, the Shriver Center endorses Senator Dodd’s bill and is contacting other lawmakers to build congressional support. By increasing fiduciary responsibility, this legislation holds the potential to bring positive, lasting change in the mortgage-lending marketplace.

For more information, contact Dory Rand at or Brian Clappier.

Payday Loan Grinch Comes to Town

2008-01-18T16:23:10Z

Just before the Christmas holiday, Illinois advocates joined a rally to warn consumers of the hazards of payday installment loans. Fast cash during the nation’s peak shopping season might sound like a deal, but the truth is that many loans, particularly those taken out over a 120-day period, are highly unregulated. Consumers beware. The Payday Loan Reform Act of 2005, while in itself a victory, leaves many vulnerable to aggressive loan servicers.

The payday loan rally, held on December 5, brought numerous organizations and advocates out to a downtown Chicago Americash location. Lt. Gov. Pat Quinn joined the Monsignor John Egan Campaign for Payday Loan Reform, including Citizen Action–Illinois, Woodstock Institute, Heartland Alliance for Human Needs & Human Rights, the Illinois Asset Building Group, the 8th Day Center for Justice, and the Shriver Center to raise awareness of the critical need to reform payday loans. A Payday Loan Grinch was on-site that morning.

“Payday loans can be dangerous to your financial health. Consumers should be especially alert if they take out any payday loan that is more than 120 days in length,” said Dory Rand, supervising attorney of the Shriver Center’s Community Investment Unit. “If you do, you will not be protected by the Illinois law that regulates payday loans and protects consumers.”

Payday loans or cash advance loans, like those sold by Americash, can steal the holiday fun from millions of Americans. The Center for Responsible Lending estimates that consumers lose $3.4 billion yearly on payday loan interest and fees.

The Monsignor John Egan Campaign for Payday Loan Reform plans to close the loopholes in the Payday Loan Reform Act and propose consumer protection amendments to the Consumer Installment Loan Act.

The Shriver Center joins the Monsignor Egan Campaign in advocating fair laws and policies that protect consumers’ wealth. The Shriver Center’s Community Investment Unit takes action to end poverty by promoting the expansion of asset-building and protection policies for all Americans. For more information, visit the Community Investment Unit or call Dory Rand at 312.368.2007.

Payday_Grinch

2008-09-05T18:24:36Z

Payday loan Grinch visits a Chicago AmeriCash location December 2007 for a rally around consumer loan protection.

It’s Time for Leadership on Job Training

2008-01-18T16:22:53Z

Throughout America, there is a boom happening, but it is not one we should be especially proud of. It is a boom in very low-wage work. A growing number of jobs do not pay enough to sustain a family. Paradoxically, there are employers—many of them—who will tell you that if they could hire skilled workers, those workers would be paid career-path family-sustaining wages. They explain that to compete in the world economy these skilled workers are essential but do not exist in the communities in which those employers are located. Rather than ignore opportunity, businesses consider relocating or attempt to obtain a sufficient number of work visas from Homeland Security to import the necessary skilled workforce from foreign countries. Employers face the loss of an opportune moment for growth, and the communities, the states, and the nation lose a chance for economic development.

There is a connection here that is not being made, an opportunity that is not being seized for businesses and workers. Promising strategies already exist to deliver the necessary training and skills to low-paid American workers. These strategies offer career paths and higher pay to the workers. Smart local and state governments will increasingly adopt these strategies in concert with their business communities. Instead of continuing its years-long disinvestment in job training, the federal government can prompt and support the use of these and similar strategies.

One leading strategy is to have a three-way partnership among a government funder/facilitator, a community-based training provider (such as a community college or a nongovernment organization that has the experience and capacity), and local employers who need specific types of skilled workers. These three groups work in conjunction to identify skills needed, develop programs to train a workforce, and ultimately find jobs for trainees. This basic system has worked very well in small pilots such as the Job Training and Economic Development Program in Illinois. The common sense is astonishing. So is the fact that this strategy is in such little supply around the country. It needs a modest amount of government funding, a keen focus on doing it right and not cutting corners, and leadership to convene the necessary players.

Another successful strategy is to establish career paths to higher-paying employment. Programs teach entry-level and basic skills and help people find such employment, but the programs then continue to offer workers opportunities to develop skills and credentials key to landing better jobs in an industry. The Joyce Foundation in Chicago coordinates in the Midwest a multi-state initiative, called Shifting Gears, to develop and promote programming to create various paths to credentials and careers, and there are successful programs in many other locations around the country. Once again what is needed is a relatively modest investment by the government, close attention to doing it right and not cutting corners, and leadership to convene the necessary players.

A strategy that has worked well at getting very hard-to-employ workers started in the workforce, and thus getting them started toward higher-paying and career-path jobs, is “Transitional Jobs.” This strategy meets the needs of three somewhat overlapping groups (among others) with high percentages of chronic unemployment: disconnected youth, people reentering communities after a time in prison, and very low-income single mothers. The transitional jobs strategy puts the person into a subsidized wage-paying job. This employment is combined with case-managed social services designed to identify whatever the employment-blocking problems are and to develop a program to help the worker learn to cope with or remedy those problems. The strategy provides instant earnings while dealing with the highly individualized sets of barriers that cause chronic unemployment. See www.transitionaljobs.org. It, too, needs investment and increased scale, proper implementation (it can easily but catastrophically be confused with “workfare” type programs, which have never produced good results), and leadership.

The cause of improving jobs and securing higher pay also would be mightily served by reforming our core educational systems. There should be improvements in our high school curricula to prepare students for higher-paying jobs in the communities served by the schools. And now, more than ever, college ensures the fullest opportunity for success in the modern economy. College attendance should be facilitated and promoted with tuition assistance and childcare services. In fact, given the nature of the modern economy, two years of postsecondary education should be added to the basic guarantee of a free public education. Again, there are ideas that work, and they need funding, attention to quality, and leadership.

There are several themes here. We need to combine economic development with workforce development, bringing employers into the conversation. We need to think about career paths. We should adopt specific proven strategies all along the employment and education continuum but conceive of them as parts of a larger whole that flows from entry-level to family-sustaining wages. We must have a helpful level of government funding and attention to quality. And, as we enter an election year, perhaps above all we should be aware of the need for leadership that understands these issues and assigns them appropriate priority in public budgets and administration.

PAR_JAN_08

2008-01-18T16:22:43Z

Rate Caps—the Only Proven Cure for Payday Loan Debt

2008-01-18T19:02:47Z

“The only proven way for state policymakers to protect their citizens from predatory small loans is to enforce a comprehensive small loan law with an interest rate cap at or around 36 percent,” concludes the Center for Responsible Lending (CRL) in a report released in December. See www.responsiblelending.org.

Entitled “Springing the Debt Trap: Rate Caps Are Only Proven Payday Lending Reform,” the report reaches that conclusion after evaluating the effectiveness of three types of payday loan policies: little or no restriction; an interest rate cap; and a middle ground where payday lenders may charge triple-digit interest rates with certain restrictions. Most payday borrowers are trapped in long-term debt. The CRL finds that the debt trap persists even in states using the middle ground approach including the following measures:
·    Renewal bans/cooling-off periods
·    Limits on number of loans outstanding at any one time
·    Payment plans
·    Loan amount caps based on borrower’s income
·    Databases which enforce ineffective provisions
·    Regulations that narrowly target payday loans

Instead the CRL finds that states enforcing a comprehensive interest rate cap at or around 36 percent have solved the debt trap problem and saved their constituents $1.5 billion.

The report singles out Illinois as an example of how narrowly targeted laws are ineffective. The payday loan law enacted in Illinois in 2005 covers only loans with over 36 percent interest rates and terms of less than 120 days. “To avoid complying with these provisions … payday lenders changed their product to a longer-term ‘payday installment loan’ of at least 121 days,” the report states.

As advocates and policymakers return to state legislatures this year, they should heed CRL’s recommendations:
1.    Cap all interest rates on small loans at or near 36 percent.
2.    Cap the number of loans that a borrower may receive annually. To be effective, a loan cap must extend to all members of a household and be tracked through a statewide database. Ensure that customers may not be in debt for over three months in any 12-month period.
3.    Ban the use of the bank account access as collateral.
4.    Increase incentives for small loans. For example, make linked deposits of state funds in financial institutions that agree to make small installment loans at no more than a 36 annual percentage rate.
5.    Encourage the accumulation of emergency savings.

For information on efforts to reform payday lending in Illinois, contact Dory Rand at the Shriver Center at 312.368.2007 or the Msgr. John Egan Campaign for Payday Loan Reform at http://www.citizenaction-il.org/issues/predatorylending/predatorylending.html.