Et tu hospitals?
Why don’t antipoverty programs work? “The unrelenting exploitation of the poor in labor, housing and financial markets,” according to a forthcoming book by Matthew Desmond
A new report crossed my desk this morning showing poor people and minorities are the biggest victims of America’s escalating medical debt crisis. It arrived on the heels of an eye-opening account in the Sunday New York Times magazine that provided a major corrective to traditional liberal thinking on why anti-poverty programs haven’t worked.
After some initial successes in the 1960s, the war on poverty over the next five decades consistently failed to reduce the national poverty rate below one-sixth of the population. “If American poverty persisted, I thought, it was because we had reduced our spending on the poor,” writes Princeton University sociology Matthew Desmond, author of the Pulitzer Prize-winning book Evicted.
“But I was wrong,” his new book, Poverty, by America, concludes. He now claims “stalled progress on poverty reduction” is primarily caused by our failure to “confront the unrelenting exploitation of the poor in the labor, housing and financial markets.”
Sector by sector, Desmond documents how low-wage employers, low-income landlords and the financial sector’s big banks and payday lenders systematically rip off the poor. This three-legged stool of oppression offsets nearly all the gains delivered by successful anti-poverty programs like supplemental nutrition assistance (previously known as food stamps), the low-income tax credit, housing vouchers and public housing, and increased child welfare allowances.
Dumping medical debt on the poor
Today’s Urban Institute issue brief added a fourth leg to the stool dumped on the poor: the unpaid medical bills caused by the gaps and loopholes in America’s toilet bowl of a health insurance system. Fully two-thirds of the 15% of American adults with past due medical debts earn less than 250% of the federal poverty level, the cutoff line for most hospital systems’ financial aid programs. More than a quarter of these medical debtors owe only hospitals, with three-fourths of debtors attributing some or all of their debts to unpaid hospital bills. Estimates of total unpaid medical debts range between $80 billion and $200 billion. For many, their unpaid bills dwarf their total household assets.
Despite the Affordable Care Act’s expansion of insurance coverage and most states expanding Medicaid, “the persistence of medical debt highlights the ongoing challenges families face in obtaining affordable health care,” writes Michael Karpman, a research associate at the Urban Institute. They include “high prices for services, gaps in access to health insurance coverage, and inadequate protection against out-of-pocket costs for many people with high-deductible insurance plans.”
The ACA requires non-profit hospitals, which account for about 60% of all facilities in the U.S., to establish patient assistance programs as a condition of their maintaining tax-exempt status. Yet those policies “are often difficult to find, use vague language, and have varying documentation requirements, income and asset limits.” They are also unclear as to what charges are discounted and what services and providers are covered. A 2020 GAO study found virtually no federal oversight of these programs.
The result? Non-profit hospitals spend less on charity care than either for-profit or government-run hospitals, the report says. A few states – Illinois, Maryland, New Jersey, Oregon and Rhode Island – have passed laws mandating hospitals write off the medical debts of people earning poverty and near-poverty level wages. A few others have restricted debt collections.
Of course, there’s plenty more that states could do to rein in medical debt. The 11 states that haven’t expanded Medicaid could cover adults earning up to 138% of the poverty level, following the examples of conservative states like South Dakota, Oklahoma and Missouri, the most recent to expand the program. An estimated 3.7 million people would gain coverage in those 11 states, the two largest being Florida and Texas.
The company they keep
It's rather sad to think about the company the nation’s non-profit hospitals keep when they add to the burdens of the nation’s poorest citizens. Desmond’s critique starts with employers of low-wage workers. “Nearly 23% of American workers labor in low-paying jobs, compared with roughly 17% in Britain, 11% in Japan and 5% in Italy,” he writes.