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When Poverty Is Profitable [TheAtlantic.com]

 

America’s safety-net programs are meant to help the poorest and most vulnerable access meet their basic needs—food, medical care, and safe housing—and there’s an ongoing debate about just how robust and successful these programs are.

In his new book, The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens, Daniel L. Hatcher, suggests that the problems plaguing programs such as foster care and Medicaid are deeper and more troubling than most realize. Hatcher, a professor at the University of Baltimore’s School of Law, writes:

States and their human service agencies are partnering with private companies to form a vast poverty industry, turning America’s most vulnerable populations into a source of revenue … The resulting industry is strip-mining billions in federal aid and other funds from impoverished families, abused and neglected children, and the disabled and elderly poor.

How does this happen? Hatcher uses the example of the foster-care system, where some states enlist the help of private consultants to come up with strategies to maximize disability claims for children in its care. That results in higher payouts from the federal government. But instead of using that money to care for children, the money is diverted, and used for other things the state deems necessary.

I spoke with Hatcher about his book, how states and private groups help abuse the safety net, and how to prevent such abuses. The interview below has been lightly edited for clarity.

[For more of this story, written by Gillian B. White, go to http://www.theatlantic.com/bus...rty-industry/487958/]

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Let's not forget the health care system. There are health care systems which are non profit that continue to build more structures usually in better income areas and pay high wages to their executives.  But they do not pay  living wages to their non professional staff .  They use their tax exempt status to pay no taxes on these buildings, but keep lower quality hospitals and other medical structures with a caste system.  What is done is they steer the medicaid clients to the poorly staffed and managed inner city hospitals that they must keep open to retain their tax status.  It is interesting that the hospital systems constantly complain about the loss of revenue from these inner city hospitals, but never share that over all they are in the black.  

When I was teaching a graduate course in health care financing, I always told my class to remember that in the United States, health care is a business, not social policy. Prior to the implementation of the Affordable Health Care Act (ACA), one system reported a net income of around 150 million dollars.  The next year they reported a net income of over 500 million dollars.

 

If only not-for-profit agencies, "social service" agencies and their funders/planners existed and operated with the goal of one-day not being relevant rather than operating with the corporate sense of perpetuity.

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