Tuesday, March 31, 2009

Senate Bill 9: Requiring Identification Slows Valid Claims Without Identifying Fraud

Senate Bill 9 (SB 9) is back. The bill, aimed at preventing fraudulent applications for public benefits (including unemployment compensation) would require applicants to show identification when applying. The problem? While there is little to no evidence of such fraud, there is much evidence that SB 9 would slow benefits processing and prevent US citizens from receiving the benefits they have earned.

One of the biggest problems with SB 9 is a problem of logistics. Pennsylvania, like the rest of the country, is facing high unemployment rates, currently reaching 8.1% (see yesterday’s post for a pictorial representation).

In order to keep up with the increased rate of unemployment compensation requests, the state has bypassed its hiring freeze to bring on more workers to take phone calls. Unemployed workers can also apply online, but what they can’t do is apply in person – which is generally required when providing identification. SB 9 does say that identification can be provided by mail or electronic means, but doesn’t give details into how this process might work.

Nor does it provide details on how to pay for the cost, estimated by the Governor’s office last year to be over $19 million. When Colorado began requiring identification only for Medicaid programs, it was estimated that the programs would only save $170,000, with an outlay of $2.8 million.

Meanwhile, since about 11% of all US citizens lack identification, people who legitimately qualify for services may be turned away. Applying for identification has gotten more complicated since 9/11 – passports alone take at least 4-6 weeks to be received.

SB 9 is not closing a loophole to potential fraud. That loophole is already closed, since illegal immigrants are ineligible for major benefits programs. What it will do, just as similar requirements have done in other states, is prevent people who qualify for unemployment compensation or other programs from actually receiving them.

Saturday, March 28, 2009

Trying to Save Taxpayer Money? Drug Testing for Public Benefits Probably Isn’t the Answer (Even if it Were Constitutional)

This week has seen many news headlines discussing legislation to ensure that people using public programs are not also on drugs. At least eight states are looking to require testing before people can receive TANF, food stamps, or even unemployment. In Pennsylvania, several representatives are looking to introduce legislation requiring testing for welfare recipients.

So what’s the problem? The ACLU points out that drug testing of welfare recipients is flawed policy from three standpoints:
  • Fiscally: The drug test itself averages around $42 per person, not including personnel costs. If costs are measured by the number of people “caught,” they could range from $20,000-$77,000 per person – much more than what is spent on the amount of benefits received (the TANF cash grant has not been increased since 1990, when it was set at between $365 and $421 per month depending on the county a family resides in).
  • Scientifically: Drug testing services note that tests don’t usually catch “hard” drug use, such as methamphetamine or cocaine. And they definitely won’t catch alcohol abuse. In fact, the states that have considered mandatory drug testing have found something as simple and noninvasive as a questionnaire can detect 94% of drug use, and often the use of alcohol as well.
  • Constitutionally: All of this, of course, is something of a moot point: in 2003, the 6th Circuit of the Supreme Court ruled that random, suspicionless drug testing of welfare recipients was unconstitutional.
When we are looking to spend our public dollars wisely, the answer doesn’t appear to lie in the direction of drug testing, but in increasing access to job training, career counseling, and other important programs.

Friday, March 27, 2009

One Out of Four Adults in PA Has No Health Insurance

Berry Friesen’s post on the PA Health Access Network blog goes into much more detail, so please take a look. As he notes, a new report from Families USA, called “Americans at Risk”, shows that 2,845,000 Pennsylvanians under age 65 were uninsured for all or part of 2007-2008. Most of the uninsured (75.6%) were employed. Among the uninsured in Pennsylvania were 48% of all families who earn below 200% of the Federal Poverty Level, or around $44,000 per year for a family of four.

While we know that the number of uninsured in the US has been rising at an alarming rate, it is important to note that Pennsylvania has been hit especially hard. Between 2000 and 2004, Pennsylvania experienced the largest decrease in the number of adults covered by employer-sponsored insurance in the country. And while we know that the cost of insurance has been rising rapidly, what many people have not discussed is how that increase affects people living in the rural areas of our state. According to the Self-Sufficiency Standard for Pennsylvania, insurance costs are roughly the same throughout the state (assuming that employers are paying for a large portion of the coverage, which is not always true). But while health insurance costs are about 6% of total expenses in counties such as Philadelphia and Montgomery, they rise to between 9% and 11% of total household costs in Fayette and Cambria counties.

Thursday, March 26, 2009

Finally, Mortgage Rules that Make Sense

As a part of Governor Rendell’s comprehensive plan to address the housing crisis in Pennsylvania, the state has implemented a number of new regulations for mortgage companies to prevent the kinds of opportunistic and irresponsible mortgage practices partially responsible for this foreclosure mess. The regulations went into effect last week, and are attached to some pretty hefty fines. Mortgage companies are now required to record the borrower’s income and fixed expenses, as well as proof of his or her employment. Equally important, mortgage companies are now required to provide the buyer with a simple, one page document outlining the details and caveats of their loans, including variable interest rates and prepayment penalties.

Borrowers find themselves facing foreclosure for a variety of reasons. Some borrowers lose their jobs, and their unemployment payments are unable to keep pace with all their expenses, especially their mortgage payments. Others enter into contracts with lenders that are less than upfront, and some with lenders who are downright dishonest. Still, others bought property that did not appreciate over time, meaning that they could not refinance or borrow enough money to make what are called “balloon” payments. Regardless of the reasoning, the foreclosure/subprime crisis is at the eye of this storm, and these new regulations are necessary, and overdue, steps in addressing the kind of mortgage trickery that forced too many families out of their homes.

But what are laws without enforcement? Blame without consequence? Breaking the rules hardly seems like anything to fret about these days, at least for corporations. When corporations behave unethically or unlawfully, they’re offered bailouts—heck, even bonuses—in return. But these new rules are, at least seemingly, going to be taken seriously by the state and, more specifically, the Department of Banking. Fines up to $10,000 per offense, although not appallingly high, are some of the highest in the country for these types of misconduct.

Let’s hope it’s enough.

This regulation was published in the Pennsylvania Bulletin on December 20, 2008. Although other provisions went into effect then, mortgage companies were given 90 days to begin complying with these new documentation and disclosure regulations. For more information on the set of requirements and regulations, read the official press release at: http://www.banking.state.pa.us/banking/lib/banking/news_and_events/press_releases/2009/rls-bank-newmortrules2-031909.pdf.

Avoid Predatory Lenders – and Sign On Today!

While predatory lending is a year-round industry here in the US, the tax season is when the industry gains the most attention. Refund Anticipation Loans (RALs) are advertised in office windows, on billboards, and even on sandwich boards worn by people walking through the streets. Yet these RALs, which offer a chance to get a quick refund, are nothing more than loans charging exorbitant interest, sometimes as high as 800%. Refund anticipation loans cost workers $900 million each year, while their more commonly used partner, the payday loan, cost $8.6 billion each year.

Its time to stop predatory lending and start regulating the industry. The National Community Tax Coalition is sponsoring a petition asking for Interest Rate Protections, Credit Card Protections, and Financial Product Protections. Sign on today to ensure less predatory lending tomorrow!

Tuesday, March 24, 2009

Child Care Works (and lets parents work!)

In Pennsylvania today, and across the country, we are constantly talking about the increasing numbers of unemployed workers. Workers are encouraged to take any job they can find, and often want to do so simply to bring in a paycheck. However, taking “any job” can come at a cost, especially to children.

Unless workers can earn enough money to pay for childcare (and in Pennsylvania, the costs range from $800-$1600 per month to care for an infant and a preschooler), they must rely on a patchwork of friends and family, or unlicensed child care providers. If friends are called away or families have their own emergencies, the workers who rely on them might lose their pay, or even their jobs. When workers accept “any job,” they run the risk of not being able to afford keeping their children safe, even though they need to work to pay for food, heating, and housing.

Pennsylvania offers a great program to help parents find and keep employment by subsidizing their childcare. The Child Care Works program subsidizes families earning up to 200% of the Federal Poverty Level, or a little over $42,000 per year for a family of four. However, the waiting list for this program is now at 15,000, and parents who sign up for the program can expect to wait up to 18 months before receiving the subsidy. Until state funding increases for the program, parents must continue waiting –and worrying that when they do find a job, a lack of child care will prevent them from taking it.