Arkansas Playing Gotcha with the Poor to Cut Them Off of Medicaid

New Orleans  In a sordid and shameful episode a few weeks ago Arkansas Governor Asa Hutchinson pridefully announced that the state had managed to bar 4300 people from health care support through Medicaid because of its new work requirement policies.  Seema Verma the head of the federal Center for Medical Services (CMS) who had approved this draconian attack on the poor played clueless cheerleader.

As more information come forward the real evil that underlies this shame emerges.  Let’s look at the facts.

Arkansas began the experiment by exempting two-thirds of the eligible recipients from having to report work hours, knowing this was going to be a problem.  30,000 people were then required to report.  16,000 didn’t report any qualifying activities to the state, either work, training or volunteer time.  In fact, according to the New York Times, “only 1200 about 2% of those eligible for the requirement, told the state they had done enough of the required activities in August, according to state figures.”  That’s pickle-poor!  It screams to a state failure not a people failure, and it foretells thousands more that will be denied coverage.

State officials tried to cover their rear ends, claiming they had done everything possible:  mailings, calls, and even putting out fliers some places where Medicaid patients congregate.  Even more ridiculously they touted the fact that they send emails and posted on social media sites.  Who are they trying to fool?  Arkansas ranks 48th among all of the states in the US in terms of connectivity and 30% of the population is underserved.  230,000 people in Arkansas don’t have any wired internet providers available where they live.  Who wants to guess whether embedded in these sorry statistics lie most of these lower income Medicaid recipients?

Shockingly, the Times then quoted Amy Webb, the chief communications and engagement officer for the Arkansas Department of Human Services saying, “If there’s something we are not doing to reach people, if someone will tell us how to do that, we will do it.”  Yeah, really?  She doesn’t mention that the state legislature forbade any use of media to increase enrollment under the Affordable Care Act.  Nowhere do they claim they were on the television or radio airwaves.  As the manager of KABF, a 100,000-watt noncommercial smack dab in the middle of the state with more than 50,000 listeners per week, more than half of them lower income, I can absolutely tell you we never received a public service announcement from them, much less any support for a real information promotion of the program.

Every other indication is one of abysmal failure.  The state conceded even when they had email address, only 20 to 30% opened the email.  Call centers said many didn’t answer their phones.  A professor from New York visited three counties in August and interviewed 18 people and 12 were unaware that work requirements even existed.  Other experts noted that an incentive system, even a punitive one trying to get more people into the workforce, won’t work if people don’t know about it.  Duh!

Adding injury to injury, all of the work hours are required to be submitted through the internet.  That’s the same internet thing that hundreds of thousands of Arkansans are not able to access, and even with access are not necessarily all-pro at using the state’s clunky website.

State officials in Arkansas need to start some truth telling.  These so-called work requirements are nothing of the kind.  This a pure and simple way to push eligible people off of Medicaid.  Hopefully a coming court hearing will stop this hypocrisy.

In the meantime, this is a scandal that none of us should be able to stomach.

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Please enjoy Johnny Guitar from Twisted Wheel.

Thanks to KABF.

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The IRS Enables the Return of Refund Anticipation Loans

New Orleans   Refund anticipation loans or RALs, as they were known, were one of the most predatory products on the market in their heyday targeted solely to low-and-moderate income workers who were most desperate for their tax returns. They were on the other side of the digital divide so less likely to file with the IRS electronically. The money was theirs, and tax preparers, especially the big boys of the market, H&R Block, Jackson & Hewitt, and Liberty Tax Services all exploited this desperation.

This was a 21st century national campaign for ACORN, and we forced the first negotiations with H&R Block after 330 actions in a 6 week time period during the height of the tax season, and eventually ended up with agreements with all three of the companies to wind down RALs. Disclosures of the interest rates were part all of the agreements, but it didn’t really matter since even if it said the interest rate on the loan to get their money one week earlier than the IRS would deliver it would cost them 349%, displayed in a poster or on the computer screen, if you have to have the money to pay rent or buy groceries or fix the car and you have to have it right now, disclosures, no matter how predatory don’t matter. Eventually we got HSBC to withdraw as the primary lender to the companies for RALs for what they termed, “reputational reasons” because the loans were so exploitative. Finally, the IRS and eventually other government agencies jumped in and also condemned RALs, and they finally faded from the market.

Now, thanks to the IRS, they are back, and there is even less doubt about the potential victims now. In 2017, the IRS decided to deliberately delay refunds until February for any taxpayer that claimed the earned-income tax credit or the child tax credit. These credits are only available to lower income workers. Presidents from Clinton to Bush to Obama have argued that EITC is the best and largest “anti-poverty program in the United States.”

On their website the IRS claimed they were concerned about an “error rate” of between 20 and 27% for filers in order to justify these delays. Something is fishy here. This is the IRS. The error rate should be an exact number based on information they have at hand on how many corrected filings they required, so giving a fudged number raises questions in my mind. Furthermore, their advice is to preparers who enable incorrect filings, which the IRS concedes are largely based on the complexity and confusion involved in the EITC program. Why was the pain not pushed to the preparers, rather than the families filing who were delayed unreasonably in receiving their returns? Oh, and meanwhile the number of audits of higher income filers is in the dumps now!

The preparers saw an opportunity and seized it by offering RALs again. Admittedly, these were no-interest loans this time offered against the amount of the return, and they had loan limits depending on the company’s policies. The big boys report over 1.5 million RALs are reported already this tax season with a month to go. Block did 840,000, Liberty175,000, and Jackson Hewitt 485,000. For the preparers, this is just the cost of customer acquisition, since it is cheese in the trap to catch low-income workers who would be forced to fork over the preparation cost to get their refunds.

No matter how much sugar you put in the coffee, this is once again the IRS partnering with private preparers to expand their businesses. The only real question is how long it will be before RALs are back in full and terrible force again?

The only good news in this tawdry story is that overall filings are down so far this year, so some people at least have decided to wait all of the vultures out.

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