Hatcher details state methods of exploiting the poor for profit

Professor Daniel Hatcher.

Professor Daniel Hatcher.

Professor Daniel Hatcher, the author of The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens, published this month by NYU Press, has recently discussed his work in The Atlantic, The Guardian and Transformation.

His topic: The creation by state governments, in partnership with private companies, of a vast “poverty industry” that turns the nation’s most vulnerable into a source of profit. (See earlier blog post.)

In Maryland, the state foster-care agency has joined forces with a firm called MAXIMUS Inc. to find children whose parents are dead, as well as children with disabilities. Their aim is not to help the youngsters but to allow the state to take their survivor and disability benefits. In a state contract, MAXIMUS referred to foster children as a “revenue generating mechanism.”

Other states take even more from foster children, including VA benefits from youngsters whose parent or parents died in the military, Hatcher says.

Children are by no means the only target of such revenue-enhancing schemes.

States are using hospitals and nursing homes in Medicaid “shell games,” Hatcher writes, by maximizing revenue intended to serve the elderly and poor and then diverting the money to their general budgets.

Texas has used these schemes to re-route $1.7 billion in Medicaid funds to state coffers over a five-year period, Hatcher writes in Transformation.

He adds that, though states and the federal government are supposed to share the cost of providing Medicaid services, Texas contributes no money whatsoever, instead forcing hospitals and nursing homes to provide the state’s share; Texas then takes the federal contribution for its general fund. As a result, state hospitals are discouraged from treating the poorest Texans, Hatcher says.

Also, some states and counties partner with companies that turn courts into debtors’ prisons, Hatcher says. Poor defendants are assigned onerous fines and, to try to make sure they pay, the state hires private collection agencies, as well as probation agencies and firms that make electronic monitoring devices – which each add their own fees.

“If the poor can’t pay, they go to jail,” Hatcher says. “An Alabama judge told poor litigants that they must sell their blood in order to pay their court fines or face time behind bars. Poor debtors in Mississippi have been forced into penal farms to work off court fines at a rate of $58 a day.”

Hatcher details other revenue-enhancing schemes, including the practice by some nursing homes and juvenile facilities of sedating residents with psychotropic medications to reduce staffing costs — and increase profits. Pharmaceutical companies have faced charges of encouraging such actions via illegal marketing, he notes.

Learn more about Professor Hatcher.

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