Exposing the greedy bastards who prey on poor people

The cover of The Poverty Industry book, with a background of run-down buildings.
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The current coronavirus pandemic has demonstrated the sharp inequities in our country. Due to lack of medical care, overcrowded living arrangements and heightened exposure to illness through their essential, front-line labor, poor people (all races, but disproportionately Black and brown) face the greatest burdens.

One would think our most at-risk residents — children, elders and low-income people — have enough to contend with. But a new book expands our understanding of the cruel system that regularly abuses those entrusted to its care. The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens, by Daniel L. Hatcher, lays bare widespread unethical and often outright illegal practices of a combination of government agencies and private enterprise contractors to extract money from those they are supposed to serve.

Throwing children and elders overboard. Hatcher opens with an exposé of the foster care system. He uses the example of a young client whose father died. The agency applied for his Social Security survivor benefits and received the payments. It then became the child’s “representative payee,” “managing” his financial affairs by pocketing the money. The agency robbed the client, who didn’t learn of this travesty until he left the system.

Government agencies and non-profits often hire private corporations to help them identify benefits for their clients. But the funds rarely find their way to the beneficiaries. Insidiously, these companies have now taken over some functions of government agencies, such as group homes for foster children, nursing homes and court probation.

The author also uncovers the practice of giving children and elders in institutions strong psychotropic drugs in order to reduce staffing. Such cost-cutting measures are often employed by private contractors in the poverty industry.

Hatcher cites a particularly egregious case of a private consultant hired by a state to seek expanded Medicaid benefits, who was later hired by the federal government to find ways to cut benefits.

Maximizing profits. Private consultants represent a major portion of the U.S.’s march toward privatization and outright theft of benefits. These companies have discovered what the health care industry has long known — there’s profit to be made from human misery. MAXIMUS is probably the largest such company. It is international, with offices from Canada and the United Kingdom to Australia and Saudi Arabia, offering a range of social services. Even defense contractors are in on the act, with Lockheed Martin recovering child support, running group homes and working in the probation system.

State child support payment recovery is often cruel. If a woman applies for welfare, she is forced to sue in court and an organization like MAXIMUS goes after the impoverished father. The author is not the first to point out that the aggressive, adversarial methods used in such collections further weaken and destroy family relationships and income.

Just as the number of private prisons expands, private industry has become involved in all aspects of the court and probation system. These companies are allowed to tack on exorbitant charges in addition to court-ordered fines and fees. The result is that the low-income people targeted fall behind in their payments and are eventually arrested. This can result in the loss of employment or a driver’s license, setting them back even further. They are then re-arrested and the cycle starts all over again. All this results in growing profits for private consultants.

Undoing the damage. Although the author does point to long-term cuts in federal spending as the source of the problem, he is short on solutions to the rip-offs he describes so extensively. He maintains there is a place for public-private partnerships to develop solutions to agencies’ problems. He merely calls for tighter government regulation of the industry.

The main conclusion I draw from the book, which Hatcher fails to see, is that there is no place for profit-making private industry in providing human services. Far from improving life for those in their clutches, these companies siphon off funds from programs designed to relieve suffering. For example, total income to state foster care agencies is a quarter of a billion dollars a year. A large share of that goes to MAXIMUS and other profiteers.

Programs such as foster care, welfare and Medicaid are funded by taxpayers and should be run by well-trained and well-paid public workers. Benefits are for the most in need, not state coffers or private industry.

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