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Friday, May 15, 2020

Focusing efforts on reducing costs of COVID-19 for those least able to bear them

Elaine Weiss, Lead Analyst for Income Security

Over the past two months, it has become clear that, like many other crises to hit the United States in recent decades – Hurricanes Katrina, Harvey, and Maria and the floods and droughts that have wiped out farms across the Midwest and California – the COVID-19 pandemic is disproportionately hurting those with the fewest resources to cope. The second Virtual Roundtable in the Academy’s Responding to COVID-19 series highlighted these realities. The challenges facing low-income communities should be a high priority as a growing number of states begin to re-open (with five Midwestern governors never having closed down their states).

Moderated by Washington Post columnist Helaine Olen, the April 21 Academy Roundtable aimed to help participants consider how future federal and state legislation might more effectively tackle the needs of low-income individuals and communities. Indivar Dutta-Gupta, Co-Executive Director of the Georgetown Center on Poverty & Inequality and an Academy Board Member, noted how low-income Americans and people of color are especially vulnerable due to both high rates of underlying health problems like asthma and other pulmonary diseases and lack of access to regular health care and testing in their communities. Sara Rosenbaum, Professor at the George Washington University School of Public Health and Health Services, highlighted the particular challenges faced by 27.9 million uninsured people across the country, for whom becoming ill could quickly result in bankruptcy. (This number continues to grow as more people lose their jobs and, with them, employer-sponsored health insurance.)

Uninsured members of marginalized communities are often part of the “essential” front-line of workers who expose themselves every day in the course of delivering our mail and groceries, removing our trash, and, as newspapers report with increasing concern, producing the large quantities of meat that we eat. Unfortunately, new OSHA guidance, which has no legal force, fails to provide sufficient protection for front-line workers at high risk.

Many low-income workers are immigrants, whose financial straits may be compounded by lack of legal protection. For families who live in close quarters where social distancing is not a viable option, when one member of the household becomes sick, the disease quickly spreads. The multi-generation families that are common in immigrant communities are especially high-risk.

Legislative responses to address the issues

The federal government has enacted legislation in response to some of these realities facing low-income communities, as the Roundtable speakers noted, but major gaps remain. For states assessing how to reopen safely and ensure that the costs in human lives do not overwhelm the economic benefits, suggestions from the Roundtable presenters offer helpful guidance.

For example, recent federal legislation now makes emergency Unemployment Insurance (UI) benefits available to many of the part-time and low-wage workers who are excluded from traditional UI coverage. However, employers, newly jobless workers, and advocates report that UI benefits remain elusive for millions due to poorly structured and outdated systems and lack of state resources to provide needed guidance. Therefore, policymakers should consider other ways to shore up and reform the UI program. Further federal or state legislation could include work-sharing options and/or partial UI benefits and other strategies that channel dollars to the low-wage workers who need them most.

Cash payments under the CARES Act will help many, but others, especially low-income Americans without bank accounts who need them most, will miss out, and some immigrants lack the required Social Security number. Despite more legislation to boost available funds for small business, most mom-and-pop businesses are unable to access the support to stay afloat and keep their employees on payrolls. Looking ahead, it is critical that future stimulus packages be structured to ensure that money goes straight to the small businesses and low-income workers who have little to zero cushion and that oversight measures ensure such targeting is enforced.

Similar gaps persist in other areas. For those who are still working, 80 hours of coronavirus-related paid leave is a welcome boost, but millions of low-income workers are excluded from this support.

Recent federal legislation has temporarily increased funding for state Medicaid programs that meet certain requirements. Medicaid and CHIP programs are also required to cover coronavirus-related testing services with no cost-sharing or utilization management for enrollees and have the option to extend testing coverage to uninsured individuals. Still, many lower income individuals, especially those who are uninsured or underinsured, are at risk of incurring significant costs if hospitalized.

Moreover, despite the substantial increase in food insecurity driven by these problems, there is no increase in the maximum allotment for food stamps, making it impossible for many families to make it through the entire month without turning to over-stretched and under-resourced food pantries.

Mitigating risks with social insurance solutions

Bold ideas like Member David Riemer’s suggestion that we look to FDR’s New Deal for inspiration, and forthcoming suggestions from the Academy’s Economic Security Study Panel, illustrate the potential of evolving and strengthening our social insurance infrastructure to meet the new challenges that this pandemic has revealed. In the past century since the first form of social insurance, Workers’ Compensation, was established in the United States, social insurance systems have adapted to new demographic, economic, and other realities. There is no reason they cannot, or should not, do the same now.

This moment offers an opportunity to assess the degree to which our social insurance systems, along with new relief policies enacted during the pandemic, might better protect large segments of our population from the risks posed by the novel coronavirus and by future crises that we know will come. Governors reopening their states should ensure that social insurance programs, which are designed to mitigate a broad range of risks for all Americans, in coordination with social assistance programs that complement them, are leveraged to their full potential.

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