Shana Alex Lavarreda, director of health insurance studies at the UCLA Center for Health Policy Research, describes a Sept. 27 presentation she gave at a community forum organized by the New America Foundation that brought bankers together with hospitals, advocates and community leaders to address health and wealth disparities among low-income residents in California.
In the past decade, as part of the Center’s State of Health Insurance in California (SHIC) project, I’ve often found myself talking to rooms full of policymakers and public advocates. My job is to arm them with solid data and information that can contribute (hopefully) to sound public policies that help low-income people gain health insurance coverage, either through public program expansions or through help with private coverage. (Or both, as in the case of the Affordable Care Act (ACA) of 2010.)
Last week, however, I found myself in room full of bankers – not my usual crowd. And yet we were all talking about the same thing: How can we help low-income people get access to good health care?
Olivia Calderon of the New America Foundation’s California Asset Building Program had brought together this unusual gathering at the Federal Reserve Bank of San Francisco in downtown Los Angeles, which included representatives from large banks such as Bank of America, smaller community-focused banks, public health officials, and hospital practitioners. On the table was one topic: How can we increase assets among low-income households so that they can afford health insurance for their families and have better access to needed health care?
The solution? Micro-lending: Very small (and thus manageable) loans that enable low-income Californians to start a small business, pay medical bills and begin to lift themselves out of poverty.
Mark Rukavina, Executive Director of The Access Project, set the scene using data from the Center’s last SHIC report. He noted that two-thirds of Californians with medical debt in 2007 were insured at the time they incurred the debt. And the total amount of debt was relatively small – most owed $2,000 or less. Yet a savings account that would cover $2,000 of medical debt might easily disqualify a household from receiving public health insurance, under current rules.
Leif Haase, Senior Health Fellow with the New America Foundation, pointed out that the subsidies that ACA will bring in 2014 will help, but there will still be some out-of-pocket costs families will have to pay.
And $2,000 is more than many total monthly household incomes, according to Jose Quiñonez, Executive Director of the Mission Asset Fund. His organization provides low-income people in the Mission District in San Francisco with easy-to-understand financial comparisions between community bank loans and payday advance lenders.
Quiñonez also discussed the overwhelming burden that medical debt placed upon low-income communities. He pointed out that expecting immediate payment on medical bills – as payday lenders or collection agencies require – would be impossible for many. However, community banks that practice fair lending and invest in local communities, may be more flexible in allowing people to eliminate their debt over time.
Ms. Calderon brought this back to the importance of asset-building – with a savings account, low-income people would not have to incur debt in the first place.
Banks already have a legal obligation to loan a certain percentage of their assets to the local community. The message of this gathering was also that they had not only a legal obligation, but a moral responsibility to find responsible ways to micro-lend to low-income households. And public policies must reward, not punish, low-income families who create savings and build their assets in order to pay for possible future health care expenses, including the predictable ones after they gain health insurance.
Micro-loans as a way to protect family health? Absolutely, this group agreed. What’s needed now is for bankers, and their community partners, to come up with a business plan that turns bankers into humanitarians.
Health Insurance Studies Program (UCLA Center for Health Policy Research)
Affordable Health Care Act of 2010
The State of Health Insurance in California (UCLA Center for Health Policy Research)
Two-Thirds of California’s Seven Million Uninsured May Obtain Coverage Under Health Care Reform (UCLA Center for Health Policy Research)
Who Can Participate in the California Health Benefit Exchange? (UCLA Center for Health Policy Research)
Californians Newly Eligible for Medi-Cal under Health Care Reform (UCLA Center for Health Policy Research)