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History lessons: Local organizations can

provide care for the poorByWayne Hoffman, President

Executive summary

Throughout much of American history, charitable giving and local aid societies were the vehicles throughwhich the poor and underprivileged have been helped. These community-oriented systems were respected,proven ways of distributing services to a broad spectrum of people with a variety of needs.

Local groups that provide unique, focused support to help the poor, most especially health care, can bethe path forward again, not just in Idaho, but also in other states. Policymakers should consider fosteringthe growth of voluntary, private organizations that are historically proven to help lift people out of poverty,help the poor save for emergencies, and connect individuals with doctors and clinics. At the same time,policymakers must understand that the government must not play a central role in the delivery of charitableservices. The best role is to play no role at all.

To help those in need obtain health care, instead of expanding a federal program such as Medicaid, andinstead of providing a state government-run solution, the state could allow volunteers and volunteerism,charity and community-based support, to work by choosing to:

Expand Idaho's charity-care liability immunity statute1 to include physicians offering services for freefrom their own clinics, and to provide continuing education credits associated with such services.

Expand Idaho's statute governing Individual Development Accounts,2 to allow the accounts to be usedby Idahoans to save for a healthcare emergency.

Provide individual taxpayers with the option of donating their Grocery Tax Credit toward health-relatedprograms for low-income individuals and families.

Allow taxpayers to direct some or all of their income tax refund to be used by those in need for theirhealthcare purposes.

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Executive summary (continued)Utilize the state Millennium Income Fund as a source of revenue, to help match moniesraised by local organizations, to finance insurance premiums and other health-relatedprograms for poor and low-income people.

Re-direct state catastrophic healthcare monies toward privately-funded and -operatedhealth care programs, as described in this paper. The use of general taxpayer supportshould be short-term and funding decisions be predicated on local support in the form of afinancial match, as described later in this paper.

A history of caringAlexis deTocqueville, a Frenchman who visitedthe United States in the 1830s, took specialnote of American philanthropy and its criticalrole in helping to make the country a rising starlong before it became a world superpower. Inhis seminal two-volume book, "Democracy in

America," de Tocqueville noted that Americancharitable organizations (described in his lexiconas "associations") were successful at filling societalneeds:

In the United States, as soon as severalinhabitants have taken an opinion or anidea they wish to promote in society, theyseek each other out and unite togetheronce they have made contact. From thatmoment, they are no longer isolated buthave become a power seen from afarwhose activities serve as an example andwhose words are heeded.3

To understand this fully, one must realize that manyof American society's maladies were addressedby private, voluntary community organizationsand not the government. People came togetherto create organizations, and those organizationsunited to form hospitals, run orphanages, feedand clothe the homeless and the hungry, and soon. The organizations — fraternal benefit societies(also known as lodges or mutual aid societies) andcharities — bestowed upon their members manypractical resources to fight poverty, provide job andleadership training, and advance good character.4

The United States was not the originator of sucharrangements. "Friendly society" organizationshad cemented themselves in Britain as "the mostimportant providers of social welfare during the

nineteenth and early twentieth centuries."5 In theAmerican colonies, the Freemasons organizeda lodge in Boston in 1733.6 Those lodges spreadthroughout the eastern seaboard, bringing in newmembers from across the socioeconomic spectrum.Odd Fellows, Foresters and other groups followed.At first offering charity, the groups later added otherbenefits as part of their membership.

As the years rolled on, more organizations providedsupport in the event of economic hardship orillness. Fraternal societies, or lodges, became vitalin promoting the wellbeing of Americans. Men andwomen paid to belong to a lodge, in sickness and inhealth, and they benefited from that membership.As such, the use of medical care through a lodgewas commonplace. "Lodge doctors" were elected to

provide care to the membership. In 1915, the NewYork City health commissioner noted that manyof its residents had chosen lodges as the primarymechanism for helping the poor.7

History professor David Beito notes that fraternalorganizations experienced a decline in the early20th century, which may be attributed to the rise ofthe modern welfare state. A specific factor in thedecline of fraternal organizations was the lobbyingof medical associations, which sought to "organizemedicine to improve its fortunes by increasing itsprofessionalism and reducing its numbers, therebyraising their income."8 This effort worked too well.

Heatthcare researcher Greg Scandlen, an experton healthcare financing and insurance regulation,wrote, "The newly powerful voices of organizedmedicine went to work to end the practice of lodgemedicine. They objected to the idea that commonworkmen could be their bosses and that competing

Governmentaid programs,simply stated,have failed todeliver on theirpromises.

for lodge contracts on an annual basis depressedtheir incomes." He added, "They decided to drumout lodge physicians from the profession."9

Few know the role lodges played not so long agoin providing for the welfare of the poor and needy.Writes Beito:

When many of us hear the word lodge,we think of it as a place where televisioncharacters from our youth, such as RalphKramden (of the Loyal Order ofRaccoons)and Fred Flintstone (of the Loyal Orderof Water Buffalos), escaped from theirmore sensible wives to engage in childishhijinks—parading around with silly hats andmouthing pretentious rituals.

There was a time, however, when fraternalsocieties could not be so easily dismissed.Before the rise of the welfare state,they were rivaled only by churches asorganizational providers of social welfare.By conservative estimates eighteen millionAmerican men and women were members

in 1920 at least three out of every ten adultmales. While fraternal societies differed inethnicity, class, and gender, most shared acommon set of characteristics. In general,this included a decentralized lodge system,some sort of ritual, and the payment of cashbenefits in times of sickness and death.10

In 1914, Robert Alien, a doctor for the A.C. WhiteLumber Company of Idaho, wrote, like someEuropean nations, it was "only a matter of time[before] we will also have state insurance againstsickness."11 Alien's prediction started to cometrue in the 1960s with the creation of Medicaidand Medicare, and later with the passage of theAffordable Care Act (ACA) in 2010. Among other

things, the ACA mandates insurance coverage forall Americans.

Today, low-income Americans, excluding seniors

(who are on Medicare), may fall in one of threecategories: those who are on Medicaid, thosewho qualify for government-provided insurancesubsidies, and those who neither qualify forMedicaid or insurance subsidies. Of the lattercategory, the Affordable Care Act mandates thatstates expand Medicaid to cover that population,which includes low-income,able-bodied childlessadults. The U.S. Supreme Court has ruled thatsuch an expansion is optional, thus leading to thedebate underway in Idaho and other states.

But government aid programs, simply stated,have failed to deliver on their promises, especiallyover the long term. Moreover, they cause peopleto become more dependent on government.Author and researcher James L. Payne notes thatgovernment tends to ignore the failures associatedwith handouts.

Charity leaders of the nineteenth centuryhad lived with the poor and had analyzedthe effects of different kinds of aid. Theydiscovered that almsgiving—that is,something for nothing—actually hurtthe poor. First, it weakened them byundermining their motivation to improvethemselves. If you kept giving a man foodwhen he was hungry, you underminedhis incentive to look for a way to feedhimself. Second, handouts encouraged self-destructive vices by softening the naturalpenalties for irresponsible and sociallyharmful behavior. If you gave a man coalwho had wasted his money on drink, youencouraged him to drink away next month'scoal money, too. Finally, the nineteenth-

century experts argued, handouts were self-defeating. People became dependent onthem, and new recipients were attracted tothem. So this type of aid could never reducethe size of the needy population. Withhandouts, the more you gave, the more youhad to give.12

A personalrelationshipbetween theperson in needand the helper isthe foundation ofcharity.

Payne argues that the best way to provide for theneedy is to expect something of the recipient.Charity leaders prior to the rise of the welfare stateunderstood the need to emphasize self-sufficiency.He wrote, the needy "weren't given money, but

were counseled to find employment; they weren'tgiven apartments, but were rented, at cost, healthydwellings managed by charities; they weren't givenfood, but learned to grow their own food at gardenclubs developed for that purpose."13

Getting charity right

Payne has written extensively on the need forvolunteerism and community-based solutionsrather than government coercion through taxationin the guise of charity. But not all charity is createdequal. Through trial and error, Payne wrote in hisbook"0vercoming Welfare," charities figured outthat successful gifts — the ones that lifted peoplefrom poverty rather than trapping people in it —had certain common characteristics:

A personal relationship between the person in needand the helper is the foundation of charity.

Sympathetic (something-for-nothing) giving isgenerally harmful to the needy.

Personal assistance should focus on the individual'sfuture prospects, and therefore on his correctablepersonal shortcomings.

Effective helping elicits constructive action from therecipient.14

The reverse describes the trappings of government— a system that lacks personal connections,

handouts with no expectation of contributionor action on the part of the participant, and no

concern about what might inhibit their future.Payne writes further, accountability to the onepaying the bill makes charities different thangovernment in their success at helping individuals:

[l]n any kind of organization based onvoluntary donations, no matter how large,there is one ultimate check. If programsbecome too unattractive—if they areclearly seen to create dependency or toassist recipients who are not trying tohelp themselves—donors are free to stopcontributing. In the end, notoriously badprograms will be cut back or terminated.... Programs based on the tax system—

whether operated by government agenciesor nonprofits using tax money—lack thissafeguard. If donors are forced to givethrough the tax system, they cannot declineto support programs, no matter how muchthey disapprove of them.15

Said differently, charities live or die based on theblessing their supporters. If a charity fails to deliverthe results expected by the donor, the donor stopsgiving and the charity goes away. While somemay view this as a negative, it is, in fact, a blessing.Organizations come and go, and they're replacedby organizations that do better things or byorganizations that do things better. Donors drivethose decisions because their support is givenfreely, without coercion.

The same cannot be said for government. Thegovernment taxes individuals and then uses therevenue to fund programs. If the programs failto produce the desired results, government usesits force to compel more money from individualsand puts more money into the programs. Usually,special interests and program dependents applypolitical pressure to keep the program in place,causing politicians to keep funding — and evenincrease funding — for programs that do not work.

The Legislatureneed not createnew entities toaccomplish thetask.

However, taxpayer money is already being used topay for healthcare programs that are too costly andfail to help people in need.This support should bephased out. During this phase out, any taxpayermoney used for charitable purposes shouldmatched to the money raised locally. Additionally,such programs should:

1. Be funded, to the degree possible, withoutnew taxpayer support, e.g., the use of

tobacco settlement money or moniesvoluntarily assigned to the program by ataxpayer, e.g., through the voluntary releaseof grocery-tax credit dollars. Anotheroption is to redirect existing catastrophicheatthcare money.

2. Be open to a wide range of providers;statutory language should be written sothat a multitude of diverse organizationscan participate and not geared toward onetype of organization.

3. Be open to a wide range of services.

Organizations should be able to choosewhether enrollment in health insurance,direct primary care, gym memberships,health share ministries or other innovativearrangements would best meet the needsof a client.

4. Originate in the private sector. TheLegislature need not create new entities toaccomplish the task.

5. Allow the programs to operate in sucha way that organizations are able tooperate unfettered by new regulations,bureaucracies or addition of publicemployees.16

6. Not expect or depend on governmentmatching grants. Sunset clauses and afunding formula that reduces matchinggrant allocations over time would signal to

participating organizations that the need todevelop local support is real.

Individual Development Accounts

and other matching programs

Rolling backgovernment-run programs andallowing charity and other voluntary, privateprograms to take hold in their place will take time.There are examples, however, of programs thatcome from the private sector and have broadappeal.

People across the political spectrum have hailedthe use of Individual Development Accounts (IDAs).These are savings accounts that can be used forspecific, legally-defmed purposes, which, as of now,do not include healt care, but could.

Mere's how an Individual Development Accountgenerally works. A participating non-profitorganization works with a client who has apredefined savings goal. For every dollar the clientputs into the account, the non-profit matches thefunds at some level, as high as 5:1. To receive thematch and remain in the program, the client mustabide by the program's rules, which are set by eachnon-profit. Those rules may include, for example,

participation in a financial management class,home economics or other program tailored to thatperson's particular needs. Money in the account

can only be disbursed by the client and non-profitworking together.

IDAs enjoy broad support because they allowindividuals and families to develop savings, whichcould mean the difference between economicprosperity or ruination. Says the Annie E. CaseyFoundation, "Assets also can promote familystability, encourage political participation, andgive people a stake in their communities."17Conservative organizations like the fact that IDAsrequire participation on the part of the client andthat the savings goals and objectives are handledby a local organization, which works with the client,rather than a system that depends on governmentstaffing and direction.

Nationally, research on Individual DevelopmentAccounts has found that program participants were85 percent more likely to own a business and twiceas likely to go on to college than a comparablegroup that did not use IDAs.18

Under Idaho law, an IDA can be used specifically

for college savings, to buy a home or starta business.19 Since 2005,77 Idahoans havecompleted a program outside of the Boise Valley.This has helped 47 people to purchase a home, 25to receive a post-secondary education and five tostart a small business.20

In the Boise Valley, 33 people enrolled in theIDA, of which three withdrew. Of the remaining30 participants, seven completed the program,allowing them to enter college or purchase a home.The remaining 23 continue to save toward homepurchase and college education goals.21

Idaho law, at present, does not allow people to useIDA accounts for health-related purposes, though itcould.22 Additionally, such savings accounts couldbe augmented with matching dollars in order todramatically boost the savings that could be usedfor healthcare expenses. One source, as noted

above, is the Millennium Income Fund, which isused to allocate money from the 1990s settlementwith tobacco companies. Another potentialsource for matching funds is the state income-taxform; Idahoans who do not accept the tax creditassociated with grocery purchases can voluntarilygive that money to the state of Idaho. Currently, bylaw, the money can only be used for home energyassistance.23 Last year, about $300,000 was returned

to the cooperative welfare fund for this purpose.24Idaho lawmakers could provide taxpayers with theoption of utilizing the funds for healthcare costs,possibly matching the money put in by charities forIDA accounts.25 Re-allocating general fund moneyfrom the catastrophic health program toward thisprogram would also be a reasonable, temporarystep.

An Individual Development Account is just one toolbeing used by the volunteer sector — charities andrelated non-profit organizations —to help people

who are trying to elevate their economic stature.Other opportunities exist to remove obstaclesthat hinder community organizations and allownon-profits and fraternal benefit associations toreturn to their historic role in providing for peoplein need.This could be accomplished by makingmatching grants available to organizations in orderto build capacity and to leverage donor support forprograms that benefit the poor.

For example, a fraternal benefit society may wishto pay for a portion of a person's health insurancepremiums. That organization may also want toallocate money for a direct primary care program,gym membership or savings in an IndividualDevelopment Account. How the programs aredesigned is entirely up to the charity or fraternallodge.

Groups already offering help

If government refrains from crowding outcompeting enterprises that work with low-incomepeople, it is reasonable to expect that non-profitorganizations, fraternal benefit societies or othersimilar organizations may wish to step forward toprovide insurance or other programs as a benefitto members. Some non-profit organizations are

already helping fill a gap when it comes to assistingpeople buy insurance or accessing medical care.

In Seattle, Project Access Northwest has beenworking with low-income residents for 10 years.The non-profit organization has a budget of about$2 million and operates two programs, fundedalmost entirely by private donors.

PROJECT

The first program connects low-income, uninsuredpatients with specialty doctors. These doctorsvolunteer to offer their services to two patients amonth.26 Other practitioners elect to serve morepatients. As a result, as many as 40 specialties arecovered by some 1,600 doctors. Last year, the

organization served 6,700 patients. Fewer thanfive percent of Project Access Northwest patientsmissed their appointments.27

Project Access Northwest also started a programthat provides premium assistance support toclients who cannot afford insurance on their own.That program has thus far provided aid to 170households and 202 people, according to SallieNeillie, the organization's executive director. Neilliecontends the program has been highly successful,providing a return-on-investment to the program's

funders, the hospital system, by as much as fourdollars for every dollar invested.28

COMPASSIPNCONNECT

'v'rtw to S&n/e"

Compassion Connect, of Portland, is anotherexample of an organization doing good work forpeople of limited means who do not have access toaffordable healthcare. Compassion Connect workswith groups of churches to set up free health clinicsboth in the Pacific Northwest region and acrossthe globe. Love Caldwell, a volunteer organizationthat works to help people and the community,held a Compassion Connect free clinic on Sept. 10,2016, the third time it had done so. The clinic seeshundreds of patients, offeringmedical screenings and dentalcare.

Jim Porter, a pastor at CaldwellFree Methodist Church anda member of Love Caldwell,said the program is also anopportunity for communityresidents to show their

1-lkSECALDWELL

support for their neighbors. As many as a thirdof Love Caldwell's clinic volunteers are medicalprofessionals. "The remaining two-thirds are justpeople who recognize there are people who liveamong us who have profound needs and needa human touch," Porter said.29 Many of these

volunteers are teenagers, and Porter said hebelieves such youth participation could lead to alifetime of community involvement and caring.

Compassion Connect Executive Director MilanHomola said the organization is based on a beliefthat it is a moral imperative for neighbors to takecare of one another, and that churches must worktogether for the betterment of the people inthe community as part of church ministries.30 Inaddition to providing standard healthcare servicesone might expect at a free clinic, the CompassionConnect clinics also help the poor by offeringpodiatry and haircuts, aimed at improving thequality of life for people who otherwise would notbe able to afford such attention.

Homola said hospital systems participate in theclinics because they recognize the return oninvestment by providing services today ratherthan waiting for someone to show up at a hospitalemergency room, which is the most expensive wayto deliver care services.

Caldwell is also home to another successfulvolunteer-driven program that provides medicalcare to the needy. The Canyon County CommunityClinic started after a Bible Study group decided itwanted to give back to the community. Memberscontemplated starting a coat drive or participatingin a soup kitchen during Thanksgiving andChristmas. Instead, they decided to engage inthe community in an ongoing, dramatic wayby starting a clinic that utilizes the servicesof volunteer doctors and other practitioners.Originally, the clinic saw patients just one day a

We only ask thatvolunteers be able toI serve in a manner thatI /s consistent with theI love of Jesus Christ asthat is the foundation

I of which our servicesI are freely given to ourI patients.

week. Today, the patient offers services three daysa week and has a permanent headquarters indowntown Caldwell.

Though the clinic started as a faith-drivenendeavor, it welcomes people from all walks of life,as noted on the organization's website:

The Clinic endeavors to nurture thelongstanding traditions ofvolunteerismand community service among healthcare professionals, and strives to foster acollaborative team-oriented approach toaddressing the needs of the under servedand uninsured.

Volunteers are critical to the Canyon Clinic.We have volunteer opportunities foreveryone, including medical and counselingprofessionals, students, and retired andworking people. While we acknowledgethat the dream of opening the clinic wasignited by our desire to share the loveof Jesus Christ with others, and we areunabashed about our Christian faith, we donot require any volunteers or patients toadhere to the same faith we do. We only askthat volunteers be able to serve in a mannerthat is consistent with the love of JesusChrist as that is the foundation of which ourservices are freely given to our patients.31

Immunity for doctors andcontinuing education

Idaho already has a law that provides liabilityimmunity for doctors providing care to patientsat free clinics. This liability immunity, by law, canonly apply upon the written, voluntary consentof the patient. But that law does not include freecare conducted elsewhere. A simple change to

state statute would allow doctors to offer free carein their own clinics. This has practical advantagesto physicians who are seeing other patients inaddition to their charitable activities. Some statesmirror Idaho in providing liability immunity onlyat free clinics, while other states, like Montana andSouth Carolina apply the immunity wherever thecare is administered.

Florida and Georgia, meanwhile, are among statesthat use sovereign immunity. Under this kind ofarrangement, the medical provider is considereda"stateactor"forthe purposes of their charitableservices. In that case, the state would intervene onbehalf of the doctor in the event of a malpracticeclaim.

Sovereign immunity may be considered lesspreferable an arrangement by some, given that itdenotes that charity care can only occur under thewatchful eye of government. Sovereign immunityalso makes it so that a patient has to challenge thegovernment, with its near-unlimited resources,

in the pursuit of a legal claim. However, Floridaofficials consider the program successful, with only10 lawsuits having been filed since 1992.

Florida's laws also allow medical practitioners theoption of providing free or reduced-cost medicalservices in lieu of continuing education credits. Byone estimate, a Florida-style sovereign immunityarrangement plus continuing education creditswould provide Idahoans with more than 18,360potential free medical visits, saving them $ 10.4million.32

One more note of caution with regard to any ofthese suggested policy changes: a statute thatis written expressly for the purpose of offering"free" care, could fall into the same trap as otherprograms in which there are no expectationson the part of the patient. It may be preferableto include low-cost or reduced-cost services, so

that professionals that choose to charge a minoramount in order to encourage investment andparticipation on the part of the client can do so.

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Conclusion

Americans have a rich history of caring for one another, particularly when it comes tohealthcare needs. Until the rise of the modern welfare state, few people would havecontemplated depending on a government program for help. Today, few people imagine aworld where the poor are cared for by anyone except the government. Yet, consider whathas happened to health care since the intervention of government: the rapid rise of healthcare costs, the rapid rise of insurance premiums, and the decline in quality and availabilityof healthcare professionals. Rather than create a new government program, or expand afailing one like Medicaid, Idaho and other states would do well to look to the past for ideasabout how to contain costs and improve the quality of care.

Endnotes

1 Title 39, Chapter 77, Idaho Code.2 Title 56, Chapter 1 1, Idaho Code.3 Tocqueville, Alexis de, Harvey C. Mansfield,and Delba Winthrop. 2000. Democracy in America.Chicago: University of Chicago Press.4 David Beito, "From Mutual Aid to WelfareState: How Fraternal Societies Fought Poverty andTaught Character/'The Heritage Foundation, http://www.heritage.org/research/lecture/from-mutual-

aid-to-welfare-state.

5 David Green, Reinventing Civil Society: TheRed iscovery of Welfare Without Politics, 1993.6 David Beito, From Mutual Aid to the WelfareState, University of North Carolina Press, ChapelHill, 2005.7 Ibid.8 Ibid.9 Ibid.10 Beito, "Lodge Doctors and the Poor," May 1 ,1994. https://fee.org/articles/lodge-doctors-and-the-poor/11 Journal of the American MedicalAssociation, Volume 63,1914.12 James L. Payne/'WhytheWaron PovertyFailed," Foundation for Economic Education,January 1999, https://fee.org/articles/why-the-war-on-poverty-failed/13 Ibid.14 James. L. Payne, "Overcoming Welfare:

Expecting more from the poor—and fromourselves," Basic Books, 1998.

15 Ibid, page 82.16 It is understandable and foreseeable thatsome administrative overhead might be necessary,or that the disbursement of money from the statewould require some level of monitoring. The

focus should be on adding staff and regulationsnecessary to execute the ministerial andadministrative responsibilities of this program,not to manage it or to direct non-governmentalorganizations in their activities.17 Individual Development Accounts andOther Asset Tools, Annie E. Casey Foundation,August 2006.18 Assets for Independence Report toCongress, Oct. 11,2012.

19 Title 56, Chapter 11, Idaho Code.20 Data from the state Division of FinancialManagement (DFM). Another 89 dropped out ofthe program for non-compliance reasons. DFM isthe designated agency to manage the programunder state law. Non-compliance generally refersto a client's unwillingness to follow the program'sself-improvement parameters. If a participantdoes not comply, she gets to keep the money sheput into the account, but not the matching funds.21 Ibid.22 See proposed draft legislation from 2016.23 Idaho Code 63-3024A.24 Data from the state Tax Commission.25 See attached draft.26 IFF interview with Sallie Neillie, executivedirector of Pacific Access Northwest, Aug.23,2016.27 Ibid.28 Ibid.29 Email to Idaho Freedom Foundation, Sept.7,2016.

30 Interview with Milan Homola, Sept. 10,2016inCaldwell,ldaho.31 http://www.canyon-clinics.org/about,accessed Sept. 11,2016.

32 Volunteer Care: Affordable health carewithout growing government. The Foundationfor Government Accountability.