Despite the government spending billions of dollars of tax payer money a year on programs to help poor Americans, poverty still exists and deepens its impact across the country. The corporate poverty complex has sprung up as a vast apparatus of private sector organizations that ostensibly aid the government in the fight against poverty but in reality pocket large chunks of money meant to aid the poor. Anne Kim details the history and impacts of this complex across multiple industries. How the complexity of the tax code ensures that low income Americans need to rely on profiteering tax filing groups. How the growth of government contractors siphons off money from welfare recipients. How federally funded job training programs are largely unsuccessful. How Medicaid has allowed ineffective and harmful medicine to be the primary forms of treatment for people needing dental work or dialysis treatment. How the criminal legal system keeps poor Americans in its grasp through fines, bail, and horrendous prison conditions. And how rental assistance has failed to provide sufficient or safe housing to those who need it. Despite these issues existing in multiple disparate industries, there are so many commonalities from the failures of legislation to intervene and make change to even some of the same actors appearing in multiple industries.

Anne Kim does an excellent job pulling apart different industries and how they all find different ways to take money from the poor or the government. It is a scathing examination of the failures of regulation over the past few decades and how the federal government can now only help the poor through high costs and little impact. Through a combination of her own original investigations and existing sources, Kim makes an extremely convincing case for reform. The creation and growth of these middlemen taking profits from those who need the money to survive has dealt untold damage to this country and while Anne Kim has done a wonderful job detailing a lot of it, action needs to be taken to start to allow for help.

Thank you to The New Press and NetGalley for a copy of Poverty for Profit in exchange for an honest review.

In a sincere but misguided effort to improve government services, President Ronald Reagan instituted a still ongoing effort to outsource essentially everything he could to private industry. The result has been a disaster of waste, inefficiency, criminality, corporate greed and corruption. Not to mention far more expenditure and far less satisfaction with government for taxpayers. Anne Kim has been fishing in these waters for decades, and the result is Poverty for Profit. It’s the story of how government money for the poor ends up in corporate pockets instead.

Kim has isolated middlemen as key to diverting funds. For every government program concerning poverty, new and totally inexperienced companies have stepped up to claim billion dollar contracts to implement and manage those programs for the government. Famously, no experience is required to work in or even open one of these businesses. Firms like Lockheed have plunged right in despite its having no experience outside of weapons systems manufacturing. Is it any wonder beneficiaries can’t get what has been promised? But there’s more: middlemen come in two flavors.

It is as simple to understand as this: some firms see opportunities in government programs by billing the recipients (the qualifying poor) for goods and services covered by the programs. Or, if private firms are managing a program for the government, they take their assignment to be denying service and goods to as many recipients as possible. For example, capitation, in which each patient is measured against a dollar cap the government is willing to pay.

The whole scam of offloading government programs to the private sector is in the conflicting goals of those two tasks: siphoning the money from the beneficiaries, or denying it to them altogether. No one but government can abide by such conflicts, because only government is neutral. Private firms are out to make as much money as possible, as quickly as possible. Government is there to serve. They are not on the same page.

Every example Kim explores can be dumped into one of those two categories: middleman vendor or middleman manager:

-In Medicaid dental services, she found numerous dental practices with numerous offices (hundreds) in poor areas. They do things like strap children down and drill away. There is the case of one child with 42 fillings – in one session – on baby teeth. Others got steel crowns, again on baby teeth. Anything to bill the government. Dentist employees are incentivized with $1500 to find some emergency procedure that absolutely must be performed right then and there at the initial examination. They get fined millions of dollars for these abuses, but just pop up again somewhere else. The profits are too good to pass up.

-Kidney dialysis firms know that a customer is for life, unless they opt for a transplant. Therefore, doctors and providers do everything they can to prevent that. They put patients on dialysis for a year or two, to “see how they do,” weakening them so a transplant is no longer feasible. They turn a five hour process into four, speeding up the machines and making patients sick (or even killing them) just to get one extra patient tallied in every seat, every day. And unlike other medical specialties, in kidney dialysis, doctors are permitted to send Medicaid patients to their own clinics, further incentivizing them not to ever suggest transplants as the real cure it is. Transplants save rich lives, not poor ones.

-So called dollar stores love to locate in poor neighborhoods, proudly accepting SNAP (food stamps) for the only foods the poor can afford: highly processed, dried or frozen instant meals loaded with sugar, salt and fat. Precious few of these stores offer so much as an apple in fresh foods. They are positioned to vacuum up the entire monthly allowance the government issues the poor. The poor very often inhabit “food deserts” where the only grocery store is the dollar store. A match made in heaven.

-Prisons charge inmates outrageous amounts for every little thing, so that by the time they are released, they are in such deep debt they will never be free of it. If and when they get out, they can be sent back just for not repaying their debt to the prison system. It’s good old debtors’ prison, that America thought it got rid of a long time ago. Nope. Privately run prisons came to its rescue.

Inmates are milked dry by vendors of snack foods, telephone services, drugstore essentials, doctor visits, carrying the sick to the infirmary, and even for their prison cells, at $250 a night (Pay To Stay laws in 48 states), far more than any hotel the inmates could afford. Prison services are so profitable that contractors have offered to build additional prisons worth a quarter of a billion dollars for free, as long as they get to manage them. In their deals with counties and states, they stipulate that jail cells must be at least 90% occupied, guaranteed. This puts pressure on the police and the courts to arrest and convict more and more people all the time. Rearresting debtors works really well in this environment.

-Contractors managing unemployment services or Medicaid eligibility routinely turn down applicants and make it all but impossible for them to succeed or even re-apply. In Iowa, Kim cites an 891 percent increase in the number of court cases where denials were reversed since privatization began. Recipients are clearly more vulnerable with the private sector running things. “Nor,” Kim adds: “has it delivered the dramatic cost reductions states want.” In other words, the government is simply spending the aid money on the contractors and not the beneficiaries.

-Medicaid patients calling Magellan’s prescription drug service experience hold times up to eight hours, if they can hang on that long. The idea, obviously, is to simply make them go away. Don’t leave a number; no one will call back.

Quite naturally, the private sector likes these arrangements, and spends tens of millions annually to fight off any hint of legislative change, such as bail reform, combining or streamlining services, easing qualifications, paying inmates a real wage for work prisoners perform, truth in fines, or anything that might put more resources into recipients’ hands and less into contractors’. Ronald Reagan created a Hydra-Head monster.

Because aside from being in Ronald Reagan’s wet dreams, there is no marketplace with competing unemployment insurance management companies qualified and waiting to take on the task. Same for Medicaid, education and so on down the line. No experience, no qualifications, just a love of easy government money. Their own incompetence easily matched and beat government’s questionable performance, as numerous fines and prosecutions show (And despite their criminal performance, government keeps renewing and expanding their contracts). Today there are nearly three contractors for every government employee. And things are decidedly not better for it.

It also adds another layer of problems. The government now finds itself tasked with contract management instead of program administration, and is far less prepared or experienced in that domain. But the result is the same – more money to contractors, fewer goods and services to beneficiaries. Always.

Kim’s Conclusion is well organized and helpfully split into five takeaways:
1. Government doesn’t deliver antipoverty programs; private actors do.
2. Poverty persists, in part, because it benefits the industries that profit.
3. “Personal responsibility” is a myth when the poverty industry controls people’s choices.
4. We need better governance—and a lot more of it.
5. More funding for federal antipoverty programs won’t solve the problem of poverty, but it will feed the poverty industry.

This last one is in many ways the most damning of all. The USA has put itself in such a bind with private providers, that they just wait for any increase in funds they can grab for themselves and keep out of the hands of the poor. It means it is well past time for a total rethink and recapture of poverty programs. Because what the country has in place only makes things worse for the poor. And pouring in more money will not fix it.

It boils down to simple greed - of pigs at the trough that was meant for the poor. The expenditures to these middlemen exceed the benefits to the poor recipients, making the entire effort a negative one. The poor are just roadkill in this neverending race for taxpayer dollars meant for the needy. Government, without these perverse incentives, was actually doing a better job, despite all the problems that inevitably surfaced.

America demonstrably hates the poor, and Anne Kim has merely reaffirmed this view by shedding a little sunlight on it. But it’s not their fault; it’s the greasy middlemen of the “free market”.

David Wineberg

I find it quite difficult to rate nonfiction and this was no exception. I felt it was well written, researched, and that I learned something from each chapter. I am curious to see how this book will be received now that it is published, I do feel like I got what I wanted out of it and am more aware of the issues built into our system.

POVERTY FOR PROFIT by Anne Kim seeks to show "How Corporations Get Rich off America's Poor" and Kim, who is an award-winning author, lawyer and public policy expert, is strident in her condemnation: "self-serving private interests have hijacked the war on poverty." For example, did you know that "the vast majority of dialysis services in America are provided by just two companies, whose centers are disproportionately located in low income neighborhoods"? OR that low-income taxpayers in Maryland claiming the Earned Income Tax Credit lost at least $50 million to tax preparation fees in 2020? Klein focuses on "the often pivotal role of private industry as intermediaries between government and people in poverty .... with interests often at odds with both the government and the people they purport to serve." In addition to dialysis and tax preparation, Kim profiles industries like welfare management for the states, education or job training, and dentistry. Painful reading at times, POVERTY FOR PROFIT offers an enlightening perspective on the obstacles faced by and the exploitation of America's poor. Notes are well-documented and encompass roughly a third of the text.

Anne Kim has done an amazing job researching for Poverty for Profit. Each one of the chapters could probably be a book by itself.

News media and politicians like to give soundbites about combating poverty, but I highly suggest reading this book if you want to learn more about poverty in America.

Thank you Anne Kim and New Press for the ARC.

Anne Kim peels back the various layers of greed and corruption in industry that profits from people’s despair. Well researched and timely, this is a highly recommended look into a shameful part of American capitalism.