City & State PA - 10062016

PHILADELPHIA FORECLOSURES: THE RECESSION, ALL OVER AGAIN

2 YEARS LATER, IS OBAMACARE WORKING?

The BUSINESS of MEDICAL MARIJUANA

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October 6, 2016

October 19th

On Healthcare City & State PA begins its series of Networking Events and Symposiums with the introduction of the On Healthcare Symposium. Partners, government leaders and policy makers will convene to discuss healthcare issues ranging from Insurance Coverage for PA’s most vulnerable population to developments in biopharmaceutical medicine.

For sponsorships, including panel participation, contact David Alpher, Publisher at 215-490-9314 ext. 3001 or Dalpher@CityandStatePA.com.

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EDITOR’S NOTE / Contents

Greg Salisbury Editor

Despite the August ruling by the federal Drug Enforcement Administration that it remain a Schedule 1 controlled substance, marijuana will soon be big business – in full defiance of the DEA position – in the Keystone State.

Why? Ask anyone who has used it to help cope with glaucoma, seizures, anxiety and a host of other health issues, and the answer becomes abundantly clear. That’s why, after a long battle, the state has finally moved forward to allow medical marijuana to become a reality. We may be coming late to the party – 23 other states legalized it before Senate Bill 3 passed in April – but, as detailed in Natalie Pompilio’s article on the future of the state’s cannabis business, this new reality is an example of the proactive mindset on health care prevalent here.

That approach is also reflected by the programs and people profiled in our inaugural Issue Spotlight, a special section devoted to one topic. We have devoted this Spotlight to covering health care, including an analysis of the Affordable Care Act’s impact two years after implementation, and profiles of private-sector innovators, as well as local and state leaders.

We would love to know what you think and where you stand on medical marijuana, as well as your views on anything else that piques your interest in this issue, so please email me your letters to the editor at gsalisbury@cityandstatepa.com. (We reserve the right to edit for clarity and content.)

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FORECLOSURES Distressed mortgage sales continue to put thousands of Pennsylvania homeowners at risk.

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IMMIGRATION BATTLE

Pennsylvania’s ongoing legislative battles over immigration take center stage this session.

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MEDICAL MARIJUANA The business of medical marijuana is charting new territory in the commonwealth.

18.

HEALTH CARE

A special section devoted to examining the issues and people affecting how Pennsylvanians are taken care of today.

30.

PERSPECTIVE

Tom Ferrick explains how voter fraud happens – it’s just not the way Republicans would like you to believe it does – and Sabrina Vourvoulias relates the plight of the families stuck at Berks County Residential Center.

CityAndStatePA.com

AS THE DIRECTOR of Juntos, a South Philadelphia advocacy group for the Latino community, Erika Almiron has earned herself some legislative battle scars over the years. In 2011, she recalls lobbying against some 17 immigration-related bills between Harrisburg and Washington, D.C. But, she says, nothing compares to – or could have prepared her for – what she has faced this year.

“For the last several years, we’ve always been able to push back,” Almiron said. “But with a candidate like Trump and the mini-Trumps all over the state who he enables, we’ve seen a resurgence of hate and racism unlike anything we’ve ever seen. It’s in the bills. It’s in the family detention at the Berks County immigrant detention center. It’s everywhere.”

After a decade of federal inaction on immigration reform, some state Legislatures – like Pennsylvania’s – are now taking matters into their own hands with immigration-related agendas. Rep. Daryl Metcalfe (R-Butler), who chairs the House’s powerful State Government Committee, has welcomed any and all legislation that will make the state less desirable for what he calls the “illegals,” and the issue promises to become even more politicized in the fall legislative session.

In two virtually identical bills currently before the PA House and Senate, lawmakers are seeking to implement federal citizenship verification systems to access employment and public benefits.

There is also an issue that has become a centerpiece of Sen. Pat Toomey’s re-election campaign. His most recent bill, which called to revoke federal funding from self-declared “sanctuary cities,” failed to pass the U.S. Senate floor in July. But there’s another sanctuaryrelated bill being considered in the PA House, which, while less severe in its impact than Toomey’s bill, faces heavy opposition from both immigrant-rights advocates in Harrisburg and opponents on the campaign trail.

BATTLE

THE

October 6, 2016

LAWMAKERS LEADING THE immigration crackdown in Pennsylvania represent all corners of the state, from the suburbs of Pittsburgh to Northeast Philadelphia. The issues in question cover equally broad terrain.

“There’s never just one issue that we’re pushing,” Rep. Doyle Heffley (R-Carbon) says of the unified effort.

“Heroin is all over our streets – you talk to the DEA, the majority of heroin coming into Pennsylvania is from the Mexican cartels. When you allow (unauthorized immigration) to go on in your society, it’s going to spill over into other areas.”

Heffley is the primary sponsor of a bill that would require agencies that issue public benefits to verify the legal status of applicants by using the SAVE program, or Systematic Alien Verification for Entitlements. There’s a nearly identical bill in the Senate, introduced by Republican state Sen. Patrick Stefano, who represents parts of three southwest PA counties. Think of it like an online vetting process to determine whether an individual is eligible for public benefits. Many public agencies already use the SAVE program, but Heffley and Stefano both argue that Pennsylvania is too lenient

MAX MARIN

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IMMIGRATION

OVER By

MAX MARIN SUNDROP CARTER, THE EXECUTIVE DIRECTOR OF THE PENNSYLVANIA IMMIGRATION AND CITIZENSHIP COALITION, LEADS A PROSANCTUARY RALLY AT PHILADELPHIA CITY HALL.

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with its enforcement.

In a similar vein, Metcalfe is pushing for statewide implementation of E-Verify, a free portal created by United States Citizenship and Immigration Services that allows employers to cross-check their workers’ identification papers against federal databases. Metcalfe originally introduced the bill in 2007. Then, in March, he reintroduced it alongside Heffley’s SAVE bill and another hot-button piece of legislation from Rep. Martina White (R-Phila.)

E-Verify does for employment what the SAVE Program does for public benefits.

His bill would place Pennsylvania among a handful of states that mandate E-Verify for all employers – not just government agencies and those companies seeking publicly funded contacts through them.

In most cases, public benefits for undocumented immigrants are a political non-starter. There are only four states – New Mexico, Texas, Washington, and California – that offer state financial aid to undocumented immigrants; most states won’t even consider discounted in-state tuition rates for undocumented residents. But Heffley’s push for SAVE is less controversial. The problem, according to some immigrant-rights advocates, is one of both the impetus behind the bill and its questionable implementation.

“If you’re undocumented, you’re already unable to receive public benefits,” Adan Jesus Marin, director of Make the Road PA, an immigrant-rights organization in Lehigh and Berks counties, said of Heffley’s bill. “The truth is that it’s going to affect non-immigrants and people who are fully documented. It will create more hoops to jump through.”

In 2015, Pennsylvania reached a settlement with the federal government to pay back $48.8 million that it had allocated to undocumented immigrants through public assistance benefits between 2004 and 2010. Heffley, Metcalfe, Stefano, Toomey and other elected officials – the list goes on – use this as fodder for their crackdown on benefits. But according to immigration attorneys with the nonprofit organization Community Legal Services, the settlement is less damning than some make it out to be. It stems from a technical dispute between the federal government and then-PA Gov. Tom Ridge’s administration over a 1996 welfare reform law that barred public benefits for documented immigrants who have been in the country for less than five years.

There’s also some anecdotal evidence

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behind the push for SAVE in Pennsylvania.

In addition to the settlement, Heffley says his bill stems in part from testimony from Beaver Meadows Police Chief Michael Morresi. The chief said that he had once stopped a driver with Mexican identification, $3,000 in cash, and two public benefits cards registered under different names. But, Morresi said, under the current law, he couldn’t confiscate the cards. Heffley tells City & State PA this is just the emerging tip of the iceberg.

“We’re not talking about migrant farm workers,” Heffley said. “We’re talking about people coming in with large quantities of cash. With gang insignia tattoos. That’s what our police officers are seeing in our communities.”

Pennsylvania was one of seven states that saw a population spike in undocumented immigrants from 2009 to 2012, according to a Pew Research Center report. In just four years, the commonwealth’s undocumented resident tally increased from 140,000 to 170,000.

Immigrant-rights advocates argue that anecdotes of criminal behavior scapegoat not just the undocumented, but whole immigrant communities. Sundrop Carter, the executive director of the Pennsylvania Immigration and Citizenship Coalition (PICC), notes that the verification systems have returned false-positive results that caused the disqualification of a number of otherwise-eligible immigrants from receiving public assistance.

“The public benefits bills are all problematic,” Carter said. “Like most antiimmigrant bills, a big piece is that it is a ‘solution in search of a problem’ – and the system is notoriously inaccurate.”

The American Civil Liberties Union has slammed E-Verify for posing “enormous privacy and security risks” for U.S. citizens.

Some experts and immigration attorneys say eligibility systems will be an inevitable component of federal immigration reform, but just how that reform takes shape will be a matter of who is elected in the upcoming November election. Whether passed or not, Marin argues that these bills are gaslighting a voter base with hairtrigger anxieties about immigrants of all backgrounds.

“The climate that all of this creates is just incredibly dangerous – I don’t think Metcalfe or his allies can pass anything in our legislature because nobody can really pass anything. But I think that they can succeed in riling up hate groups in Pennsylvania, which already has the fifth-largest number of hate groups in the

country,” Marin says, citing a report from the Southern Poverty Law Center.

“The climate that all of this creates is just incredibly dangerous,” he adds.

“I don’t think Metcalfe or his allies can pass anything in our legislature, because nobody can really pass anything. But I think what they can succeed in riling up hate groups in Pennsylvania, which already has the fifth-largest number of hate groups in the country,” citing a report from the Southern Poverty Law Center.

Heffley’s and Metcalfe’s bills will likely see their first committee meetings this session. Stefano’s Senate bill, which is identical to Heffley’s House bill, is already moving through the committee in its current incarnation.

IT’S BEEN A tumultuous year for sanctuary cities across the country, and Philadelphia is no exception.

Rep. Martina White is a multiple minority on the House floor. At 27 years old, she’s one of the youngest lawmakers in Harrisburg. She’s also a Philadelphia Republican who serves a two-to-one Democratic district in a five-to-one Democratic city. Drawing comparisons to Trump, however, White says her constituents view her outsider status favorably.

“I was a complete political newbie,” White recalled of taking the reins of the 170th District through a special election in 2015. “I didn’t know what a ward and division was … But most people don’t know what ward and division they live in.

So I think that people just want (a leader) who is going to just be, like, the ultimate American.”

White raised her profile quickly by latching on to two controversial public safety issues. Amid uproar over policecommunity relations, she introduced legislation that would make it illegal to identify any police officers who shot civilians, no matter the circumstances.

Then she drafted another headlinegrabbing policy that would penalize “sanctuary cities” like Philadelphia for limiting their cooperation with immigration authorities.

White tells City & State PA that her bill was “designed to protect citizens from any type of damage that an illegal immigrant would have on a citizen” as well as to create “accountability” for the sanctuary city designation.

The bill earned the ire of Philadelphians who had supported Mayor Jim Kenney’s executive action to return Philadelphia’s

City & State Pennsylvania

October 6, 2016

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3 bills

in the state House and Senate seek to deter undocumented immigration into the state

HB 1885 (Rep. Martina White) would hold municipalities with ‘sanctuary’ policies liable for damages incurred by undocumented immigrants.

HB 1894 (Rep. Daryl Metcalfe) would mandate all employers in Pennsylvania use a federal verification system to only employ legal residents.

HB 237 (Rep. Doyle Heffley) and SB 9 (Sen. Pat Stefano) would tighten restrictions on undocumented residents receiving public benefits.

140,000 170,000 estimate of PA’s undocumented population in 2009

estimate of Pennsylvania’s undocumented population in 2012

6 percent of Pennsylvania population is

49.6%

foreign-born

12 percent of Philadelphia County’s population is foreign-born, the largest in the state

13 percent of the U.S. population is foreign-born

759,837

foreign-born residents in Pennsylvania

growth in state’s foreign-born population between 2000-2013

17 counties in Pennsylvania

have written policies to restrict cooperation with ICE detainers

15 counties have no written

policy, but restrict cooperation with ICE detainers

2 counties (Northampton and

Berks) have written policies to cooperate with all ICE detainers

18 counties have no written policy, but still cooperate with ICE detainers

“sanctuary” designation. For the second time, Philadelphia is now one of 32 Pennsylvania counties that formally or semi-formally restrict cooperation between local law enforcement and Immigration and Customs Enforcement (ICE), according to a report from Temple University’s Beasley School of Law.

Philadelphia first became a sanctuary city in 2014 under then-Mayor Michael Nutter’s executive order. The move was hailed by immigrant-rights groups as a major victory. But then, in the eleventh hour of his administration, Nutter rescinded the status in favor of one that aligned more closely with the Department of Homeland

Security’s Priority Enforcement Program (PEP).

Kenney reversed the executive order on his first day in office, reaffirming his status with the local and national immigrant community. (Meanwhile, Nutter was offered an advisory position with the Department of Homeland Security.)

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“LOOK, ILLEGAL IMMIGRATION IS A PROBLEM. BUT DEMONIZING THESE PEOPLE – THEY’RE HUMAN BEINGS – TO SCORE POLITICAL POINTS IS ALSO A PROBLEM.” – MATT DARRAGH, 170th Congressional District candidate Today, nine months later, faced with both Toomey’s U.S. Senate bill and White’s PA House bill, Kenney has continued to hold his ground. He won’t change anything, he says, without the nod from immigrant community leaders, which isn’t likely under the current PEP blueprint.

Unlike Toomey’s bill, which looked to hold $39 million in federal funds hostage if Philadelphia didn’t rescind its status, White’s bill doesn’t come attached to a dollar amount. More concerning, however, is the second amendment of White’s bill, which explicitly forbids any restrictions on sharing an individual’s immigration status with ICE. In short, the bill would seek to make sanctuary policies like Kenney’s illegal, at least in writing.

In terms of damages, no data exists on the fiscal burden posed by being a sanctuary city. White cited the 2015 killing of Kathryn Steinle in San Francisco by an undocumented immigrant who had been deported five times – an event that would later become the impetus for Toomey’s bill. White also referenced the 2014 rape of a Philadelphia woman by a Honduran national who had once been deported.

“There’s not a whole lot of information about the level of damages, because there’s no way to track it right now,” she said.

“Nobody truly knows what the impact is going to be or has been – and we’re going to find out. If we can prevent one of our citizens from being murdered or raped by someone who is not supposed to be here, I find that extremely important to address.”

Anti-sanctuary thinking across the country follows a similar pattern, citing at most a handful of cases in which undocumented immigrants who committed major crimes had passed through the local justice system without providing notification to ICE. But others say that immigrant criminality is a deeply rooted myth. Peer-reviewed research suggests that foreign-born individuals are far less prone to crime than native-

born individuals. An analysis of the 2010 American Community Survey found that just 1.6 percent of immigrant males between ages 18 and 39 were incarcerated, compared to 3.3 percent of the same native-born demographic.

Defenders of sanctuary cities argue that greater public safety results from allowing law-abiding undocumented persons the freedom to cooperate with local law enforcement without fear of retribution.

Sanctuary city policies – which are currently upheld by some 300 municipalities across the country – evolved out of the federal government’s Secure Communities program, which, in essence, turned local law enforcement into a dragnet proxy for ICE. The program has since been replaced with the Priority Enforcement Program, which encourages requests for notification rather than relying so heavily on detainers as Secure Communities did.

But local immigrant-rights advocates aren’t sold, and neither is Kenney.

Nonetheless, things took an early turn for White’s bill in the current House session. On Sept. 20, the bill passed through the House Committee on State Government, drawing an immediate response from Kenney, who called the bill “dangerous” and expressed “serious concerns about (White’s) understanding of the law, government and policing.”

The momentum behind the bill, however, could be stymied by the upcoming election and its results.

WHILE ONLY ON the periphery in the smaller congressional races, immigration has been a central motif in the U.S Senate race between Toomey and his Democratic opponent, Katie McGinty.

On a conference call with reporters in June, McGinty said she sent Mayor Kenney a letter asking him to reconsider his sanctuary policy, allowing for more coordination between law enforcement and federal immigration authorities.

It marked a shift for the McGinty campaign on the eve of the U.S. Senate’s vote on Toomey’s sanctuary bill. The change of course also came after Toomey, looking to secure his second term, took several shots at McGinty’s wholesale support of sanctuary cities on the campaign trail.

McGinty has specified that she doesn’t “reject” sanctuary cities, nor does she believe they’re the answer for the state’s immigration-related woes. Since then, McGinty has been focusing her attacks on Toomey’s track record on big-picture immigration reform that would, in her campaign’s words, render sanctuary cities obsolete.

Metcalfe, whose office did not return multiple requests for an interview from City & State PA, will not face an opponent in the upcoming election. In Carbon County, Heffley is being challenged by Neil Makhija. Makhija did not return interview questions. When asked about his opponent, Heffley says he has faced a Democratic challenger every two years since taking office. None have succeeded in unseating the incumbent Republican, despite a Democratic voter registration edge in his district.

But Matt Darragh, who’s gunning to unseat White in the 170th District, had some words about White’s appeal to voters’ “anxieties about immigration” with her sanctuary bill. “The process needs to get reformed, but it really isn’t the place of the state government to do that,” Darragh said.

“Look, illegal immigration is a problem.

But demonizing these people – they’re human beings – to score political points is also a problem.”

From the presidential race to state house races, the Nov. 8 election will have lasting ramifications for immigrant communities in Pennsylvania.

“There’s a danger if we’re not paying attention to the friends of Trump,” Jesus Marin says. “Because Trump could lose.

Metcalfe is not going to lose. Our state House and state Senate are not going to flip this election. There are more dangers of more local legislation like this getting passed.”

“Toomey’s bill has a bit of an uphill battle,” he adds. “There are enough people in the Senate who get that it’s just insane. The idea that you would strip entire counties of federal funds, including Lehigh County, where Toomey lives...I don’t think he wants the bill to pass. Again, I think these bills are just pandering to people’s fears for votes.”

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October 6, 2016

City & State Pennsylvania

Eight years after the Great Recession, distressed mortgage sales continue to put thousands of Pennsylvania homeowners at risk.

By RYAN BRIGGS

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THERE WAS A time, for a good month or so in September 2014, when Beverly Henry had no idea who owned her house.

“I turned to this woman and I said, ‘Wait, who owns my home?’” she said, recalling a conversation she had with a customer service representative at her lender, Bank of America. “And she said, ‘HUD does.’ And I said, ‘Oh!’” In June 2014, the lender had, in fact, sold her mortgage to the Department of Housing and Urban Development in order to collect on federally guaranteed insurance for distressed mortgages.

It was already a shock for Henry to learn that a federal agency apparently owned the note to the tidy West Philadelphia rowhome she and her husband have lived in since 1977. But, as she later discovered, even that information wasn’t accurate.

Henry knew something was afoot – her husband, Thomas, had been diagnosed with prostate cancer, and they’d fallen a few months behind on their monthly payments to Bank of America in 2011. She’d offered to pay back the delinquent sum – about $6,000 – in installments, but the bank said no. As far as she knew at the time, she was still negotiating with her bank to receive hardship status to lower their monthly payments and pay back the lump sum.

But HUD didn’t own her mortgage, either. The agency had almost immediately auctioned it off to RoundPoint Mortgage, a subsidiary of a subsidiary (you read that correctly) of Tavistock Group, an investment firm based in the Bahamas and owned by British billionaire Joe Lewis.

Unbeknownst to Henry, she had been quietly sucked into an obscure government auction program for distressed Federal Housing Administration loans. She was – and continues to be – stuck in bureaucratic limbo, along with some 6,000 other homeowners in Pennsylvania (and more than 102,000 nationally) who have seen their mortgages put on the auction block, often with little to no notification, by a poorly understood federal program.

Some have already lost their homes; many more could at any time. Henry will take her case to trial in May in an effort to fend off foreclosure, but 99 percent of homeowners in similar straits do not have legal representation, even though they are entitled to it. Virtually all of them are at the mercy of shadowy private equity companies that specialize in buying and profiting off of distressed financial assets.

“I think because properties are so hot in this neighborhood, they just want to get rid of us,” Henry told City & State. “This has

October 6, 2016

been the most devastating experience I’ve ever been through in my life. And I’m 70 years old.”

While the Henrys struggle to save their home, HUD has come under increasing criticism for its handling of this and many other mortgages. Last year, U.S. Sen. Elizabeth Warren of Massachusetts rapped the agency over its mortgage sales, while Philadelphia, New York City and other areas have formed a coalition to drive local efforts aimed at combating a growing problem. Meanwhile, HUD auctioned off another round of homes on Sept. 14.

In June, the agency pledged reforms to stave off the looming mass foreclosures.

But housing advocates say HUD has not gone far enough, nor – for the Henrys and thousands of other homeowners in desperate need of assistance – anywhere near fast enough.

“HUD mostly seems to be good at putting out press releases and then talking about those press releases for three or four years,” said Geoffry Walsh, a staff attorney for the National Consumer Law Center.

In Philadelphia, hundreds of properties, often in black and Hispanic neighborhoods, have been sucked into asset sales and seized by third-party mortgage buyers through foreclosure proceedings. This obscure program now has visible, streetlevel consequences, according to local political leaders.

“These are homeowners who are in vulnerable situations,” said Philadelphia City Councilwoman Helen Gym. “When we turn them over to private equity groups, we all suffer the consequences. They’re not developers; they’re profiteers. They’re there to make money, and they don’t mind sitting

on properties, so you’re seeing increased abandonment in neighborhoods.”

The problem will probably get worse before it gets better. Pennsylvania is one of the real estate markets hit hardest by federal asset sales. Even more troubling is the paradox of the state’s existing protections for homeowners actually driving large banks to jettison even more risky assets through HUD auctions.

“We think the big servicers, like Bank of America, are trying to avoid state laws that include borrower protections … They’re trying to cherry-pick mortgages from states with laws they don’t like,” Walsh said.

“Pennsylvania is one of those states.”

PART OF THE problem with the issue of distressed asset sales is complexity. In the most basic terms, the FHA offers insurance to private lenders as the cornerstone of long-running government inducement for big banks to offer mortgages to lowand moderate-income borrowers, like the Henrys.

The idea is that if the owner ever defaults, lenders are protected because they can collect on insurance that the homebuyer contributes toward through their mortgage payments – $3,375 up front, followed by $91 a month, in the case of the Henrys. In theory, this collection can only happen after the bank offers certain FHA-mandated bailout options to homebuyers who qualify for relief.

The problem: that last part isn’t happening, according to Rachel Labush, an attorney with Community Legal Services of Philadelphia, who is representing the Henrys in court.

“Most of the time, FHA clients have

SHE WAS STUCK IN BUREAUCRATIC LIMBO, ALONG WITH SOME 6,000 OTHER HOMEOWNERS IN PENNSYLVANIA WHO HAVE SEEN THEIR MORTGAGES PUT ON THE AUCTION BLOCK, OFTEN WITH LITTLE TO NO NOTIFICATION, BY A POORLY UNDERSTOOD FEDERAL PROGRAM.

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Distribution of DASP loans in Philadelphia, 2013-2016

1= 5HOUSE LOANS Many of these clusters are in lower-middle-class neighborhoods

Source: Community Legal Services

some temporary hardship – say, they were unemployed for a few months, and called their mortgagor, who says, ‘We can't do anything for you,’” explained Labush. “But in that early stage of delinquency, they’re supposed to interview the client to discuss repayment options.”

Instead, if homeowners miss some mortgage payments, banks will speed toward cashing in on the insurance and dumping the distressed mortgages, making only token outreach efforts at best. Some homeowners, like the Henrys, are never notified that their homes are essentially headed to sale, and critics say the FHA does little to enforce its own consumer protections.

Mortgages then get assigned to HUD to be sold through the Distressed Asset Stabilization Program, or DASP. A sort of a government clearinghouse for ailing, government-backed mortgages, DASP was initially conceived of as a way for the Fed to offload toxic assets that had gotten stuck in court or other internecine mediation processes for years after the housing crash.

“The main impetus for these DASP sales was that HUD was developing a cash shortage for its insurance funds because they had a big backlog of foreclosures,” Walsh said. “It was a way of cutting short the foreclosure process to get those claims paid … HUD was basically washing their hands of all these insurance claims.”

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HUD began to auction off the mortgages – minus pesky consumer protections – to boutique financial firms to recoup some value and, at the same time, shifting responsibility for either righting the ship or foreclosing.

Advocates like Walsh say the program achieved that initial objective long ago and has now spiraled out of control, needlessly drawing homeowners with resolvable mortgage issues into a bureaucratic nightmare. What started as an effort to burn off the most tangled foreclosure cases has become an avenue for private banks dealing in FHA loans to wriggle out of bothersome legal responsibilities to those borrowers.

“My view is that it was never the mediation programs that were slowing down foreclosures in the first place; it was mortgagees not participating effectively in the mediation process,” he insisted, referring to foot-dragging by big banks that were forced to honor FHA protections.

Homeowners who are pushed into the DASP program wind up with few protections. Many of the end buyers are offshoots of larger private equity firms, like hedge funds, often based in tax havens like Florida or the Bahamas. As secondary buyers, most aren’t interested in helping residents stay in their homes.

In short, small disruptions – say, a homeowner losing her job and missing a few mortgage payments – can quickly put residents on the verge of foreclosure. And that’s precisely what the FHA protections at the beginning of this process were designed to prevent.

“HUD should really just be looking at phasing the program out,” Walsh declared.

THE HENRYS’ PROBLEMS began decades ago. They bought their house for $30,000 in the 1970s. Over the years, though, Beverly Henry refinanced her home several times when money got tight.

In March 2008, she took an FHA-insured refinancing deal from Security Atlantic Mortgage Co. that lowered her monthly interest rate but drastically increased the principal balance on her house. Eventually, her monthly payments began started spiraling out of control.

When her husband got sick and she started to miss payments in 2012, the couple owed a staggering $263,000 on the house – more than its current value – and was paying out nearly $1,800 a month, plus taxes and insurance, just to hang onto the property.

“I thought refinancing would bring it

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down, but it didn’t,” she said. “There was a lot we should have educated ourselves about. I should have educated myself.”

Security Atlantic would eventually be sanctioned by HUD for its mortgage practices, but Henry was stuck haggling with Bank of America over roughly $6,000 in back payments – because she had an FHA-insured mortgage, she was entitled to certain hardship protections. The Henrys weren’t totally without means: both worked administrative jobs at the University of Pennsylvania, typically earning around $70,000 a year combined. She just wanted to lower her mortgage payments to around $800 a month.

Yet every time she applied for mortgage relief, something would come up to prevent a resolution. The bank might say it hadn’t received her application, or that a form was filled out incorrectly, or that a medical note was too old to be valid. Bank representatives seemingly changed with the seasons, if anyone was available to talk to the Henrys at all.

Beverly Henry says she applied for the same hardship status eight separate times in two years, and submitted individual documents dozens of other times.

“I started walking to the Bank of America branch on Walnut Street to drop everything off just to make sure they got it.

But they would still say they didn’t receive everything,” she recalled. “Then they made me come out to a branch in Cherry Hill to just scan everything. I didn’t hear back from them for months.”

In the end, none of it made a difference.

By that time, Bank of America was already negotiating with HUD to collect the insurance money attached to the Henrys’ mortgage, presenting the couple as a lost cause.

Bank of America sent a single letter to the Henrys with a notice that their mortgage was being sold through the DASP program.

The couple says they simply didn’t see the fine print, which Labush said was “buried” in the notification letter – part of the deluge of application rejection and delinquency notices they regularly received from Bank of America.

Labush says most of her DASP clients are like the Henrys: people who got in over their heads through refinancing deals at the height of the subprime mortgage crisis.

Over the years, as the shame and anxiety built along with the couple’s deteriorating situation, Henry says she kept everything a secret. She refused to talk to her coworkers and her close friends about her staggering bills. One day, she broke down and asked a

October 6, 2016

PHILADELPHIA CITY COUNCILWOMAN HELEN GYM SAYS THAT RESIDENTS LOSING THEIR HOMES “HAS DRAMATIC CONSEQUENCES FOR A CITY LIKE OURS THAT ALREADY STRUGGLES WITH POVERTY.”

lawyer friend for help.

The friend balked at her situation but referred her to Community Legal Services and the Affordable Housing Centers of Pennsylvania. The Henrys started attending a foreclosure diversion program at City Hall through AHCP, crammed into a crowded courtroom with hundreds of people in similar situations and dozens of bank lawyers, Henry says.

Like most homeowners who enter into the city’s dwiversion program, Beverly and her husband went to court every month or so for a year and a half to stave off foreclosure.

Despite these visits, her consultation with pro bono lawyers and the reams of letters and legal notices she’s amassed, Henry says her children and grandchildren still don’t know.

“That’s just how we are,” she explained.

“It’s embarrassing. It’s degrading.”

PART OF THE PROBLEM, again, is the complexity of mortgage arrangements – many homeowners may not even be fully aware of what forms of relief they are entitled to. On the other side of the equation, many mortgage companies owned by private equity firms are hardly enthusiastic when it comes to reminding homeowners about their options.

Homeowners do lose their homes to private equity firms, and some of these companies have amassed dozens of properties in Philadelphia alone. This leads to one of the biggest mysteries about DASP:

What are companies like Bayview and Lone Star doing with all this real estate?

Housing advocates like Walsh say that they have not detected a singular pattern to investors’ use of the properties they acquire through DASP. “My sense is that the basic business model is to look at these portfolios of nonperforming loans as mid-term investments that you want to hold onto and resell for as much profit as possible after, say, four or five years,” he said.

“So, they’re looking to keep their options open for a five-year period.”

Sometimes, companies lock homeowners into five-year “repayment” programs, often designed to never actually pay down the principal of a mortgage, in order to to create the illusion that a loan is performing for resale purposes. Others are securitized and resold as new financial products.

But in still other instances, it can be more profitable to simply aim for foreclosure to acquire and flip real estate, or chop housing into rental units.

“For some of them, they may just want to foreclose and realize a profit,” Walsh said.

“It depends on things like fluctuations of property values or whether they can use them as large-scale rental holdings in some areas.”

RoundPoint Mortgage services hundreds of DASP mortgages in Philadelphia through shell companies with names like Newlands Asset Holding Trust or Queens Park Oval Asset Trust, all based out of the same anonymous North Carolina office building.

City & State Pennsylvania

October 6, 2016

Newlands, a company with no listed phone number, no website and a single publicly disclosed employee has accumulated 46 properties in Philadelphia through foreclosure proceedings.

It has flipped about 10 of those properties.

In one instance, Newlands foreclosed on 3687 Belgrade Street, a newly built townhouse in a middle-class neighborhood of Philadelphia, for just $65,000 in February 2014, two months after it had picked up the mortgage at a DASP sale. Another two months later, having made no major improvements to the property, Newlands resold the same house for $175,000.

These are in the minority of properties, however. In the majority of cases, private equity firms appear to mainly sit on the properties they accumulate, sometimes for years. If DASP buyers are renting out their new assets while they wait for home values to appreciate, many do not appear to be doing so legally: Out of dozens of properties owned

by Newlands analyzed by City & State, none had received a rental license.

City & State reached out to both HUD and RoundPoint for comment on multiple occasions, but received no reply from either entity.

Philadelphia councilmember Gym said she believed this process is increasing the number of vacant and rental properties in urban neighborhoods, in addition to other stressors.

“When you have homeowners who are evicted or who lose their homes, that has dramatic consequences for a city like ours that already struggles with poverty,” she said. “We have affordable housing waitlists that take years and homeless shelters that are overcrowded. We can’t fix it all.”

It doesn’t have to be this way. Gym is part of Local Progress, a network of local elected officials that has pushed for reforms to programs like DASP. In June, HUD announced that it would make an effort to steer more distressed mortgages to nonprofit buyers, who would ideally be more forgiving towards impoverished homeowners. Nonprofit mortgage buyers, known as community development financial institutions, or CDFIs, were previously outbid on 98 percent of DASP sales.

HUD now separates out some mortgages for sale specifically to nonprofits. But Gym would like to see the program go further.

“That’s one of our biggest questions. Does

13

it all have to go to private equity or could some go to CDFIs? Or the land bank?” she said, in a recent interview.

Gym had been a champion of the land bank, an arm of City Hall that acquires blighted property. She said she believes the agency could also function as a receiver for distressed mortgages, cribbing off a model implemented in New York City, where the municipality began bidding on DASP sales.

“It’s driven by our need to not increase our homelessness and eviction rates, and not lead to blight. Because we were seeing so much,” she said. “The consequences both to individuals and communities are dramatic – the Fed not being attentive to problems like this exacerbates our local situations.”

Changing the trajectory of DASP for future homeowners can seem like a daunting and risky proposition for cities like Philadelphia, but it could stave off years of misery and legal battles for homeowners who find themselves in situations similar to Beverly Henry’s.

Henry admits even she is overwhelmed by the intricacies of her own mortgage crisis at times, but says she is driven by a simple and understandable urge.

“We just don’t want to lose our home.”

■

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CityAndStatePA.com

October 6, 2016

The business of medical marijuana is charting new territory in the commonwealth.

W

By NATALIE POMPILIO

I N N I N G ONE OF Pennsylvania’s licenses to grow or dispense medical marijuana won’t come easily or cheaply. Recreational smokers with grow lamps in their basements, young’uns looking for a “fun” business, and former flower children with impeccable pot palates but no capital need not apply.

“There’s this stereotype of the people who are involved (in the medical marijuana field) being hippies in bean bags. That is not what this industry looks like around the country,” Pennsylvania state Sen. Daylin Leach, a Democrat, said in a telephone interview. “These are serious people, intelligent people, and you’ll see a very professionally run industry.”

Gov. Tom Wolf signed the bill legalizing medical marijuana in April, with government officials predicting it would take another

18 to 24 months for the industry – including grow houses, dispensaries and related businesses – to be up and running. Pennsylvania is poised to collect a 5 percent sales tax on all medical cannabis sales, an amount dependent on demand, which is yet unknown.

But a fiscal impact report predicts the application process alone will net commonwealth coffers $10 million. Michael Bronstein, the co-founder of the

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October 6, 2016

American Trade Association for Cannabis and Hemp, who is working as a consultant for those looking to enter the industry, said that can cost an applicant as much as $500,000. Those who want to be considered for a license to grow also need to prove they have access to a few million dollars more to launch the business.

“It’s an expensive process,” said Bronstein. “You can’t get traditional bank financing out of this. People will have to leverage their own money or partner with private investors.”

Licensed growers will need property to grow and process their plants as well as employees to tend the buds. Dispensaries will need trained staff to recommend products to patients. Both entities

15

backers include three Coloradobased technology companies, and others have told him they’ll join the party as soon as Pennsylvania finalizes its requirements. He’s secured a 25,000 square-foot building – with a stone facade and neat landscaping – that sits on nine acres where he can grow, build and expand.

“It’s a good-looking building in a good area. I didn’t want to get some broken-down warehouse I could pick up cheap. I want to get the company off in the right direction right off the bat,” he said.

Yemc has owned and operated his own 310-seat restaurant in Irwin, Pennsylvania, since 1991, so he knows tough businesses. Getting in on the ground floor of the new medical cannabis industry appealed

“THERE’S THIS STEREOTYPE OF THE PEOPLE WHO ARE INVOLVED (IN THE MEDICAL MARIJUANA FIELD) BEING HIPPIES IN BEAN BAGS. THAT IS NOT WHAT THIS INDUSTRY LOOKS LIKE AROUND THE COUNTRY.” – state Sen. DAYLIN LEACH will need security personnel and equipment.

Rodney Yemc, a restaurateur in southwestern Pennsylvania, is ready for all of it. He’s spent the last two years going back and forth between the commonwealth and Colorado, gathering knowledge and investors. He’ll be submitting a application for a license to grow and process on behalf of his company, PA Cultivation Group, as soon as those forms are available. His current

to his inner entrepreneur, he said.

“It’s a very attractive thing to be early on a business. Initially I thought this would be something huge, and then you find out that it’s like every other business,” he said. “There’s no guarantees to be profitable and they’re not as high as people might believe.”

So he had to find another reason to get involved and it actually came easily, he said. “This could be a way for me to give back, to say

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CityAndStatePA.com

October 6, 2016

“IT’S A VERY ATTRACTIVE THING TO BE EARLY ON A BUSINESS. INITIALLY I THOUGHT THIS WOULD BE SOMETHING HUGE, AND THEN YOU FIND OUT THAT IT’S LIKE EVERY OTHER BUSINESS. THERE’S NO GUARANTEES TO BE PROFITABLE.” – RODNEY YEMC, PA Cultivation Group Founder/CEO

thanks for all the success I’ve already enjoyed.”

He’s referring to the medical benefits of cannabis. Pennsylvania is the 24th state to legalize the use of marijuana for medical reasons.

(Ohio would follow suit a month later.) Leach called it “the most important piece of social legislation that we’ve passed in Harrisburg in decades.” In Pennsylvania, as in other states, physicians will not “prescribe” marijuana.

Instead, doctors will write a recommendation for a patient who suffers from one of 18 conditions, including chronic pain, glaucoma and epilepsy.

Leach’s support for the legalization of medical cannabis is also driven by the knowledge that it will lessen the pain for so many Pennsylvanians. Still, even now with the bill passed, he finds himself disputing claims others make about the drug.

Speaking before Philadelphia City Council’s Public Health and Human Services Committee Sept.

9, Leach still felt the need to address the idea that marijuana could be dangerously addictive during this

hearing, emphasizing that the word “addiction” is often used too broadly. A frequent user of alcohol, heroin or an opioid faces severe consequences if they suddenly stop using, he said, but that’s not true even for heavy marijuana users who stop abruptly.

“It is possible for people to be dependent on it in the sense that if they don’t get it, that they get anxious, like ‘I really miss my pot,’ he noted, “but that’s not the same as physical addiction. I liken it to sex addiction – you could be like, ‘Oh my God, I really wish I could have sex.’ But you’re not going to have delirium tremens if you don’t, you’re not going to die if you don’t, you’re not going to go through coldturkey night sweats if you don’t.

You’re just going to be anxious and unhappy. I’ve been there.”

Someone suggested to Yemc that his involvement in the medical cannabis industry would hurt his restaurants. So, he said, he put that to the test, talking to newspapers and television stations in the Pittsburgh area about his plans.

He said he received no negative responses and his restaurant,

Rodney’s, is as busy as ever.

“People in my community know I have a good reputation and I operate a good business,” he said.

Entering the medical marijuana industry a little later in the game has given those crafting Pennsylvania’s industry guidelines an advantage, as they can look at lessons learned in states like California, Alaska, Maine and Oregon, which have allowed the use of cannabis for medicinal purposes since the late 1990s.

“The industry’s had a lot of time to develop, get its feet under it, and for people to know what are good and sensible laws that are patientfocused,” Bronstein said.

The Pennsylvania law requires that local growers have at least 10 years of experience. Since no one currently living and working here can legally claim that distinction – again, basement crops do not count – that means a local entrepreneur will need to partner with someone from outside the commonwealth to provide that institutional knowledge. The percentage of local ownership required for a partnership to be awarded a license has not been finalized, Leach said.

“We want Pennsylvania ownership and involvement, but on the other hand, we know that there’s not as much expertise in the state as there could be because it’s been illegal for 75 years,” he said.

“We wanted people from outside the state to participate and give their expertise.”

That’s a smart move, said Brett Roper, founder and chief operating officer of Medicine Man Technologies, a consulting firm that has been advising companies in the cannabis business for about five years.

“We know most of the

City & State Pennsylvania

October 6, 2016

mistakes that can be made in the industry,” said Roper, who said several Pennsylvania groups have contacted his company for guidance through the application process.

“Not everybody can shove a seed in a pot, put it under a light and, voilà!

Three months later, we have great cannabis.”

Rosie Yagielo and her company, HempStaff, are also stepping in to fill the information void. Three years ago, she used her background in recruiting and training to launch the Florida-based company, which offers four-hour workshops at about $250 per person for those who want to work in the medical cannabis industry. She personally leads sessions about laws and regulations, and a partner who has worked in the cannabis industry in Colorado talks about recommending the right form of cannabis for a patient.

The company’s first Pennsylvania sessions are scheduled for November.

“We don’t teach how to start a business,” she said, stressing that these workshops were for people seeking entry-level positions in the industry. Understanding the multitude of products and the effects they produce is essential knowledge for a dispensary worker, she said. The patient takes that recommendation to the dispensary, where an employee helps determine which form of cannabis would work best for the physician-stated condition.

After the class, attendees take a test and, if they pass, receive a laminated certificate noting that they have passed “Budtender Training and Certification.”

Students can attend future classes for free to network and get updated information.

Is such training a requirement?

No, Yagielo said, but in a competitive new industry, any advantage is a plus.“It helps if you show a passion for the product,” she added.

Tom Santanna, a Harrisburgbased lobbyist for the Pennsylvania Medical Cannabis Society, expects other businesses like HempStaff will pop into the state and offer training workshops. He’s attended a few and found some more helpful than others.

“But I’ve learned something new each time,” he said. “The important thing is for everyone to meet and keep learning as we get these programs rolled out.”

Roper said a workshop was a good idea for someone who doesn’t know much about the industry and wants to learn more, “but like any job competency, it’s not a matter of taking a one-day class and saying, ‘I know how to do this.’ … It’s a good first step, but most people would agree that walking away with a piece of paper doesn’t make you an expert.”

Chris Driessen, the president of O.pen Vape, the largest

17

consumer cannabis brand in the United States, said he expects his company will partner with a Pennsylvania entity seeking a license. The Colorado-based company specializes in extracting medical-grade oil from cannabis, which is what local businesses will need to provide – smoking the product is still not legal.

There’s a lot of potential for profit here. Pennsylvania has 12.8 million residents and potentially 150 dispensaries to start. O.pen Vape is also licensed in Maine, which has 1.3 million people and three dispensaries. The company grossed more than $1 million in Maine last year.

“Your regulations are going to be very conducive to running a good program,” Driessen observed.

That will benefit everyone, Roper said. Last year, he noted, Colorado collected $130 million in taxes from cannabis-related businesses.

“This has meant an awful lot of jobs across the state of Colorado,” he said. “It’s a whole new niche of employment being created.”

GOV. TOM WOLF LISTENS TO STATE SEN. DAYLIN LEACH DISCUSS MEDICAL MARIJUANA.

■

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CityAndStatePA.com

October 6, 2016

Spotlight:

HEALTH CARE IN HOW BIG A DEAL IS HEALTH CARE IN PENNSYLVANIA? JUST BY THE NUMBERS ALONE,

BROBDINGNAGIAN. FOR STARTERS:

• MEDICAID SPENDING ACCOUNTED FOR FULLY ONETHIRD OF TOTAL STATE BUDGET SPENDING IN 2014.

• THE BIOPHARMACEUTICAL INDUSTRY’S DIRECT ECONOMIC OUTPUT IN THE STATE IN 2014: $30.9 BILLION. • DURING THAT SAME PERIOD, HOSPITALS IN THE STATE SUPPORTED 591,000 JOBS AND CONTRIBUTED $111 BILLION TO THE STATE ECONOMY.

BEYOND THE SHEER SCOPE OF ITS ECONOMIC WALLOP, HEALTH CARE IS AN INTEGRAL PART OF LIFE THAT DIRECTLY AFFECTS LITERALLY EVERYONE IN THE STATE, WHETHER THROUGH PHYSICAL, PSYCHOLOGICAL, BEHAVIORAL OR EMOTIONAL TREATMENT. IT IS PRECISELY BECAUSE OF ITS OUTSIZED IMPACT ON PENNSYLVANIANS THAT MAKES IT A NATURAL SELECTION TO BE OUR FIRST ISSUE SPOTLIGHT FEATURE.

City & State Pennsylvania

October 6, 2016

contents 20

AFFORDABLE CARE ACT

TWO YEARS AFTER THE AFFORDABLE HEALTH CARE ACT’S DEBUT IN PENNSYLVANIA, WHAT REMAINS TO BE DONE?

24

ASK THE EXPERTS TED DALLAS AND ARTHUR C. EVANS JR. REVEAL THE INNER WORKINGS OF THE GOVERNMENTAL APPROACH TO HEALTH CARE

26

INNOVATIVE NATIVES

MEET FIVE LEADERS WHO HAVE HELPED THE STATE BECOME A FORCE IN HEALTH CARE ADVANCES

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CityAndStatePA.com

October 6, 2016

PENN STATE HERSHEY CHILDREN’S HOSPITAL

HEALTH CARE

Observation It’s been two years since the Affordable Care Act launched in Pennsylvania, and the state uninsured rate has been cut nearly in half.

But what still remains to be done?

By CARMEN DEL RAVAL

City & State Pennsylvania

October 6, 2016

FOR YEARS, Jim Thornton felt his blood pressure rise in alarming tandem with his family’s health insurance premiums. From $1,200 in the early 2000s, the Thorntons’ monthly bill skyrocketed to more than $2,600, even after he dropped his children from the plan. “It just kept going up and up, and it was a trap – take it or leave it,” recalled the freelance writer, 64.

Thornton, a resident of Ambridge, was on the verge of dropping coverage altogether when the federal health insurance exchanges opened in 2014 as the centerpiece of the Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA) or “Obamacare.” Thornton cancelled his old insurance, qualified for subsidized coverage under the health care law – and was able to pay his entire annual bill with the $1,300 refund he received for half a month’s coverage under his former plan. “It has been a godsend for us,” he related.

Six years after the passage of the ACA, there is little debate over its biggest success in Pennsylvania: a state uninsured rate cut nearly in half – from 14 percent in 2013 to just 8 percent after the expansion of Medicaid two years later – and hundreds of thousands of covered Pennsylvanians, like Thornton, who would otherwise find health insurance unaffordable. All this has been accomplished without the deluge of new patients or vastly increased wait times for service that some had predicted, according to observers around the state.

“Undoubtedly, the Affordable Care Act has been immensely successful at getting new people covered,” said Dr. David Grande, a senior fellow and director of policy at the Leonard Davis Institute of Health Economics at the University of Pennsylvania, where he teaches medicine and is on the medical staff at two Penn-affiliated hospitals.

But significant challenges remain: rising insurance rates, insurance companies fleeing the program, escalating health care costs and lingering concerns over safety, efficiency and quality. Coverage rates aside, “the verdict is still out on the rest of it,” said Dennis Patrick Scanlon, professor of health policy and director of the Center for Health Care and Policy Research at Penn State University.

Democrats around the state have cheered the legislation, citing the benefits for Pennsylvania’s most vulnerable residents. “Today, over 17.6 million Americans have health care, including children who can no longer be discriminated against by insurance companies because of pre-existing conditions,” said U.S. Sen. Bob Casey, who serves on the Senate Health, Education, Labor and Pen-

sions Committee, and is a ranking member of the Subcommittee on Children and Families. “In Pennsylvania alone, 479,000 more have gained insurance since 2010, and hospital readmissions are dropping dramatically. The historic effects ACA has had on seniors, low-income communities and the uninsured is incomparable.”

But Republicans like state Rep. Matt Baker, Majority Chairman of the House Health Committee, took a dimmer view. “The future of Obamacare rests with Congress, as it is a federal law,” said Baker. “Some components are well-intentioned and others need to be repealed in (their) entirety, but Congress will ultimately decide what changes will be made. In the meantime, double-digit insurance rate increases continue and are unaffordable and unsustainable for many, and will continue to lead some to not be able to afford insurance as a direct result of Obamacare.”

Nearly 900,000 Pennsylvanians are currently covered through the first major ACA provision, which took effect in 2014. The exchanges allow individuals and small businesses to choose from a selection of privately administered, competitively priced health plans regulated by the Pennsylvania Insurance Department.

Roughly three-quarters of the 505,000 individual Pennsylvanians on the exchange qualify for federal subsidies, which are available to applicants earning up to 400 percent of the federal poverty level. Between lower net rates and the elimination of exclusions for pre-existing conditions, the exchange radically transformed the landscape of individual health insurance.

But the biggest statewide impact has come from Pennsylvania’s ACA-backed, federally funded Medicaid expansion, which went into effect in April 2015, three months after newly elected Gov. Tom Wolf set the plan in motion. As of April 2016, the Medicaid expansion had reached 625,970 newly eligible Pennsylvanians; nearly half are employed, and a similar percentage is younger than 35.

21

DR. DAVID GRANDE

“In some respects, it has the chance to have the greatest bang for the buck,” said Grande of the state’s expanded Medicaid program, which extended coverage to individuals with family incomes up to 138 percent of the federal poverty level. “It’s been a very effective way to reach a vulnerable population that previously struggled a lot to get insured.”

And within a year of the expansion, nearly 63,000 of the new Medicaid recipients had received addiction treatment – a priority of the Wolf administration, which has put the opioid crisis at the top of its public health agenda. “Medicaid has been a huge tool for us in that fight,” confirmed Kathaleen Gillis, a spokesperson for the Department of Human Services, which administers the Medicaid program.

But the fact that Pennsylvania waited a year later than many states to expand Medicaid speaks to the very issues that make the state a challenging environment for reform.

Scanlon, for one, cites the complicated political geography of a “purple” state as an obstacle to change, noting that Pennsylvania’s powerful, Democratic-leaning urban centers can be at odds with the inclinations of its more conservative rural communities – especially given the partisan dynamic of the Obamacare debate.

“UNDOUBTEDLY, THE AFFORDABLE CARE ACT HAS BEEN IMMENSELY SUCCESSFUL AT GETTING NEW PEOPLE COVERED.” – DR. DAVID GRANDE, senior fellow and director of policy at University of Pennsylvania’s Leonard Davis Institute of Health Economics

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CityAndStatePA.com

“These changes are threatening to certain stakeholders,” explained Scanlon. “Health care’s a big business. Any decision you make, someone stands to win and someone stands to lose. People argue over turf.” Scanlon said those conflicts can slow the pace of health care initiatives – not only coverage, but also innovation in key areas like price, quality, technology and payment – relative to states with consistent leadership and greater consensus.

One very visible example: the shortlived experiment known as Healthy PA. A predecessor of the current Medicaid expansion, Healthy PA was a program of state-subsidized, private coverage options for low-income residents created under Wolf’s predecessor, Gov. Tom Corbett.

Similar plans were floated in other Republican-controlled states, noted Gillis, as a way to extend coverage without signing on to a key Obamacare provision.

But more patients were able to enroll a year later when Healthy PA was replaced with expanded Medicaid, which simplified enrollment and extended eligibility requirements. “It reduced a lot of the bureaucracy that was associated with Healthy PA,” said Gillis – but more than a half-million Pennsylvanians waited an additional year for coverage.

The Pennsylvania insurance market is also finding its footing more slowly than those in neighboring blue states, according to Katherine Hempstead, a senior advisor and health insurance expert at the Robert Wood Johnson Foundation in Princeton, N.J. “The products came out priced really, really low – too low, because people didn’t anticipate what it would cost to cover the population,” said Hempstead. “The insurance companies lost a ton of money. Sizable increases are needed, because the prices

October 6, 2016

aren’t sustainable.”

Hempstead explained that more evolved insurance markets in New York and New Jersey meant that those states’ insurance carriers had a more accurate idea of costs, leading to more realistically priced exchange plans. Like the ACA, markets in those states already operated on a basis known as “guaranteed issue” – a guarantee of the right to obtain insurance regardless of health status – whereas Pennsylvania insurers used medical underwriting to exclude some patients and adjust pricing, essentially cherry-picking a healthier clientele.

While a boon for sicker patients, the shift to federal exchange plans – priced only according to age, location and smoking status – introduced a greater degree of uncertainty into the Pennsylvania market, where the average 2016 silver plan was sold for just $239. In contrast, a comparable 2016 plan cost $310 in neighboring New Jersey, where health care costs are otherwise similar.

“These past few years have been a process of learning for all the companies,” said Ron Ruman, a spokesperson for the Pennsylvania Insurance Department, which is currently evaluating proposed rate increases for 2017. “In the insurance world, three years is not much.” But it’s enough time for major providers like Highmark, Geisinger and UPMC to raise rates for a more diverse exchange clientele with higher-than-expected health care costs. (Most consumers won’t bear the brunt of premium increases, however, because subsidies will absorb much of the difference.)

One upside to the Pennsylvania marketplace: stability. “The plans are being offered through established insurers who, in most cases, have been around for a long time doing business here,” said Ruman. Pennsylvania never had the kinds of experimental,

A brief history The most notable milestones for the Affordable Care Act’s impact on Pennsylvania since the landmark health care bill was passed in 2009:

2010

March: The Patient Protection and Affordable Care Act passes.

DR. EZEKIEL EMANUEL

nonprofit marketplace startups – co-ops, for example – that have failed in other states. Nor has it thus far suffered from the overly restrictive provider networks that generate complaints elsewhere, said Grande of Penn. In addition, the high-profile marketplace exit of United HealthCare, the biggest player on the national scene, will have only a minor impact in the Keystone State, where it has only about 6 percent of the overall market, Ruman said.

But even if rates somehow stabilize, experts say a long-term challenge will be to bring down spiraling health care costs – many of which are related to an overreliance on expensive hospital systems statewide, not just in Philadelphia. “We are hospital-centric, and that raises premiums,” said Dr. Ezekiel Emanuel, a renowned bioethicist who chairs the Department of Medical Ethics and Health Policy at the University of Pennsylvania. “We have too many hospital beds compared to other places in the country, and hospitals are going to have to close.”

2013

November: Enrollment opens for federally run health exchange for 2014 coverage.

State uninsured rate: percent for non-elderly adults.

14

PA Medicaid/CHIP enrollment:

2.35 million

2014

318,000

Pennsylvanians enroll in ACA plans on the new federal exchange.

City & State Pennsylvania

October 6, 2016

Emanuel is certainly in a position to know. A former special advisor for health policy at the White House Office of Management and Budget, he is credited as a key architect of the ACA; Obamacare was the focus of his 2014 book, “Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, ErrorProne System.”

Despite all those adjectives, Emanuel was sunny on the topic of the ACA’s future in Pennsylvania, explaining that hospital closures would ultimately lead to greater value and stabilized costs. “And by the way, it doesn’t mean we’re going to get less care,” he emphasized. “It doesn’t mean we’re going to get worse care. In fact, we’re going to get better care.” By way of example, he noted that a joint replacement performed in an ambulatory urgent care center is not only far cheaper than the same operation performed in a hospital; it also puts the patient at far less risk of the community-acquired infections prevalent in American hospitals.

From the other end of the state, a similar sentiment was voiced by longtime health care advocate Karen Wolk Feinstein, president and CEO of the Jewish Healthcare Foundation, which operates the Pittsburgh Regional Health Initiative. On the plus side, Wolk Feinstein said, Pennsylvania’s extensive hospital network gave the system plenty of slack to absorb newly insured patients: “I think we can all agree that it’s better to have some insurance than no insurance.”

But she noted that the ACA – with its copious, expensive paperwork and technology requirements, including a shift to electronic medical records – has had the unintended effect of encouraging smaller providers to consolidate for efficiency within larger hos-

2015

April: Gov. Tom Wolf announces Medicaid expansion.

121,234

residents are directly transitioned to Medicaid from Healthy PA. State uninsured rate:

8%

pital networks. “And there is little doubt that this has resulted in higher costs and lower quality,” Wolk Feinstein said. Like Emanuel, she believes that hospitals are undesirable for many services – and she also identified safety and quality as being areas where ACA goals have fallen short thus far.

“I’m registering as a skeptic – there is no way you can look across the board and say that quality is improving,” said Wolk Feinstein, noting that despite a slew of new ACA-related provisions aimed at improving hospital quality, preventable problems such as wrong-side surgery and pressure sores continue to occur at unacceptably high rates. “It’s not just about access. We have a long way to go.”

To shift non-emergency care away from hospitals, the ACA subsidizes community clinics – including FQHCs (federally qualified health centers), which operate under a federal mandate to charge sliding-scale fees in underserved areas. Grande noted that such clinics are particularly vital in immigrant neighborhoods – Northeast Philadelphia is one example – where many residents are ineligible for insurance as a result of a legislative compromise that excluded undocumented immigrants from ACA eligibility. “Even though Southeast Pennsylvania has a pretty robust network of availability, there are pockets of the city where there are stresses on the system related to access and demand,” Grande explained.

Ultimately, bringing more patients into the system – whatever their health or legal status – is among the most critical nearterm challenges facing the ACA. From the standpoint of public health, covering more people is a no-brainer; from a fiscal perspective, a larger, more diverse patient pool spreads risk more evenly across insurers, which could theoretically stabilize costs.

2016

The ACA will inevitably need more young, healthy consumers to offset costly new enrollees like Barbara White of Wilkinsburg. When the health exchanges launched in 2014, White, then 57, had been limping for two and a half years due to a degenerative joint condition, which was considered pre-existing under her employer’s grandfathered health plan. “I realized that with my insurance, any treatment I would have would not be covered,” recalled White, who needed multiple surgeries to avoid permanent disability.

So White quit her job in medical billing and – as a newly unemployed person – was eligible to sign up mid-year for a marketplace plan. A few months later, she had her hip replaced; two knee replacement surgeries followed, all of it made possible by the new healthcare law. Cases like hers “are the reason the Affordable Care Act was passed,” said White.

But while White’s story illustrates the promise the ACA holds for Pennsylvanians, it also illuminates the ongoing challenges of a system burdened by cost and complexity. Even with solid health coverage, White added that she spent at least $10,000 for out-of-pocket medical expenses in each of the last two years. And in order to qualify initially, she had to quit her job – a move that ultimately damaged her career, sending her onto the Medicaid rolls as she starts her own business from scratch.

That’s why White – like Thornton – quietly hopes the ACA will be replaced eventually by a cheaper, simpler single-payer system. For now, they are grateful for a program that, for all its drawbacks, offers indisputable advantages. “I was fortunate to have access to coverage,” said White, who is back on her feet and feeling good. “I’m not sure what I would done otherwise.”

■

625,970

Pennsylvanians have been newly enrolled in Medicaid since the expansion, bringing total Medicaid/ CHIP population in PA to an

2.8 million,

18% increase from 2013.

505,000

Approximately Pennsylvanians are currently enrolled in ACA plans on the exchange.

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108,776

providers statewide accept Medicaid, up from 92,801 in 2013.

24

CityAndStatePA.com

HEALTH CARE

October 6, 2016

Ask

the

Experts Ted Dallas SECRETARY, STATE DEPARTMENT OF HUMAN SERVICES

TED DALLAS GAVE new meaning to the phrase “Hit the ground running” when he became secretary of the Department of Human Services in January 2015. In addition to the host of responsibilities attendant to running the largest state agency in Pennsylvania – DHS provides services to 3.1 million residents, thanks to a $36.7 billion annual budget and some 17,000 employees – Dallas made it a priority to expand Medicaid on an unprecedented scale, which has resulted in more than 670,000 Pennsylvanians moving from the ranks of the uninsured.

C&S: What is the DHS elevator pitch?

TD: We cover everything from Medicaid program to children, youth and families, to mental health, substance abuse – a range of just about every social service you can think of.

C&S: The DHS website has a prominently featured list of five priorities,

including ones that seem more suited for a private company than a state agency. How did you develop this list?

TD: I was No. 2 in the department in the Rendell administration, so that gave me a head start for ideas. What underlies everything is that we want folks to be treated just how we would want our own family members to be treated. We want access to services that are high-quality and good enough for our own family members.

C&S: Could you explain your focus on keeping people who need care in the community instead of in facilities?

TD: Every human services agency looks at something called program integrity.

You look at Pennsylvania right now, there are 50,000 folks in nursing homes, state mental hospitals, homes for mental disabilities – it’s a number roughly equal to the population of Harrisburg. Whether it’s a nursing home we contribute money for or a facility we run, the research is

clear: If it’s a choice between a nursing home and being in the community longer, not only is it common sense to keep people in the community, but research shows it keeps people healthier.

Folks are in places they don’t want to be, and it costs a lot more: 95 percent of people in the state want to age in place.

Right now, we only serve 51 percent in the community. There is a big gap between where people want to be n where we serve them And it costs more money: $62,000 a year to keep someone in a nursing home, versus $31,000 to keep them in the community.

C&S: What are some of the lesserknown benefits of helping so many people get health insurance?

TD: Of those 670,000 people, in the first year, about 62-63,000 of them accessed drug and alcohol services. A big part of that is the opioid crisis, something that affects people from all walks of life. Before that, people were dealing with substance abuse disorder without any access to health care.

C&S: How would you allocate a funding windfall?

TD: By providing services we don’t cover in Medicaid yet, like dental care, expanding early intervention in child services – they have an impact and benefit for kids not only as they grow up but into adulthood – and for folks with intellectual disabilities and autism. There is a growing need out there that we cannot always meet.

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City & State Pennsylvania

October 6, 2016

ARTHUR C. EVANS JR. heads up an agency with an unwieldy name – he is the commissioner of Philadelphia’s Department of Behavioral Health and Intellectual disAbility Service (DBHIDS) – and an impressively increasing range of impact on the citizens of Philadelphia and beyond. Evans, who also holds faculty appointments at the University of Pennsylvania School Of Medicine and the Philadelphia College of Osteopathic Medicine, is responsible for integrating the city’s behavioral health care and intellectual disability services into one comprehensive system by, according to the agency’s website, “providing services through a network of agencies while collaborating with the Philadelphia School District, child welfare and judicial systems and other stakeholders.”

Evans is also innovating mental health applications that can be used nationwide.

C&S: What is your DBHIDS elevator pitch?

AE: We are a city agency responsible for mental health, substance use and intellectual disability needs – we are the safety net for the city of 1.5 million people.

C&S: What are behavioral health issues that citizens should be paying more attention to?

AE: Opioid addiction is a big issue we are dealing with right now, of course. We are also trying to improve the mental health literacy of the population. After Sandy Hook, there was a big push to train people in mental health first aid. The idea is that you want people in the community to recognize when people have mental health challenges and what to do about it Many people know CPR for basic physical health challenges; they are not familiar with what to do with mental health challenges – most people don’t know the difference between depression and schizophrenia. We have been training people to have a basic understanding of and what to do when friends, family and coworkers have challenges. So far, we have reached 20,000 people – we have a broad-based strategy, and are a national leader on it.

C&S: If you had a wish list for funding initiatives, what would be on it?

AE: Absolutely, to have more flexible funding for public health strategies. To put it in perspective, our annual budget is $1.2 billion; almost all of it goes to treating people who have a diagnosis and

are ill – very little of it goes to prevention and intervention. As a result, health care systems are very inefficient. We have partnered with other agencies to work further upstream and not wait for crises.

When we have community health fairs, people screen for heart disease, diabetes – we are taking that strategy and employing it in mental health. One of the things we have to do is identify issues much earlier.

For example, we are the first major city in the country to have hospital-based interventions to provide psychological interventions in addition to traditional ones.

We are screening children in pediatric settings for trauma. We are working with the city’s Mural Arts Program to reduce the stigma and make it more likely people will reach out for help.

C&S: How much interaction and partner opportunities do you have with other agencies in the city and the state?

AE: We have trained more than 2,400 police officers in crisis intervention training so they can recognize when people are having mental health challenges and know how to de-escalate a situation. We put headphones on them to give them the experience of hearing voices giving them commands – they see what it is like for someone who has a mental illness and is trying to listen to a police officer give

Arthur C. Evans Jr. COMMISSIONER, PHILADELPHIA’S DEPARTMENT OF BEHAVIORAL HEALTH AND INTELLECTUAL DISABILITY SERVICE

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them commands.

We also have mental health professionals embedded in the courts and the child welfare system, and in the school district – part of our strategy is to help build capacity of other agencies to deal with mental health.

One of the things we have tried to do is be very efficient – part of our responsibility is to oversee the managed health care contract that the city has with the state. So far, we have saved $226 million over 10 years that we have been able to reinvest in services.

When there are agencies that are doing this work in an effective way, saving taxpayer dollars, those kinds of efforts get recognized by the public.

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CityAndStatePA.com

October 6, 2016

HEALTH CARE

INNOVATIVE

NATIVES

By MELISSA JACOBS

It’s about insurance To understand why again, right? That’s Pennsylvania companies what many people think when they hear have become such a the words “health force in health care care.” Or, that there’s advances, look no further yet another new study than these five leaders debunking an older study about how we should be eating, drinking and exercising. But there are real innovations in medicine, business and technology that are shaping the future of health care. Here are the most interesting forward-thinkers in Pennsylvania.

October 6, 2016

John W. Manzetti President & CEO, Pittsburgh Life Sciences Greenhouse; Founder and Managing Director, PLSG Accelerator Fund

Stephen Tang President & CEO, University City Science Center

City & State Pennsylvania

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Cancer biochip systems that use genomics to predict how patients will respond to Tamoxifen. Nanotechnology that creates alloy gradient quantum dots (QDs) for use in optoelectronics. These and other breakthroughs are in development by companies at Pittsburgh Life Sciences Greenhouse. Since its formation in 2002, PLSG has invested $21 million in 78 companies, and has exited 11 other companies for $600 million.

The only life sciences incubator in western Pensylvania, PLSG was created in 2002 as a public/private partnership by the Commonwealth of Pennsylvania, University of Pittsburgh, Carnegie Mellon University, University of Pittsburgh Medical Center and Pittsburgh’s regional foundation community. The incubator has assisted 440 life sciences companies, creating or retaining more than 2,300 jobs and bringing more than $1.5 billion to the Pittsburgh area.

John Manzetti, PLSG’s president and CEO, says that its executive program is one of the little-known keys to its success. Great ideas need great companies to bring them to market, Manzetti says. Doing that requires specific skill sets, which is why he recruits CEOs with existing experience in the life sciences field. “We’ve been able to find very talented CEOs and get them to move to Pittsburgh,” he explains. “We’ve done that 14 times – and it’s a win-win.”

Why is PLSG the only life sciences incubator in the region? “Life sciences is not for the faint of heart,” Manzetti says. “It requires in-depth domain expertise to know the companies and marketplace.”

As to where the marketplace is headed, Manzetti says that health IT and therapeutics are PLSG’s fastest growing segments. That’s a sea change from when Manzetti arrived in 2006. Then, PLSG had two startups working in therapeutics and zero health IT companies. Manzetti – and the six CEOs he immediately hired – saw the business reality of life sciences, especially health IT. Those products don’t require FDA clearance to go to market, meaning that investments in those companies are less risky and products can get to market quickly.

Manzetti and PLSG still face challenges. “A lot of people are interested in investing when companies are cash flow-positive, but it’s equally critical to provide a continuous flow of capital so when they hit a bump in the road, they can power through it.”

Being acquired for millions of dollars is the dream of many medical research firms. Helping millions of people is even better. Both happened to Avid Radiopharmaceuticals, which created technology to diagnose the pathology of Alzheimer’s and other neurodegenerative diseases. In 2010, the company was sold to Eli Lilly & Company for $800 million.

That’s only one of the microscopes-to-riches stories coming out of University City Science Center, itself a success story. UCSC now generates $12.9 billion in annual economic activity – more than 2 percent of Greater Philadelphia’s total economic output. Part of UCSC’s success is due to its neighbors. The center is surrounded by an embarrassment of academic riches, attracting researchers from the University of Pennsylvania, Drexel University, University of the Sciences, PCOM and Temple University. “The absolute secret sauce we have is engagement with our shareholders, which are essentially all of the universities and medical centers in and around Philadelphia,” says Stephen Tang, UCSC’s president and CEO. “We help innovation flow from universities into the marketplace, then engage the marketplace to further fund and refine them.”

Tang isn’t settling for being the best in the region. Philadelphia should be competing with San Francisco, Boston and Austin, Tang believes. For that to happen, city and state government leaders need to create policies that are favorable to startup businesses. “Over $1 billion worth of research goes on in the city limits,” Tang says. “How do we further capitalize on the great innovation capacity we have here? What else could be done to make Philadelphia more attractive to businesses as they grow?”

For the time being, Tang is focusing on nurturing the startups already at UCSC. Its strongest growth sectors are therapeutics, medical devices, diagnostics and digital tools.

Much of that, Tang says, is because the region has one of the highest concentrations of clinical research organizations in the country. “There’s been so much consolidation in the pharmaceutical industry in the past five to 10 years that former employees – from Wyeth, Astra Zeneca, Merck and elsewhere – have come into the marketplace and formed their own businesses,” he explains. Tang’s goal, as he sees it, is to make Philadelphia the best place for them to grow – and keep – their companies.

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CityAndStatePA.com

Mike West CEO, The Rothman Institute

David Feinberg President and CEO, Geisinger Health System

October 6, 2016

Mike West has created an orthopedic empire. When he joined Rothman in 1999, the newly formed practice had nine physicians in two Center City offices. Today, Rothman has 145 physicians and 24 offices in Southeastern Pennsylvania and South Jersey. In 2016, West spearheaded major westward expansion into the Philadelphia suburbs. Never mind that the area already has well-established orthopedic practices. “We assume that any market we go into has high-quality orthopedic physicians,” says West. “We know we have to compete for patients and earn them – and we will.”

Competition is part of Rothman’s brand; its doctors are team physicians for the Philadelphia Eagles, Philadelphia Phillies, Philadelphia Flyers, Philadelphia 76ers, Villanova University, St. Joseph’s University and more than 40 local high school and colleges. Not only does that give the company major sports cred, but it cements Rothman’s relationship with the Philadelphia region. Just in case that isn’t enough, in 2014, it became the title sponsor of The Rothman Institute Ice Rink at Dilworth Park, adjacent to Philadelphia’s City Hall.

While all of that is great marketing, West is keenly concentrated on preparing the company for the future of health care: ambulatory surgical centers. Thanks to new technology, the development of less invasive surgical procedures and better pain management, Rothman has seen significant decreases in the amount of time patients need to spend in hospitals. West says that the next three to five years will bring a significant shift in the marketplace, as more and more cases will be performed on an outpatient basis.

That’s why West is in the process of building four ambulatory surgical centers in each corner of its geographical territory, from South Jersey to Bucks, Chester and Delaware counties.

While Rothman is becoming the Goliath of orthopedics in the Delaware Valley, it does face challenges. The biggest of those, West says, is the transformation from the current fee-for-service to value-based payment. “The Rothman Institute is completely reorganizing our process,” West says. “The changes required for this transformation are significant and require collaboration within Rothman and with our health care networks, health insurance companies, PCPs, specialists and post-op care providers.”

Dr. David Feinberg is one of the new breed of health care leaders. An MD and MBA, Feinberg is fusing business with the art of medicine to make health care both profitable and patient-centered. How does a money-back guarantee sound?

That’s only one of the ideas put forth in the short time that Feinberg has led Geisinger Health System, one of the largest in the state. At the helm since May 2015, Feinberg leads a company that treats more than 3 million residents at 12 hospital campuses in 45 counties in central, south-central and northeast Pennsylvania, as well as in South Jersey. In August 2016, Feinberg led Geisinger to a big acquisition: St. Luke’s University Health Network. What Feinberg calls a “master collaboration” unites Geisinger with St. Luke’s seven hospitals in eight Pennsylvania counties and Warren County, NJ. Feinberg is also revamping Geisinger’s leadership. In June, he hired a new chief integration officer, chief strategy officer and chief medical officer. While remaining mum on the exact reasons for the big C-suite makeover, it seems obvious that Feinberg is stacking his corporate deck with disruptors like himself. That money-back guarantee is one of Feinberg’s shiny new ideas.

It expands Geisinger’s groundbreaking ProvenCare system, created in 2006. Dubbed “surgery with a warranty” by The New York Times, ProvenCare stated that surgical patients readmitted within 90 days because of preventable complications would be treated at no extra charge.

In 2015, Feinberg expanded ProvenCare with ProvenExperience, which gives patients their money back if they aren’t pleased with their service. Like ProvenCare, ProvenExperience is only available to patients getting certain treatments and surgeries.

“The way I see it, if you go into Starbucks and you’re not happy with your order, they don’t sip your latte and argue that they made it correctly. They just take care of you on the spot,” Feinberg said during a speech at the 2015 Press Ganey Executive Leadership Conference in Orlando.

“What matters to me is that every patient is satisfied with their treatment and so I started thinking, ‘What is our guarantee? What is our refund?’ We need to be disruptive to move the practice of providing great patient experience forward, and so the decision was made to give unsatisfied patients their money back.”

ProvenExperience is now up and running as a pilot program at Geisinger Medical Center, the health system’s main campus in Danville.

City & State Pennsylvania

October 6, 2016

Martin Lupinetti Executive Director, HealthShare Exchange of Southeastern Pennsylvania

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Electronic medical records are like text messages. Americans are highly dependent upon them and can’t remember life without them. But not until the federal Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 did the health care industry get pushed into digitizing their paperbound systems. As soon as President Barack Obama signed HITECH, forward-thinkers began to consider creating a health information organization (HIO) to share records between health systems. In 2012, the HealthShare Exchange of Southeastern Pennsylvania (HSX) was created to figure out how to accomplish that.

Formed as a nonprofit, HSX had to figure out the technical end of getting different networks’ systems to communicate – and get competitors to communicate. Health care companies don’t encourage patients to seek care elsewhere. Navigating this multipronged problem is HSX’s executive director Martin Lupinetti, and the organization has made tremendous strides. HSX now includes major networks like Aria, Jefferson, Penn, Trinity, Temple, Einstein, Independence Blue Cross, AmeriHealth Caritas and Health Partners Plans.

HSX’s system has developed different technologies for different usages. “We want physicians to have the most relevant, actionable data,” Lupinetti explains. “We are spending a lot of time and attention integrating this into the system. Health care providers want to find exactly what they want to access, when they want it.”

HSX isn’t the only HIO in the commonwealth. There are four others: ClinicalConnect, eVantageHealth, Keystone Health Information Exchange and Mount Nittany Exchange.

The HIOs break down by geography and will, at some point, be united statewide by Pennsylvania Patient & Provider Network (P3N). State officials have backed HIOs and P3N since HITECH’s inception brought a grant of $17.1 million to fund the HIOs. And of course, security is a huge issue. HSX has a clinical data repository of 3.6 million patients in the five-county region. “We take security extremely seriously,” Lupinetti says.

“We have high trust certification for health IT-related initiatives where data is being shared. It’s a costly venture, and that’s always a conversation. But we need to raise that bar very high.”

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CityAndStatePA.com

PERSPECTIVES

PULLING BACK the CURTAIN

Voter fraud does happen – just not the way Republicans would like you to believe it does.

By TOM FERRICK IS THERE VOTING fraud in Philadelphia?

Sean Hannity thinks so. The Fox News broadcaster and Donald Trump adviser cites as proof that there were 59 voting divisions in Philadelphia where Republican presidential candidate Mitt Romney got zero votes in the 2012 election.

That could only happen, Hannity argued recently, if the election process in Philadelphia is rigged.

Is Hannity correct?

Yes. And no.

There were, in fact, 59 voting divisions where Romney got zero votes in 2012. There is a simple explanation for how this shutout happened: No one voted for him.

All of those divisions were in wards where nearly all the voters were black. In 2012, President Barack Obama won 99 percent of the black vote in Philadelphia, according to my analysis of key black wards.

It stands to reason that if one candidate averages 99 percent of the vote and another averages 1 percent, there are going to be places where that 1-percenter gets zero votes – just as there were divisions where Romney got two, three or just a half-dozen votes.

Does it surprise you that black voters would prefer a black president to a white, Mormon conservative multimillionaire?

For the record, Obama got 588,000 votes in Philadelphia in 2012; Romney logged 96,000.

Now that you know the facts, will it make any difference?

Not if you are a Republican true believer. As GOP presidential nominee Donald Trump has proven ad nauseum, Republi-

October 6, 2016

City & State Pennsylvania

October 6, 2016

cans are impervious to facts, and this especially holds true when it comes to voter fraud. They believe – no, they know – it is widespread, especially in areas where there are poor, black voters.

Instead of trying to win over those voters, they prefer voter suppression – making it harder for them to cast their ballots.

Preventing voter fraud was the stated purpose of a voter ID law passed by the Republican-controlled legislature before the 2012 election. It never went into effect – the courts declared the law discriminatory. It also noted evidence that no one could find any examples of in-person voter fraud in Pennsylvania.

Does this mean there is no voter fraud in Philadelphia?

No. There is some. The district attorney’s office has prosecuted eight cases in recent years, most of which dealt with ballot tampering – usually by low-level election officials – on voting machines after the polls had closed.

As a rule of thumb, I have observed that fraud cases are limited to minor races where the pool of voters is small – and where a dozen votes can make a difference, like with races for party committee people. Indeed, one case involved someone running for Democratic State Committee.

I have never seen fraud cases involving citywide elections. There’s a reason why: It would take a massive organizing effort, and would likely yield minimal results.

Suppose, for instance, that you wanted to buy votes and organized a plan to pay select voters $20 a head to vote for Mitt Romney. Your goal would be to get 2,000 extra votes.

A couple of points:

SUPPOSE, FOR INSTANCE, THAT YOU ORGANIZED A PLAN TO PAY SELECT VOTERS $20 A HEAD TO VOTE FOR MITT ROMNEY. YOUR GOAL WOULD BE TO GET 2,000 EXTRA VOTES. WHAT GOOD WOULD THOSE 2,000 VOTES DO FOR ROMNEY? OBAMA WON PHILADELPHIA BY A MARGIN OF 492,000 VOTES IN 2012. YOUR PLAN WOULD LOWER HIS MARGIN TO 490,000.

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What good would those 2,000 votes do for Romney?

Obama won Philadelphia by a margin of 492,000 votes in 2012. Your plan would lower his margin to 490,000.

Also, it is axiomatic that the more people involved in this kind of deal (it’s called a conspiracy in the law), the harder it is to keep it secret. If someone were passing out Jacksons to buy votes, word surely would spread.

During my career, I have spent a lot of time tracking down tips about voter fraud. These days, we have sophisticated tools to sniff it out. Take turnout. Some years ago, we took data on voting in one election for all 1,700 of the city’s divisions and ranked it from highest to lowest turnout.

Our feeling was that if citywide turnout was 60 percent and you had divisions where it was 90 percent, that may indicate fraud. We found a handful of such outliers in our number-crunching and looked into them.

Inevitably, they turned out to be high-rise apartment buildings with a generally elderly population large enough to merit having voting machines in their lobby. The residents were active voters. The machines were nearby. It was convenient to vote – and they did.

Another claim made to prove there is voter fraud is the high number of people registered to vote in the city: We have an over-18 population of 1.16 million and over 1 million registered voters. How can this be?

The answer lies in federal voting laws that make it easier to add people to the rolls and harder to remove them. Under the law, seven years must pass before a person who has not voted can be purged from the rolls.

People who die are purged more quickly, because the state Department of Health forwards data on deaths to election boards each month. People who move in-state and change their driver’s licenses to reflect their new addresses are also purged from the rolls or, more accurately, their files are transferred from their old county to their new residence.

The upshot is that Philadelphia’s voting rolls (and those in other counties) are inflated.

Last year, I did an analysis of voting using data from the City Commissioners. At the time, there were 1,036,943 registered voters, but nearly 300,000 of them had not voted even once in the previous five years. So, the real total of active voters was about 740,000.

If the past is any guide, about 650,000 people will vote in this November’s election.

I can confidently predict that Hillary Clinton will win the city, as every Democratic presidential candidate has done for the last 50 years.

She will win not because the same people voted five or six times, as Trump alleged in a speech in Altoona. She will win because about 650,000 people will each vote once, and the overwhelming majority will repudiate Trump's candidacy.

That's not cheating. That's democracy in action.

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Tom Ferrick is an award-winning reporter and columnist who has covered state and local government politics since the 1970s.

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CityAndStatePA.com

October 6, 2016

CAPTIVE IN THE

PERSPECTIVES

COURTESY OF THE BERKS MOTHERS

LAND OF THE FREE

Families who fled Central America to seek asylum in the U.S. find themselves held indefinitely in a Berks County detention center.

By SABRINA VOURVOULIAS WE HAVEN’T EVEN flipped the calendar page to October as I write this column, but I can tell that the kids at the four schools I pass on my way to the train station every day are already sick of school. Maybe, if they are especially bored (and intrepid), they’re starting to hatch plans of how to ditch classes for a day and instead go claim the nearest Pokémon gym for their team.

Some 35 miles west of here, in Leesport, another group of kids is also weighing the possibility of cutting classes. But their reasons have nothing to do with humdrum school routines or creative ways of avoiding them.

In fact, when these kids speak about the new academic year, it is with a plaintive sense of yearning.

The children – seven of them – who range in age from 12 to 17, are from Berks County Residential Center, and when they send me an email Sept. 6, they describe all

that yearning, and more.

They tell me how they are scrambling to find a way to support their moms – the Madres Berks (Berks Mothers) who started a hunger strike on Aug. 8, protesting their extraordinarily long detentions. The kids have hit on the idea of going on strike as well. A student strike, they say, held at the detention center where they attend classes.

And eat. And sleep. The place they inhabit 24/7.

Sept. 15 – the Independence Day for all Central American nations – is the day they’ve chosen as a start date for the strike. The symbolism resonates: The desire for freedom drives independence. Or is it the other way around?

Either way, it is not mere rhetoric for these kids – freedom is a small flame of hope they bank against all odds.

“We have a voice,” they write. “We want it to be heard, so we can secure the freedom we long for.”

City & State Pennsylvania

October 6, 2016

Three of the seven kids who sign the email have been held at the center more than a year, another three are a few months shy, and the “new kid” among them has been held in detention for five months.

They are all Central American. Along with their mothers, they sought asylum in the United States after fleeing from countries with some of the highest homicide rates in the world. What they got instead of refuge were walls. And not nice ones.

The Berks facility where the kids and their mothers are housed is one of three Immigration and Customs Enforcement family detention centers in the nation – the other two are in Texas – has a less-thanstellar history.

In fact, on Jan. 30, 2015, the Pennsylvania Department of Human Services announced it would not be renewing the facility’s license (which was set to expire that February), citing that the center was operating beyond what it was authorized to do, which was to house children – not children and adults together.

Earlier that same month, a staff member of the center was arrested for repeated sexual contact with a 19-year-old detainee, some of it witnessed by an 8-year-old child. Then, in March 2015, Pennsylvania Sen. Daylin Leach (D-Montgomery/Delaware) spoke out publicly about the terrible conditions at the center.

“While the Berks facility is not a state prison under my purview,” he told journalist Ana Gamboa, “it is a facility in our commonwealth that is currently holding human beings, including children, against their will in conditions that seem negligent, abusive, and tragic.”

Some of the abuse and negligence at Berks that has been documented by attorneys and Human Rights First includes: written requests for medical help for children that were ignored by Berks staff, but forwarded to ICE. The agency responded to the requests by suggesting that in order to receive treatment, the detainee mothers must agree to withdraw any asylum requests; a 2-year-old, vomiting blood for three days, was given

ONE OF THE STRIKING MOTHERS AND HER 13-YEAR-OLD CHILD WERE SUDDENLY DEPORTED IN THE MIDDLE OF NIGHT – EVEN THOUGH THEIR CASE FOR ASYLUM (ON THE BASIS OF DOMESTIC ABUSE) WAS STILL PENDING.

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water to drink as her sole treatment, then sent back to her room wearing the same blood-soaked shirt; a 5-year-old suffering from diarrhea for three weeks received no treatment at all; staff members woke detainees (adults and children) every 15 minutes during the night, shining flashlights in their eyes during safety and security checks; an 8-year-old girl was forced to share sleeping quarters with an unknown man.

In June 2015, 10 women in the center launched a work strike, refusing to perform the cleaning labors assigned to them and remunerated at $1 per day. According to a 2014 New York Times report, some 60,000 immigrants worked in the federal government’s detention centers in 2013, and were paid 13 cents an hour – thus saving authorities the $40 million a year it would have had to pay minimum-wage workers to do the job.

When Berks started to feel the effects of the strike, the center’s administration reportedly added children as young as 13 to the work roster.

That same month, one of the striking mothers and her 13-year-old child were suddenly deported in the middle of night – even though their case for asylum (on the basis of domestic abuse) was still pending. (The two were subsequently “un-deported” – the Third Circuit Court of Appeals ordered ICE to bring them back, and they were then released from Berks with ankle monitors.)

The 22 mothers participating in the current hunger strike say they have been psychologically tortured by staff members who have allegedly threatened to separate them from their children, and have periodically barred access to the outdoors, the offices of social workers and of legal counsel. In the Berks Mothers’ most recent communication, they mention new and seemingly arbitrary limits on the hours staff members will allow them outside – from 6:30 p.m. to 8 p.m.

In the meantime, Sept. 15 comes and goes without my hearing a word from the Berks kids.

It is the first day of Hispanic Heritage Month (which runs through Oct. 15) and people are starting to promote the feel-good features and events celebrating Latinxs in the U.S. that proliferate at this time of year.

If this were one of those stories, it would have a happy ending: The kids and their moms finally on the outside of those walls that have hemmed them in, every hour of every day for the past year.

But there is no such resolution in this story.

When I finally hear from the kids, they tell me they’ve decided not to strike because their lawyers think it might damage their legal cases. And might get their mothers in trouble.

“But we’re going to continue looking for a way we can protest,” the kids tell me. They haven’t given up on freedom, and their independence day, yet.

And that is a tiny but certain glimmer of hope I can hang onto.

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Sabrina Vourvoulias is an award-winning metro columnist at Philadelphia Magazine and an op-ed contributor to The Guardian US.

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CityAndStatePA.com

October 6, 2016

CITY & STATE PENNSYLVANIA Publisher David Alpher dalpher@cityandstatepa.com Editor Greg Salisbury gsalisbury@cityandstatepa.com

Finance and Office Manager Allison Murphy amurphy@cityandstatepa.com Chairman Steve Farbman President/CEO Tom Allon tallon@cityandstatepa.com

LOSERS STATE REP. MARK ROZZI – The Berks County pol survived childhood sexual abuse only to see his bill to lift the statute of limitations on molestation suits lobbied out of existence by clergy groups. This month, he announced he’s taking a second run at it. Godspeed.

OUR PICK

OUR PICK

WINNERS

Whether you’re one of the countless recipients of the dreaded blue-andwhite envelopes on your windshield who have been enjoying watching the Philadelphia Parking Authority boss and board self-immolate in an execrably handled sexual harassment scandal, or you have been waiting to see the arc of justice bend in the right direction for Pennsylvania victims of childhood sexual abuse at the hands of Catholic priests, it was a September to remember for our Winners & Losers.

Staff Reporter Ryan Briggs rbriggs@cityandstatepa.com

Editorial Director Michael Johnson mjohnson@cityandstatepa.com Managing Editor Ryan Somers rsomers@cityandstatepa.com

VINCE FENERTY – The longtime Philadelphia Parking Authority director/ entitled goon sexually harassed multiple women – and his board members (who deserve a special Losers mention all their own) covered it up. Fenerty only lost his job after Inquirer reporter Mike Newall sniffed out the story. The infuriating coda: He will collect a $12,000+ monthly pension anyway. Wait, who’s the real loser here again?

THE BEST OF THE REST

THE REST OF THE WORST

STATE SUPREME COURT JUSTICE

STATE REP. LESLIE ACOSTA - After

TOM SAYLOR - In November, voters

quietly pleading guilty to felony

will weigh in on whether to raise the

embezzlement charges, the Philly

state’s judicial retirement age in a

lawmaker says she wants to keep her job

move designed mainly to help the

anyway. In other news, Dante is busily

state’s most aged justice keep his spot

adding a new circle of hell, reserved

on the bench for a few more years.

for oblivious Philadelphia government

PATRICK KERKSTRA - The former

officials.

PhillyMag editor fought for more

ALLENTOWN MAYOR ED PAWLOWSKI

diversity and local political coverage

- Hizzoner lamely tried – and failed – to

in the newsroom; ownership wanted

get back campaign funds frozen by

more articles on the perfect golf swing

federal investigators, all while still under

and less digital outreach. His departure

federal investigation. Dude, there’s plenty

makes Pat a winner in our book.

of room in hell for Lehigh Valley pols, too.

Creative Director Guillaume Federighi gfederighi@cityandstatepa.com Digital Manager Chanelle Grannum cgrannum@cityandstatepa.com Copyright ©2016, City and State PA, LLC

Vol. 1 Issue 6 - October 6, 2016

PHILADELPHIA FORECLOSURES: THE RECESSION, ALL OVER AGAIN

2 YEARS LATER, IS OBAMACARE WORKING?

The BUSINESS of MEDICAL MARIJUANA

CIT YANDSTATEPA .COM

@CIT YANDSTATEPA

Cover : art direction GUILLAUME FEDERIGHI graphic design ALEX LAW

October 6, 2016

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