Eric Gay/AP Photo
Spin the wheel and you may get this payment, or maybe not.
First Response
Stephanie Engel has written for the Prospect before, but by day she’s a psychiatrist in semi-retired private practice in Cambridge, Massachusetts. The other day she was going over her payments from Medicare patients, a small part of her business. “It’s usually a series of very small payments, $13, $17,” Engel told me. But in the middle of this statement was a deposit of $893, with no explanation except one line: “CARES Act: HHS stimulus payment.”
Engel hadn’t submitted a claim under the CARES Act to receive assistance. In fact, her business is thriving at the moment (people are a little stressed lately). She didn’t go to the money, the money came to her. All she had to do to keep it was visit an online portal, and check a box attesting that she was a Medicare provider in 2019, and that the money won’t be used for “lobbying, gun control or reproductive rights.”
The funds came from the Department of Health and Human Services portion of the CARES Act, an initial $30 billion in direct deposits to Medicare providers. UnitedHealth, an insurance company, won a contract to do the disbursements, even though numerous health-related agencies throughout the government are familiar with delivering funds. An economist at the Council of Economic Advisers who is part of a small group deciding how to allocate the now $175 billion in assistance to providers was previously a consultant for United Health. The company claims to be doing the service for free, but obviously this could be a prelude to additional for-profit contracts. Engel happens to get her secondary Medicare payments through Optum, a division of UnitedHealth.
While health care providers who may be coping just fine during the coronavirus randomly get money placed in their bank account, nobody on the island of Puerto Rico has received a $1,200 CARES Act payment, according to San Juan mayor Carmen Yulín Cruz. A Pew Research Center report found that only 29 percent of jobless workers actually received an unemployment payment in March, owing to wide disparities in state-based unemployment insurance systems and historic backlogs. The small business loan program ran out of money once and reopened today.
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Meanwhile, millions more one-time payments have been sent, but to the wrong household or bank account. Sending money to dead people is somewhat understandable, if the information used to generate the payments is as old as someone’s 2018 tax return. (It’s unclear if those payments will be sent back, or if beneficiaries can receive it). Less understandable is the source of the delay for millions of mostly low-income people: the strange way that for-profit tax preparers handle tax refunds from the IRS.
As I’ve explained previously, 21 million tax returns were financed through “refund anticipation checks,” where the tax preparer sets up a temporary bank account with an affiliate, and then distributes refunds from that account later, minus preparation fees. The IRS blindly supplied an unknown number of payments to these closed or defunct accounts. One company reported receiving 300,000 payments in one day; they returned them to the IRS, which must put them in the queue for a paper check. Chi Chi Wu of the National Consumer Law Center told me that another source of confusion are prepaid cards, which some tax preparers issue to customers for their refunds. “The official word from the IRS was that payments would not be sent to prepaid cards,” Wu said. “We have been hearing that some prepaid cardholders have been getting them.”
Setting aside how your bank or a private debt collector, or a scam artist, can grab your money, everyone will likely get the payments eventually. So far the tax prep industry has done a decent job of routing payments (Republic Bank didn’t return payments to the IRS, but sent them to customers at their own expense). The problem lies with the systems we have. As Wu explains, it’s pretty remarkable that the IRS’s antiquated infrastructure managed to get 80 million direct deposits out the door at all, even if they got some wrong. “Be mad at Congress for underfunding the IRS,” Wu said. “We need to develop a better system.” At a time when the U.S. Postal Service is on the brink of failure, postal banking, which could have prevented many of these problems, looks better than ever.
You can’t help but be struck at how the lottery-like nature of the CARES Act is on full display. Depending on how you did your taxes or what state you happened to lose your job in or how your bank managed the small business program, you either smoothly received relief or are still waiting for it. There are arcane rules and procedures that could delay or speed up your payments.
Or you could be Stephanie Engel, and just have $893 show up in your bank account without asking for it or knowing if it will arrive. “It never occurred to me that I would get this payment,” Engel said. She decided to send her share to a local food bank in Cambridge and a program she works with in Burundi. “When they’re asking small business to apply for a loan and run out of money, why are they giving money to me?”
Odds and Sods
Over at the Prospect, Brittany Gibson explains how the coronavirus plays on our existing legacy of environmental racism to hit people of color harder.
And Paul Waldman notes how Donald Trump is failing the most basic test of presidential leadership: showing empathy in a crisis.
The Prospect’s coronavirus coverage is at prospect.org/coronavirus.
Remembrances
I want to thank everyone who responded to my call on Saturday to send me stories of people you know who passed away from coronavirus. I appreciate you trusting me with these memories. Here are a few:
Reader CM sent me this obituary of their friend Rebecca Reich, “with whom I spoke or emailed several times a week.” Rebecca was a longtime affordable housing advocate in Brooklyn, eventually working for non-profits like the Low Income Housing Fund. Despite her excellent health, she “started showing COVID symptoms on a Thursday or Friday and died in the ER (she went in because of increasing breathing difficulties and cough). They diagnosed a pulmonary embolism, but many of us including her doctor brother think it was brought on by COVID-19.” One common thread among these stories is the uncertainty of the diagnoses, which gives more credence to the Financial Times estimate that real deaths are around 60 percent higher than what has been reported.
Reader CD told me about Wogene Debele of Takoma Park, Maryland, a fellow parent who was part of a school carpool, “An [Ethiopian] immigrant who had very little but always treated me like an honored guest in her modest apartment when I was picking up or dropping off.” As this Washington Post story illustrates, Wogene contracted COVID-19 while eight months pregnant with her fourth child. She gave birth prematurely the first day in the hospital, mother and son were separated, and she died a month later having never seen her newborn’s face.
Reader KH described a good friend named Helen, age 66, who came down with a dry cough, a fever, and general exhaustion back in November 2019. Helen “was highly social, always doing something, going somewhere. She was the bedrock of our circle of friends.” She entered the hospital December 1 with extremely low oxygen levels that led to a coma. She died one week before Christmas. This doesn’t fit the timeline of the coronavirus’ entry into America at all. But KH writes, “I can't help but wonder if she had COVID-19. As the timeline changes and more is discovered about COVID-19 symptomology, the possibility seems greater that she had been infected.”
Reader SS told me about two members of her family that were victims of the coronavirus. “My brother Tom died in a nursing home in Winston-Salem, North Carolina,” SS wrote. “His death was not recorded as caused by Covid-19 because he was not tested, but he died of pneumonia and the nursing home was on lockdown and the family is pretty sure it was COVID-19.” A couple weeks later, SS learned that her first husband, who she had two kids with, “had died of COVID-19 induced pneumonia in a nursing home in northern Virginia.” He was tested posthumously and the coronavirus was definitively the cause. He was 78.
SS lives in an RV park in Washington state near her third daughter, and maintains an incredibly cheery attitude despite these blows. “I realize I could be far worse off. I could be in NYC, or someplace with no family at all. So I am not complaining at all.”
If you have a story, not just about a fallen friend but a tip, an opinion, a theory, anything, reach out via email.
Today I Learned
- House Democrats are finally realizing that they’ve been sidelined by one-woman Congress Nancy Pelosi. (Washington Post)
- The second round of the PPP starts today, and big bank participation is capped at 10 percent of overall funds. (Reuters)
- PPP loans are probably insufficient to prevent the “tsunami” of business bankruptcies. (Associated Press)
- Months into the pandemic, we still know frighteningly little about how the coronavirus kills. (New York Magazine)
- Tyson Foods’ full-page ad, “the food supply chain is breaking,” is a shocker. (via Twitter)
- With its extreme reliance on tourism, Las Vegas will be as damaged economically as any city in America. (New York Times)
- The fight over state and local funding is about destroying public employee pensions. (Los Angeles Times)
