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Letter of Transmittal

August 11, 2008

The President\
The White House\
Washington, DC 20500

Dear Mr. President:

On behalf of the National Council on Disability (NCD), I am pleased to
submit a report titled *The State of 21st Century Financial Incentives
for Americans with Disabilities.* We believe that this groundbreaking
document provides a road map for equality of economic rights for people
of all abilities, regardless of race or socioeconomic background.

This NCD report defines or describes financial incentives affecting
people with disabilities and presents research findings in key areas of
people's lives, such as education and health care. It also describes
selected state-level innovations affecting asset development and wealth
accumulation. In addition, the report suggests several strategies for
securing meaningful employment, career advancement, and benefits needed
for daily living and accommodations.

*The State of 21st Century Financial Incentives for Americans with
Disabilities* recognizes that the potential for Americans with
disabilities to become full citizens cannot and will not be realized
without a redesign of public policy. To that end, this report offers
recommendations that can increase opportunities for people with
disabilities to become fully involved in the economic mainstream of
American society.

We thank you for your leadership in promoting the full participation of
people with disabilities through your New Freedom Initiative (NFI). The
NFI programs have proved to be comprehensive and effective in addressing
challenges faced by people with disabilities in all areas of society.
NCD believes that many ideas in this report will help achieve the goals
of the NFI, and our Council stands prepared to work with you and the
Office of Domestic Policy in the planning and implementation of
cooperative actions on these matters.

Sincerely,

> ![](media/image3.png){width="1.7881944444444444in"
> height="0.6708333333333333in"}
>
> John R. Vaughn
>
> Chairperson

(The same letter of transmittal was sent to the President Pro Tempore of
the\
U.S. Senate and the Speaker of the U.S. House of Representatives.)

**National Council on Disability Members and Staff**

**Members**

John R. Vaughn, Chairperson

Chad Colley, Vice Chairperson

Patricia Pound, Vice Chairperson

Milton Aponte, J.D.

Victoria Ray Carlson

Robert R. Davila, Ph.D.

Graham Hill

Marylyn Howe

Young Woo Kang, Ph.D.

Kathleen Martinez

Lisa Mattheiss

Lonnie Moore

Anne M. Rader

Cynthia Wainscott

Linda Wetters

**Staff**

Michael C. Collins, Executive Director

Martin Gould, Ed.D., Director of Research

Mark S. Quigley, Director of External Affairs

Julie Carroll, Senior Attorney Advisor

Joan M. Durocher, Senior Attorney Advisor

Sharon M. Lisa Grubb, Special Assistant to the Executive Director

Geraldine Drake Hawkins, Ph.D., Senior Program Analyst

Stacey S. Brown, Staff Assistant

Carla Nelson, Secretary

Acknowledgments

The National Council on Disability thanks the staff and subcontract team
of the National Disability Institute (NDI) of the National Cooperative
Bank Development Cooperation (NCBDC) for conducting the research for
this report. They include principal investigators Steve Mendelssohn,
J.D., and Johnette T. Hartnett, Ed.D. (NDI Director of Research and
Strategic Planning), along with NDI Director Michael Morris, J.D., who
contributed research, and Carol Harvey, Ph.D., who contributed economic
analyses.

NCD also wishes to acknowledge the contributions of study advisors
contacted during the early phases of work, including Charlie Hammerman,
John Hetterick, Elizabeth Jennings, Tobey Partch-Davies, and Robert
Zdenek.

**TABLE OF CONTENTS**

[Executive Summary 3](#__RefHeading___Toc204703667)

[Background 3](#__RefHeading___Toc204703668)

[Research Framework 3](#__RefHeading___Toc204703669)

[Summary of NCD's Key Findings on Financial Incentives
3](#__RefHeading___Toc204703670)

[Summary of NCD's Major Public Policy Recommendations on\
Financial Incentives 3](#__RefHeading___Toc204703671)

[Chapter 1: The Topology of Financial Incentives for Americans with
Disabilities: A Review of the Current Federal Experience in Providing
Direct, Indirect, and Community-based Financial Incentives to Americans
with Disabilities 3](#__RefHeading___Toc204703672)

[1.1. Introduction 3](#__RefHeading___Toc204703673)

[Current Context 3](#__RefHeading___Toc204703674)

[Defining Financial Incentives 3](#__RefHeading___Toc204703675)

[Understanding the Incentives of Spending and Tax Entitlements
3](#__RefHeading___Toc204703676)

[Understanding Disability Demographics 3](#__RefHeading___Toc204703677)

[Poverty 3](#__RefHeading___Toc204703678)

[Geography 3](#__RefHeading___Toc204703679)

[Employment and Income 3](#__RefHeading___Toc204703680)

[Diverse Ethnic Backgrounds 3](#__RefHeading___Toc204703681)

[Social Spending History in the United States
3](#__RefHeading___Toc204703682)

[Social Spending and Program Drift 3](#__RefHeading___Toc204703683)

[The Financial Incentives Project 3](#__RefHeading___Toc204703684)

[1.2. Conclusion 3](#__RefHeading___Toc204703685)

[Chapter 2: Research Factors That Influence the Use of Financial
Incentives: A Review of What Is Working and What Needs to\
Change for People with Disabilities Accessing\
Financial Incentives 3](#__RefHeading___Toc204703686)

[2.1. Context for Review 3](#__RefHeading___Toc204703687)

[2.2. Review of the Literature 3](#__RefHeading___Toc204703688)

[2A -- Education 3](#__RefHeading___Toc204703689)

[2B -- Employment 3](#__RefHeading___Toc204703690)

[2C -- Transportation 3](#__RefHeading___Toc204703691)

[2D -- Health Care and Long-Term Services and Supports
3](#__RefHeading___Toc204703692)

[2E -- Income Maintenance and Asset Development
3](#__RefHeading___Toc204703693)

[2F -- Housing 3](#__RefHeading___Toc204703694)

[2.3. Conclusion 3](#__RefHeading___Toc204703695)

[Chapter 3: Research of Promising State Innovations
3](#__RefHeading___Toc204703696)

[Introduction 3](#__RefHeading___Toc204703697)

[3.1. Louisiana State Innovation 3](#__RefHeading___Toc204703698)

[3.2. Missouri State Innovation 3](#__RefHeading___Toc204703699)

[3.3. Wisconsin State Innovation 3](#__RefHeading___Toc204703700)

[3.4. Maryland State Innovation 3](#__RefHeading___Toc204703701)

[3.5. Kentucky State Innovation 3](#__RefHeading___Toc204703702)

[3.6. Washington State Innovation 3](#__RefHeading___Toc204703703)

[3.7. Conclusions 3](#__RefHeading___Toc204703704)

[Chapter 4: A New Financial Incentive Framework for Individuals with
Disabilities: A Review of the Proposed Framework, Application to Case
Studies, and Cost-Benefit Analysis 3](#__RefHeading___Toc204703705)

[4.1. Introduction to a Conceptual Framework
3](#__RefHeading___Toc204703706)

[Seven Key Findings Pertaining to the Proposed Conceptual Framework
3](#__RefHeading___Toc204703707)

[4.2. Principles for a 21st Century Conceptual Framework: Policies\
Optimizing Workers' Economic Reach (POWER)
3](#__RefHeading___Toc204703708)

[Financial Incentives Principles 3](#__RefHeading___Toc204703709)

[Financial Incentives Core Strategies 3](#__RefHeading___Toc204703710)

[4.3. Application of the POWER Framework to Case Studies
3](#__RefHeading___Toc204703711)

[Case Study 1: Mary: SSI Recipient Attempting to Enter the Workforce
3](#__RefHeading___Toc204703712)

[Case Study 2: Melissa: Working-Age Adult Acquires Disability and\
Starts Her Own Business 3](#__RefHeading___Toc204703713)

[Case Study 3: Parents Raising a Child with Significant Disabilities:\
James, a Teenager 3](#__RefHeading___Toc204703714)

[Case Study 4: Moira: Young Adult with a Disability and\
Not on Public Benefits 3](#__RefHeading___Toc204703715)

[4.4. Cost-Benefit Analysis for the Proposed POWER Framework
3](#__RefHeading___Toc204703716)

[Methodology 3](#__RefHeading___Toc204703717)

[Data Sources and Assumptions 3](#__RefHeading___Toc204703718)

[Benefits, Earnings, and Tax Revenue Estimates
3](#__RefHeading___Toc204703719)

[Use of Cost-Benefit Analysis in the Regulatory Arena:\
Environmental Regulation 3](#__RefHeading___Toc204703720)

[Application of Cost-Benefit Analyses to Disability Policy Initiatives
3](#__RefHeading___Toc204703721)

[Lessons for Application of Cost-Benefit Analysis to Disability Issues
3](#__RefHeading___Toc204703722)

[Chapter 5: Summary of Findings and Recommendations
3](#__RefHeading___Toc204703723)

[5.1. Summary of Key Findings on Financial Incentives
3](#__RefHeading___Toc204703724)

[5.2 Summary of Major Recommendations According to Federal Leadership
3](#__RefHeading___Toc204703725)

[Appendix: Mission of the National Council on Disability
3](#__RefHeading___Toc204703726)

[Endnotes 3](#__RefHeading___Toc204703727)

[]{#__RefHeading___Toc204703667 .anchor}Executive Summary

For over half a million people with disabilities, the specific reason
they never leave home is that they cannot get the transportation they
need;[^1] the current federal regulations force adults with significant
disabilities to remain in a poverty state.[^2]

[]{#__RefHeading___Toc204703668 .anchor}Background

Limited access to money is one of the most serious problems facing
Americans with disabilities, according to a recent National Organization
on Disability/Harris survey.[^3] The Federal Government spends large
amounts on behalf of people with disabilities in terms of health care,
education, vocational rehabilitation (VR), transportation, housing, and
in other areas, whether sources are direct, indirect, or community based
(i.e., through specialized services, resources, or environmental
access). Yet, the knowledge base is small regarding the extent, costs,
utilization, or impact of these incentives, financial or otherwise, on
the everyday lives of people with disabilities.

As disability policy stands today, a child with significant disabilities
born in the United States in 2007 has little chance of gaining access to
assets and escaping poverty, despite advances in health care and
technology. In part, a major reason for this conclusion is the
all-or-nothing dichotomy of public policy that continues to view
disability as the inability to work and that provides needed public
assistance only if one remains poor and completely dependent on
government help. More than 30 years after the creation of the federal
mandate for a free, appropriate public education for children and youth
with disabilities, each new generation of parents has higher
expectations. Parents envision their son or daughter with a disability
having a quality of life as an adult anchored by job satisfaction,
independent living, and the benefits of full participation in the
economic mainstream. This National Council on Disability (NCD) report,
*The State of 21st Century Financial Incentives for Americans with
Disabilities*, recognizes challenges to meeting such expectations.
Without a redesign of public policy, the potential for Americans with
disabilities to become full citizens with the same access to the
economic mainstream as Americans without disabilities cannot and will
not become a reality. The redesign must create policy that consistently
supports individual objectives to advance self-sufficiency and economic
independence. This NCD research is the third in a series (two earlier
reports were on Social Security issues[^4] and employment matters[^5])
building upon prior NCD work on livable communities. This report is part
of an effort, under the umbrella of inclusive livable communities, to
guide future policy and practice to advance choice, full community
participation, and economic independence for people with disabilities.

[]{#__RefHeading___Toc204703669 .anchor}Research Framework

This report introduces a new vocabulary as a way to define financial
incentives, track their major outcome and impact, and apply this
methodology to the study of a number of key incentives. It also provides
research findings from a review of the literature in six selected
domains: education, employment, transportation, health care and
long-term services and supports, income maintenance and asset
development, and housing. In addition, this report analyzes research on
promising state innovations and introduces a new framework based on four
case studies presented with a cost-benefit analysis. The report
comprises five chapters.

Chapter 1 defines the concept of financial incentives for the purpose of
this study as an intended benefit conferred by Federal Government
programs that provide social transfers, usually of cash or in-kind
services, designed to change behavior, increase cash flow, supplement
services, and support---but rarely enhance or create---assets. This
definition differs from the traditional understanding of financial
incentives, which implies a benefit intended to enhance profit.

Built upon the aforementioned background information, chapter 1
introduces a topology that draws the strands of policy and experience
more tightly together to parlay what was known about the six selected
domains and other spheres of public policy into a coherent whole. The
proposed topology divides disability-related financial incentives into
three broad categories: (1) direct funds, which are provided directly to
individuals with a disability; (2) indirect funds, which are provided to
third parties for use in connection with or on behalf of people with
disabilities; and (3) community-based funds, which are used for
developing various kinds of infrastructure and resources that have a
specific purpose or significant effect on the lives of people with
disabilities.

Chapter 2 presents a review of the literature conducted and condensed
into major findings in the six life domains---education, employment,
transportation, health care and long-term services and supports, income
maintenance and asset development, and housing. Ten years ago, NCD also
reported data like the 17 key findings in this chapter.[^6] The findings
have two purposes: to describe barriers, utilization, impact, and
outcomes of financial incentives; and to add fresh insight and propose a
framework for revising federal programs incorporating social transfer
benefits (such as increased cash flow, supplemental services, and
supports) that affect the lives of people with disabilities.

Chapter 3 provides the results from research on promising state
innovations (direct, indirect, or community based) in Louisiana,
Missouri, Wisconsin, Maryland, Kentucky, and Washington. The selection
of each program was based on potential for state- or federal-level
replication, diverse strategies, and potential to affect people with
disabilities. Each selected program addressed a different element of the
challenges to facilitate a more advanced social and economic status for
individuals with disabilities and their families. Each selected state
has adopted policy that may exist in other states but has program
elements that are unique in terms of public and private participation
and the leveraging of resources to compound the benefits to the
individual and family, the community, and the state.

Chapter 4 sets forth a conceptual framework based on the research
findings from the first three chapters, a direction for making changes
and providing supports to improve the daily living and economic status
of people with disabilities. Fundamental to development of the
conceptual framework used in this study is a set of financial incentive
principles linked to four proposed core strategies for action. The
principles are seeing financial incentives as a tool linked to Americans
with Disabilities Act (ADA) goals, making choices available to all
people with disabilities, aiming for full community participation, and
striving toward universal impact that can boost involvement in livable
communities for all citizens. Grounded in the identified principles, the
conceptual framework, called Policies Optimizing Workers' Economic Reach
(POWER), is a combination of strategies that modify existing policies
and enhance direct, indirect, and community-based incentives as a
comprehensive blueprint for change. The POWER strategies propose
modification to federal entitlement policy, modification to tax policy,
enhancement of direct asset-building options, and enhancement of
indirect, community-based, and employer incentives, including new and
expanded tax deductions. The POWER strategies in chapter 4 involve
individual behavioral and Federal Government-level changes that also
will affect the major life domains by encouraging work, income
preservation, asset building, and awareness raising related to improved
access to health care, transportation, continuing education, and
affordable and accessible housing, including home ownership.

Finally, chapter 5 recapitulates the key findings pertaining to
financial incentives and the NCD core recommendations for action at the
federal level. The findings and recommendations are as follows.

[]{#__RefHeading___Toc204703670 .anchor}Summary of NCD's Key Findings on
Financial Incentives

1\. Financial incentives are complex and need explanations pertaining to
definition and type.

There is no simple definition of financial incentives. While some
operational definitions might involve disability-based, case, in-kind,
or other funding streams as categories of financial incentives, this
report uses three overarching categories---direct, indirect, and
community based---according to the topology developed for this research.
Efforts to gain an understanding of these variations and to account for
as many of them as possible will contribute to making this research
meaningful.

2\. Financial incentives are underutilized.

Financial incentives in tax and social policy are multifaceted, used in
limited fashion, and not well communicated to the public. Examples
include limited use of a true asset-building and tax-filing opportunity
for employed recipients of public benefits and a tax deduction for
individuals who itemize income tax returns.

3\. Individuals with and without disabilities are denied the opportunity
for savings and asset growth because of the means testing required to
remain eligible for many public benefits.

Well-intentioned public programs sometimes reflect disconnections that
reduce their effectiveness and put the programs at cross-purposes. The
disconnections also render a negative impact likely. For example,
means-tested eligibility for public benefits entitlements (Social
Security, Medicaid) denies many individuals with disabilities the
opportunity to preserve income, save, and build assets.

4\. Low-income wage earners do not benefit from many federal tax
provisions that promote savings and asset development.

Financial incentives in tax policy that promote asset building are out
of reach to low-income wage earners who do not itemize.

5\. Direct, indirect, and community-based financial incentives have an
important impact on people with disabilities and their families.

Financial incentives across the major life domains (e.g., education,
employment, transportation, health care and long-term services and
supports, income maintenance and asset development, and housing) affect
people. The impact can be direct, indirect, or through community-based
entities.

6\. There are no one-size-fits-all financial incentives strategies.

Americans with disabilities will benefit from existing and new financial
incentives strategies only through targeted and customized outreach that
communicates information, training, and technical assistance in formats
that are accessible, understandable, and relevant for all ranges of
ability.

7\. Financial incentives funding strategies are interrelated.

None of the financial incentives funding strategies studied for this
report operates in isolation from the others. One cannot understand
housing patterns in the United States unless one understands the tax
code, the mortgage industry, and the funding for automobiles versus mass
transit. Similarly, one cannot understand the economic status of
Americans generally, and of people with disabilities in particular,
without reference to the educational system of the United States. No
single financial incentive directly or indirectly can produce a better
economic future for individuals with disabilities. Many incentives
overlap in their goals and together offer a combined and cumulative
response to the challenges of poverty for Americans with and without
disabilities.

8\. Opportunities that encourage and support savings and asset
acquisition are limited and need to be expanded for people with low
incomes who have disabilities.

A meaningful definition of assets in the modern world must go beyond
tangible possessions such as bank accounts, investments, and real
estate. The definition also must include resources such as education and
health, as well as networked connections such as access to expertise and
influence.

The realities of cash flow in the sense of income stream, on the one
hand, and assets in the sense of tangible and intangible goods,
resources, and other types of assets, on the other hand, are very
different things. Disability-related programs, ranging from entry-level
employment to cash payments in lieu of employment, have been predicated
on a belief in cash flow/income stream. By contrast, most tax-based
policy is predicated on cash payments in lieu of employment, in that the
policy intentions and effect are to increase the size and leverage value
of existing assets, particularly capital assets, rather than to
encourage initial asset acquisition.

9\. Disability remains an all-or-nothing proposition based on
eligibility determination and disability definition.

In public policy, as articulated in the definitions and rules governing
almost every law and program, disability is an all-or-nothing
proposition. Certainly, this is clearest in the financial support
programs. However, even under laws like the Americans with Disabilities
Act (ADA), which adopted an enlightened attitude about the ultimate
social meaning of disability, the notion of disability has been
converted into a largely jurisdictional issue. If a person is determined
eligible for public benefits based on a particular definition of
disability, then he or she receives benefits A and B. If that person is
determined ineligible for public benefits based on a particular
definition of disability, then he or she does not receive benefits A and
B. Accordingly, under most program models, the existence of disability
is correlated with need---need for income support, need for services,
need for exemption from otherwise applicable requirements, or need for
supervision and control.

10\. Several financial incentives need modification to provide parity
for people with disabilities.

Some financial incentives incorporate a universal approach and offer
benefit to a large class of individuals with and without disabilities.
Some financial incentives require modification to provide parity for
people with disabilities comparable to their peers without disabilities.
Comparable opportunities should be based on consideration of the extra
gateway costs needed to level the playing field for a person with a
disability because of extra health care costs, assistive technology
needs, or other services.

11\. A consensus model is unavailable for evaluating the impact of
financial incentives.

There are no adequate or consensus models for evaluating the impact of
most financial incentives. Even when researchers limit their inquiry to
the expenditures and programs that have people with disabilities as
their conscious, intended, and sole focus, the absence of suitable
baseline data compounds the lack of evaluative criteria. For a variety
of reasons, including the small size of cohorts and the lack of
comparability in the life circumstances of individuals with
disabilities, standard research methodologies are insufficient, and
observational research fails to overcome the ideological fault lines
that run through disability policy.

12\. Gateway costs of living with a disability are more expensive than
costs of living without a disability.

Function for function (e.g., getting back and forth to work, obtaining
education, and giving informed consent to a medical procedure), living
with a disability costs individuals and families more than living
without one. This is one reason that disability costs must be factored
into generic financial incentives in order to portray equal value for
people with and without disabilities. The gateway costs of living with a
disability are unique, often high, and rarely taken into account in the
design of public programs or the federal tax code.

13\. Disability programs are weighted heavily toward the use of
resources for determination of status and assessment of eligibility.

Most federal disability programs are weighted heavily and unduly toward
the determination of status and the assessment of eligibility. Most ADA
court decisions involve the threshold question of whether the individual
has a disability. From the huge investment historically made by
vocational rehabilitation in determining eligibility and need for
services to the role of objective test dividing lines in determining
levels of intellectual disability (often to the detriment of resources
for providing the necessary services), programs are concerned as much
with ferreting out improper benefit as with helping people who could
benefit.

14\. The conversion of federal financial disincentives to incentives is
possible.

The operation of needs-based program limits across a broad range of
federal programs regarding what beneficiaries can receive creates a
major disincentive to work, entrepreneurship, or other
asset-accumulation activities. This report proposes that, through the
development of the Policies Optimizing Workers' Economic Reach (POWER)
framework, needs-based programs could be converted experimentally from
disincentives to incentives that help people gain employment and
self-sufficiency.

15\. Public accounting practices, especially the practices related to
federal savings across programs and services, need review.

Existing public accounting practices do not readily permit the
computation of projected long-term savings into federal budgeting and
appropriations decisions that cut across program authorities. Strictly
speaking, the Congressional Budget Office (CBO) legally would not be
permitted to take into account the lifetime savings to the Supplemental
Security Income (SSI) Program envisioned by the POWER framework in
"scoring" the program, which cuts across multiple funding authorities.

16\. Definite cost benefits are found when the framework and strategies
introduced in this report are applied to three of the case studies
presented.

Estimates of disability and health coverage benefits and tax revenue
associated with the POWER framework that allow for changes in the
treatment of disability benefits and other financial incentives
demonstrate positive cost-benefits over total lifetime earnings.

17\. Cost benefits for Case Study 4 are unknown because scientifically
reviewed, methodologically valid studies for this purpose are lacking.

The necessary data were unavailable to support policies and programmatic
proposals that attempt to address barriers to employment and quality of
life for people with disabilities.

For the Federal Government to invigorate programs and policies with
financial incentives that tap into the potential of people with
disabilities, it is necessary to assess the economic impacts and measure
the behavioral response to policies that seek to influence individual
behavior and decisions. Methodologically sound cost-benefit analyses in
the social policy arena require significant time and resources to
conduct. Observing the complete impact can take years. Research and
implementation efforts used to assess cost-benefits in the arena of
public policy encounter a number of challenges at the federal level. The
findings of this report also underscore the need for an overhaul of
federally funded financial incentives in ways that modify programs and
expand benefits for people with disabilities. Such is the intent of the
POWER framework. Indeed, the unveiling and effective implementation of
the framework also can unleash literal power yet unseen as a 21st
century movement supporting more people with disabilities than in the
past---lifting people from the roles of poverty to the ranks of
empowerment.

[]{#__RefHeading___Toc204703671 .anchor}Summary of NCD's Major Public
Policy Recommendations on Financial Incentives

Disability and its role in the mainstream economy, despite the efforts
of ADA since 1990, still are not considered a "natural part of the human
experience." The potential for individuals with disabilities to be
integrated fully into the workforce and thus into the formal U.S.
economy is not understood fully by policymakers or private sector
business. This report, *The State of 21st Century Financial Incentives
for Americans with Disabilities*, is part of the evolutionary journey of
disability policy in the United States and provides a road map for
equality of economic rights for people of all abilities regardless of
race or socioeconomic background. The following recommendations provide
a new frontier for the next generation of Americans with
disabilities---allowing them to participate fully in the economy.

**Recommendation 1: NCD recommends that the Administration create a
federal interagency workgroup on financial incentives for people with
disabilities and their families; develop an Executive order calling for
all agencies to identify policy barriers; and create a time-limited body
to facilitate a consistent, coordinated, comprehensive, and
consumer-friendly approach to advance opportunities for full community
participation and economic self-sufficiency.**

**Implementation Lead:** The President and Cabinet members should
implement this recommendation. The federal agency lead should be the
director of the Office on Disability, Department of Health and Human
Services. Other interagency workgroup members should include the
departments of Labor, Housing and Urban Development (HUD),
Transportation, Education, and Treasury, the Social Security
Administration (SSA), and representatives from the Department of Health
and Human Services Centers for Medicare and Medicaid Services.

NCD urges the President to issue a new Executive order that charges the
full range of federal agencies with identification of policy barriers
and facilitation of a consistent, coordinated, comprehensive, and
consumer-friendly approach to financial incentives. The intent is to
advance full community participation and economic self-sufficiency for
people with disabilities and their families through financial
incentives, both directly and through third parties in the public and
private sectors. The time-limited workgroup (six months) would develop
an action plan with recommendations for policy and program changes that
would accomplish the following:

-   Increase consumer choice

-   Encourage income preservation and asset building

-   Improve interagency coordination

-   Reduce and eliminate policy barriers to improved economic status and
    community participation

-   Provide incentives for private sector support of community access
    and participation in the economic mainstream

-   Adopt universal design principles in housing, transportation, public
    spaces, and public accommodations

-   Reduce the connection between disability and poverty in the
    continued eligibility for public benefits

The secretary of the U.S. Department of Health and Human Services would
request the director of the Office on Disability to chair the workgroup.
The final report to the President would include recommendations for
policy and program changes not limited to changes to the federal tax
code or entitlement authority.

No single agency or policy solution can produce the comprehensive
reforms needed to align financial incentives that directly and
indirectly will support the range of choices people with disabilities
desire to be fully productive, independent, and active participants in
the economic mainstream. The workgroup would bring to the table the
array of agencies needed to transform policy and practice.

**Recommendation 2: NCD recommends that Congress review, introduce, and
consider adoption of the POWER framework through changes in federal
legislation pertaining to Social Security, Medicaid, savings, asset
building, and the relevant aspects of the federal tax code*.***

**Implementation Lead:** Through the committee chairperson, the Senate
Finance Committee, with its jurisdiction over the federal tax code and
entitlement programs, may be the logical starting point for a
congressional hearing to clarify the current challenges that force
people with disabilities to remain poor in order to access minimal
public benefits. Recommended for additional consideration are the House
Committee on Ways and Means and the House Committee on Energy and
Commerce.

The multiple components of the POWER framework offer the opportunity to
advance a consistent agenda for a better economic future for individuals
with disabilities and their families.

**Recommendation 3: NCD recommends that the Department of Education take
appropriate actions to expand the knowledge available about the
cost-benefit outcomes of direct and indirect financial incentives and to
advance self-sufficiency for people with disabilities. These actions
would include the establishment of a new Rehabilitation Research and
Training Center (RRTC) on Financial Incentives to Advance
Self-Sufficiency charged to increase the sparse knowledge base.**

**Implementation Lead:** NCD recommends for leadership the U.S.
Department of Education, with the involvement of the assistant secretary
for the Office of Special Education and Rehabilitative Services and the
director for the National Institute on Disability and Rehabilitation
Research (NIDRR). NCD recommends collaboration with the assistant
secretary for planning and evaluation, Centers for Medicare and Medicaid
Services, in the Department of Health and Human Services, and the Social
Security Administration.

In collaboration with the agencies identified, NIDRR should establish a
new RRTC on Financial Incentives to Advance Self-Sufficiency. The RRTC
would develop new methods and measures to help diverse audiences better
understand the impact of financial incentives and disincentives across
federal agency authorities. These impacts are related to community
inclusion and economic participation for individuals with disabilities
and their families.

The research findings indicate how little is known about the impact of
financial incentives and disincentives for people with disabilities and
their families. New knowledge and methodologies designed to clarify the
potential impact of direct and indirect incentives on people with
disabilities and their families are needed. Multiple federal agencies
listed as lead implementers must refine their research priorities to
focus much-needed attention on evidence-based financial incentives
research. The outcomes can help policymakers at each level of government
make informed decisions about resource allocation to support a better
economic future on individual and community levels for people with
disabilities.

**Recommendation 4: NCD recommends that key federal agencies (see below)
fund demonstration projects that improve capacity for employer and
community use of financial incentives to advance real economic impact.
This work should be included in the written plans and annual reports to
Congress of each agency.**

**Implementation Lead:** Senior-level leaders with budget authority
should account for effective implementation. The collaboration should
occur through HUD as it works with the departments of Labor, Commerce,
Transportation, Education, and Treasury, and the Internal Revenue
Service (IRS).

The research findings of this report document the potential benefits of
leveraging employer and community interest to advance self-sufficiency
and integration of people with disabilities and their families. NCD
recommends using financial incentives to capture employer and housing
developer interests that promote positive economic impact at individual
and community levels, and providing data where not enough is known about
the cost benefit of indirect financial incentives to advance
self-sufficiency and economic status of individuals with disabilities.

A series of demonstration projects coordinated among HUD, the
departments of Labor, Commerce, Transportation, Education, and Treasury,
and the IRS could evaluate the benefits of a set of financial incentives
that encourage affordable and accessible housing design. For example,
the evaluative research could study Low-Income Housing Tax Credits, job
creation with appropriate supports using New Markets Tax Credits, and
employer support of the cost of transportation, continuing education,
and rent subsidies leading to home ownership based on expanded tax
benefits.

These projects would allow for community development of diverse supports
with public and private sector collaboration. These supports stimulated
by financial incentives would be evaluated for economic impact and
cost-benefit, which has not been studied previously. The results will
support potential policy change and new approaches to the much-needed
improvement of interagency collaboration at federal, state, and local
levels.

**Recommendation 5: NCD recommends the establishment of a federally
funded joint education effort to expand and improve financial education
and outreach to children and adults with disabilities across economic
levels and types of abilities.**

**Implementation Lead:** At least five federal entities should form a
partnership to lead implementation of this recommendation. The initial
partnership should include the Federal Deposit Insurance Corporation,
IRS, the departments of Labor and Education, and the Social Security
Administration.

Research findings documented the importance of developing financial
literacy in children and adults with disabilities. Financial incentives
require knowledge and basic understanding of money management, credit,
and the importance of savings and asset accumulation. The creation of
individual budgets, access and use of favorable tax provisions, and the
selection of one or more asset-building strategies require expanded
emphasis on outreach, education, and training for the targeted
population.

The IRS has been expanding its outreach to low-income workers with
disabilities to educate and inform eligible individuals about the
benefits of the Earned Income Tax Credit. The Federal Deposit Insurance
Corporation recently produced Money Smart, a financial education
curriculum, in Braille. However more education and increased public
awareness are needed. They should include development and dissemination
of consumer-friendly information through efforts involving the Social
Security Administration (SSA) and the Department of Labor (DOL) and
Department of Education. The education should begin in elementary school
and continue in multiple venues that support adults with disabilities in
order to improve the skills that empower and support income preservation
and asset building. The purpose is to advance real economic impact using
direct and indirect financial incentives.

SSA and DOL, respectively, should train employees in the SSA-funded Work
Incentives Planning and Assistance (WIPA) Program and the DOL-funded
Disability Program Navigator Program on how to access the full spectrum
of financial incentives that could benefit people with disabilities.
Ongoing technical assistance should be available to help support the use
of knowledge and to enhance access by people with disabilities.

Outcomes from implementation of these recommendations could turn
financial disincentives into incentives. Bold new approaches and
directions hold the hope of breaking existing patterns and providing a
way to eliminate economic and other disparities between people with
disabilities and those without disabilities. This report makes detailed,
far-reaching proposals for conducting the necessary demonstrations, as
highlighted in the five recommendations above and discussed more
specifically in the full report.

[]{#__RefHeading___Toc204703672 .anchor}Chapter 1: The Topology of
Financial Incentives for Americans with Disabilities: A Review of the
Current Federal Experience in Providing Direct, Indirect, and
Community-based Financial Incentives to Americans with Disabilities

An individual with a disability is three to four times more likely to
live in poverty as an individual without a disability.[^7]

[]{#__RefHeading___Toc204703673 .anchor}1.1. Introduction

The federal and state governments and the nonprofit sector spend
enormous sums on people with disabilities and in connection with
disability-related issues---more than \$300 billion annually.
Determining the exact amount of such expenditures is difficult.

To be fully meaningful, an effort for aggregate fiscal or expenditure
data collection must accomplish three goals. First, it must create
expenditure and outcome categories that are meaningful to the people
receiving, spending, or benefiting from the funds, and that resonate
with the public's and legislators' understanding of the issues. Second,
it must both allow for comparative assessments of investment in various
options and permit analysis of the impact of increases or decreases in
one area of spending upon costs in other areas. Third, it must allow for
the creation of outcome criteria that are measurable and against which
difficult value judgments can be made nonpolitically and
nonideologically.

Accomplishing these goals is no easy task. Appropriate baseline data do
not exist; prospective information-collection procedures are not in
place; consensus has yet to form around the definition of expenditure
categories that make most sense; outcome measures are still in their
infancy; and outcome criteria are subject to innumerable political,
economic, and philosophical cross-currents. A building process likely of
several years' duration must be put in place before the key questions
can be asked and answered, and before evidence-based policy and resource
allocation decisions truly can be made.

[]{#__RefHeading___Toc204703674 .anchor}Current Context

For a number of years, NCD has published groundbreaking studies that
assess the status and impact of public policy in major areas of life,
such as education, housing, health care, long-term services and
supports, employment, and transportation. Taken together, these and
other studies present a broad panorama of government efforts, societal
conditions, and program strengths and failures. Consistent with a
long-established value framework, a review of these studies as they have
been published (or updated) provides an unequaled overview of the
structure and nature of disability policy, and of the way people with
disabilities live their lives in this country.

The strands of policy and experience need to be drawn together more
tightly to parlay into a coherent whole what is known about education,
housing, health care, long-term services and supports, employment,
transportation, and other spheres. A common vocabulary and topology
allows assessment of the six areas in combination and also allows us to
compare, contrast, and integrate findings effectively, and to study
overlaps and interconnections with new flexibility, facility, and
confidence. Issues of definition and questions of categorization are
certain to arise. Therefore, while extensive details of the topology are
available on the NCD Web site ([www.ncd.gov](http://www.ncd.gov/)),
definitions essential to this research report and information about an
economic and demographic context are presented below.

[]{#__RefHeading___Toc204703675 .anchor}Defining Financial Incentives

Broadly, financial incentives are defined as benefits that confer
economic well-being and opportunity. *Webster's Unabridged Dictionary*
defines an incentive as something that promotes or incites greater
productivity.[^8] The economist Levitt describes incentives as "the
cornerstone of modern life and that the ability to understand them is
the key to solving just about any riddle."[^9] Levitt and Dubner write
that incentives come in "three flavors, economic, social and moral," but
rarely does an incentive represent all three.[^10] The most common
definition of a financial incentive is a benefit that is intended to
enhance profit. Financial incentives drive the marketplace for
pharmaceuticals, insurance companies, health care, and technology
industries. The other definition of financial incentives and the one
used in this study is the intended benefit conferred by Federal
Government programs that provide social transfers, usually of cash or
in-kind services, designed to change behavior, increase cash flow, and
supplement services and supports, but that rarely enhance or create
assets.

Disincentives also play a large role in understanding financial
incentives. An example is the current debate about the development of an
AIDS vaccine.[^11] While the Federal Government and private industry
both are investing resources in research for a vaccine, none has been
found.[^12] The problem probably is not a lack of resources from the
public or private sector but a competing "disincentive" created by
profit margins already being realized from existing AIDS drugs.
Arguably, the profit margins may be too great to leverage the relative
profitability of a vaccine, although inevitably a vaccine will be
discovered and marketed for profit.

Disincentives are rife in disability policy as well. Selected disability
policies are at odds with advancing independence and productivity. A
good example of the consequences of conflicting policies is the chronic
unemployment experienced by individuals with disabilities. Failure is
all but guaranteed when an individual with a disability attempts to work
full time while receiving federal benefits. Federal eligibility and
program rules do not complement each other across federal disability
programs, so the incentives from one federal program turn into
disincentives when interfaced with another program. Misdirected policy
and funding of programs that promote "work incentives" that are really
"disincentives" cannot in truth produce outcomes that include
employment. As this review will demonstrate, current disability policy
does not have unified goals, measurable program outcomes, and clear
funding expectations that are universal across federal agencies and that
promote economic independence and self-sufficiency.

[]{#__RefHeading___Toc204703676 .anchor}Understanding the Incentives of
Spending and Tax Entitlements

The United States enters the 21st century ill prepared to finance its
current spending and tax entitlements that benefit low-, middle-, and
upper-income Americans with and without disabilities.[^13] Federal
spending for all entitlements, whether mandatory or discretionary,
whether means-tested or not, for retirements, for safety net programs,
and for tax deductions, is rising and unsustainable.[^14] Rising costs
for health care provided by Medicaid and Medicare are at the center of
the problem.[^15] Actuaries are reluctant to predict future spending
scenarios given the uncertainties of future health care costs that
continue to rise yearly at double-digit rates. Even though Medicaid
growth rates have slowed in the past few years, Medicaid accounts for 21
percent of total state budgets.[^16] The comptroller general of the
Government Accountability Office wrote that incremental reform for
entitlement spending is no longer good enough to fix the problem.[^17]

One way to define a problem is to measure it. How a problem is measured
is more than a rudimentary process of tallying or counting: it is a
conscious act of inclusion or exclusion.\
*---Deborah Stone,* The Policy Paradox*, 1997, p. 164*

Recent research on federal disability programs highlights the costs of
more than 200 federal disability programs but is silent about the
benefits and impact for 34 million beneficiaries with disabilities.[^18]
What is known is the Federal Government is spending more than \$245
billion a year for programs dedicated to individuals with
disabilities---half of which is for health care programs such as
Medicaid and Medicare.[^19] Evidence-based research to date is thin and
does not correlate the impact and costs with outcomes clearly and
consistently across the wide array of federal programs. Without evidence
of the impact and outcomes on the lives of individuals with
disabilities, researchers and policymakers do not know if too much, too
little, or just the right amount is being spent*.* Congress and the
White House have received research that demonstrates the "high risk" and
"high costs" of current disability program spending, but have not been
given research on the "benefits" and "outcomes" for individuals with
disabilities and their families or for American society as a whole.
Congress cannot answer these questions fully without cost-benefit
research. Federal disability spending from a market perspective could be
paying for itself because of the overall "benefit" and "cost savings" it
confers. Certainly, life for the one out of five people in the general
population (or more than 50 million Americans with disabilities) would
look quite different given no federal spending or tax entitlements on
their behalf.

While the value of the emerging disability industry from a market
perspective is a different question not addressed in this review, it is
worth mentioning. Whether growth in the private disability market is
correlated to growth in federal disability legislation is unclear.
However, the disability market is here to stay and will expand and
produce profits as the population ages and prevalence of disabilities
rises.

As this review begins, there are two camps of support for federal
financial incentives, each with different goals. On the one hand is the
support for financial incentives that are intended to enhance and
increase wealth through tax deductions, such as pension or health
insurance contributions paid by employers. Primarily, these incentives
target Americans under age 65.[^20] On the other hand there is support
for financial incentives that are intended to supplement or provide cash
or in-kind services to a population of Americans both over and under age
65, with or without disabilities, who often are poor. Unlike the tax
incentives, the spending or safety net incentives, given their rising
costs and increasing roles, are at the center of much federal agency and
congressional concern. There is much discussion about the costs of these
incentives but little discussion about what reforms or changes are
necessary to ensure sustainable and equitable policy well into the 21st
century. This chapter will briefly review definitions of spending and
tax entitlements as well as their economic and historical context to
clarify their role in this financial incentive research.

For the purpose of this study, financial incentives are defined as the
outcome conferred, whether cash or in-kind, on individuals with
disabilities, whether positively or negatively impacted by government
spending and tax entitlements. Eligibility for federal spending and tax
entitlements is broad for both individuals with and without
disabilities: One can be a member of a particular group, like a veteran
or senior or a homeowner; or one can earn a benefit through payroll
deductions such as Social Security pension or Social Security Disability
Insurance. Some entitlements, such as Medicaid, are means-tested and
require income eligibility tests, versus a program like Medicare whose
primary entrance criterion is age.

Some entitlements, such as Social Security and Medicare, are formula
based or have dedicated revenue streams attached to them that pay
benefits without an annual appropriation by Congress.[^21]^,^[^22]
Historically, this authority was granted to "reduce the uncertainty of
the annual funding cycle through which programs traditionally
pass."[^23] Other entitlements, such as Medicaid, Supplemental Security
Income, welfare, and other safety net programs, require yearly
appropriations from Congress to pay benefits in accordance with
underlying statutes. The House and Senate budget committees define
entitlements as a combination of "any federal outlay that either
requires no annual appropriation by Congress or must be appropriated by
Congress according to the terms of some underlying statute or program
legislation."[^24]

In addition to the traditional spending entitlements for retirement
programs, safety net programs, and health care, there are tax
entitlements that confer benefits on individuals through the tax code
and allow for special deductions and credits.[^25] For example, to a
homeowner the tax benefit allows deducting mortgage interest; to a
builder the tax benefit means receiving tax credits for targeting
housing units for individuals with disabilities; to low-income
individuals the tax benefit could mean receipt of the Earned Income Tax
Credit or participation in a matched savings account; and to an employer
the tax benefit could mean tax credits for providing pension and health
care contributions to employees.

AARP's policy research division found that "during times of recession
entitlement spending increases as a share of the GDP \[gross domestic
product\] and declines as a share during expansions" and that different
categories of entitlements experience different growth patterns.[^26] In
the past 15 years the only spending entitlement that has increased and
that is projected to increase as a share of the economy in the next 10
years is health care or Medicare and Medicaid. Retirement and safety net
programs (including SSI, food stamps, social services, and unemployment
compensation, to name a few) declined by 2.4 percent of the GDP between
1983 and 2001 and are projected to decline by 0.3 percent of the GDP by
2021. Health entitlements (Medicare and Medicaid) increased by 1.5
percent of GDP for the same time period and are expected to reach 2.5
percent by 2012.[^27]

AARP researchers found that more than 50 percent of spending
entitlements, for the population ages 65 and over, go to household units
whose annual incomes are below \$30,000.[^28] On the other hand, 72
percent of tax entitlements (mortgage interest, child tax credit,
untaxed Social Security, Earned Income Tax Credit, child care credit,
charitable contributions, savings and loan income, property tax, real
estate tax, and medical expenses) go to individuals making over \$50,000
and only 22 percent go to people making under \$30,000. The Earned
Income Tax Credit is an exception because it is "both a spending
entitlement and tax entitlement (because it reduces taxes but also
results in cash benefits) and if it were excluded more than 82 percent
of the tax benefits would flow to people with incomes above
\$50,000."[^29] Unlike spending entitlements that benefit mainly
individuals over age 65, tax entitlements benefit mainly individuals
under age 65.[^30] If 82 percent of tax benefits go, not surprisingly,
to people with income, then it follows that spending programs, to the
extent they exist to help the less wealthy, should be equally skewed to
the poor and individuals with disabilities.

[]{#__RefHeading___Toc204703677 .anchor}Understanding Disability
Demographics

The world's population quadrupled in the 20th century and is predicted
to grow by 50 percent by the end of the 21st century.[^31] In less than
a hundred years, life expectancy in the United States increased 30
years, with the fastest-growing age group now in their eighties. Along
with this unprecedented population growth is the fact that the
industrialized countries, with the United States in the lead, account
for only 20 percent of the world's population but produce about 80
percent of the gross world product.[^32] As the industrialized world
ages, it is projected that its productivity will decline as it is forced
to allocate resources to health care and pensions.[^33] A number of
trends in the United States will require significant changes in American
social and tax policy, such as the reduced number of workers per
retiree; reduced fertility rates; the growing challenges of the health
care workforce; and the low national savings rate. Add to these changes
the increase of diverse racial and ethnic groups, lack of any national
long-term services and supports policy, rising health care costs,
growing numbers of underinsured and uninsured Americans, the 25 percent
increase in disability since 1990, and the projected doubling in the
number of elders over the next decade.[^34]

[]{#__RefHeading___Toc204703678 .anchor}Poverty

There were 54 million Americans reporting a disability in 2004; over 20
million of those represent families who report having at least one
member with a disability.[^35] Thirteen percent of families report
having at least one member with a disability, and 25.7 percent report
having two members with a disability.

In 2000, 8.7 million people with disabilities were poor, with 17.6
percent age 5 and older, compared to 10.6 percent for people without
disabilities. Twenty-five percent of American children with disabilities
(ages 5 to 15) live in poverty compared to 15.7 percent of children
without disabilities. Americans with disabilities between the ages of 16
and 64 make up the group with the next largest number of people living
in poverty, at 18.8 percent---nearly double the rate for people without
disabilities (9.6 percent).[^36]

Data indicate that the number of all children living in poverty has
risen since 2000 to 17.3 percent, or 12.5 million. Fifty-seven percent
of these children live in families headed by their mother; 33 percent
have no family workers; 33 percent live in families with year-round
full-time workers; and 26 percent live in families headed by an
immigrant. The financial incentives that make up the society safety net
for children are mostly direct (needs-based transfers of cash and
noncash benefits) and indirect (earnings-based social insurance and tax
credits).[^37]

[]{#__RefHeading___Toc204703679 .anchor}Geography

Disability prevalence[^38] is higher in the South than in the other
three regions of the United States. Two out of every five people in the
South---20.9 percent, or 19.2 million people---have a disability, while
in the other three regions of the United States one out of every five
people has a disability. The West is second, with 10.8 million; the
Midwest is third, with 10.5 million; and the Northeast is last, with 9.5
million people with disabilities. For families, disability prevalence is
even higher, with 30.8 percent of families in the South, or 8.1 million,
reporting a member with a disability.[^39]

Among states, West Virginia has the highest disability rate, with 24.4
percent, followed closely by Kentucky (23.7 percent), Arkansas (23.6
percent), Mississippi (23.6 percent), and Alabama (23.2 percent). The
five states also register higher rates of individual disability measures
than the rest of the country in sensory (hearing and vision), physical,
and intellectual disabilities.[^40] Virginia, Maryland, and Delaware, on
the other hand, register disability rates significantly below the
national rate. The highest disability rates were found clustered in the
coal-mining areas of Kentucky and West Virginia in 2000.

[]{#__RefHeading___Toc204703680 .anchor}Employment and Income

Employment favors people without disabilities, with 79.9 percent of
working-age men between the ages of 16 and 64 employed compared to 60.1
percent of men with a disability. Working-age women without disabilities
also experience higher employment rates of 67.3 percent compared to 51.4
percent for their colleagues with disabilities. The employment rates for
family householders with disabilities were 53.3 percent, compared to
80.7 percent of all family householders.[^41]

Families with members with a disability had a median income of \$39,155,
below the overall family median income of \$50,046 for families without
members with a disability. The data show that family income changes
across disability types. For example, families with members with an
intellectual disability had a median income of \$36,197, while families
with members with a sensory disability or a physical disability had a
median income of \$36,950.

Families reporting earnings from wages or salaries in 1999 were 73.1
percent of the total for families with members with a disability
compared to 84.9 percent for families without members with a disability.
Families with disabilities were more likely to receive income from
public programs (42.8 percent received income from Social Security
compared to 22.5 percent of all families without members with a
disability).[^42]

[]{#__RefHeading___Toc204703681 .anchor}Diverse Ethnic Backgrounds

Ethnicity is a strong variable in the poverty and disability mix.
Available data indicate that an average of 22 percent of
African-American, American Indian, and Alaska Native families who have
members with disabilities live in poverty. The rates are compared to 8.3
percent of non-Hispanic white families and 12.4 percent of
Asian-American, Native Hawaiian, and other Pacific Island families.[^43]
Nationally, 28.9 percent of the 72.2 million families reported members
with a disability. The disability prevalence rate among families
reporting one or more members with a disability was 38.5 percent for
American Indian and Alaska Native householders; 35.7 percent (2.9
million) for African-American householders; 33.2 percent (2.5 million)
for Hispanic householders; 27.1 percent for non-Hispanic white
householders; and 26.5 percent for Asian-American householders.

Over the past 30 years, 500,000 to 1 million people have come to the
United States yearly from other countries. Today, one in 10 Americans is
born outside the United States, compared to one in 20 just 30 years
ago.[^44] Since the September 11, 2001, attacks, the number of people
granted legal permanent residence in the United States has dropped. For
example, the FY 2003 number was fewer than 706,000 (34 percent), down
from 1.06 million in 2002.[^45]

[]{#__RefHeading___Toc204703682 .anchor}Social Spending History in the
United States

For developing countries, the modern age of social spending dawned in
the 18th century, when less than 1 percent of any one country's gross
national product (GNP) was spent on welfare, unemployment, pensions,
health, and housing subsidies.[^46] Today in the United States, federal
spending on just three social programs, Medicaid, Medicare, and Social
Security, accounts for 42 percent of all federal outlays---compared to 2
percent of federal spending on social programs in 1950 prior to the
creation of these programs.[^47] Since the 1950s, the United States'
federal outlays have averaged 20 percent of the GDP and composition of
this spending has changed as well, with mandatory programs now
representing over 50 percent of federal spending compared to one-third
in the early 1960s.[^48]

During the time of Adam Smith and Thomas Jefferson, there were
practically no social programs (education included) for elders,
individuals with disabilities, or children except for "poor relief."
Although the concept of the government's taxing its citizens for
education was discussed, it did not begin until the 19th century in the
United States.[^49] A rare exception was the military half-pensions that
began during the Revolutionary War for veterans permanently disabled by
combat-related injuries. It is reported that between 1880 and 1920,
expenditures to provide pensions for aging veterans and veterans with
disabilities of the Grand Army of the Republic grew to a quarter of
federal expenditures.[^50] Spending by towns for individuals who were
blind began in the early 1800s, as did funding for institutions to house
individuals with disabilities.

The United States in FY 2004 reported its largest deficit since the end
of World War II at \$412 billion, representing 3.6 percent of the
GDP.[^51] The Congressional Budget Office (CBO) projected the increases
that would be needed in the public debt, which results in a \$2,234
trillion increase[^52] since 1997 (at the writing of this report the
public debt stood at more than \$9 trillion dollars).[^53] Mandatory
outlays representing over 50 percent of federal spending are projected
to grow by \$339 billion, from \$1.385 trillion for FY 2006 to \$1.724
trillion for FY 2010.[^54] Discretionary outlays were projected to grow
by \$65 billion, from \$915 billion for 2006 to \$980 billion for
2010.[^55]

The CBO reported that Medicare and Medicaid---the two major health care
entitlements---consume a growing share of the nation's economic output,
having risen from 1.0 percent of GDP in 1970 to 4.2 percent in
2005.[^56] The CBO provides projections and options for slowing spending
for both Medicare and Medicaid that involve difficult choices and
decisions about reductions, whether in the number of beneficiaries
served, the amount of government support provided, or the types of
services provided.[^57]

Recent findings from a report by NCD on long-term services and supports
financing showed that there is no long-term services and supports policy
for working Americans with disabilities in the United States except for
Medicaid, and that new funding mechanisms and new policy must be
designed to meet the growing needs of individuals under age 65 who are
working and have disabilities.[^58] In addition, this report found that
there are very few data on individuals age 65 and under with lifelong
disabilities needing personal assistance services, transportation,
housing, and services other than the functional limitation measurements
of activities of daily living and instrumental activities of daily
living; most research relates to the needs and costs of services for
elders.

Similar to the growth in federal spending over the past 200 years,
revenues have grown and have fluctuated between 16.1 percent and 20.9
percent of the GDP since 1951.[^59] Like the change in spending
priorities, the composition of revenues has changed, with the major
portion coming from social insurance payroll taxes such as Social
Security, Medicare, unemployment insurance, and retirement programs for
federal civilian employees, and corporate income taxes and excise taxes
decreasing.[^60]

The growth of social spending over the past 200 years is attributed to
aging of the population, the rise in average income, and a shift of
power and political voice to marginal populations (poor) as well as a
change in voting rights.[^61] The United States experienced all four
conditions in the 20th century as the population and income more than
doubled, life expectancy increased by 30 years, and the civil rights
legislation of the 1960s opened the door to voting and disability rights
for all Americans.

[]{#__RefHeading___Toc204703683 .anchor}Social Spending and Program
Drift

An international study that examined the history of social spending of
industrialized countries over the past three centuries found that with
few exceptions, the distribution and redistribution of wealth from "the
rich to the poor is least present when and where it seems most
needed."[^62] For example, during the period of 1985--1990, Lindert
(2005) found that countries that were members of the Organization for
Economic Cooperation and Development spent 16.3 percent of their GDP for
social security or social insurance programs, compared to 2.7 percent in
developing countries where the need was far higher.[^63] Lindert
describes this phenomenon as a "program drift" from "help-the-poor"
programs to big, broad social safety nets that give back many benefits
to income classes that paid the tax originally.

This "program drift" is evident when one looks at spending and tax
entitlements in the United States today. The Government Accountability
Office (GAO), for example, identified a number of federal programs
wholly devoted to serving mostly low-income individuals with
disabilities as "high risk" and calculated the cost conservatively, when
combined with costs of Medicare and Medicaid, to be over \$240
billion.[^64] The GAO surveyed 20 different federal agencies that
administer more than 200 disability programs (many of which are defined
as financial incentives in this research) and found that 59 percent of
the programs provided indirect support to people with disabilities
through state grants, while the rest provided direct support to 34
million beneficiaries or clients.

Another study conducted by the Corporation for Enterprise Development, a
private nonprofit, examined four tax entitlements that benefit
homeowners, savers, investors, and small-business entrepreneurs. The
study estimated that 98 percent of these four federal asset-building
initiatives totaled \$345 billion and benefited individuals and
households with incomes over \$50,000.[^65] One-third of the assets went
to 1 percent of Americans who earned over \$1 million, and less than 5
percent went to the bottom 60 percent of taxpayers.[^66] The top 20
percent with incomes over \$81,000 received the largest share of tax
benefits; the poorest 20 percent of taxpayers received an average
benefit of \$4.24, while 1 percent with incomes \$1 million and over
netted a benefit of \$38,107.[^67] The research found that the
"government gives up \$642 in revenue for every dollar spent on
asset-building outlays."[^68]

The study did not include asset policies that benefited corporations and
included only a limited number of policies that benefited individuals.
If corporate income tax revenues in 2004 were \$189.4 billion (1.6
percent of GDP), and when combined with state corporate tax revenues
totaled \$225.8 billion (2.1 percent of GDP), one must wonder what the
benefit amount to corporations would have been if asset policies that
benefited corporations had been included.[^69] It is clear that the two
entitlements---spending programs viewed mainly as safety net programs
and tax spending---provide benefits to two very different groups of
stakeholders and represent the phenomenon of program drift. Although
some individuals with disabilities do own homes (less than 44 percent
and less than 10 percent for people with intellectual disabilities),
research shows that many do not take advantage of the home mortgage
deduction.

Lindert's theory of program drift may explain why more than half of
federal spending or tax entitlements are directed to nonpoor
Americans.[^70] The issue that will face 21st century policy analysts
will be the struggle to balance market values with social values---a
dilemma well known to the disability advocacy world. Charlton writes,
"It is not easy to think about social phenomena in terms of dualities or
paradoxes and contradictions but reality is complex and contradictory,
no matter how much we yearn for something simpler."[^71] Charlton
describes the fundamental paradox facing the disability movement as the
struggle "to incorporate differences into a strong, unified economy
while simultaneously differentiating itself in the process." Martha
Minow, a Harvard law professor, suggests that the cultural and political
focus on identifying disability has replicated rather than resolved the
conflicting conceptions of individual freedom and social meaning.[^72]
It is possible that the focus on the critical issues of integration and
equal access dominated disability policy over the second half of the
20th century and that until now little attention has been paid to the
integration and equity issues of financial incentives derived from
federal spending and tax programs.

[]{#__RefHeading___Toc204703684 .anchor}The Financial Incentives Project

The six subject areas identified for review in this study are education,
employment, transportation, health care and long-term services and
supports, income maintenance and asset development, and housing. Chapter
2 addresses these six subject areas and identifies and describes key
financial incentives that exist in each of them. This chapter has
established the background to begin formulation of a topology for
looking at all expenditures, including those expenditures that are
defined as incentives.

The proposed topology divides disability-related financial incentives
into three broad categories: incentives involving direct payments (to
people with disabilities), indirect payments (to third parties for
disability-related purposes), and community-based expenditures. The
community-based category includes services or programs that have a
direct, intentional, or otherwise significant effect on the lives of
people with disabilities in some way exceeding or differing from the
impact on all other members of the community. In each of the six key
subject areas, this report identifies and describes incentives falling
into each of these three categories.

[]{#__RefHeading___Toc204703685 .anchor}1.2. Conclusion

This chapter has introduced and described many of the key financial
incentives, such as direct, indirect, and community based, to promote
the full participation in society of people with disabilities. These
incentives are grouped in ways that reflect their operation in a complex
modern society. Some novel concepts have been employed to clarify how
the incentives operate.

In attempting to create a flexible framework for understanding the range
and impact of the incentives that exist today, this chapter lays the
groundwork for a new policy vocabulary. By creating new categories into
which most or all incentives, and for that matter disincentives, can be
placed, this chapter has sought to create conditions under which various
approaches, policies, and measures can be effectively compared, and
through which the relationships among diverse measures, systems, laws,
and funding streams can be understood integrally.

Chapter 2 will draw together research findings concerning the effects of
these incentives, with a view to identifying which are successful and
which are not. Chapter 2 also identifies some of the design features and
factors for the proposed conceptual framework described in chapter 4.
Such factors may have predictive value in determining the outcome of a
particular incentive.

[]{#__RefHeading___Toc204703686 .anchor}Chapter 2: Research Factors That
Influence the Use of Financial Incentives: A Review of What Is Working
and What Needs to Change for People with Disabilities Accessing
Financial Incentives

The economic realities in which economists such as Smith, Richards, and
Keynes lived are distant worlds away from the one we inhabit at the
beginning of the 21st century, as indicated in The Next Global Stage:
Challenges and Opportunities in Our Borderless World. (Kenichi Ohmae,
2005, Wharton School Publishing Pearson Education, Inc.)

[]{#__RefHeading___Toc204703687 .anchor}2.1. Context for Review

This chapter includes information pertaining to each of the six domains
and presents the information in terms of an introduction, purpose and
method, and findings based on available research. With consideration for
the limited volume of relevant evidence-based research, the information
addresses the impact, outcomes, utilization, and challenges of financial
incentives for individuals with disabilities.

[]{#__RefHeading___Toc204703688 .anchor}2.2. Review of the Literature

[]{#__RefHeading___Toc204703689 .anchor}2A -- Education

Introduction

Financial incentives and disincentives have an impact on special
education funding and practice, whether local, state, tribal, or
federal.[^73] Although substantive, evidence-based research exploring
special education funding and practice in the United States is limited,
this review will explore relevant available literature looking at how
special education is funded in U.S. schools, along with its
effectiveness and impact, with an eye toward unpacking financial
incentives and disincentives as they relate to students with
disabilities. This review also will look at the effectiveness of special
education practice, with particular attention to its impact on the
representation of students coming from diverse cultural, linguistic, and
economic status; students with disabilities in the judicial system; and
postschool outcomes for special education students. Finally, this review
will provide recommendations for research, funding, and practice in the
broad field of special education.

Purpose and Method

The purpose of this section is to examine the evidence-based practices
that demonstrate the impact of education financial incentives on the
daily lives of individuals with disabilities. The research examines the
direct, indirect, and community-based impact of education financial
incentives. It also looks at whether education financial incentives work
better for some individuals with disabilities than for others; the gaps
in access and availability of education financial incentives for
individuals with disabilities compared to individuals without
disabilities; and what policy changes are needed to expand use of and
participation in education financial incentives for individuals with
disabilities. The findings from this section will be used to inform the
recommendations for any changes or reform that will include a framework
for congressional, legislative, and executive-level involvement.

2A:1 -- The Individuals with Disabilities Education Act (IDEA)

Although the Americans with Disabilities Act of 1990 and Section 504 of
the Rehabilitation Act of 1973 have broad application in schools, it is
really the federal special education law passed in the mid-1970s that
has had the most impact on students with disabilities.[^74] Before the
early 1970s, students with disabilities in the United States either
received very poor educational services or were prohibited from
attending school altogether. Largely as the result of advocacy on the
part of parents, Congress first codified federal law regarding special
education in 1975, with passage of P.L. 94-142, known as the Education
for All Handicapped Children Act. Over time, this law has been changed,
modified, and reauthorized several times. In 1990, its name was changed
to the Individuals with Disabilities Education Act (IDEA), with another
major reauthorization in 1997.[^75] The most recent version of the act
was reauthorized in 2004, and its name was changed to the Individuals
with Disabilities Education Improvement Act, attempting to align it with
the recent No Child Left Behind legislation.[^76]

Findings

A key principle on which IDEA is based is that students with
disabilities deserve a "free and appropriate public education" (FAPE).
This principle was inserted into legislation in order to ensure that
students with disabilities were no longer excluded from public
schools---prior to passage of P.L. 94-142, many students with
disabilities were not receiving education in public schools. In fact,
OSEP reports that by 1975, Congress had determined that millions of
American children with disabilities were still not receiving an
appropriate education,[^77] finding that "More than half of the
handicapped children in the United States do not receive appropriate
educational services which would enable them to have full equality of
opportunity" (Education for All Handicapped Children Act (EAHCA),
§3(b)(3)). Public Law 94-142 was enacted to remedy this situation by
requiring that all students with disabilities receive FAPE and by
providing a funding mechanism to help defray the costs of special
education programs (Martin, Martin, & Terman, 1996).[^78]

-   Along with the FAPE principle is the requirement that students with
    disabilities be educated in the "least restrictive environment" by
    being included in regular classrooms and regular schools (OSEP,
    2006).[^79]

-   In 2001, approximately 5.2 percent of children ages 3--5 received
    special education and related services in the United States and 12.1
    percent of students ages 6--21 attending school received special
    education services.

-   The number of students receiving special education services in both
    the group ages 6--12 and the group ages 13--17 grew during the
    1992--2001 period. Forty-three percent of students ages 6--12 and 56
    percent of students ages 13--17 had two or more disabilities.
    Disabilities included specific learning disabilities,
    speech/language impairments, intellectual disabilities, emotional
    disturbance, hearing impairments, visual impairments, orthopedic
    impairments, other health impairments, autism, traumatic brain
    injury, multiple disabilities, and deaf-blindness. Boys represented
    about two-thirds of students with disabilities.[^80]

2A:2 -- Funding of IDEA

Educational funding has changed substantially since the early 20th
century in the United States. Then, schools were funded principally by
tuition and charity mechanisms. Later, local taxes provided public
school funding. State funding also was added to the mix to assist school
districts that were not able to provide a minimum, foundational level of
funding. Later funding mechanisms sought to establish equitable
educational funding across poor and wealthy school districts. Currently,
with the No Child Left Behind (NCLB) Act, both federal and state school
funding schemes are tied to learning outcomes based on standardized
tests.[^81] NCD is investigating the impact of both IDEA and NCLB on the
educational outcomes for students with disabilities.

Findings

-   Receipt of funding by states from the Federal Government for special
    education services is conditional on provision of a FAPE in the
    state for Part B of IDEA. Part C of IDEA provides for services for
    infants and toddlers. According to the Congressional Research
    Service, federal funding of IDEA has grown substantially in recent
    years---over 250 percent between 1995 and 2005---to \$11.7 billion
    in FY 2005.[^82] Although there is overall growth in special
    education funding appropriated for FY 2006, K--12 funding actually
    has gone down slightly.[^83]

-   According to data from the Special Education Expenditure
    Project[^84] (SEEP), total special education funding for students
    with disabilities in the United States was \$77.3 billion for school
    year 1999--2000.

-   In constant dollars, SEEP found that the total special education
    per-pupil cost (which includes both special and regular education
    dollars) rose by 110 percent between school years 1968--1969 and
    1999--2000.

-   The \$77.3 billion total special education funding reflects \$12,474
    per student receiving special education services in the United
    States for school year 1999--2000. The special education per-pupil
    cost was slightly less than half the per-pupil cost of students who
    were not receiving special education services. Put another way, the
    cost of providing regular and special education services to students
    receiving special education was 1.90 times the cost of providing
    education services to students not receiving special education in
    school year 1999--2000. This reflects little change from the
    estimated 1.92 times the cost of providing education services to
    students not receiving special education in school year
    1968--1969.[^85]

-   During the school periods 1968--1969 through 1999--2000, total
    per-pupil cost for all students (both special and regular education)
    rose 140 percent.[^86]

2A:3 -- Effectiveness and Impact: Evaluating Educational Funding for
Special Purposes

Concerns about the effectiveness and impact of educational funding are
not new. The same concerns have been expressed about the effectiveness
and impact of educational funding for special purposes, some as early as
almost half a century ago.[^87] Yet there is little evidence-based
research exploring these concerns. Some argue about what that research
should explore. A broad exploration of the utility of educational
funding in general found that it would be helpful to evaluate the
effectiveness of individual interventions rather than to explore the
effects of large educational programs in aggregate, because federally
funded educational programs allow a great deal of grantee flexibility in
how to use that funding.[^88]

Findings

-   In spite of large increases in educational funding over the last
    decade, funding levels continue to fall short of what is necessary
    to address the need. When Congress initially enacted special
    education legislation in the 1970s, it decided that it wanted to
    fund up to 40 percent of the "excess" cost of special
    education---the cost of educating a student with disabilities over
    and above the cost of educating a student without a disability,
    which was felt then to be approximately twice the cost of educating
    students without disabilities.[^89]

-   While Congress has steadily increased its funding levels over time,
    it has never come close to reaching its goal at the 40 percent
    level. In FY 2005, special education funding of Part B of IDEA (both
    as proposed by the President and as actually appropriated by
    Congress) did not even reach half the excess cost, at only 18.6
    percent. Given a federal appropriation of \$10.6 billion for IDEA
    Part B in FY 2005, this left a balance of the estimated excess cost
    for students with disabilities of \$46.2 billion.[^90] This balance
    is borne typically by local school districts already overwhelmed by
    budget shortfalls.[^91]

2A:4 -- Special Education Funding Models

Funding for special education to local school districts in the United
States is provided in two different ways. Traditionally, funding is
provided through child count---the number of students with disabilities
is counted in a particular district, and funding provided to the
district proportional to that number. The other special education
funding approach is a lump-sum method.[^92] Child-count funding methods,
referred to by some as a bounty approach, appear to encourage school
districts to label students as having disabilities.

Findings

-   One study done at the Manhattan Institute for Policy Research found
    a direct correlation between child-count funding methodologies and
    the increase in the number of students with disabilities. According
    to research, lump-sum funding methods remove this incentive. While
    some have argued that the increase in the number of students with
    disabilities reflects either a real increase in the incidence of
    disability or the effect of high-stakes testing, the Manhattan
    Institute for Policy Research study found no such effects.[^93]

-   A cross-national comparative study of special education funding
    practices described two different modes of funding: supply-oriented
    and demand-oriented funding.[^94] The study defined supply-oriented
    funding mechanisms as the traditional approach to funding special
    education, in which students with disabilities are moved from their
    neighborhood schools to special ("segregated") schools, where
    specialized supports are congregated. Control of special education
    funds and resources is held at the district, sometimes
    interdistrict, level, with only limited control at the school
    building level. Researchers saw this funding approach as a
    disincentive to the inclusion of students with disabilities in
    regular education schools and classrooms.

-   The authors then outlined another funding approach, demand-oriented
    or pupil-bound funding, in which funding goes directly to local
    schools and is completely under local school control. Decisionmaking
    happens much closer to student and family, and was described as
    offering more incentive to at least the physical integration (if not
    necessarily always the social inclusion) of students with
    disabilities.

-   In the countries using a demand-oriented approach, researchers found
    that parents had control over whether students could be included in
    regular education schools and classrooms, and that they could choose
    between schools (if available). Objective criteria for developing
    budgets for individual students were not developed in countries
    using a demand-oriented approach. Using demand-oriented approaches
    does not mean that inclusion will then be a foregone conclusion, the
    authors point out.

-   Voucher approaches have been variously proposed and implemented.
    With only a few exceptions, according to a NCD (2003) study, special
    education has been left out of model voucher programs. Where special
    education has been included, programs may not serve as an
    appropriate model for replication. Substantial research is needed
    before voucher approaches can be applied broadly in special
    education.[^95]

2A:5 -- Disincentives and Incentives for Inclusion

A report by the NCD (1995) found that significant state funding barriers
prevented students with Individual Education Programs (IEPs) from
receiving educational services in anything but segregated settings.[^96]
In a preliminary study of the cost of inclusion, researchers at the
Center for Special Education Finance found similar problems at both
state and local levels. Education agencies allocated the most funds when
special education and related services were provided in segregated or
separate education environments. Such practices created disincentives
for educating students with disabilities in regular education schools
and classrooms. Finance reform that encourages educational intervention
for all students, funding following students, and direct training would
support a move away from disincentives.[^97] Funding reforms alone, it
was felt, would not be enough to change where students with disabilities
receive special education services.[^98]

Findings

-   According to the 1995 NCD study on inclusionary education referenced
    above, inclusion was no more expensive, and was perhaps often less
    expensive, than providing education to students with disabilities in
    segregated settings.[^99] Conclusions from data gathered for the
    Center for Special Education Finance, also were that cost savings
    may be realized as the result of implementing inclusive special
    education services. The studies point out that districts
    implementing inclusion reform did so as a move toward best
    educational practice rather than to save money.[^100]

2A:6 -- Other Funding Streams

There are roughly 200 programs, across 20 separate federal agencies,
providing supports and services to people with disabilities, with a
funding level of over \$120 billion in 2003 for programs focused solely
on people with disabilities. Of that funding, 8 percent was spent on
education. The Department of Education alone administers 33 programs
either wholly or partially targeted to people with disabilities. Among
other issues related to these many programs, there are concerns
regarding the interaction among them.[^101]

Findings

-   One study by the Government Accountability Office (1999) looked at
    the interaction between Medicaid (which funds medically related
    services for students with disabilities in schools) and IDEA. The
    report, which looked at 12 states, found problems related to
    coordination, including identification, documentation, and a lack of
    federal guidance.[^102]

-   Another funding stream that impacts students with disabilities comes
    from the Higher Education Act. NCD (2003)[^103] found little
    research about the impact of funding on the postsecondary education
    outcomes of students with disabilities. NCD encouraged the Federal
    Government to improve access to postsecondary education for students
    with disabilities.

-   The GAO (2005) investigation found differences between the
    percentages of children determined eligible for services (which
    ranged from 1.3 to 7.1 percent, depending on the state). States had
    differences in assessment and eligibility criteria, as well as
    differences in sources of funding. States were encouraged to
    concentrate on improving efforts to make the transition from Part C
    to Part B services seamless.[^104]

2A:7 -- Rights and Inclusion

Families and people with disabilities indicate that changes in the IDEA
legislation and supporting regulations, over time, have moved laws
farther away from protecting the rights of students with disabilities
and their families and closer to protecting the interests of school
systems. Others have expressed concern that the Department of Education
has not done enough to ensure that students with disabilities, perhaps
especially people with the most severe disabilities, receive educational
services in the least restrictive environment.[^105]

Findings

-   Based on Office of Special Education Programs (OSEP)
    information,[^106] fewer than half of students ages 6--21 receiving
    special education services spent most of their time (80 percent or
    more) in regular education classrooms in 2000, and almost 20 percent
    spent more than 60 percent of their school time in segregated
    classes, outside of regular education classrooms. A full 4.2 percent
    of students with disabilities in the 6--21 age range received their
    education in completely segregated settings outside of regular
    education buildings (residential facilities and other separate
    facilities, or in homebound or hospital environments \[terms used in
    the OSEP data\]). Students with deaf-blindness, multiple
    disabilities, and emotional disabilities were the most likely to
    receive educational services in completely segregated settings. Even
    when receiving their education in regular education buildings,
    students with intellectual disabilities, autism, multiple
    disabilities, deaf-blindness, and emotional disabilities were likely
    to spend most of their time in segregated classes outside of regular
    education classrooms.

-   The Congressional Research Service also expressed concern that some
    provisions of NCLB may be disincentives to inclusion of children
    with disabilities, and in conflict with the provisions of IDEA. NCLB
    testing and accountability measures may force IEP team decisions
    that exclude students with disabilities from regular education
    curricula. While regulations have been proposed to address this
    issue, they have not yet been implemented.[^107]

2A:8 -- Overrepresentation in Special Education of Students from Diverse
Racial and Ethnic Groups and Students from Families Living in Poverty

Overall, there are significant achievement gaps between whites and
students of other racial and ethnic groups in U.S. schools. For example,
research indicates that graduation rates are substantially lower for
students from diverse racial and ethnic groups.[^108]

Findings

-   African-American students are much more likely to be identified as
    having intellectual disabilities and emotional disabilities than are
    whites.[^109] OSEP data[^110] indicate that African-American
    students are almost three times more likely to be labeled as having
    intellectual disabilities, and well over two times more likely to be
    labeled as having an emotional disability, than all other racial and
    ethnic groups combined.

-   African-American students are much more likely to be educated
    outside of regular education classrooms than are students from other
    racial and ethnic backgrounds.[^111] More than twice as many
    African-American students with disabilities as white students spend
    at least 60 percent of their time in segregated-by-disability
    classrooms. The Special Education Elementary (SEELS) Parent
    Survey[^112] found that students with disabilities from impoverished
    backgrounds, and African-American students with disabilities, were
    much more likely to be retained in grade than nonimpoverished or
    white students.

-   Based on a review of achievement literature, 14 factors influenced
    the achievement gap between students of different racial/ethnicity
    groups and income levels.[^113] Birth weight, lead poisoning, hunger
    and nutrition, reading to young children, television watching,
    parent availability, student mobility, parent participation, rigor
    of curriculum, teacher experience and attendance, teacher
    preparation, class size, technology-assisted instruction, and school
    safety were found to correlate highly with student achievement. All
    factors influenced the achievement gap between students of different
    racial/ethnic groups and income levels.[^114]

2A:9 -- What Happens after Students with Disabilities Leave School?

One way of determining the impact of special education on students with
disabilities is to explore their postschool experiences. What happens to
students with disabilities after they leave school? What are their lives
like?

Findings

-   One study used data from the National Longitudinal Transition Study
    (NLTS) of Special Education Students conducted in 1987--1991, and
    the 1988 National Educational Longitudinal Study.[^115] Using a
    statistical analysis, the 1987--1991 NLTS of Special Education
    Students found that 40 percent of former special education students
    in the 18--26 age range lived at home, were single, were unemployed,
    and were not attending postsecondary education. Many of the
    remaining former special education students were employed, had
    started families, and had attended postsecondary education.

-   The President's Committee for People with Intellectual Disabilities
    (2004)[^116] reported that as students with intellectual
    disabilities, especially people between 18 and 21 years of age,
    transition from educational opportunities to the world of work they
    may experience situations in which there are conflicts between
    special education and community support funding practices and
    incentives, limiting their employment and training options. Only 15
    percent of people with intellectual disabilities attended any kind
    of postsecondary education in 2002.[^117]

-   A 2003 Government Accountability Office study[^118] found several
    reasons that the transition from school to postsecondary employment
    and living was complicated for students with disabilities and their
    families: they did not have enough information about other resources
    (for example, vocational rehabilitation); service providers had
    inadequate capacity to serve students with disabilities seeking
    services from those resources; and transportation was lacking.

-   A qualitative study by the Youth Advisory Committee for NCD found
    that even when adults with disabilities do seek postsecondary
    education experiences, they are unable to obtain the necessary
    financial aid.[^119]

2A:10 -- A Universal Design for Learning

One mixed-methods project exploring policy and practice implications of
state-level reform legislation for students with disabilities and
at-risk students found that reforms need to focus on positive outcomes
for all students, not just students with disabilities or students who
were at risk. The same project suggested the need to make appropriate
professional development resources available for all educators and
administrators, not just people who teach or administer special
education and related services.[^120] It is essential to develop
education policy that systematizes shared responsibility for the needs
of all students and ensures that pre-service and in-service teachers and
administrators have the knowledge, resources, and experience to deliver
differentiated instruction to all students.[^121] Funding and
implementation of best educational practices must be available to ensure
that entitlement.

[]{#__RefHeading___Toc204703690 .anchor}2B -- Employment

Introduction

While the findings in this section focus narrowly on the financial
incentives targeted to improving and increasing the employment of people
with disabilities, NCD had previously published a report examining
issues, practices, and recommendations focused on the employment of
people with disabilities. According to data in Kosciulek's 2004 report,
people with disabilities, compared to their peers without disabilities,
remain significantly unemployed or underemployed despite such policies
as the Rehabilitation Act, the Individuals with Disabilities Education
Act, and the Ticket to Work and Work Incentives Improvement Act.[^122]

Purpose and Method

The purpose of this section is to examine the evidence-based practices
that demonstrate the impact of employment financial incentives on the
daily lives of individuals with disabilities. The research will include
direct, indirect, and community-based impacts of employment financial
incentives. This will include examination of whether employment
financial incentives work better for some individuals with disabilities
than for others; the gaps in access and availability of employment
financial incentives for individuals with disabilities compared to
individuals without disabilities; and what policy changes are needed to
expand utilization of and participation in employment financial
incentives for individuals with disabilities. The findings from this
section will be used to inform the recommendations for any changes or
reform that will include a framework for congressional, legislative, and
executive-level involvement.

2B:1 -- Vocational Rehabilitation

Findings

By far the greatest federal expenditures in rehabilitation services
occur through the federal/state vocational rehabilitation (VR) system.

-   For all reported VR closures in FY 2003, only 35 percent of closures
    represented successful employment outcomes (defined as completion of
    an Individual Plan for Employment \[IPE\]), but those closures cost
    65 percent of the total funding of purchased services. The numerical
    outcomes for VR closures in FY 2003 show a slight decrease from
    comparable data extracted from the FY 1996 Rehabilitation Services
    Administration 911 database by Berry et al. (2000). People exiting
    the VR system with a successful employment outcome were 36.8 percent
    of the total; within this total, 39.7 percent of transition-aged
    individuals (ages 16--24) achieved such outcomes.[^123]

-   During the last 25 years, a significant change in vocational
    rehabilitation strategies involved two parallel transitions of many
    individuals with severe disabilities. For some people with severe
    disabilities, the transition was from segregated institutions to
    community-based sheltered workshops; for others, it was from
    sheltered workshops to competitive employment, many through the
    relatively new "supported employment" strategy. Blanck, Schartz, and
    Schartz (2003), in their study of these transitions in seven states,
    indicate again the difficulty in accurate outcome measurement
    because of the use of nonstandard definitions of employment
    outcomes. The researchers found that while sheltered employment was
    a gateway for some individuals with intellectual disabilities into
    eventual supported employment, accompanied by an increase in
    earnings, this group represented only a small proportion of the
    sampled populations.[^124]

-   Cimera (2000) reviewed 21 studies published since 1980 that
    investigated the cost-benefit ratio of supported employment
    programs, and found that all reported at least some positive
    benefits (i.e., ratios above 1.0) for federal/state VR dollars
    spent.[^125]

-   Lee, Yoo, and Peters (2003), adapting a similar U.S. economic
    methodology to supported employment programs in Korea that were
    modeled after American developments, emphasized the need for
    longitudinal studies. Differing cost-benefit ratios for supported
    employment programs were obtained when sufficient time was allowed
    for start-up costs to decrease to annual operating expenses while
    the earnings of program participants grew significantly year by
    year.[^126]

-   A primary source of evaluative data with respect to the vocational
    rehabilitation system derives from the Longitudinal Study of the
    Vocational Rehabilitation Services Program (LSVRSP), as mandated by
    the 1992 Rehabilitation Act Amendments. The Research Triangle
    Institute conducted a study of the decade 1992--2002 for the
    Department of Education, Rehabilitation Services Administration
    (RSA). The study's database, final reports, and published research
    relating to the LSVRSP are available on the RSA Web site and through
    the RRTC at Cornell University (www.ilr.cornell.edu/ped/lsvrsp) and
    the Disability Institute at the University of Illinois
    (http://compaq.ncsa.uiuc.edu:8080/vrsp/do/overview). The
    availability of this database provides researchers and others the
    opportunity for many research studies.[^127]

-   The Tashjian and Schmidt-Davis (2000) study reported three key
    findings. First, the average cost for a single study participant was
    \$4,921, almost 20 percent higher than the approximate \$4,000 cost
    for the nonsupported employment successful completer of an IPE.
    Second, individuals who obtained a supported employment position
    worked an average of 23 hours per week and earned an average of
    \$4.53 per hour, compared to other successful consumers with
    significant disabilities, who worked an average of 34 hours per week
    and earned an average hourly wage of \$7.20. Third, on average,
    individuals with intellectual disabilities in supported employment
    earned virtually the same wage (\$4.21) as did individuals with
    intellectual disabilities who exited VR services into other forms of
    employment (\$4.19).[^128]

-   We may conclude that, with availability of the RSA 911 database of
    state vocational rehabilitation performance outcomes and the data in
    the LSVRSP, many research questions about the relative costs and
    benefits of VR programs (e.g., sheltered employment, supported
    employment, and competitive employment) and comparability of costs
    and benefits between state programs can now be addressed.

2B:2 -- Ticket to Work

The Ticket to Work and Work Incentives Improvement Act of 1999, while it
resulted from the contributions of many disability researchers and
advocates, can trace one clear origin to economist Monroe Berkowitz
(1997),[^129] who has long recommended that vocational rehabilitation
services for Social Security disability recipients be privatized. The
resulting legislation established a national system of employment
networks as community-based alternatives to the vocational
rehabilitation system, created a national system of benefits planning,
assistance, and outreach programs, and extended the Medicare coverage of
individuals returning to work to a new maximum of eight and a half
years.

Findings

-   The most recent data published by Maximus, Inc. (the Ticket to Work
    Program manager under contract from the Social Security
    Administration) illustrate the lagging effectiveness of this
    program, which was five years old when this NCD report was
    developed, with Ticket to Work roll-out operations beginning in
    February 2002.

-   The lack of overall success of the Ticket to Work Program, as
    currently structured, was highlighted in a Government Accountability
    Office report to the Social Security Administration (2005). Within
    the Ticket to Work Program, the small number of community-based
    organizations operating as employment networks (ENs), the small
    number of Ticket to Work holders working beyond substantial gainful
    activity (SGA), and the small number of actual payments to ENs were
    cited by both the Ticket to Work Advisory Panel (2004)[^130] and the
    GAO report. The GAO report called for research planning to test more
    effectively the changes suggested in the Ticket to Work Program by
    the Ticket to Work Advisory Panel and others.[^131]

2B:3 -- Department of Labor: Disability Program Navigators

The Workforce Investment Act of 1998 (WIA) established, among other
programs, statewide workforce network councils under each state
governor, and a number of workforce investment boards, varying by state
population size. In turn, each workforce investment board was to certify
a varying number of One-Stop Centers, in which both mandated federal
programs and voluntary private-sector partner organizations were to be
co-located. Included in the WIA legislation was the reauthorization of
the Rehabilitation Act of 1973 (as amended in the intervening years).
This legislation thus made each state vocational rehabilitation agency a
mandated One-Stop Center Program. People with disabilities became
eligible in many instances to receive federal training and employment
benefits outside of their state VR agency. The U.S. Department of Labor
is responsible for overall WIA program management.

Findings

-   Early program implementation revealed that people with disabilities
    continued to encounter a number of serious barriers to the
    participation WIA mandates.[^132] WIA Standardized Records Data
    figures indicate that individuals with disabilities (i.e., people
    who self-report their disability) continue to be underrepresented in
    the WIA programs. However, Holcomb and Barnow (2004)[^133] indicate
    that such voluntary self-reporting may result in an undercounting of
    individuals with disabilities actually served through the various
    WIA programs.

-   In response to such findings, the Department of Labor and the Social
    Security Administration jointly created the Disability Program
    Navigator (DPN) Program, a \$24 million initiative in 17 states
    where SSA previously implemented employment support initiatives. At
    the writing of this report, 450 Disability Program Navigators were
    serving one or more workforce investment areas in 30 states and the
    District of Columbia.

-   Disability Program Navigators are people with training and
    experience in the workforce and rehabilitation systems who are
    employed by the workforce investment boards to work with the
    One-Stop Centers to enhance interagency program coordination and to
    facilitate access to the various programs for WIA customers with
    disabilities. Morris (2005) made the following preliminary
    observations from an evaluation of the DPN Program nationally.[^134]

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-   Enthusiasm for the DPN Program is strong from all levels of
    participants interviewed.

-   There is more interagency cooperation, with Navigators building
    infrastructure and serving as valuable resources.

-   Participants at all levels want to see the DPN initiative continue
    and become imbedded as a natural position within the One-Stop
    system.

-   Satisfaction ratings were high:

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-   Overall satisfaction was 7.54 on a 1--9 scale.

-   DPN services exceeded "expectations" (7.01 on 1--9 scale).

-   DPN services rated well when compared with an ideal set of services
    (6.65 on 1--9 scale).

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-   In the case of the Colorado WIA system, of the 291,770 recorded job
    seekers, 11,379 (3.9 percent) were people with disabilities; of the
    1,458 WIA customers served by the DPNs, 81.2 percent were people
    with disabilities. However, while 10.4 percent of the WIA customers
    with disabilities received DPN services, only 2.0 percent and 5.9
    percent received WIA training services or WIA main program services,
    respectively. Almost all (91.1 percent) received some service; 67.9
    percent conducted a job search, and 52.8 percent were referred to a
    job opening; these constitute the WIA "core services," with the
    least additional funds invested in the individual customer.[^135]

2B:4 -- Cash Benefits and Work Incentives for Employment

The two primary cash benefit programs for people with disabilities are
Supplemental Security Income (SSI) and Social Security Disability
Insurance (SSDI). SSI is a "safety net" program for recipients whose
earned income record is insufficient to have created a work history
(taxable work for 10 quarters), whose current resources are less than
\$2,000, and whose low income qualifies them. SSI payments derive from
the general federal treasury. SSDI benefits are paid to beneficiaries
with a work history, with the monthly amount based by formula upon their
previous earnings. SSDI funds derive from a trust fund created by each
worker's Federal Insurance Contributions Act (FICA) taxes. Table 5
presents current data for these two programs.

Findings

-   Given the interrelationship between the SSDI Program operated by the
    Social Security Administration and the Vocational Rehabilitation
    Program operated by the Rehabilitation Services Administration, the
    success of these programs in terms of employment outcomes is
    difficult to ascertain.

-   However, Berry et al. (2000)[^136] found that most often services
    were provided to transition-age young people with disabilities (SSI
    participants) exiting vocational rehabilitation programs. According
    to Hergenrather et al. *(*2003), "Only 27 percent of SSDI
    beneficiaries received one of the public vocational rehabilitation
    services. Of these, job placement was used by less than 2 percent of
    beneficiaries. Less than one-fourth of one percent (.25 percent) of
    SSDI beneficiaries returns to work through public vocational
    rehabilitation."[^137]

-   Berry et al. (2000) reported that job-finding services were provided
    to 57.7 percent of SSI participants versus 43.2 percent of
    nonparticipants, and for job placement services, the percentages
    were 51.8 percent and 33.3 percent, respectively. No other analyses
    of the VR-SSA disability relationship were discovered.

-   In a 2004 Congressional Budget Office study, the percentages of
    disability and early retirement were slightly lower for women. Among
    these SSA disability beneficiaries, 24 percent of men and 34 percent
    of women lived with incomes below 100 percent of the federal poverty
    level. Thus, while the SSA disability system was designed primarily
    on the model of the Old Age and Survivors system to serve as a
    safety net for people who had to leave the workforce prior to age 62
    due to disability, it still leaves between one-fourth of men and
    one-third of women in poverty.[^138]

-   Among people qualifying for SSA disability benefits who are
    nevertheless able to perform work at less than SGA (a
    dollar-per-month threshold announced annually by SSA), the use of
    three "work incentives" shows a distinct pattern.[^139] In the
    period 1990--2004, the mean number of the following work incentives
    per state was illustrative of a distinct pattern. PASS (Plan to
    Achieve Self-Support) grew from 44 in 1990 to a peak of more than
    200 in 1994 and 1995, then declined precipitously to 92 in 1996 and
    further declined to a low of 32 in 2004. Impairment-Related Work
    Expenses (IRWE) followed a similar pattern, peaking at 195 in 1995
    and ending at 137 in 2004. Blind Work Expenses (BWE) held steady in
    the high 80s from 1990 through 1995, then began a gradual decline to
    57 in 2004. The declines in these three work incentives all followed
    a strongly worded General Accounting Office report (1996).[^140]
    Many individuals with disabilities with PASS in 1995 found them
    abruptly rescinded by SSA field offices in 1996, causing financial
    disruption in those individuals' vocational plans. Such data provide
    some indication of the trust relationship that needs to be
    established between SSA and individual disability beneficiaries when
    the latter choose to use a work incentive, and the problems caused
    by inadequate program management and precipitous changes.

2B:5 -- Tax Incentives to Employment

In examining the tax incentives to encourage the employment of people
with disabilities, review needs to focus on both sides of the labor
market equation: the supply side and the demand side. Among the tax
incentives designed to induce people with disabilities to offer
themselves for employment (supply), the primary one is the Earned Income
Tax Credit (EITC). For some undeterminable portion of all returns filed
with an EITC claim, those taxpayers were able to use their EITC to both
offset income tax before credits *and* receive a cash refund. While the
EITC is not targeted specifically to low-income taxpayers with earned
income who have disabilities, they certainly are included. The EITC has
enjoyed bipartisan congressional support since its establishment in
1975, and has proven among the most successful of all federal programs
in raising low-income families out of poverty.[^141]

Findings

-   Ten states and the District of Columbia have enacted state EITC
    programs with refundable credits (i.e., even if zero taxes are
    owed), and five states have enacted nonrefundable programs modeled
    on the federal EITC.[^142] Low-income workers with disabilities can
    use the Retirement Savings Contributions Credit, which, as a pre-tax
    exclusion, further reduces taxable earned income, and thus increases
    the EITC.[^143]

-   The success of the EITC in motivating low-income individuals to
    enter the workforce also stimulated a mid-1990s proposal for a
    Disabled Worker Tax Credit (DWTC).[^144] The DWTC would provide
    approximately \$1,000 as a refundable credit *in addition to* the
    EITC, with similar ramp-up provisions (increase in the DWTC with
    increase in earned income up to a ceiling), and then a plateau of
    DWTC for a range of earned income, and then declining DWTC after a
    certain threshold of earned income is passed. Of particular
    interest, the DWTC was designed to significantly mitigate the
    "income cliff" faced by SSDI beneficiaries whose earned income
    exceeded SGA after the nine-month trial work period and three-month
    cessation period.

-   In the linking of a policy proposal to both a successful IRS program
    and a problematic Social Security Program, the DTWC proposal
    provides a heuristic model for future such proposals. A chronic
    problem with the entire "patchwork" of cash benefits and work
    incentives for individuals with disabilities has been legislation
    targeted to one agency program, without consideration of how changes
    in that program would affect eligibility criteria and benefits, and
    so forth, in other programs. Finally, in support of policy analyses
    that led to the Ticket to Work and Work Incentives Improvement Act
    of 1999 (TWWIIA), decision-support software was developed by
    Virginia Commonwealth University under contract from the Social
    Security Administration. The resulting application, WorkWORLD,
    enables policymakers, academic researchers, and benefits managers at
    all levels to model the *system effects* of changes in programs from
    the perspective of the impacted individual with disabilities.[^145]

-   As employer subsidies, the Work Opportunity Tax Credit (WOTC) and
    Welfare to Work (WtW) are designed to lessen the costs of the
    perceived productivity gaps of the 11 targeted groups of low-income,
    lower-educated employees. Among the targeted groups, three groups
    (vocational rehabilitation clients, SSI recipients, and Ticket to
    Work employment network ticket holders) focus on people with
    disabilities. In FY 2003, 403,243 certifications were issued to
    employers by state agencies.[^146] Of this number, 6 percent (down
    from 8 percent in FY 2002) were SSI recipients; 5 percent in both FY
    2002 and FY 2003 were VR referrals to employers. (Ticket to Work
    holders were only added as a designated group in 2004.)

-   As directed by the TWWIIA legislation, the Government Accountability
    Office (2001, 2002) studied the usage of the WOTC/WtW, the
    Architectural/Transportation Tax Deduction (IRS Code, Section 190,
    Barrier Removal), and the Disabled Access Credit (IRS Code, Section
    144). The GAO reports determined that these three tax incentives are
    underutilized, but noted that IRS does not provide disaggregated
    data on rates of usage by employers among the 11 targeted groups of
    the WOTC/WtW, and does not determine whether barrier removal and
    accommodations claimed were made by an employer for employees with
    disabilities or to provide greater accessibility for
    customers.[^147]

-   Two other perspectives challenge the traditional disability and
    employment research paradigms to become more comprehensive. The
    first is the *asset development movement*, which focuses upon assets
    as a key variable in family movement out of poverty.[^148] Among
    disability advocacy organizations, the World Institute on Disability
    provides its e-newsletter *EQUITY* and policy studies to
    professionals in both the asset-building and disability communities.
    Asset-building strategies conflict with the resource limits for many
    benefits programs, especially SSI, which has a \$2,000 limit for the
    duration of SSI payments. The growth in application of Individual
    Development Account (IDA) legislation, at both the federal and state
    levels, provides some lessening of these resource limits, but has
    yet to overcome fully the SSI resource limitation[^149] beyond the
    time limits of the IDA Program.

-   The second perspective is the Family Economic Self-Sufficiency
    Standard, created by the Wider Opportunities for Women organization
    as part of a state-by-state movement to define what self-sufficiency
    means in each labor market, and to use that standard to measure
    policy decisions targeted to low-income families and individuals.
    Ultimately, the measure of the various disability employment
    assistance, cash benefits, work incentives, and tax incentives, both
    for employees and employers, is to assist people with disabilities
    to reach economic self-sufficiency. Much research must be done on
    existing programs' impacts, and the hypothesized systemwide impacts
    of proposed modifications, before this goal is within reach.

[]{#__RefHeading___Toc204703691 .anchor}2C -- Transportation

Introduction

Transportation is a key factor in the employment options, housing
availability, health care access, and community living for individuals
with disabilities. Assisting people in living independent lives, staying
out of nursing homes for as long as possible, and maintaining steady
employment will save more taxpayer money than maintaining institutional
supports for individuals with disabilities. The private automobile is
the transportation of choice for most Americans, and the design of the
environment has contributed to this preference by making many trips
difficult or impossible to complete by any other means. Even when public
or mass transit is available, scheduling, routing, financing, capital
investment, crowding, and other factors, including inaccessibility, may
reduce its value for people who would choose to utilize it.

Purpose and Method

The purpose of this section is to examine the impact of transportation
financial incentives on the daily lives of individuals with
disabilities. The research will include direct, indirect, and
community-based impacts of transportation financial incentives. The
effort will address whether transportation financial incentives work
better for some individuals with disabilities than for others; the gaps
in access and availability of transportation financial incentives for
individuals with disabilities compared to individuals without
disabilities; and what policy changes are needed to expand utilization
of and participation in transportation financial incentives for
individuals with disabilities. The findings from this section will be
used to inform the recommendations for any changes or reform that will
include a framework for congressional, legislative, and executive-level
involvement.

2C:1 -- Direct, Indirect, and Community-Based Impacts of Transportation
Financial Incentives

There are many federally funded human service programs that assist
people with nonemergency medical needs, job training, education,
employment opportunities and placements, and other supportive services.
These programs usually are managed by state and local human service
agencies, such as departments of social services, departments of health
and mental health, and area agencies on aging. However, many of these
agencies' clients are "transportation disadvantaged"---that is, they are
unable to provide their own transportation to these services as a result
of an age-related condition, disability, or income constraints.[^150]

Findings

-   The Federal Government manages 62 separate programs that can fund
    transportation services for individuals who are transportation
    disadvantaged. The Government Accountability Office reports that
    federally funded transportation programs are administered through
    eight federal departments. There are 23 programs in the Department
    of Health and Human Services, 15 in the Department of Labor, 8 in
    the Department of Education, 6 in the Department of Transportation,
    and the remainder in the departments of Veterans Affairs (VA),
    Housing and Urban Development, Agriculture, and Interior. The 62
    programs are authorized by 25 separate pieces of legislation.[^151]

-   The extent of spending for services for transportation-disadvantaged
    clients is not fully known. Only 32 of the 62 federal programs
    identified by the Government Accountability Office track
    transportation spending in their accounting or information systems,
    or could provide an estimate of transportation spending. For these
    32 programs, federal spending totals \$2.5 billion a year. Most of
    these programs require a state or local match for the federal funds,
    many of them at 50 percent. However, some of these programs do allow
    other federal funds to be used as the match. So, even considering
    only the partial data that is available on human services
    transportation, the combined federal, state, and local annual
    investment in these services is at least \$3 billion to \$4
    billion.[^152]

-   Coordination can lead to significant reductions in per-trip
    operating costs for transportation providers. The savings proposed
    through agency coordination can be used to expand services to people
    or areas not previously served. The potential benefits of
    coordinating human services transportation include the
    following:[^153]

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-   Access to more funds and more sources of funds

-   Higher-quality and more cost-effective services

-   Enhanced mobility and better access to jobs, health care, shopping,
    and community facilities

-   More visible and customer-friendly transportation services that are
    less confusing to access

2C:2 -- Architectural/Transportation Tax Deduction: IRS Code, Section
190, Barrier Removal

Businesses may take an annual deduction for expenses incurred to remove
physical, structural, and transportation barriers for people with
disabilities at the workplace. All businesses are eligible. Businesses
may take a tax deduction of up to \$15,000 a year for expenses incurred
to remove barriers for people with disabilities. Amounts in excess of
the \$15,000 maximum annual deduction may be depreciated. The deduction
is available every year. It can be used for a variety of costs to make a
facility or public transportation vehicle, owned or leased for use in
the business, more accessible to and usable by people with disabilities.
Examples include the cost of the following:[^154]

-   Providing accessible parking spaces, ramps, and curb cuts

-   Providing telephones, water fountains, and restrooms that are
    accessible to people using wheelchairs

-   Making walkways at least 48 inches wide

The deduction may not be used for expenses incurred for new
construction, or for a complete renovation of a facility or public
transportation vehicle, or for the normal replacement of depreciable
property. Small businesses may use the credit and deduction together, if
the expenses incurred qualify under both sections 44 and 190. For
example, if a business spent \$12,000 for access adaptations, it would
qualify for a \$5,000 tax credit and a \$7,000 tax deduction. Although
both the tax credit and deduction may be used annually, if a business
spends more than what may be claimed in one year, it cannot carry over
those expenses and claim a tax benefit in the next year. The amount
spent is subtracted from the total income of a business to establish its
taxable income. In order for expenses to be deductible, accessibility
standards established under the Section 190 regulations must be
met.[^155]

2C:3 -- Federal Funds

Findings

-   The Air Carrier Access Act of 1986 (ACAA)[^156] imposes
    nondiscrimination and accommodation requirements on most commercial
    airlines operating in the United States. While ACAA is not a
    benefits law with federal funds appropriated, there are funds to
    support its enforcement by the Department of Transportation (DOT).
    Airlines are obliged to spend some money to comply with the
    law.[^157]

-   Title II of ADA addresses rail and bus transportation. Amtrak, the
    nation's passenger rail service, receives direct federal support,
    both for capital and operational expenses. Although neither the
    precise sums in question nor the specificity of appropriations
    language have yet been reviewed, it is clear that federal financial
    support to a third party (namely, Amtrak) does go toward making
    intercity rail travel more accessible.[^158] Thus, Title II of ADA
    applies to this mode of transportation.

-   Perhaps the greatest change in this nation's transportation
    resources over the past generation has been the development of
    paratransit as a supplement or replacement for fixed-route transit
    for people whose disabilities make the general system unusable,
    despite its accessible design. Paratransit, as operated by local or
    municipal transportation agencies, represents one of the closest
    approaches to a direct transportation subsidy to individuals. The
    other near approximation to direct incentives to individuals is the
    reduced fares required by federal law to be provided to passengers
    with disabilities on municipal transit systems. Neither paratransit
    nor reduced fare is means-tested. Both are status based, in that the
    recipient of the service or discount must be an individual with a
    disability (or, in the case of the fare subsidy, an individual over
    the age of 65). Eligibility for paratransit is made on an
    individualized, case-by-case basis. Beyond even individualized
    eligibility determinations, there is a further concept---disliked by
    many, but legal---called trip eligibility.[^159] With trip
    eligibility people with disabilities, though eligible in principle,
    are granted or denied the service for particular or types of trips
    based on purpose of trip, destination, or other factors.[^160]

NCD identified that \$2.4 billion was spent on human service
transportation, but it is estimated that more than 40 of the
participating programs do not track transportation expenditures.
Therefore, the full cost of transportation services is unknown.[^161]

2C:4 -- Financial Incentives for Transportation Work Better for Some
Individuals with Disabilities than for Others

Findings

-   The U.S. population is aging, and transportation is critical to
    helping individuals stay independent as they age. Access to
    transportation, whether by automobile or some other mode, is
    considered essential to independent living, allowing individuals to
    gain access to the goods, services, and social contacts that support
    their day-to-day existence and quality of life. Both the number of
    older people and their percentage of the U.S. population are growing
    rapidly. Although many elders continue to drive for most of their
    lives, the growing size of the senior population will increase
    demand for alternative transportation services.

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-   For example, one study found that more than 600,000 people ages 70
    and older stop driving each year and become dependent on others for
    transportation.[^162] The increase in the potential pool of elders
    needing mobility assistance will challenge federal, state, and local
    government agencies' ability to provide such assistance.

-   In 2000, 35 million Americans, or 12.4 percent of the total U.S.
    population, were ages 65 and over, according to the U.S. Bureau of
    the Census. The Census Bureau projects that this group will double
    to 70 million people by 2030, representing 20 percent of the total
    population.

-   As elders age, their ability to drive, walk, or use public
    transportation may become limited by reduced reaction time;
    deteriorating night vision; lessening ability to climb, reach, or
    stand; or other physical limitations.

-   To help ensure that transportation-disadvantaged elders have access
    to health and medical care, employment, and other basic services,
    various federal programs provide funds for a range of senior
    transportation services to state, local, and nonprofit agencies that
    actually provide the services and, in some cases, also provide their
    own funds to support those services.[^163]

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-   If an individual is on Medicaid and is going to the doctor's office,
    he or she might be able to take only one type of transportation
    service in the community. If a person is an elder (compared to
    adults under the current retirement age) and is going to a meal
    service, there might be someone else that provides that ride, but
    the elder may not be able to ride on a vehicle if another person
    with a disability is going in the same direction at the same time,
    just because of the eligibility rules provided by that funding
    stream.[^164]

-   Inadequate transportation is an even greater obstacle for people
    with severe disabilities. People with somewhat or very severe
    disabilities are more than three times as likely to think
    transportation is a problem (34 percent and 36 percent,
    respectively) as are people without disabilities (10 percent) and
    twice as likely as are people with slight disabilities (17
    percent).[^165]

-   Medical care transportation also affects decisions to reside in
    nursing homes. For example, from October 2003 until September 2004,
    113 people reported that they would like to leave nursing homes in
    rural Kansas, but entered due to the need for transportation to and
    from medical care. Due to nursing home costs that must be paid by
    individuals, some people who are in a facility for more than 30 days
    will have their home utilities turned off for lack of payment, or
    will lose a home for lack of ability to pay for housing that they
    would otherwise be able to pay. Then they will step onto the
    Medicaid roster without a likely exit.[^166]

-   The employment-related benefits of improving rural transportation
    options for people with disabilities have been demonstrated by a
    five-year project of the Association of Programs for Rural
    Independent Living (APRIL), funded by the Rehabilitation Services
    Administration, U.S. Department of Education. The purpose of the RSA
    project is to demonstrate effectiveness of a voucher model to
    provide employment-related transportation to people with
    disabilities who live in rural areas. APRIL reports that after the
    third year of the project, 482 consumers were served. Approximately
    52 percent, or 250, were unemployed when they entered the project. A
    total of 117 people obtained employment after entering the project.
    Clearly, federal financial assistance for rural transportation is a
    good investment.[^167]

2C:5 -- Gaps in Access and Availability of Financial Incentives for
Transportation for Individuals with Disabilities Compared to Individuals
without Disabilities

Findings

-   The National Organization on Disability (NOD) reported that 30
    percent of people with disabilities found transportation inadequate,
    compared to 10 percent of people without disabilities.[^168] Lack of
    transportation to and from work among people with and without
    disabilities working full-time or part-time was reported as a
    barrier as well.[^169] Three out of 10 people with disabilities (30
    percent) still have a problem with inadequate transportation, and 16
    percent cite inadequate transportation as a major problem. By
    contrast, only 1 out of 10 people without disabilities (10 percent)
    have a problem with inadequate transportation, and only 4 percent
    say it is a major problem.[^170]

-   The *Washington Post* found that MetroAccess, a service that
    transports riders who have disabilities in the Washington area, has
    had erratic service. "A blind lung transplant patient was stranded
    by MetroAccess four nights in a row this week; a Maryland man in a
    wheelchair waited at a Giant supermarket for four hours and called
    Metro 24 times before a MetroAccess ride finally appeared on
    Wednesday; and on Thursday, a physician said three patients had
    trouble getting to or leaving his D.C. dialysis clinic because of
    mistakes by MetroAccess."[^171]

-   The presence of a disability is not the only determining factor in
    whether transportation is a problem; income also seems to play a
    large role. People with annual household incomes of \$15,000 or
    less, whether with or without disabilities, are much more likely to
    say transportation is a problem than people with annual household
    incomes of \$50,000 or more.[^172]

-   The transportation gap between people with disabilities and people
    without disabilities has actually widened by 7 percentage points
    since 1998, when NOD and Harris began collecting this data.
    Nationally, almost 15 million people in this country have
    difficulties getting the transportation they need. Of these, about 6
    million (40 percent) are people with disabilities. More than 3.5
    million people in this country never leave their homes. Of these,
    1.9 million (54 percent) are people with disabilities. About 560,000
    people with disabilities indicate that they never leave home because
    of transportation difficulties.[^173]

-   In a nation of over 290 million, a Bureau of Transportation
    Statistics (BTS) survey (see note 153) found that almost 15 million
    people have difficulties getting the transportation they need.
    Nationwide, more than 1 percent of people are homebound because of
    unmet transportation needs. More than half of the 1.9 million people
    who are homebound are people with disabilities. Many have
    disabilities that severely limit their mobility, such as Alzheimer's
    disease, senility, or dementia. However, the BTS survey found that
    for over half a million people with disabilities, the reason they
    never leave home is specifically that they cannot get the
    transportation they need.[^174]

2C:6 -- Policy Changes Are Needed to Expand Utilization of and
Participation in Financial Incentives for Transportation for Individuals
with Disabilities

Even where public or mass transit is available, scheduling, routing,
financing, capital investment, crowding, and other factors, including
inaccessibility, may all reduce its value for people who would choose to
utilize it. Accessible transportation often is a powerful positive
predictor of employment, and of several other important quality-of-life
indicators, such as political participation, access to entertainment,
socializing, and religious attendance. Likewise, inaccessible
transportation limits the ability of people with disabilities to
participate in these activities.[^175]

Findings

-   The GAO has made recommendations[^176] about coordination, and the
    departments of Transportation, Health and Human Services, Labor, and
    Education have taken subsequent actions related to several options
    outlined therein:

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-   The departments of Labor and Education join the departments of
    Transportation and Health and Human Services as members of the
    Coordinating Council on Access and Mobility (Coordinating Council).

-   The members of the Coordinating Council develop and distribute
    additional guidance to states and other grantees that encourages the
    coordination of transportation services.

-   The member departments ensure that the Coordinating Council's
    strategic plan and each member department's strategic and annual
    performance plans have long-term goals and performance measures
    related to coordinating the departments' programs and improving
    transportation for transportation-disadvantaged populations.

-   The member departments link their Web sites to the Web site of the
    Coordinating Council and advertise the site in departmental
    correspondence and other outreach opportunities. In addition to
    these recommendations was the identification of several more general
    options for improving coordination---including developing improved
    leadership and establishing interagency forums at the federal,
    state, and local levels; harmonizing differing federal program
    standards and requirements; and providing financial incentives to
    encourage state or local agencies to coordinate.

-   The departments of Transportation, Health and Human Services, Labor,
    and Education also have taken additional actions related to the
    other options outlined in the GAO report for improving coordination.
    In December 2003, the four departments launched a five-part
    coordination initiative, "United We Ride," that is designed to help
    states and communities overcome obstacles to coordination. This
    initiative is designed to provide financial incentives for
    coordination and establish an interagency forum for
    communication.[^177]

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-   Programs that can fund incidental transportation services include
    health and medical programs or job-training programs.

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-   For example, Medicaid, which is administered by the Centers for
    Medicare and Medicaid Services within the Department of Health and
    Human Services (HHS), spent an estimated \$976.2 million on
    transportation in FY 2001.[^178]

-   In addition, the Community Transportation Association of America
    identified several programs as routinely providing transportation
    for clients, including WIA programs, administered by the Department
    of Labor, and Vocational Rehabilitation Grants, administered by the
    Department of Education.

-   DOT also funds several programs that focus on the specific
    transportation needs of transportation-disadvantaged populations.
    For example, Job Access and Reverse Commute Grants are aimed at
    connecting low-income individuals to employment and support
    services, and the Capital Assistance Program for Elderly Persons and
    People with Disabilities provides financial assistance to nonprofit
    organizations for meeting the transportation needs of elders and
    people with disabilities.[^179]

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-   The Committee on Transportation and Infrastructure Subcommittee on
    Education and the Workforce, Joint Hearing on Coordinating Human
    Services Transportation, attempted to address the following
    questions:[^180]

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-   **What are the obstacles to successful coordination?**[^181]

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-   **Obstacles related to shared resources.** "Turf control" is a fact
    of life at all levels of politics. Some agencies fear loss of
    control over the quality and convenience of transportation services
    to their clients, and some clients fear changes to their services,
    such as mixing different populations (e.g., people with
    developmental disabilities and children). Additionally, there are
    concerns about the initial time, effort, and costs required to
    establish coordinated services.

-   **Obstacles related to programmatic differences.** Each federal
    program has specific eligibility requirements and rules that may
    limit potential partners. Program reporting requirements and funding
    cycles differ, as do some vehicle safety and driver qualification
    standards. Most basically, human service program managers are
    focused on individuals, while transportation officials are focused
    on systems.

-   **Obstacles related to leadership and commitment.** Federal agencies
    provide limited leadership and guidance on coordination. For
    example, the DOT/HHS Coordinating Council on Access and Mobility is
    not funded, and the Council's Web site is not even linked to the HHS
    Web site. Many human service program managers are not aware of the
    Coordinating Council or its efforts. The Centers for Medicare and
    Medicaid Services has not provided sufficient guidance on how to
    coordinate Medicaid transportation with existing public transit or
    other transportation resources. The Federal Transit Administration
    has disseminated coordination guidelines to transit agencies, but
    not to human service officials or programs.

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-   **What are some potential options to improve coordination?**[^182]

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-   Federal or state program managers could provide financial incentives
    or additional mandates to encourage coordination. An example of
    financial incentives is in Florida, where direct funding is provided
    for coordination planning and operations, and "bonus points" are
    given in funding applications for state grants if services are
    coordinated. An example of a coordination mandate is the DOT Job
    Access and Reverse Commute Grant program, which requires that
    projects be part of a coordinated public transit-human services
    transportation planning process in order to be eligible for funding.

-   Federal agencies could harmonize program eligibility, reporting,
    safety standards, and funding cycles. Legislation and regulations
    could include common language, such as "and others, as space is
    available," to explicitly encourage and allow coordination of
    transportation resources.

-   Federal and state agencies could provide additional technical
    guidance and information sharing. For example, the membership of the
    DOT/HHS Coordinating Council could be expanded to include other
    agencies involved in providing transportation, and the Council's Web
    site linked to HHS, DOL, and Department of Education Web sites.
    Federal agencies could provide guidance to states and other grantees
    to clearly define allowable uses of funds and develop cost-sharing
    arrangements for transportation of common clientele.

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-   The reauthorization of the Transportation Equity Act presents a
    unique opportunity to improve access to transportation for the 56
    million individuals with disabilities and their families. The
    Transportation Equity Act (TEA) contains several provisions that
    improve mobility for people with disabilities:[^183]

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-   TEA-21 authorizes Project Action, which for 12 years has provided
    valuable technical assistance to transportation providers and people
    with disabilities and contributed to making transportation one of
    the most accessible sectors of today's society.

-   As a result of TEA-21, states can use federal surface transportation
    funds for the modification of public sidewalks to comply with ADA.
    Without accessible sidewalks, many people with disabilities are
    stranded, unable to take advantage of the investments made in the
    accessibility of the transportation system.

-   The most recent reauthorization of TEA-21 added a requirement that
    transportation plans and projects provide due consideration for
    safety and contiguous routes for pedestrians, including the
    installation, where appropriate, and maintenance of audible traffic
    signals and audible signs at street crossings. As a result, states,
    cities, and counties are beginning to take advantage of assistance
    from the U.S. Federal Highway Administration and the U.S. Access
    Board to make their pedestrian environments accessible for people
    who are blind, visually impaired, or have deaf-blindness.

-   Grants to assist over-the-road bus operators in complying with ADA
    have contributed to more accessible intercity bus transportation for
    people with disabilities.

-   Transit enhancement funds include a set-aside of funds for certain
    transit improvements, including enhanced access for people with
    disabilities to mass transportation.

[]{#__RefHeading___Toc204703692 .anchor}2D -- Health Care and Long-Term
Services and Supports

Introduction

Health care and long-term services and supports (LTSS) are critical
concerns for the disability community. No single federal program or
federal agency is charged with the responsibility for management,
funding, and oversight of LTSS at home and in the community. More than
20 federal agencies and almost 200 programs provide a wide range of
assistance and services to people with disabilities.[^184] There is no
single entry point at a community level for individuals with
disabilities to learn about and access service and support options.
Thus, it is difficult for people to take advantage of existing financial
incentives related to health care and LTSS.

LTSS is an issue for elders and for younger individuals with
disabilities; any LTSS financing and system reform efforts must consider
both populations. Although people who have disabilities have indicated a
preference for receiving LTSS in home- and community-based settings, a
federal institutional bias exists. Presently, about 1.6 million people
live in nursing homes, group homes, and other institutional
facilities.[^185] At the same time, about 2 million to 2.4 million
people are on waiting lists or in need of some type of LTSS.[^186]

Disability advocates are working with the health care industry to create
a continuum of care, including such services as assisted living, adult
day services, and home care. Issues include financing, supporting family
caregivers, addressing workforce shortages, improving the quality of
LTSS services, and improving access to transportation and housing. The
development of a sustainable and affordable LTSS public policy funded
through innovative private sector assistance and public support will
provide security for individuals with disabilities.[^187]

Purpose and Method

The purpose of this section is to examine the evidence-based practices
that demonstrate the impact of financial incentives on the availability
of health care and LTSS for individuals with disabilities. The research
will include direct, indirect, and community-based impacts of health
care and LTSS financial incentives and disincentives. The work will
focus on whether financial incentives work better for some individuals
with disabilities than for others; the gaps in access and availability
of financial incentives for individuals with disabilities compared to
individuals without disabilities; and what policy changes are needed to
expand utilization of and participation in health care and LTSS
financial incentives for individuals with disabilities. The findings
from this section will be used to inform the recommendations for any
changes or reform that will include a framework for congressional,
legislative, and executive-level involvement.

2D:1 -- Private Health Insurance and Unpaid Caregivers

Many individuals with disabilities must rely on sources other than
federal or state assistance to meet their health care and LTSS needs.
The Federal Government should strengthen partnerships with these
entities.

Findings

-   Forty-two percent of the cost of treating uninsured patients is
    shifted to private insurance.[^188] As Medicaid becomes more
    stringent in its requirements for coverage, the burden will be
    placed on private insurers, even if uncovered patients do not seek
    private insurance.

-   Managed care plans frequently limit beneficiaries to a closed
    network of providers. Since often there are only a few qualified
    providers with the specialized skills and experience in treating
    people with specific types of disabilities in a community, closed
    networks create a risk that people with disabilities will not have
    access to all the types of providers they need.[^189]

-   Private insurance for long-term care is usually capped at a specific
    dollar amount, provides coverage for only about three years, and is
    geared toward services and supports that cater to diseases of aging
    and not the needs of everyday working Americans with
    disabilities.[^190] In addition, only about 10 percent of Americans
    have private long-term care insurance.[^191] A recent actuarial
    study found that Americans at age 45 are more likely to become
    people with disabilities than to die, yet the industry continues to
    insure against loss of life rather than against the risk of
    disability.[^192]

-   The estimated benefit of informal caregiving exceeds \$200 billion
    annually. Services should be designed to support, not supplant, the
    role of the family and actions of informal caregivers.

-   One suggestion is to conduct a feasibility study of possible new
    insurance products and options regarding relationship to the
    Medicaid Program to evaluate possible strategies to partner an LTSS
    insurance product with supplementary Medicaid coverage for people
    with disabilities under age 65.[^193] A feasibility study would need
    to consider price, benefit coverage, caps in coverage, and
    eligibility for Medicaid LTSS, and project market demand and needed
    incentives to share risk among stakeholders: the government, the
    consumer, and the insurance industry.[^194]

-   Nearly three-quarters of individuals ages 18--64 receiving long-term
    care assistance rely exclusively on unpaid caregivers---usually
    family. Only 6 percent of people ages 18--64 years rely exclusively
    on paid assistance.[^195]

-   Most states have regulations referred to as the "Nurse Practice
    Act." The effect of the Nurse Practice Act may bar friends and
    family members from receiving funds for assistance defined as
    nursing, such as administration of medication, urinary
    catheterization, and gastrostomy tube feedings. States will need to
    amend their regulations so as not to impede the assistance of
    personal care attendants who are not nurses.[^196]

2D:2 -- Medicare and Medicaid

There is not enough money to pay for any type of public program,
expansion of existing programs, or long-term care for everyone.[^197]
This was substantiated when President Clinton signed the Long-Term Care
Security Act in September 2002, establishing the Federal Long-Term Care
Insurance Program for federal employees.[^198] The program was the
result of a three-year study that showed a need for this type of
benefit, and it became a model for employers across the country.[^199]
Twenty-four states now offer a tax credit for residents who own a
long-term care policy.[^200]

Findings

-   Medicaid has significant gaps in coverage that can limit the
    independence of individuals with disabilities.[^201] The gaps in
    Medicaid coverage include limited coverage for personal assistance
    services, institutional services, dental care and dentures, hearing
    aids, eye care, foot care, many screening tests, bathroom grab bars,
    and other assistive equipment.[^202]

-   Increasingly, states have chosen to eliminate or restrict coverage
    of a number of optional services for their adult Medicaid
    beneficiaries in order to contain program costs.[^203] States have
    broad discretion in determining the amount, duration, and scope of
    their covered Medicaid services.[^204] The distinction as to whether
    a benefit is mandatory or optional is somewhat blurred, regardless
    of how a benefit may be classified in federal law, since services
    regarded as medically needed are in each classification.[^205]

-   The growth in Medicaid spending is unsustainable. Eligibility and
    service pathways to the state Medicaid Program have expanded to meet
    the growing needs of 53 million low-income, middle-income, and
    uninsured acute care and LTSS beneficiaries, and reflect growing
    challenges of economic downturns, increased health premiums,
    increased longevity, a low savings rate, and slower wage
    growth.[^206] States cannot respond to current and future LTSS needs
    as long as health care costs continue to rise by double-digit
    rates.[^207]

-   The cost of long-term care accounts for a large portion of Medicaid
    spending. Of the more than 3.5 million Americans suffering from
    chronic conditions, severe mental illness, or developmental
    disabilities that necessitate long-term care, 37 percent of people
    receiving Medicaid long-term care benefits are under age 65 and
    account for 43 percent of Medicaid long-term care funding.[^208]

-   Medicare's coverage of long-term care is limited to postacute care
    through its skilled nursing facility benefit and home health care
    benefit.[^209] Accessing the postacute care services and supports
    through Medicare coverage of skilled nursing facility and home
    health care benefits is crucial to enabling millions to avoid far
    more costly hospitalization and long-term
    institutionalizations.[^210]

-   In 2000, Medicaid paid for 45 percent of the total amount spent on
    long-term care in the United States.[^211] In FY 2004, total federal
    and state Medicaid expenditures on all long-term care reached
    \$100.5 billion and accounted for 35.7 percent of all Medicaid
    spending.[^212]

-   "Dual eligible" make up 24 percent of the cost of both Medicaid and
    Medicare.[^213] Dual eligible are individuals who meet the
    requirements for both Medicaid and Medicare because of age and
    disability. The Robert Wood Johnson Foundation co-funded the
    long-term care study, which found that dual eligibles are most
    likely to be female, widowed, living alone, and with lower incomes
    than other elderly Medicare enrollees.[^214] The study also found
    that among this population there are widespread shortfalls in access
    to long-term care. Among people surveyed, 56 percent reported
    serious consequences resulting from a lack of needed assistance,
    including falling out of bed, not being able to bathe, and soiling
    themselves.[^215] This is an indication of how much vulnerable
    populations rely on Medicare and Medicaid, as well as the
    insufficiency of these programs in meeting the needs of the dual
    eligible.

-   LTSS is not portable across states. The fiscal health of each state
    and its ability to provide the necessary match to draw upon federal
    Medicaid resources determine the scope and array of the current LTSS
    system for low-income Americans with disabilities. Therefore, the
    personal assistance needs of an individual in one state may be
    similar to those of an individual in another state, but the
    availability of services and funding may vary dramatically.[^216]

2D:3 -- Waiver Authority

States currently operate more than 250 distinct waiver programs.[^217]
Waivers enable states to design programs that meet the unique needs of
individuals with disabilities. Waiver programs are the fastest growing
segment of Medicaid, with expenditures and number of people covered
increasing annually by more than 10 percent.[^218] These waiver programs
constitute the principal way that states can offer services and supports
that are consumer centered and promote independence and community
participation among people with disabilities.

Findings

-   Three federal initiatives that have demonstrated success are Real
    Choice System change grants, Independence Plus initiative, and Home
    and Community-Based Services (HCBS) waivers.[^219] The Real Choice
    System change grants have been awarded to 238 recipients to foster
    systematic changes to enhance independence.[^220] States are using
    these grants for personal assistance services, direct service worker
    shortages, transitions from institutions to the community, respite
    service for caregivers and family members, and better transportation
    options.[^221]

-   Similarly, SSA has waiver authority it can grant to states on a
    case-by-case basis to modify existing policies and procedures and
    encourage testing alternative policies and procedures that promote
    independence and self-sufficiency for individuals with disabilities
    and their families.

-   On May 9, 2002, Tommy Thompson, secretary of the Department of
    Health and Human Services, unveiled the Independence Plus initiative
    in response to Executive Order 13217, in which HHS promised to
    provide states with simplified model waiver and demonstration
    application templates that would promote person-centered planning
    and self-directed service options.[^222]

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-   Independence Plus is based on the experiences and lessons learned
    from states that pioneered consumer self-direction. Two national
    pilot projects demonstrated the success of these approaches in the
    1990s: the Self-Determination project in 19 states that focused
    primarily on the Home and Community-Based Services Section 1915(c)
    waivers, and the Cash and Counseling project in three states that
    focused on the Section 1115 demonstrations. These programs allowed
    service recipients or their families the option to direct the design
    and delivery of services and supports they received, with the goals
    of avoiding unnecessary institutionalization, experiencing higher
    levels of satisfaction, and maximizing the efficient use of
    community services and supports.[^223]

-   The Centers for Medicare and Medicaid Services (CMS) is
    consolidating the existing Independence Plus template into a new
    Web-based Section 1915(c) application with instructions. The
    consolidation enables the expansion of a variety of self-directed
    options in existing waivers; consistent participant protections
    across all waiver programs; minimal administrative burden to states;
    an easier waiver amendment process; and improved communication of
    expectations for quality.[^224]

-   There are 11 approved Independence Plus waivers in 10 states, and
    several states are working with CMS to submit proposals.[^225]

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-   In response to the increasing costs of nursing facility care and the
    institutional bias that was part of the initial authority in 1970,
    home health services became a mandatory benefit.[^226] In 1981,
    Congress authorized the HCBS waiver authority.[^227] The Section
    1915(c) waiver, named after the section of the Social Security Act
    that authorized it, allows states to provide services not usually
    covered by Medicaid to keep a person from being institutionalized.
    Home and community-based services (other than room and board) for
    specific eligible populations are now part of waiver programs in all
    50 states.

-   In addition to the HCBS waiver authority, there is a Section 1115
    waiver authority. Section 1115 of the Social Security Act provides
    CMS broad authority to support experimental, pilot, or demonstration
    projects to test new ideas related to the financing and delivery of
    medical and supportive services. A proposed experiment or
    demonstration under Section 1115 of the Social Security Act must be
    a program model that had not been tested previously and could not be
    conducted within the boundaries of a more limited waiver authority,
    such as the HCBS waiver. A Section 1115 waiver must be budget
    neutral over the life of a project, typically five years. In other
    words, the model cannot be expected to cost the Federal Government
    more than it would cost without the waiver. A number of states with
    current Section 1115 demonstration projects are testing managed care
    approaches covering acute and long-term care services. Other states
    are using Section 1115 authority to test self-directed support
    plans, individual budgets, and the hiring of family members to
    provide services.[^228]

-   States may offer a variety of services to participants under an HCBS
    waiver program and are not limited in the number of services that
    can be provided. To be eligible under a specific HCBS waiver, an
    individual must meet targeting and service criteria. Targeting
    criteria may involve age, diagnosis, or condition. Most states have
    multiple waivers targeted to different groups, such as people with
    traumatic brain injury, people with AIDS, and people with
    intellectual and developmental disabilities.

-   States must demonstrate that waiver services are being provided only
    to individuals who are eligible for institutional placement.
    Equivalent criteria for waiver services and for institutional
    placement stem from the SSA waiver program's primary purpose, which
    is to offer alternatives to institutional placement.[^229]

2D:4 -- Future Considerations

Findings

-   The National Academy of Social Insurance Study Panel on Long-Term
    Care (LTC Study Panel) found that three tenets should guide the
    long-term care system of the future:

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-   The needs of individuals should determine the kinds of services
    available.

-   Service delivery should preserve the autonomy of the people
    receiving services.

-   The costs of services should be shared equitably among individuals,
    families, and the society. Services should be similarly available
    and affordable regardless of the state in which a person
    lives.[^230]

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-   The LTC Study Panel also found that nearly 10 million Americans need
    help with basic tasks of living, such as bathing, eating, dressing,
    or walking, or with other activities that maintain their
    independence, such as shopping, cooking, or cleaning. More than 80
    percent of people who need care live in their communities, not in
    nursing homes, and nearly 40 percent of them are under age 65.

-   The LTC Study Panel found that the current long-term care system
    falls far short of meeting reasonable expectations in several
    ways:[^231]

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-   *Unmet needs.* Many people receive inadequate care. Nationally, 20
    percent of people living in the community and needing services get
    less help than they need. As a result, they are more likely to fall,
    soil themselves, or be unable to bathe or eat.

-   *Burden on caregivers*. Unpaid caregivers play a critical role in
    the system but often pay an economic, physical, and emotional toll.
    Workers in the formal long-term care system labor under difficult
    conditions and low wages, frequently without fringe benefits.

-   *Financial jeopardy***.** The cost of long-term care can impose
    financial hardship or even spell financial catastrophe for many
    families. Few people have any type of insurance against the expense
    of long-term care, which can reach \$26,000 a year at home and more
    than twice that amount in an institution.

-   *Limitations in Medicaid.* The federal-state Medicaid Program
    finances long-term care only for people who are or have become
    impoverished. Its benefits vary widely from state to state, and it
    requires some people who need help to move to institutions, when
    they would much rather live in their communities.

-   *Quality problems.* Serious quality problems persist in some nursing
    homes, partly as a result of inadequate staffing. Quality in
    noninstitutional settings is also a concern.

-   *Demographic challenges.* The long-term care system is unprepared to
    meet the demands that the baby boom generation will impose upon it.
    The coming demographic shift also will exacerbate staffing
    shortages.

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-   The LTC Study Panel identifies two promising approaches. Expanded
    federal financing could take one of two forms:

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-   *Universal approach.* One option, modeled on Social Security, would
    provide everyone access to a basic, limited, long-term care benefit,
    supplemented by private insurance for people who can afford it, and
    enhanced public protection for the low-income population.

-   *Means-tested approach*. Another option would establish a national
    floor of income and asset protection that would reform or replace
    Medicaid's coverage of long-term care. People could purchase private
    long-term care insurance to protect a larger amount of assets.

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-   Further expansion of the federal role in long-term care financing
    faces significant obstacles. Congressional deliberations and debate
    among other policymakers focus on the scope of government, the roles
    of public support and private responsibility, and levels of spending
    and taxation. According to the LTC Study Panel, the public seems
    more receptive toward mixed public/private financing mechanisms than
    to fully public solutions.

-   The LTC Study Panel also suggests that long-term care financing
    should include initiatives to promote the purchase of long-term care
    insurance, provide public coverage of catastrophic costs, mandate
    financial contributions to prefund long-term care, and provide more
    comprehensive public coverage.[^232]

-   LTSS needs among people from diverse racial and ethnic groups are
    greater than in the current U.S. majority population. The issues of
    poverty, lack of insurance, and continued segregation from
    affordable and consistent health care will increase the future needs
    and costs for LTSS for nonwhite populations in the United States,
    which are projected to make up 50 percent of the American population
    by 2050.[^233]

-   Better medical care has increased the life expectancies for the
    disabled, so there will be more people living with disabilities and
    requiring health coverage for a longer period.[^234] The result is
    that the composition of the Medicaid caseload is expected to shift
    toward an increasing proportion of elderly and disabled, the most
    expensive categories.

-   Some believe that progress in the treatment of disabling conditions
    may eventually reduce the need for long-term care. Others suggest
    that the projected longer life span will mean individuals will
    experience more years of disability before death.

-   There are precedents of successful programs for consumer-directed
    long-term care. For the past 30 years, the Veterans Administration
    has operated the Housebound and Aid and Attendance programs, which
    provide additional cash benefits to qualified veterans or their
    surviving spouses if they require ongoing personal care services,
    are housebound, or require nursing home services. This cash benefit
    provides the veteran with additional monthly income to purchase
    needed services and supports. There are no federal restrictions on
    how this additional cash benefit may be used. The veteran with a
    disability can determine how to spend the benefit; for example, he
    or she can hire friends or family members to provide personal care
    services. Two of the most common types of consumer-directed
    approaches are the individualized budget and direct cash:[^235]

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-   In an individualized budget, the state establishes a total dollar
    value for the services needed by the individual. The state contracts
    with an organization, such as a Medicaid provider, to track the
    individual's budget and, in some cases, to employ the direct care
    workers who are selected by the consumers. However, the consumer has
    discretion over what services he or she will receive and how much
    that direct care worker will be paid.

-   In the direct cash approach, the state also establishes a total
    dollar value for the services the consumer needs; however, the cash
    allotment goes directly to the consumer rather than the provider.
    The consumer recruits, hires, and manages the direct care worker.
    The direct care worker is employed by the consumer, does not have to
    be a certified Medicaid provider, and is not required to have a
    written contract with the state.[^236]

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-   The *Olmstead* decision determined that states had a legal
    obligation to serve individuals with disabilities in a setting that
    reflected their preferences. States' responses to the decision have
    focused attention on increasing the capacity of Medicaid HCBS as an
    alternative to institutions such as nursing homes, and developing
    options that respond to consumer preferences. However, state budget
    shortfalls and declining revenues have affected the level of
    implementation.[^237]

-   There is concern about fraud and abuse in consumer-directed
    programs. However, many consumer-directed programs include policies
    and procedures to minimize fraud and abuse and maintain
    accountability for public funds, such as approving the consumer's
    plan for using the funding, tracking utilization of services, other
    forms of monitoring, and collecting receipts. Kevin Mahoney,
    national program director for the Cash and Counseling demonstration,
    after three and a half years, found "no major instances of fraud and
    abuse." The final report on the program in three original states
    (Arkansas, New Jersey, and Florida) noted that "Abuse of the
    allowance was almost nonexistent in the three Cash and Counseling
    programs."[^238]

-   Health care costs for mental illnesses in America are unknown, and
    the prevalence rate of mental illnesses is growing. The mental
    illness category is projected to rank number two after heart disease
    and replace cancer by 2010 as having a greater impact on death and
    disability.[^239] Medicaid is the principal public payer for mental
    health services and represents 36 percent of the \$48 billion in
    spending.[^240] It is unclear what the future LTSS needs and costs
    will be for people with mental illnesses.

-   The public overestimates the help that is available from public
    disability insurance programs like SSDI and other state-mandated
    short-term programs. Workers compensation benefits cover only
    disabilities caused by injury or illness arising on the job, which
    accounts for only 4 percent of disabilities.

-   There is a lack of data regarding the costs of LTSS for children and
    adults with disabilities**.** LTSS for people 65 years and younger
    includes many nonmedical services and supports such as personal
    assistance, assistive technology, financial management, housing,
    transportation, and nutrition.[^241]

-   AmeriWell is a model suggested by NCD to cover the LTSS costs of all
    Americans.[^242] AmeriWell is a prefunded, mandatory, long-term
    services and supports model that provides all Americans of any age
    with coverage from birth based on criteria of risk and functioning,
    not category of disability. AmeriWell delinks LTSS from Medicaid and
    Medicare, creating its own governing agency, regulations, oversight,
    and congressional committee. The contributions of individuals and
    families, the private sector, and the Federal Government fund
    AmeriWell. A penny pool is established through private stock
    transactions to supplement LTSS costs for impoverished and
    vulnerable Americans previously served under Medicaid and
    Medicare.[^243]

[]{#__RefHeading___Toc204703693 .anchor}2E -- Income Maintenance and
Asset Development

Income Maintenance

Depending on one's definition, income maintenance and income replacement
may represent the largest category of identifiable federal expenditures
targeted to people with disabilities. Though varying in detail based on
the prevailing assumptions at the time of enactment, all these programs
take as their point of departure certain assumptions about the
association of disability, in its own right or as mediated by inability
to work, with poverty.[^244]

Income maintenance or replacement programs can be divided into two basic
groups: programs that provide cash and programs that provide in-kind
assistance.

Purpose and Method

The purpose of this section is to examine the evidence-based practices
that demonstrate the impact of income maintenance financial incentives
on the daily lives of individuals with disabilities. The research will
include direct, indirect, and community-based impacts of income
maintenance financial incentives. Examination will include whether
income maintenance financial incentives work better for some individuals
with disabilities than for others; the gaps in access and availability
of income maintenance financial incentives for individuals with
disabilities compared to individuals without disabilities; and what
policy changes are needed to expand utilization of and participation in
income maintenance financial incentives for individuals with
disabilities. The findings from this section will inform the
recommendations for any changes or reform. In turn, the recommendations
will include a framework for congressional, legislative, and
executive-level involvement.

2E:1 -- Social Security Disability Insurance

SSDI is one of the two key underpinnings of this nation's social
insurance system. Available to workers who have paid into Social
Security[^245] and to their dependents, SSDI replaces income for people
rendered unable to work by reason of disability prior to normal
retirement age. Benefit levels are predicated on meeting the SSA
definition of disability, which includes both a diagnosis, a prognosis
that the condition will last for at least a year or result in death, and
a determination of the individual's inability to work.[^246] Although
not means-tested, this linkage to the ability to gain income through
work amounts as a practical matter to the equivalent of means testing in
many cases. Benefit levels are linked to the amount of time the
individual has worked, and to the individual's wages or self-employment
income during that time.[^247]

Findings

-   Although SSDI is vital to millions of American families, it is hard
    to characterize it as an incentive. Despite the suspicions of many
    about SSDI, it is unlikely that people would deliberately seek to
    become people with disabilities (as opposed to claiming falsely to
    have a disability) in order to qualify for SSDI. In the end, the
    program is a community resource, designed to ensure stability and
    prevent destitution and rapid downward mobility.[^248]

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-   A key factor in understanding the role of SSDI as an incentive or
    disincentive in the lives of people with disabilities is its linkage
    to health insurance. Most people receiving SSDI also are eligible
    for Medicare.

-   While some SSDI recipients will be able to maintain private sector
    insurance, assuming they had it when they worked, through the
    coverage of a spouse at work, for a period of time through their
    former employment coverage under the Consolidated Omnibus Budget
    Reconciliation Act of 1985 (COBRA) (subject to full assumption of
    the premiums and a 2 percent administrative fee)[^249] or through
    other affiliations, Medicare is as crucial as cash benefits in the
    lives of many SSDI recipients.

-   It is this close connection, resulting as it does in the potential
    loss of insurance coverage if work is obtained that does not include
    comparable insurance coverage, that perversely cements the
    relationship and the destructive dichotomy between disability and
    work in American public policy.[^250]

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-   Of the 41 million Medicare beneficiaries, approximately 6 million
    under the age of 65 received Medicare on account of disability
    status in 2003.[^251] According to recent research based on new SSDI
    beneficiaries in 1995 who qualified upon their own work record, 11.8
    percent died within the waiting period for Medicare. The study
    estimated hypothetical Medicare costs for the first 24 months of
    SSDI entitlement to be \$10,055 in 2000 dollars per person.

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-   Costs varied substantially by diagnostic group. If the person died
    during the waiting period, costs were estimated to be \$25,864; if
    the person recovered, costs were estimated to be \$1,506.[^252] One
    study suggested that eliminating the 24-month Medicare waiting
    period would cost \$5.3 billion, while another study estimated the
    cost at \$8.7 billion. The reasons for differences in the estimates
    are the following:

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-   The \$5.3 billion used 2000 dollars while the \$8.7 billion is in
    2002 dollars.

-   The \$5.3 billion estimate is only for SSDI beneficiaries who
    qualified under their own work record, while the \$8.7 billion
    estimate includes adult offspring and surviving spouses of people
    with disabilities.

-   Each study used substantially different estimation methodologies.
    Neither of these estimates included the cost of the prescription
    drug benefit that started in January 2006.[^253]

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-   When it was first created, the SSDI Program probably was effective
    in its legislative objective to replace a portion of income lost due
    to a qualifying disability. However, because of the many changes
    that have occurred since 1956, the program design does not optimally
    meet the needs of people with disabilities.

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-   For example, advances in technology and legislation like ADA have
    opened the workplace and made it more accessible to all people.

-   In addition, many disabilities that in the past might have been
    permanent, completely, or severely limiting may now be treatable and
    accommodated because of advances in medicine and technology. These
    changes have made some aspects of the current disability program
    outdated.

-   The GAO expressed a similar conclusion when it recently placed all
    federal disability programs on its high-risk list. SSA is exploring
    how to reshape the SSDI Program in the future to reflect these
    changes and how to improve the processing of disability claims,
    which can be lengthy.[^254]

2E:2 -- Supplemental Security Income

SSI derives from many of the same premises as SSDI, but with several key
differences. SSI extends the safety net to all people with disabilities
regardless of age, and to all senior citizens regardless of disability,
who meet its strict income- and resource-eligibility standards. SSI also
differs from SSDI in being strictly means-tested, beyond the fact or the
capacity for earnings. Unearned income is taken into account in
determining eligibility and benefit amounts, as are savings, along with
employment. Lastly, SSI differs from SSDI in being linked not to
Medicare but to Medicaid, meaning that the state plays two important
roles in it that are not paralleled with SSDI. These roles are that the
state may or may not add a state supplement to the standard SSI payment
(the federal benefit rate) and that the state, through its discretion in
administering the Medicaid Program, will determine to a large degree
exactly what health services an individual will receive. For people
whose route to eligibility comes through disability rather than age,
monitoring disability status as well as economic status is a standard
component of the program.[^255]

Findings

-   The SSI Program is not, however, free of major design flaws,
    including the following:

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-   The disability determination process does not ensure that the right
    people get benefits on a timely basis.

-   The complex rules related to income and assets make it difficult to
    pay people the correct amount.

-   Many of the medical listings that are used as part of the disability
    determination process do not recognize advances in medicine that
    would enable individuals to work.

-   The vocational information used as part of the disability
    determination process is out of date.[^256]

-   The GAO expressed a similar conclusion when it recently placed all
    federal disability programs on their high-risk list.

-   Despite the drawbacks in program design noted above, the SSI
    Program, with its nationally uniform standards and payment levels,
    is a considerable improvement over its predecessor programs.[^257]

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-   The SSI Program does not always effectively reach its intended
    beneficiaries.[^258] In 2002, \$2.7 billion, or 8 percent, of all
    SSI payments were improper. There are inconsistencies across states
    and between Disability Determination Services (DDS) and Offices of
    Hearings and Appeals in decisions about whether someone is a person
    with a disability. A Lewin Group study has shown that within
    individual DDSs, examiners come to different decisions on the same
    types of cases.[^259]

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-   SSA is working to reduce inconsistency. SSA has developed both
    short-term and long-term strategies.

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-   The short-term strategy includes early screening of hearings for
    on-the-record decisions, using a short form for fully favorable
    decisions, and deploying speech recognition and video
    teleconferencing technology to hearings offices.[^260]

-   For the long term, the SSA commissioner has developed a new approach
    to disability determinations that focuses on making the right
    decision as early in the process as possible.[^261] This approach is
    predicated on the successful implementation of SSA's new electronic
    disability system.

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-   The major findings of the 2005 *Annual Report of the Supplemental
    Security Income Program* are the following:[^262]

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-   By 2029, the end of the 25-year projection period, the federal SSI
    recipient population is estimated to reach 8.7 million.

-   The projected growth in the SSI Program over the 25-year period is
    largely due to the overall growth in the U.S. population.

-   The rate of participation is projected to vary somewhat by age
    group, with the overall participation of the age groups 65 or older
    projected to decline and the participation of the under-65 age
    groups projected to increase slightly.

-   The number of federal SSI recipients remained essentially level at
    2.2 percent of the total U.S. population in 2004, and is projected
    to increase gradually to 2.4 percent of the population by 2029.

-   Federal expenditures for SSI payments in calendar year 2005 were
    estimated to increase by \$2.2 billion to \$36.4 billion, an
    increase of 6.4 percent from 2004 levels.

-   In constant 2005 dollars, federal expenditures for SSI payments are
    projected to increase to \$45.8 billion in 2029, a real increase of
    1.1 percent per year.

-   When compared to the gross domestic product, federal SSI
    expenditures are projected to decline over time, from the current
    level of 0.29 percent of GDP in 2004 to 0.24 percent of GDP by 2029.

2E:3 -- Ticket to Work and Work Incentives Improvement Act of 1999

Thousands of people with disabilities and their advocates shared
enthusiasm that TWWIIA would greatly expand employment opportunities for
people on the SSA disability rolls,[^263] providing an alternative to
direct income maintenance for individuals with disabilities. Three years
after enactment of the law, it is clear that TWWIIA is faltering. The
Ticket to Work and Self-Sufficiency Program (Ticket Program) is failing
to recruit the anticipated numbers of new employment service providers,
called Employment Networks (ENs). In addition, ENs are serving only a
fraction of the beneficiaries thought to be interested in participating
in the Ticket Program. Nearly 1,000 providers have enrolled in the
program, but only about one-third of programs operating have accepted
any tickets.[^264]

Findings

-   The SSA Ticket to Work Advisory Panel has urged Congress and the SSA
    commissioner to take quick action on the following issues:

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-   Ticket Program as a supplemental funding source. ENs are uncertain
    about whether and how they can use funds from other public sources
    to serve ticket holders and have chosen not to actively participate
    in the Ticket Program because of fear of losing other stable funding
    sources.

-   EN payment system. Two problems in the EN payment system discourage
    the active participation of many providers:

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-   The payment system places too much financial risk on ENs.

-   The payment system provides significantly lower reimbursements to
    ENs for serving SSI recipients than for serving SSDI beneficiaries.

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-   Adequacy of provider incentives. Because little is known about
    outcome payments for providers, TWWIIA authorizes the SSA
    commissioner to review, refine, and alter the payment system to
    ensure that it provides adequate incentives for ENs to serve
    beneficiaries and produce savings to the program. Despite major
    problems with the payment model, no alterations have been made to
    the original program payment system. The commissioner has
    established an advisory group on adequacy of incentives to assist
    SSA with the design of a workable payment system, including
    financial incentives to serve four groups of beneficiaries with
    special needs that were referenced in the legislation.

-   EN payment claims administration. Two factors compound the financial
    risk and working capital problems of Employment Networks:

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-   Long-term tracking of beneficiary earnings is labor intensive and
    administratively burdensome for ENs.

-   Often there are long delays in processing EN claims for payment.

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-   Marketing to ENs and to beneficiaries. To date, there is no national
    marketing plan for the Ticket Program, and the program is not well
    understood by the vast majority of beneficiaries or by people who
    influence a beneficiary's decision to attempt work. ENs spend
    considerable time explaining the program and dispelling
    misconceptions. In addition, the lack of marketing contributes to
    the insufficient demand for EN services. However, SSA has been
    awarded contracts to support development of a strategic marketing
    plan and EN marketing and recruitment efforts. The Ticket to Work
    Advisory Panel has made numerous recommendations to the commissioner
    on this issue in past reports.

-   EN training and communication. Inadequate training, technical
    assistance (TA), and timely information is available to ENs.
    Existing TA and training resources are inadequate, nonuniform,
    piecemeal, uncoordinated, and of varying quality, with no
    coordinated means for ENs to identify and share best
    practices.[^265]

2E:4 -- Financial Incentives for Income Maintenance Work Better for Some
Individuals with Disabilities than for Others

Work disability is a costly problem in the United States. In 1988, for
example, the costs of work disability included \$22 billion in SSDI
payments, \$11 billion in SSI payments to people who are blind and
people who have other disabilities, \$19 billion in Medicaid
expenditures, and \$27 billion (1987) in workers compensation payments
(Employee Benefit Research Institute, 1990).[^266]

Findings

-   Marjorie L. Baldwin and William G. Johnson, in *Dispelling the Myths
    about Work Disability*, describe four principles (related to
    prevalence of disability types, onset of disability, factors
    impacting employment outcomes, and wage differences) that contradict
    common misconceptions of disability and working:[^267]

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-   The most frequent types of disabilities are not present at birth or
    are the result of traumatic accidents. Instead, they are
    musculoskeletal conditions, such as arthritis, or cardiovascular
    conditions, typically caused by chronic degenerative processes that
    increase as people age. Among younger age groups, mental illnesses
    form the most prevalent disability category.

-   Most workers with disabilities did not have disabilities as children
    and were not, therefore, subject to discrimination in education or
    employment at the time of entry into the labor market.

-   The ability of a person with a disability to work does not depend
    solely on the nature of his or her disability and the quality of
    medical care received. Many other factors, including characteristics
    of the worker and usual job, attitudes of employers, labor market
    conditions, and the availability of workplace accommodations, are
    important determinants of employment outcomes for workers with
    disabilities.

-   There are large wage differentials between workers with and without
    disabilities that are not explained entirely by health-related
    differences in productivity. Although productivity differentials are
    one important factor explaining the wage differentials, employer
    discrimination also contributes to the low wage rates of workers
    with disabilities.

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-   People with Down syndrome and other people with significant
    disabilities depend largely upon SSI to augment their income, and
    upon Medicaid to pay for their health expenditures. Today,
    opportunities have increased for this population to show their
    capacity and desire to become productive contributors to their
    communities through meaningful employment. Both SSI and Medicaid,
    however, have caps so that when people with significant disabilities
    earn too much money or accumulate too many resources, they are no
    longer eligible for these programs.[^268] The job market for people
    with disabilities, although improving, is not stable. As a
    consequence, many people with significant disabilities[^269] choose
    not to work to their full capacity for fear of losing their
    benefits. Adults with significant disabilities could earn no more
    than \$860 a month in gross wages in 2006 or they would lose their
    SSI eligibility. This cap prevents people with significant
    disabilities from pursuing and obtaining employment opportunities
    that would provide more financial independence. They are forced to
    remain in low-paying jobs under the current regulations. They can
    have no more than \$2,000 in total resources or they will lose their
    SSI eligibility.[^270] This fact prevents them from saving money or
    investing in a home of their own. Families cannot bequest or give
    resources in the name of an individual with significant
    disabilities, since most often these are counted toward the \$2,000
    eligibility cap. Thus, the current regulations force adults with
    significant disabilities to remain in a state of poverty.[^271]

-   A recommended solution is to subtract Impairment-Related Work
    Expenses (IRWE) after countable income is determined in SSI payment
    calculations. Individuals who are blind subtract their work-related
    expenses after countable income is determined. This means that they
    can reduce their countable income by twice as much as people with
    other disabilities. The smaller the countable income calculation,
    the larger the SSI benefit payment will be.[^272]

-   Advocates for patients with inflammatory bowel disease (IBD) believe
    that the SSA process for determining eligibility for disability
    insurance may treat some claimants unfairly.[^273] As a result of
    perceived unfair treatment regarding eligibility determination,
    claimants with IBD believe they are likely to be denied benefits at
    the initial decision and reconsideration levels, making it necessary
    for them to appeal to the SSA hearings level to have their claims
    allowed.

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-   However, the GAO found that while claimants with IBD are somewhat
    less likely to be allowed SSDI benefits than claimants with other
    disabilities, their experiences applying for disability benefits are
    not unique, and SSA has efforts under way that may address some
    claimant concerns.

-   To help ensure that all claimants are informed of and provide SSA
    with information needed to assess fairly how disabilities limit
    claimants' ability to work, the GAO recommends that SSA emphasize
    the types and importance of information claimants must submit for
    their claim.

-   SSA agreed with the GAO's recommendations, but thought that some
    perspectives the GAO provided on evaluating IBD claims were not
    relevant, and that the GAO's characterization of one finding went
    too far.

2E:5 -- Gaps in Access and Availability of Financial Incentives for
Income Maintenance for Individuals with Disabilities Compared to
Individuals without Disabilities

Median household income of (working-age) men without disabilities
increased by 9.4 percent and median household income of women without
disabilities increased by 12.6 percent between 1989, the peak year of
the 1980s business cycle, and 2000, the peak year of the 1990s business
cycle.[^274] In contrast, the median household income of men with
disabilities fell by 2.9 percent and the median household income of
women with disabilities fell by 5.6 percent over the period.[^275]

Findings

-   The proximate reason for the dramatic difference in the fortunes of
    the working-age population with and without disabilities was the
    dramatic divergence in their employment rates over the period.[^276]

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-   The employment rate of men without disabilities was "procyclical"
    (i.e., followed the business cycle), declining during the recession
    years of the early 1990s but then growing over the later recovery
    years.

-   In contrast, the employment rate of men with disabilities declined
    both over the recession years and over the recovery years of the
    1990s.

-   The long-term growth in the employment rate of women muted some of
    the cyclical effects on their employment rate. The employment rate
    of women without disabilities rose during both the recession and
    recovery years but rose much more during the growth years. Women
    with disabilities experienced declines in their employment rate over
    the entire period (despite the increase in median household income),
    although the decline was smaller over the growth years.

-   The failure of the employment rates of both men and women with
    disabilities to increase during the growth years of the 1990s
    business cycle (after 1992) was a complete reversal of the
    procyclical behavior of their employment rates over the 1980s
    business cycle.

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-   The GAO found that lifetime earnings, the incidence of disability,
    and mortality are three key factors that influence the taxes
    individuals pay into the Social Security system and the benefits
    they receive.[^277] Lifetime earnings factor directly into the
    Social Security benefits formula, which is designed to replace a
    larger proportion of pre-retirement earnings for low-income earners
    than for higher-income earners. Additionally, the probability of
    being on the disability insurance rolls affects the expected value
    of benefits. People with disabilities start receiving benefits
    earlier. The third factor, mortality, affects the benefits received
    relative to taxes paid because it determines the number of years a
    person will pay taxes and receive benefits.[^278]

-   Differences by race in the relationship between taxes paid and
    benefits received under Social Security are due mainly to
    differences in lifetime earnings, the incidence of disability, and
    mortality among the groups.[^279] In the aggregate,
    African-Americans and Hispanics have higher disability rates and
    lower lifetime earnings, and thus as a group tend to receive greater
    benefits relative to taxes than whites. However, whites with low
    lifetime earnings or high disability rates also receive greater
    benefits relative to taxes than their higher-income counterparts or
    those without disabilities. Higher benefits relative to taxes paid
    are associated with lower lifetime earnings and higher disability
    incidence.[^280]

2E:6 -- Policy Changes to Expand Utilization of and Participation in
Financial Incentives for Income Maintenance for Individuals with
Disabilities

Findings

Structural weaknesses in the SSDI and SSI programs have prevented the
agency from offering return-to-work services when they may help
most---soon after a person becomes identified as having a
disability.[^281] Some federal programs other than SSDI and SSI also
face the challenge of providing services in a timely fashion. For
example, 38 percent of the programs that provide employment-related
assistance to people with disabilities reported that ensuring timely
provision of services and benefits was a challenge.[^282]

-   Similarly, despite the VA's recent progress in reducing its
    disability claims workload, it will be difficult for the agency to
    cope with future workload increases due to several factors,
    including increased demand for services linked to military conflicts
    and federal legislative mandates. Almost half the programs that
    provide employment-related assistance and 54 percent of the programs
    that provide medical care reported that planning for growth in the
    demand for assistance was a challenge.[^283]

-   The GAO recommends that the commissioner of Social Security develop
    a comprehensive strategic plan to ensure the reliability and
    usefulness of the data the agency collects. SSA should take the
    following steps to improve its data reliability and
    usefulness:[^284]

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-   Establish a cost-effective internal control strategy for ensuring
    the reliability of data in electronic disability records that would
    include both front-end controls on data entry and a tracking and
    feedback system for back-end verification of the electronic records.

-   Take steps to review the usefulness of the types of information
    collected and consider whether additional types of information could
    improve program oversight. This effort could include a survey of
    users of electronic disability data.

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-   In August 2004 and January 2005 the GAO found the following:[^285]

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-   SSA has made progress implementing and evaluating the Ticket
    Program, but the agency has had limited success in achieving the
    program's goals of expanding beneficiaries' choice of service
    providers and increasing beneficiaries' efforts to work and become
    self-sufficient. Although SSA experienced delays with the initial
    distribution of tickets, the agency finished distributing tickets to
    eligible beneficiaries throughout the nation in September 2004. As
    part of implementation, SSA also has contracted for extensive
    assessments of its program's performance. Despite SSA's completion
    of key implementation activities, it has had limited success
    achieving its goal to encourage service providers to join the
    program and provide services to beneficiaries.

-   The Ticket Program's ability to achieve its goals has been hindered
    by several factors, according to the Ticket to Work Advisory
    Panel,[^286] researchers, and service providers. First, service
    providers believe that the program's payment system does not provide
    adequate compensation for the administrative costs of participating.
    Second, participation of eligible beneficiaries has been limited by
    the lack of ENs, the lack of outreach to provide information about
    the program, and the lack of incentives to encourage beneficiaries
    to participate.

-   GAO also reported that the Ticket to Work Advisory Panel and others
    have suggested numerous changes to improve the Ticket Program. They
    believe that reforming the payment system is critical to expanding
    participation. In addition, they suggest numerous changes to reduce
    the administrative burden for service providers, such as having SSA
    provide additional services, guidance, and information to
    providers.[^287]

-   SSA faces several challenges as it tries to improve the Ticket
    Program's ability to achieve its goals. Although SSA has made some
    administrative changes to the program, the agency recognizes that
    additional changes are needed. However, SSA has deferred other
    reforms until it has performed additional assessments on changes
    that it believes could be costly.

Asset Development

2E:7 -- Demographic and Trend Characteristics of Asset Development
Impact for People with Disabilities

Introduction

The field of asset development has emerged as the "third pillar" of
social policy intended to complement income support from public benefits
programs and social services for low-income Americans. Asset building
for people with disabilities is viewed as a way to complement (not
replace) income support and to foster income preservation from public
and private benefits programs.

Assets have many possible meanings, but as a general concept, assets are
rights or claims related to property, both tangible and intangible. Such
rights or claims are enforced by cultural expectations and formal laws
and regulations. Assets can be invested or otherwise made active to
generate returns. Broadly conceived, assets can refer to anything that
has this potential for positive returns. The research demonstrates that
asset ownership is a good thing and that individuals who have assets
live longer, are healthier, and have more education than individuals
without assets. For the purpose of this research, assets are defined as
capacities and resources that enable individuals with disabilities and
their families to identify, choose, and implement activities that
sustain and enhance their quality of life and improve their long-term
economic, social, and psychological well-being. Assets can be separated
into the following three categories that represent direct, indirect, and
community-based incentives:[^288]

**1. Individual financial and nonfinancial assets:** money and savings;
stocks, bonds, and other financial securities; real and personal
property, machines, equipment, tools, assistive technology, durable
household goods, and other components of production.

**2. Human capital assets:** skills, knowledge, and experience gained
from education and training.

**3. Gateway assets:** formal and informal community assets, cultural
capital, and social capital that consist of the value of access to
family and social contacts, education, transportation, communications,
the political process, organizations, health care, and credit and expert
advice (such as tax and financial advice).[^289]

Findings

-   Americans acquire assets through many channels besides work.
    Ownership of assets for many Americans often comes from sources
    other than income from work.[^290] The research on assets describes
    family of origin, geography/environment, education, ethnicity,
    class, inheritance, personality, and even legislation enacted more
    than a hundred years ago, such as the Homestead Act, as strong
    predictors of asset ownership in the 21st century.[^291] More than
    55 percent of people with disabilities are "asset poor" (live at the
    federal poverty level and have only enough resources for three
    months).[^292]

-   People with disabilities often are unemployed or under employed, or
    live with fixed or capped incomes. Examples are the three and a half
    million adults with disabilities receiving federal Supplemental
    Security Income (SSI) benefits equal to monthly incomes of \$512 in
    2000.[^293]

-   The research shows that, fewer than 10 percent of individuals with
    intellectual disabilities and fewer than 50 percent of individuals
    with disabilities are home owners. In reality, many low-income
    Americans survive through substantial help from families, hard work,
    their community and religious affiliations, and income support and
    social services from the government and private charities.[^294]

-   Americans with disabilities represent one-third of American families
    (29 million out of 72 million families) and are likely to be twice
    as likely to be poor compared to their neighbors without
    disabilities.[^295] Individuals with disabilities who are poor
    represent almost 18 percent of the Americans age 5 and older; among
    Americans age 5 and older without disabilities, individuals who are
    poor comprise 11 percent of the population. Twenty-five percent of
    American children with disabilities (ages 5 to 15) live in poverty,
    compared to 15.7 percent of children without disabilities. Americans
    with disabilities between the ages of 16 and 64 make up the next
    largest number of people living in poverty, at 19 percent---nearly
    double the rate of individuals in the same age range without
    disabilities.

-   Americans who live in the South are more likely to be poor and have
    a disability than people living in other locations in the United
    States. Disability prevalence is higher in the South, with two out
    of every five living with a disability; in the other three regions
    of the United States, one in five live with a disability.[^296]

-   American employment opportunities favor individuals without
    disabilities. Seventy-nine percent of working-age men between the
    ages of 16 and 64 are employed, compared to 60.1 percent of working
    age men with a disability. Working-age women without disabilities
    experience employment rates of 67.3 percent, compared to 51.4
    percent for their colleagues with disabilities. The employment rates
    for people with disabilities who were heads of families were 53.3
    percent, compared with 80.7 percent of all people who were heads of
    families.

-   Families with members with a disability had a median income of
    \$39,155 compared with the overall family median income of \$50,046
    for families without members with disabilities. For example,
    families with members with mental disabilities had median incomes of
    \$36,197, and families with members with a sensory or physical
    disability had median incomes of \$36,950.[^297] In 1999, among
    families that had members with a disability, 73.1 percent of the
    families had earnings from wages or salaries, compared to 84.9
    percent of families without members with disabilities. Families with
    members with disabilities were more likely to receive income from
    public programs (42.8 percent of the families that had members with
    a disability received income from Social Security compared to 22.5
    percent of families without members with disabilities).

-   Global demographic changes will impact disability policy in the
    United States. The world's population quadrupled in the 20th century
    and is predicted to grow by 50 percent by the end of the 21st
    century.[^298] Life expectancy in the United States has increased 30
    years in less than a hundred years, with the fastest growing age
    group now in their 80s. Life expectancy for people with disabilities
    has increased as well, and the population of individuals with
    disabilities under age 65 has increased 25 percent. The future
    economics of the country is uncertain and is projected to challenge
    the social system of spending entitlements for individuals with
    disabilities, approaching \$300 billion for 2005.

-   Americans from diverse racial and ethnic backgrounds have a higher
    prevalence of poverty and disability than the general population.
    American Indian and Alaska Native householders made up 38.5 percent;
    for African-American householders the prevalence rate was 35.7
    percent; for non-Hispanic white householders the prevalence rate of
    disability was 27.1 percent; for Asian householders the prevalence
    rate was 26.5 percent; and for Hispanic families the prevalence rate
    of disability was 33.2 percent reporting one or more members with a
    disability.[^299] Some people with disabilities who have low incomes
    have more barriers[^300]^,^[^301] than other people to achieving
    home ownership or accumulating assets.

-   Realizing the American dream of home ownership and economic
    self-sufficiency has not been a reality for most working low-income
    Americans. Outcome data from the American Dream Demonstration, which
    studied the savings behavior and use of financial instruments and
    services of thousands of low-income working Americans, did not
    include account holders with disabilities.[^302]

2E:7A --- Utilization of Tax and Financial Services

Historically, when the tax code was written and federal disability
policy, such as Medicaid and Supplemental Security Disability Insurance,
was drafted, there was no thought that asset development would ever
apply to individuals with disabilities, who were mostly hidden from
society and not in the mainstream workforce. The overarching notion of
disability as limitation and need was the norm, with poverty as its most
outstanding asset well into the second half of the 20th century. Steven
Mendelsohn, a noted attorney and disability tax expert, found that even
today the word *disability* appears most frequently with the word
*death* in the Internal Revenue Code and noted that "Americans should be
embarrassed at reinforcing these associations and recognize the ongoing
harm they do to the contemporary efforts to bring people with
disabilities in to mainstream American life."[^303]

Despite the progress made over the past 50 years in advancing the rights
of individuals with disabilities to be educated, to work, and to live
independently, much progress is still needed. Working Americans with
disabilities are three times as likely to be in poverty as their
colleagues without disabilities. For Americans with disabilities to take
ownership of their futures, the following key factors need to be
addressed:

-   Chronic poverty that promotes exclusion and limits participation in
    mainstream American life

-   Unemployment and underemployment due to the lack of meaningful
    education and training for jobs beyond entry level

-   High school dropout rates that are highest for young men with
    disabilities

-   Lack of access to affordable long-term services and supports for
    everyday living and work

-   Absence of health care providers who understand disability and its
    medical components

-   Lack of housing that is accessible and affordable

-   Lack of transportation that is accessible, reliable, affordable, and
    central to where people with disabilities live

-   Lack of community integration, evidenced by the high prevalence of
    loneliness and isolation experienced by individuals with
    disabilities

-   Outdated disability policy that discourages work and savings

-   Lack of knowledge about the relationship of public benefits to
    earned income and to savings opportunities, such as matched savings
    accounts and the Earned Income Tax Credit

The enduring nature of these chronic conditions results in obstacles to
building income preservation and self-sufficiency for Americans with
disabilities.

Findings

-   Financial institutions have conducted and reported little research
    on the financial service needs, use, and activities of individuals
    with disabilities. Historically, the banking industry has paid
    little attention to disability as a market segment. The ways in
    which individuals with disabilities manage their finances (checking
    and savings accounts), plan for retirement, make investments, and do
    their everyday banking are unstudied.[^304] In addition, little
    information is known about the accessibility of various financial
    services except for the recent evolution of voice-activated ATMs,
    which for the first time in history made banking privacy and
    independence available to millions of Americans who are blind.[^305]

-   The National Federation of Community Development Credit Unions has
    developed a national work committee with aggressive disability
    outreach in order to bring disability awareness and financial
    services and disability education to its national network of more
    than 230 credit unions.[^306]

-   The tax filing behavior and use of the IRS free tax services by
    individuals with disabilities is unstudied. Historically, the IRS
    has not collected data on individuals with disabilities and their
    utilization of and access to a wide array of free tax preparation
    services, which include walk-in clinics, 800 numbers, and Web sites.

-   Americans with disabilities underutilize tax provisions. The
    National Organization on Disability (NOD)/Harris survey found that
    83 percent of people with disabilities never claimed available tax
    credits and or deductions related to work.[^307] Less than half of
    people with disabilities who own homes claim the home mortgage
    interest deduction, often because of their low income, failure to
    itemize, and lack of knowledge.

-   The EITC is a true asset-building opportunity that is underutilized
    by working individuals with disabilities on public benefits. A Ford
    study that examined the needs of taxpayers with disabilities found
    that only 25 percent filed for the EITC and that few understood the
    benefits of filing taxes even when not required to by law.

[]{#__RefHeading___Toc204703694 .anchor}2F -- Housing

Introduction

Being part of the community and living as independently as possible are
among the most important values and goals shared by disability advocates
and people with disabilities and their families. A home of one's
own---whether rented or purchased---is the cornerstone of independence
for people with disabilities. However, across the nation, people with
disabilities face a crisis in the availability of decent, safe,
affordable, and accessible housing. Today, many people with disabilities
still live in large, congregate facilities or other inappropriate places
such as institutions. Approximately 750,000 people with developmental
disabilities live with aging parents (one of whom is over age 65).[^308]
For people who use wheelchairs or other mobility devices, finding
housing with even basic accessibility features (e.g., an entrance with
no steps) ranges from daunting to impossible. This difficulty is
magnified in rural areas where there is a scarcity of any rental housing
and new units rarely are developed. In addition, the designation "for
elders only" of almost half a million units of Department of Housing and
Urban Development (HUD)-funded public and assisted housing over the past
12 years has had a devastating impact on people with disabilities.[^309]

Purpose and Method

The purpose of this section is to examine the evidence-based practices
that demonstrate the impact of housing financial incentives on the daily
lives of individuals with disabilities. The research will include
direct, indirect, and community-based impacts of housing financial
incentives. The examination will address whether housing financial
incentives work better for some individuals with disabilities than for
others; the gaps in access and availability of housing financial
incentives for individuals with disabilities compared to individuals
without disabilities; and what policy changes are needed to expand
utilization of and participation in housing financial incentives for
individuals with disabilities. The findings from this section will be
used in chapter 4 to inform the recommendations for reform that will
include a framework for congressional, legislative, and executive-level
involvement.

2F:1 -- Discrimination against Home Seekers with Disabilities

Overcoming the preconceptions of service providers and housing
professionals regarding the capabilities of people with disabilities has
been a challenge. Often, service providers are accustomed to promoting
supported living programs as the best option for people with
disabilities. In addition, housing agency professionals often have fears
and misconceptions that make them hesitate to work with people with
disabilities.[^310]

Similarly, with respect to the well-established and better-known
criteria for physical accessibility, grounds exist for concern over
whether the value to people with disabilities is being maximized
regarding the housing subsidies in question. Without attention to
needs-based program limitations on the ability of potential purchasers
to aggregate down payments or meet even subsidized mortgage commitments,
and without attention to integration of key infrastructural elements
such as transportation, accessible commercial facilities, health care,
or other community-based resources, use of subsidies may be limited.
Faced with a perceived lack of coordination among housing,
transportation, economic development, and health care planners and
programs, a possible question is whether the number of individuals with
disabilities who can benefit from these subsidies is as large as it
might be.

Findings

In June 1999 the U.S. Supreme Court in the *Olmstead v. L.C*. decision
made it clear that ADA protects people with disabilities from being
confined unnecessarily in restrictive settings such as nursing homes or
institutions.[^311] The ADA "integration mandate," with the support of
President George W. Bush and his Administration, requires each state to
develop "comprehensive effective working plans" to expand the
availability of housing and other community-based supports. Such
planning efforts must respond to the needs of individuals with
disabilities both at risk of as well as living in public institutions
and nursing homes.[^312]

In *Discrimination against Persons with Disabilities: Barriers at Every
Step*, researchers from The Urban Institute of Washington, DC, found
widespread discrimination against individuals with disabilities seeking
rental property.[^313] The report states, "Deaf testers seeking rental
housing were significantly less likely to be able to speak to a housing
provider than were their hearing counterparts about available
units."[^314]

In addition, the study found that "16 percent of rental housing
providers who indicated that they had units available for the wheelchair
user refused to make or allow for reasonable unit modifications, and
about 19 percent of people who had on-site parking refused to make the
reasonable accommodation of providing a designated accessible parking
space."[^315] The researchers also found that wheelchair users
experience significant levels of adverse treatment with respect to
housing availability. In 5 percent of tests, the rental housing provider
told the tester without an obvious disability that a unit was available
while telling the tester with a disability that no units were
available.[^316]

Nationwide, over 4 million individuals with disabilities depend on SSI
as their sole source of income (\$552/month, 2003), pricing them out of
housing markets. Since 1992, Congress has authorized housing agencies to
exclude people with disabilities from certain properties designated as
housing for elders only, resulting in a loss of over 300,000 units
nationwide. Federal budget authority almost doubled from 1976 to 2002
(\$1.2 trillion to \$2.1 trillion), while HUD budget authority declined
by 41 percent. In many local communities, housing subsidies (rental
vouchers) go unused because of escalating rental rates and landlord
disinterest.[^317]

In a 2004 report funded by the HHS Center for Mental Health
Services/Substance Abuse and Mental Health Services Administration
(CMHS/SAMHSA) Bazelon Center for Mental Health Law researchers found
that the rental market has been unresponsive to the needs of home
seekers with psychiatric disabilities ever since the advent of
deinstitutionalization in the 1960s.[^318] The report claims that "In
many states, people with mental disabilities have been, and continue to
be restricted to the least attractive parts of a community---to
neighborhoods where housing often is relatively inexpensive and
unsafe."[^319]

The report also contends that little has changed in the "not in my back
yard" (NIMBY) attitude.[^320] It states that the privatization of mental
health housing has had effects that "will not be easily rectified
without a major infusion of federal and state funding and an overhaul in
the way states regulate these homes and coordinate agencies involved in
human services delivery."[^321]

For people with disabilities, discrimination plays a significant if
unspecified role in obtaining housing. Every two years, the Technical
Assistance Collaborative (TAC) and the Consortium for Citizens with
Disabilities (CCD) Housing Task Force publish a study comparing SSI
incomes with fair market rents. What TAC found in the latest study was
the housing crisis for people with disabilities receiving SSI is worse
than ever.[^322] People with disabilities receiving SSI have extremely
low incomes. SSI as income equals just 18 percent of median income,
nationally. A person receiving SSI will need to pay 105 percent of his
or her income to afford a modest one-bedroom apartment. Therefore, there
clearly is a need for some type of government services. For a studio
apartment, the news is not much better: a person receiving SSI would
need to pay 89 percent of his or her income.[^323] In some urban areas,
where rents are extremely high, it is even worse. In some rural areas
the situation is not as bad, but housing still is not affordable.[^324]

The 2002 National Cooperative Bank study[^325] found not one housing
market in the country where a person receiving SSI could rent an
apartment affordably. "Affordably" means that a person pays 30 percent
of his or her income on rent and utilities. The income that SSI provides
is equal to a wage of approximately \$3.43 an hour. The researchers also
found that rent rose twice as fast as the SSI cost of living. The bottom
line is the only way a person with a disability can bridge this
affordability gap is to access housing subsidies.[^326]

2F:2 -- HUD Programs

There are two types of federal affordable housing programs. The first
are housing subsidy programs that provide rent or operating support to a
project or apartment that typically allows the tenant to pay between 30
to 40 percent of income on rent. The second are capital programs that
provide resources to help fund capital development of affordable
multifamily rental projects. Some of these programs provide either
subsidy or capital funding. Capital programs include programs covered
under the consolidated plan requirements of HUD. These programs provide
block grants to states and Local Housing Authorities through the HOME
Program, the Community Development Block Grant Program, the Housing
Opportunities for Persons with AIDS Program, and the Emergency Shelter
Grants Program. An additional capital program is the Low-Income Housing
Tax Credit Program. It provides tax credits that developers can use to
raise equity to fund the development of affordable rental housing.[^327]

Findings

-   The largest housing program, Housing Choice Voucher Program---a
    Section 8 program---is funded at approximately \$800 million a year
    and administered by 2,600 Public Housing Agencies (PHAs) nationally.
    The program is available in every locality from either a state,
    regional, or local PHA. It provides participants with a rent subsidy
    to identify a house in the local market. The subsidy amount is based
    on the household's income and the cost of housing in the local
    market. Typically, the participant will pay between 30 and 40
    percent of income on rent. The PHA will pay the difference between
    the established rent and the tenant's rent share.[^328]

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-   During the past few years, many PHAs have had a poor success rate in
    using their vouchers. HUD has implemented a policy pushing PHAs to
    use it or lose it. This gives the federal entity an opportunity to
    partner with PHAs, because they are looking for eligible people to
    use these subsidies. In addition, PHAs that do not have a high
    utilization rate, defined as 97 percent or greater, are not eligible
    to apply for new vouchers. The utilization rate is the percentage of
    vouchers that the PHAs have under lease.[^329]

-   Since 1997, HUD has issued more than 60,000 new vouchers, which are
    targeted to people with and without disabilities within programs
    managed at the state or local level. More than 470 PHAs throughout
    the country have targeted the disability vouchers.[^330]

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-   To the extent that fair housing laws are vigorously enforced,
    including through the levying of maximum fines for their violation,
    fair housing laws can represent a financial incentive to people with
    disabilities. Faced with a real risk of incurring costs for
    violating the law, building designers, owners, rental agents, and
    others are less likely to engage in discriminatory practices. In
    turn, the supply of available housing is be expanded, hence bringing
    down the price.[^331]

-   Virtually all adults with disabilities receiving SSI benefits who do
    not have government housing assistance qualify under federal
    guidelines as households with "worst case" housing needs. Worst case
    housing needs are defined as the need to pay more than 50 percent of
    income for housing costs, or the need to live in severely
    substandard housing. A 1996 HUD report indicates that people with
    disabilities are more likely than elders or family households to
    experience both these housing problems.[^332]

-   The information in *Priced Out* in 1998[^333] is directed at federal
    housing policymakers and the nation's affordable housing officials.
    During the early 1990s, the Federal Government made no effort to
    assess accurately the housing needs of people with disabilities.
    Recent estimates have been more realistic, including numbers in a
    1999 HUD report which documented that 25 percent of the 5.4 million
    households in the United States with worst case housing
    needs---approximately 1.4 million households---were people with
    disabilities.[^334] Statistics published by HUD in March 1998
    document that people with disabilities assisted through HUD programs
    have an average annual income that is about 20 percent less than the
    income of elderly households receiving HUD assistance.[^335]

-   Section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f)
    authorizes housing assistance to aid families with low income in
    renting safe and decent housing. Housing assistance payments are
    limited by fair market rents (FMRs) established by HUD for different
    areas. In the Housing Choice Voucher Program, the FMR is the basis
    for determining the "payment standard amount" used to calculate the
    maximum monthly subsidy for an assisted family.[^336] In general,
    the FMR for an area is the amount that would be needed to pay the
    gross rent (shelter rent plus utilities) of privately owned, decent,
    and safe rental housing of a modest (nonluxury) nature with suitable
    amenities. In addition, all rents subsidized under the Housing
    Choice Voucher Program must meet reasonable rent standards.

-   To a limited extent, federal housing subsidies still include some
    rental subsidies that allow people with low income, and in some
    cases expressly allow people with low income who have disabilities,
    to pay for rental housing that they could not otherwise afford. The
    role of such subsidy and voucher programs has steadily
    declined.[^337] Even when such programs were a more prominent
    component of national housing policy, and to the extent that they
    remain in use in conjunction with other programs,[^338] recognition
    of the issues facing people with disabilities appears to have
    focused on only one dimension of access. That is to say, while
    economic eligibility standards recognize the limited income and
    resources of many people with disabilities, there has never been in
    the Section 8 (or Section 811) program any recognition that factors
    other than income, age, or family size need to be taken into account
    in determining the amount of subsidy or the kind of housing that
    would be appropriate. Thus, these programs have not included
    sufficient elasticity to reflect possible needs for additional
    space, or the heightened costs imposed on affordability by the
    scarcity of accessible dwellings.[^339] It seems likely that the
    value of direct financial incentives, or of indirect incentives, has
    been significantly undermined or limited by this failure.

-   While it is clear that people with disabilities are represented
    among people with low income, whose access to housing has been
    enhanced by this financial incentive to a third party, nothing in
    the law itself rewards developers for designing or building in ways
    that would make facilities more accessible than what the law
    minimally requires. Many approaches could be fashioned that,
    consistent with well-understood precepts of tax administration,
    would encourage accessibility and heightened outreach to people with
    disabilities.

2F:3 -- The Role of Medicaid and Social Security in Combining Housing
and Supportive Services for Individuals with Disabilities

In response to the increasingly higher costs of nursing facility care
and the institutional bias that was part of the initial authority, home
health services in 1970 became a mandatory federal benefit.[^340] In
1981, Congress authorized the Home and Community-Based Services waiver
authority.[^341] The Section 1915(c) waivers, named after the section in
the Social Security Act that authorized them, allows states to provide
services, not usually covered by the Medicaid Program, to keep a person
from being institutionalized. Home and Community-Based Services (other
than room and board) for specific defined eligible populations are now
part of waiver programs in all 50 states.

In addition to the HCBS waiver authority, there is a Section 1115 waiver
authority. Section 1115 of the Social Security Act provides CMS broad
authority to support experimental, pilot, or demonstration projects to
test new ideas related to the financing and delivery of medical and
supportive services.[^342] 

2F:4 -- Limited Equity Cooperatives

Limited equity cooperatives (LECs) are an option for populations that
require an alternative to home ownership or renting. Cooperative housing
can create a sense of community without the negative impacts of
institutionalization or group living.[^343]

Findings

-   In a report by the City University of New York Graduate Center, the
    following criteria were found to be necessary for the success of
    LECs:[^344]

1\. Sponsoring organizations, financial institutions, and regulatory
bodies must develop offering plans, purchase and maintenance terms, and
governance and taxation structures that make the LEC investment a
prudent one for low-income families.

2\. Conveying property in good condition is essential. When this is not
feasible, property should be conveyed only to residents who want to
purchase and are prepared to make the necessary sacrifices.

3\. Shareholder education and leadership development training are
critical and must continue throughout the life of a LEC.

4\. The specific housing market and economic conditions of an area
dictate different regulatory and financing arrangements.

-   In one study in New York City that surveyed 3,000 residents, LECs
    were found to be the most "reasonable" in cost when quality of
    housing was considered. Among co-op members, 7 out of 10 members
    found their monthly costs to be "very reasonable." LECs scored
    highest on ratings of "repair quality and management
    characteristics, including quickness, durability quality
    information, availability and employees."[^345]

2F:5 -- Ownership Programs

The programs that today chiefly characterize federal housing policy, as
described in detail in several NCD reports over the past five
years,[^346] emphasize home ownership as the primary goal of federal
involvement, and as the primary measure of policy success. These
programs take two basic forms. They include programs, many administered
under Section 202, for the construction or renovation of housing that is
then made available to appropriate buyers under variously subsidized
conditions. In some cases the programs also involve direct subsidies or
rent-to-own demonstrations. For many people with disabilities, a lack of
financial resources, restrictive social service policies, and
accessibility needs put home ownership out of reach.

Findings

-   The HomeChoice initiative, a program recently developed by the
    Federal National Mortgage Association (Fannie Mae), is intended to
    help individuals with disabilities overcome these obstacles and
    achieve dreams of owning a home. HomeChoice has made grants of \$50
    million over three years to 11 states and the District of
    Columbia.[^347]

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-   HomeChoice is an experimental mortgage product using modified
    lending standards developed specifically for the initiative.
    Borrowers who are eligible for the program are people with
    disabilities, including individuals who have court-appointed
    guardians and families who have a member with a disability living
    with them.[^348]

-   Alabama, California, the District of Columbia, Massachusetts,
    Michigan, Minnesota, Missouri, New Mexico, New York, Oregon,
    Washington, and Texas received grants from Fannie Mae for HomeChoice
    projects. Each has created its own policies and procedures, and has
    structured its program somewhat differently. Some focus on serving
    particular disability communities, and certain programs provide only
    financing for home renovation---not new construction projects.[^349]

-   Common to each project, however, is the involvement of a coalition
    of representatives of the housing and social service fields, and
    from the public, private, and nonprofit sectors. The coalitions pool
    their resources to help borrowers obtain financial assistance for
    down payments, closing costs, and accessibility or general repairs;
    they also provide foreclosure prevention help and any necessary
    social services. In addition, each program provides home ownership
    education and counseling to prepare borrowers for the responsibility
    of owning a home.[^350]

2F:6 -- Policy Changes to Expand Utilization of and Participation in
Housing Financial Incentives for Individuals with Disabilities

Findings

-   Many people with severe disabilities require supports or units with
    a higher degree of physical accessibility than is available in the
    private market. By limiting Section 811 funding solely to
    tenant-based vouchers, the Administration proposes a major change in
    the targeting of the Section 811 Program---away from people with
    severe disabilities, who have the most significant housing needs.
    This proposal will relegate these individuals to institutions,
    nursing homes, or homeless shelters.[^351]

-   At a disability policy seminar in 2005 titled "Housing for People
    with Disabilities: The Crisis," participants included The Arc, the
    American Association on Mental Retardation (now the American
    Association on Intellectual and Developmental Disabilities), the
    Association of University Centers on Disabilities, United Cerebral
    Palsy, and the National Association of Councils on Developmental
    Disabilities. Participants proposed encouraging Congress to increase
    Section 811 funding by at least \$129 million in FY 2006 to restore
    the program to its FY 2004 funding level and to require HUD to
    reinstate the capital advance/production component of the
    program.[^352]

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-   In addition, participants examined the Administration's FY 2006
    budget requests: a total of \$15.9 billion for the Section 8 Housing
    Choice Voucher Program, \$14.1 billion of which is for voucher
    renewals. No funding is proposed for new/incremental vouchers
    targeted to people with disabilities. This request will fund
    approximately 2 million vouchers---only 94 percent of the vouchers
    currently administered by PHAs. Full funding would allow PHAs to use
    all vouchers authorized by Congress. Prior to FY 2004, Congress
    fully funded all vouchers, including (from 1997 to 2001) vouchers
    targeted to people with disabilities. Since 2004, PHAs have not had
    sufficient funding to use all of their authorized vouchers.[^353]

-   The seminar group made the following recommendations to Congress:

> 1\. Increase funding for the Section 811 Supportive Housing for
> Persons with Disabilities Program by at least \$129 million to restore
> the program to its FY 2004 level (\$249 million) and require HUD to
> reinstate the program's capital advance/production component.
>
> 2\. Ensure that the Housing Choice Voucher Program is adequately
> funded so that current Section 8 voucher holders will retain their
> vouchers.
>
> 3\. Oppose any proposals that would block-grant the Section 8 Housing
> Choice Voucher Program.

-   Ann O'Hara and Emily Miller, in their study *Going It Alone: The
    Struggle to Expand Housing Opportunities for People with
    Disabilities,* [report their
    findings[^354]](http://www.c-c-d.org/task_forces/housing/going_alone.htm)
    about needs pertaining to state and local funding priorities, PHAs,
    information sharing on federal housing programs, home ownership, and
    expanding access to affordable housing. Among the findings are the
    following points:

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-   State and local housing officials do not give a high priority to the
    housing needs of people with disabilities. Only 10 percent of
    state/local housing officials, 18 percent of PHAs, and 26 percent of
    state/local housing finance agencies have made housing for people
    with disabilities a high priority for funding in their
    communities.[^355]

-   Most PHAs are not working with the disability community to expand
    housing options. HUD data indicate that only 10 percent of all PHAs
    collaborated with the disability community each year to seek new
    Section 8 vouchers for people with disabilities.[^356] In addition,
    the HUD data showed the following:

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-   Most disability organizations have not established relationships or
    partnerships with affordable housing providers and funders. Only 16
    percent of home ownership coalitions and only 22 percent of CCD
    members and affiliates had formed partnerships with PHAs to expand
    access to Section 8 vouchers. On a more positive note, 48 percent of
    home ownership coalitions serving people with disabilities had
    formed partnerships with government and nonprofit housing
    agencies---progress that should eventually improve the outcomes of
    HomeChoice and Home of Your Own coalitions.

-   The disability community's knowledge of key federal housing programs
    and policies that can assist people with disabilities is very
    limited. Only 14 percent of CCD members and affiliates have an
    understanding of HUD regulations, only 19 percent know about the PHA
    Plan and its impact on the Section 8 Program, and only 41 percent
    know that Section 8 rent subsidies can be used to expand home
    ownership as well as rental housing opportunities. On a more
    positive note, 62 percent of CCD members and affiliates know that
    new Section 8 vouchers are available to help people with
    disabilities.

-   The disability community has very limited knowledge of Fannie Mae
    housing programs targeted to people with disabilities. Most
    organizations were not aware of the full array of Fannie Mae
    products available to assist people with disabilities, including
    HomeChoice, Community Living Program, and Retrofitting Mortgage. In
    fact, only 9 percent knew about all three products: 27 percent knew
    only about HomeChoice, 3 percent knew only about the Community
    Living Program, and 2 percent knew only about the Retrofitting
    Mortgage.

-   Many disability organizations do not understand how participation in
    HUD's Consolidated Plan process can help expand home ownership and
    rental housing for people with disabilities. At the time of the
    survey, only two home ownership coalitions had assisted 60 or more
    households with disabilities to purchase a home. Both these
    coalitions have the active participation of state and local housing
    officials, housing counseling agencies, and private lenders in the
    coalition model. The majority of coalitions had assisted fewer than
    30 households, and two were just getting started and working to help
    their first household.** **

-   Most home ownership coalitions serving people with disabilities have
    achieved only modest results in terms of the number of people who
    have become homeowners.

-   With more housing knowledge, capacity, and technical assistance,
    disability organizations can help expand access to affordable
    housing. Of the 21 disability organizations that had learned how to
    apply for HOME or Community Development Block Grant funds, 14
    reported success---a 67 percent success rate. A similar rate (56
    percent) was achieved by disability organizations seeking Federal
    Home Loan Bank Affordable Housing Program funds for down payment
    assistance or rental housing production. This finding underscores
    the future potential for better housing outcomes from within the
    disability community, provided their housing knowledge and capacity
    issues can be addressed.[^357] 

[]{#__RefHeading___Toc204703695 .anchor}2.3. Conclusion

Chapter 2 has presented an overview of findings from the literature and
analyzed the state of current research and the impact on existing
federal programs to promote enhanced independence and community
participation for people with disabilities through direct and indirect
financial incentives. The review of the literature on what is working
and changes that are needed to advance self-sufficiency for the target
population sets the stage for the design of a 21st century policy
framework that maximizes the use of financial incentives to promote
changes in behavior at individual, family, and community levels.

What is perhaps most striking is the paucity of evidence-based research
on cost-benefit calculations, which would justify continuation of
progressive public policies and the improvement and adjustment of other
public policies that serve as barriers to the advancement of social and
economic inclusion in mainstream community life for individuals with
disabilities and their families. Little effort, if any, has been focused
on analyzing and calculating the benefit of indirect financial
incentives that make communities more livable for everyone. The
intersection of universal design of housing, education, transportation,
employment, and technology access and use that would benefit people with
and without disabilities in a "livable community" is not yet a focus of
evidence-based research design. Little is understood of costs saved in
individual social programs as a result of the livable community
construct, and even less is known about the cost-benefit ratio for
people with disabilities.

Finally, the new tools and strategies of the past 20 years, such as the
EITC, IDAs, and financial education, developed by Congress to help
workers with low incomes, are just beginning to be marketed through
outreach to people with disabilities.

The results describe financial disincentives and other federal tax and
social policies that are inconsistent with the principles of ADA and the
focus of this study. To improve economic status and community
participation for people with disabilities, all existing policy levels
must be evaluated based on the preferred valued outcomes of
independence, inclusion, and the advancement of economic freedom.

[]{#__RefHeading___Toc204703696 .anchor}Chapter 3: Research of Promising
State Innovations

[]{#__RefHeading___Toc204703697 .anchor}Introduction

In creating a 21st century framework for federal authorized direct and
indirect financial incentives to positively impact people with
disabilities and their families, it also is important to examine
innovations that are being implemented by state governments. States in
the past 10 years have become important originators of social policy
reforms that respond to challenges related to affordable housing,
welfare and work, access to health care, and transportation. The purpose
of this chapter is to identify, document, and assess selected promising
state innovations in policy design and implementation of direct and
indirect financial incentives that are contributing to improved social
and economic participation in community life for individuals with
disabilities and their families.

Each state-authorized program was selected according to four criteria:
(1) each of the selected state initiatives was authorized by the state
legislature and as a result has a clear statutory authority; (2) each
state program shows potential for replication by other states and at a
federal level; (3) the selected program responds to a different element
of the challenges to facilitate a more advanced social and economic
status for individuals with disabilities and their families; and (4)
each selected state has adopted policy that may exist in other states.
However, the six states that were selected have program elements that
are unique in terms of public and private participation and the
leveraging of resources to compound the benefits to the individual and
family, the community, and the state.

Table 1 identifies the six selected states---Louisiana, Missouri,
Wisconsin, Maryland, Kentucky, and Washington---the program area,
legislative authority, administering agency, year of implementation, and
types of incentives.

Table 1: Study States

+----------+-------------+------------+-----------+--------+---------+
| State    | Program     | L          | Admi      | Year   | Type of |
|          |             | egislation | nistering | E      | In      |
|          |             |            | Agency    | nacted | centive |
+----------+-------------+------------+-----------+--------+---------+
| L        | Education   | S.B. 690   | Louisiana | 1995   | Direct  |
| ouisiana |             |            | Tuition   |        |         |
|          | Student     | Act 332    | Trust     |        |         |
|          | Tuition     |            | Authority |        |         |
|          | Assistance  | S.B. 271   | (LATTA)   |        |         |
|          | and Revenue |            |           |        |         |
|          | Trust       | P.L.       |           |        |         |
|          | (START)     | 174-1997   |           |        |         |
|          | Savings     |            |           |        |         |
|          | Program     |            |           |        |         |
+----------+-------------+------------+-----------+--------+---------+
| Missouri | Long-Term   | S.B. 721   | Missouri  | 2000   | Direct  |
|          | Services    |            | Assistive |        |         |
|          | and         | P.L.       | T         |        |         |
|          | Supports    | 191-862    | echnology |        |         |
|          |             |            | (MoAT)    |        |         |
|          | Assistive   |            | Council   |        |         |
|          | Technology  |            |           |        |         |
|          | Program     |            |           |        |         |
+----------+-------------+------------+-----------+--------+---------+
| W        | Employment  | Act 9      | Wisconsin | 2000   | Direct  |
| isconsin |             | (1997)     | Medicaid  |        |         |
|          | Medicaid    |            |           |        |         |
|          | Buy-In      | A.B. 152   |           |        |         |
|          | Program,    |            |           |        |         |
|          |             |            |           |        |         |
|          | also        |            |           |        |         |
|          | called:     |            |           |        |         |
|          | Medicaid    |            |           |        |         |
|          | Purchase    |            |           |        |         |
|          | Plan (MAPP) |            |           |        |         |
+----------+-------------+------------+-----------+--------+---------+
| Maryland | Tra         | H.B. 758   | Maryland  | 2001   | In      |
|          | nsportation |            | Mass      |        | direct/ |
|          |             | P.L.       | Transit   |        | Co      |
|          | Statewide   | 106-417    | Admin     |        | mmunity |
|          | Special     |            | istration |        | Based   |
|          | Tra         |            | (MTA)     |        |         |
|          | nsportation |            |           |        |         |
|          | Assistance  |            |           |        |         |
|          | Program     |            |           |        |         |
|          | (SSTAP)     |            |           |        |         |
+----------+-------------+------------+-----------+--------+---------+
| Kentucky | Housing     | H.B. 289   | Kentucky  | 1993   | I       |
|          |             |            | Housing   |        | ndirect |
|          | Universal   | H.B. 382   | Co        |        |         |
|          | Design      |            | rporation |        |         |
|          | Program     |            | (KHC)     |        |         |
+----------+-------------+------------+-----------+--------+---------+
| Wa       | Asset       | S.B. 5469  | Office of | 2000   | Direct  |
| shington | Development |            | Trade and |        |         |
|          |             | WAC        | Economic  |        |         |
|          | Individual  | 38         | De        |        |         |
|          | Development | 8-470-0045 | velopment |        |         |
|          | Accounts    |            | (OTED)    |        |         |
+----------+-------------+------------+-----------+--------+---------+

All the state programs explained in this chapter have the potential for
expansion and replication to better address each of the life domains of
individuals with disabilities. More detailed information about each
state innovation is available via the NCD Web site:
[www.ncd.gov](http://www.ncd.gov/). An overview of each program is
presented here.

[]{#__RefHeading___Toc204703698 .anchor}3.1. Louisiana State Innovation

Louisiana's Student Tuition Assistance and Revenue Trust (START) Savings
Program encourages families to save for the postsecondary education of
their children and grandchildren. Parents, grandparents, and legal
guardians may establish a college savings account to benefit their child
or grandchild.[^358] The feature that makes the START Savings Program
unique among savings plans is that, for the average family that has less
than \$100,000 in annual income, the State of Louisiana will award an
incentive to save by matching a percentage of the family's annual
deposits. Deposits into individual accounts are pooled, invested, and
professionally managed by the state treasurer.[^359] This is an
important gateway to an education for individuals with disabilities,
whose finances often are stretched to cover additional health care
costs.

The problem for many Americans is that escalating tuition costs make it
increasingly difficult to access a college education. Over the past 10
years, the price of a year of college at a four-year public institution
has increased 36 percent---10.5 percent in 2006 alone.[^360] Affording
these costs is especially challenging for families with few resources.
Many individuals with disabilities and their families are forced to
redirect resources to health care and other supports. Programs like
START can provide a vehicle to finance college for people with
disabilities who might otherwise be priced out of higher education.

Obtaining a postsecondary education usually is not only a necessary step
in securing a well-paying job, but often is a vital step in achieving
security, acquiring assets, and building wealth. For example, college
graduates are more likely to have jobs with benefits, such as health
insurance and retirement plans---two key pillars of economic
well-being.[^361] Therefore, financial access to higher education is
crucial in enabling people with disabilities to gain independence.
Louisiana has led the nation in access to higher education by offering
matching funds for its 529 Plans, and by promoting inclusion of
beneficiaries who most need tuition assistance. Other states can greatly
assist their residents with disabilities through a similar approach to
college savings. The matched savings features of the program also could
be adopted at a national level.

[]{#__RefHeading___Toc204703699 .anchor}3.2. Missouri State Innovation

Missouri has a well-developed and well-funded assistive technology
program as part of its long-term services and supports initiative for
individuals with disabilities. The program includes ongoing training and
accountability aspects, as well as the supports and services. The cost
of the program is spread to all users of communicative devices through a
tax to general phone services to cover the training, maintenance, and
hardware to make the assistive technology program effective.[^362]

Missouri has developed a complex network of loan programs and standards
for entities accepting state funds to support full access to assistive
technology for individuals with disabilities. On a national level, the
expanded role of state Public Service Commissions could be authorized
with adoption of the broader mandate to promote telecommunications and
Internet access with appropriate products and services. The linkages to
the entity in each state authorized by the federal Assistive Technology
Act and the state Public Service Commissions also merit further
exploration of ways to enhance the social and economic freedom of
individuals with disabilities.

[]{#__RefHeading___Toc204703700 .anchor}3.3. Wisconsin State Innovation

Wisconsin's Medicaid Buy-In Program differs from other states' plans in
that Wisconsin provides an incentive for continued work effort by
providing Medicaid Buy-In Program coverage during temporary periods of
unemployment and before an individual finds a job as well. Wisconsin
calculates separate payment obligations for earned and unearned income,
with proportionately smaller premiums assessed on income derived from
work. The fear of losing Medicaid coverage makes many people with
disabilities reluctant to find employment, despite the greater financial
security it may offer them. Wisconsin's program allows individuals to
work and keep their health care, which has led to a large number of
participants' enrolling in the program.

The primary strategies available to control costs within a Medicaid
Buy-In Program are the following:[^363]

1\. Limit enrollment to people with higher levels of earnings.

2\. Establish an unearned income limit.

3\. Impose premiums or other cost sharing.

Many states, Wisconsin included, have been actively developing programs
to promote competitive employment for people with disabilities. Buy-In
programs (enabling people with disabilities who have increased earned
income to obtain Medicaid eligibility) have become a key component of
state efforts. States are implementing Buy-In programs (and related
programs and supports) not as welfare programs, but as programs that
help states make productive use of all their human capital resources.
Many policymakers support Buy-In programs as a means to increase the
participation of workers with disabilities as productive citizens of
states. Such programs are seen as a means to "enhance a state's economic
status; not simply as a means to enhance access to health care."[^364]

The Wisconsin-proposed waivers from SSA offer important new ideas about
potential strategies to increase income preservation and asset growth
for individuals with disabilities who return to work. Evaluation of
these approaches to advance self-sufficiency and evidence of favorable
outcomes will offer important new ways to encourage federal adoption and
national replication.

[]{#__RefHeading___Toc204703701 .anchor}3.4. Maryland State Innovation

Maryland's Statewide Special Transportation Assistance Program (SSTAP)
is an example of an effective approach to the transit and paratransit
needs of individuals with disabilities. In many areas across Maryland,
jobs and job seekers are far apart, often across county and city lines.
This gap is even wider for people with low income. In addition, many
companies across the state face a shortage of workers, especially
entry-level employees.[^365]

With this in mind, the Maryland Mass Transit Administration (MTA), in
conjunction with Governor Paris Glendenning's Coordinating Committee for
Human Services Transportation, worked with local jurisdictions to
develop Maryland's Job Access and Reverse Commute Program. This program
has allowed the state to develop transportation services to meet local
community needs and link workers with job opportunities. A map
describing projects funded through the state's Job Access and Reverse
Commute Program is available.[^366]

Through the SSTAP, Maryland has taken steps to greatly improve
paratransit service for residents with disabilities, while exploring
methods to reduce reliance on paratransit by enabling greater access to
fixed-route transit. Maryland's approach to transportation for
individuals with disabilities increases their independence and access to
means of asset development, including education and employment.

[]{#__RefHeading___Toc204703702 .anchor}3.5. Kentucky State Innovation

Kentucky has taken a "carrot and stick" approach to its housing policy
through its Universal Design Program. In order to receive funding or
subsidies from the Kentucky Housing Corporation (KHC), builders are
required to follow guidelines designed to ensure accessibility and ease
of movement for individuals with mobility challenges.

KHC's universal design policies have wide support from the legislature,
and from the people they are designed to serve. People with disabilities
have a wide range of housing needs and preferences. In recent years,
people with disabilities and their advocates, supported by the U.S.
Supreme Court's 1999 *Olmstead v. L.C.* decision, have focused on the
right of people with disabilities to live as independently as possible.
This has led to increased targeting of tenant-based vouchers (both
federal vouchers and vouchers secured by the HOME Program) for people
with disabilities. States can better serve the housing needs of their
citizens by leveraging funding and tax credits as incentives to build
accessible housing, following Kentucky's model of universal design.

At a federal level, lessons learned from Kentucky's pairing of financial
incentives with universal design requirements for single and multifamily
development could be adopted for nationwide replication. HUD, which
funnels housing financing to the states, and the U.S. Treasury, which
distributes low-income housing tax credits to the states, could require
the adoption of universal design standards.

[]{#__RefHeading___Toc204703703 .anchor}3.6. Washington State Innovation

Washington is the first state in the nation to specifically address the
needs of individuals with disabilities in its Individual Development
Accounts legislation. The State of Washington matches savings that are
deposited into IDAs by individuals with low income. The state includes a
provision for people with disabilities by allowing the funds to be used
for assistive technology.

By allowing IDA funds to be used for assistive technology, the state
supports the asset development of individuals with disabilities,
enabling them to earn and save income. It is necessary that IDA dollars
not become a penalty against Medicaid and SSI eligibility in order for
the program to be widely utilized by people with disabilities. The
Washington State Legislature recently approved amendments to the state
IDA Program. These amendments increase funding and expand the assets for
which an individual can save, to include assistive technology and
automobiles. The Washington Department of Vocational Rehabilitation will
be requesting a waiver from Social Security so that non--Assets for
Independence Act IDAs will not be considered as resources, nor will they
affect benefits for individuals on Supplemental Security Income.[^367]

More research needs to be conducted on the success of state IDA programs
in fostering financial stability and independence for people with
disabilities. States can replicate Washington's program by explicitly
including people with disabilities among other groups that are
disproportionately affected by poverty in their IDA programs.

At a federal level, a compelling case can be made to amend the Assets
for Independence Act to allow for the additional asset-building goals of
purchasing technology, funding transportation, or paying for home
improvements. These goals would enhance the level of participation of
people with disabilities.

[]{#__RefHeading___Toc204703704 .anchor}3.7. Conclusions

The innovative state strategies of direct and indirect financial
incentives presented in this chapter offer diverse opportunities to
establish or amend existing federal policies based on current
experience. It is clear that no single solution effectively addresses
all life domains for individuals with disabilities. It is imperative to
find ways to combine these innovative state policies and programs to
allow for greater financial security, improved access to housing and
education, better health care, and sufficient transportation to promote
community participation.

Each state above has embraced principles of self-determination with
varying degrees of choice and control. This has led to expanded
opportunity for greater numbers of people to manage and direct public
and private resources. These six states were selected because they have
an ongoing, intensive, comprehensive planning process that involves a
full range of stakeholders---from state officials to providers to
advocates and people with disabilities themselves---and the commitment
and support of the governor and legislature.

Each state has recognized the importance of financial incentives to
change thinking and motivate a change in behavior by multiple
stakeholders. For the individual and family, direct financial incentives
are offered to stimulate saving for lifelong housing needs and asset
development that will advance economic status and community
participation. For developers and a range of service providers,
financial incentives are offered that will change the design of housing
and transportation systems. These financial incentives will indirectly
benefit individuals with disabilities and their families and also
enhance opportunity for social, civic, and economic engagement in more
livable communities.

An equally compelling finding from the analysis of the six state
examples is the variety of approaches to funding the financial
incentive. In a majority of the examples, there is recognition of the
merits of cost sharing to accomplish the identified social objective. In
each of the examples, the state will allocate public resources
contingent on leveraging individual or other private resources. Whether
the vehicle is an individual account for education or is the buy-in to
continued access to Medicaid benefits, there is a clear intent of shared
responsibility in the interest of the individual, family, and public.

The Missouri example is yet another alternative approach in the public
interest that spreads the cost of communication access across all users
of telecommunications services to benefit individuals with disabilities
who have additional needs. Finally, Kentucky, using a "carrot and stick"
approach, succeeds in advancing public policy to expand availability of
accessible housing by tying the requirements to public financing for
development.

As key stakeholders examine NCD's proposed conceptual framework for the
21st century of direct, indirect, and community-based financial
incentives to advance the social and economic freedom of Americans with
disabilities, the state lessons in innovative policy and program
development will offer important choices for adoption to stimulate
national replication.

[]{#__RefHeading___Toc204703705 .anchor}Chapter 4: A New Financial
Incentive Framework for Individuals with Disabilities: A Review of the
Proposed Framework, Application to Case Studies, and Cost-Benefit
Analysis

[]{#__RefHeading___Toc204703706 .anchor}4.1. Introduction to a
Conceptual Framework

In 2004, the President's Committee for People with Intellectual
Disabilities explained the following in its *Report to the President*:

Historically, public assistance in exchange for enforced poverty and the
absence of freedom is a bad deal---one that fails all parties to the
arrangement; people with intellectual disabilities, their families and
the American people. A great challenge before the United States
government and society is to will a public safety net that permits
people with intellectual disabilities to pursue economic and personal
freedom and leads them to achieve the goal in a systematic way.[^368]

The research conducted for this study on financial incentives reviewed
and analyzed public policy across all the major life domains: education,
employment, transportation, health care and long-term services and
supports, income maintenance and asset development, and housing. In each
area, the research team focused on barriers and facilitators to the
advancement of greater economic independence and a better economic
future for individuals with disabilities and their families. The
analysis produced seven overarching findings that provide a platform to
develop a 21st century conceptual framework in keeping with the core
principles of ADA to promote full community participation, independent
living, and economic advancement.

[]{#__RefHeading___Toc204703707 .anchor}Seven Key Findings Pertaining to
the Proposed Conceptual Framework

1\. Financial incentives in tax and social policy are complex, poorly
communicated, and underutilized.

2\. Means-tested eligibility for public benefits entitlements (Social
Security, Medicaid) deny many individuals with disabilities the
opportunity to preserve income, save, and build assets.

3\. Financial incentives in tax policy that promote asset building are
out of reach to low-income wage earners who do not itemize.

4\. Financial incentives across the major life domains (e.g., education,
housing, employment, and health care) impact people with and without
disabilities directly and indirectly through third-party community-based
entities and employers.

5\. Americans with disabilities will benefit from existing and new
financial incentives strategies only through targeted and customized
outreach that communicates information, training, and technical
assistance in formats that are accessible, understandable, and relevant
for all ranges of ability.

6\. There is no single financial incentive that either directly or
indirectly can produce a better economic future for individuals with
disabilities. Many incentives overlap in their goals and together offer
a combined and cumulative response to the challenges of poverty for
Americans with and without disabilities.

7\. Some financial incentives incorporate a universal approach and offer
benefit to a large class of individuals with and without disabilities.
Some financial incentives require modification to provide parity for
people with disabilities compared to their peers without disabilities.

[]{#__RefHeading___Toc204703708 .anchor}4.2. Principles for a 21st
Century Conceptual Framework: Policies Optimizing Workers' Economic
Reach (POWER)

NCD has a strong record of accomplishment in the development of policy
recommendations that have been enacted into law and regulation. From
advocating for the passage of ADA to being a leading voice for change
related to emergency planning and response, NCD consistently has raised
expectations for individuals with disabilities and their families about
public responsibility to advance the benefits for all within livable
communities. There is no other single disability policy that quite
captures the inadequacies of existing civil and human rights for
Americans with disabilities as does the topic of asset development. For
many Americans, tax and social policy supports building assets in
multiple ways. For many Americans with disabilities, tax and social
policy not only fails to support asset-building objectives, it actually
prohibits such activities and outcomes.

To create a conceptual framework that sets a clear direction and
supports increasing economic status for people with disabilities, NCD
first lays out a set of overarching principles and then proposes core
strategies. The conceptual framework has been identified as Policies
Optimizing Workers' Economic Reach (POWER). There is no single financial
incentive that will make the difference. In fact, it is a combination of
strategies that both modify existing policies and enhance indirect
community-based and employer incentives that can provide a comprehensive
blueprint for change.

[]{#__RefHeading___Toc204703709 .anchor}Financial Incentives Principles

A. Financial incentives form a tool for public policy to advance the ADA
goals of equality of opportunity, independent living, and economic
self-sufficiency.

B. Individuals with disabilities, regardless of age, economic status, or
type of disability, and their families should have a range of choices to
benefit from financial incentives across life domains.

C. Direct and indirect financial incentives overlap in terms of
opportunity to benefit from fuller community participation.

D. Disability-specific financial incentives must be complemented by
financial incentives with more universal impact than allowed by existing
policy in order to encourage access and use by people with and without
disabilities in livable communities across life domains.

[]{#__RefHeading___Toc204703710 .anchor}Financial Incentives Core
Strategies

This section describes each of the POWER strategies, identifies the
elements suggested for implementation, and explains challenges that
people with disabilities face in navigating the major life domains. The
section also details how implementation of the proposed POWER provisions
would alter existing public policy. POWER strategies A through D and
their corresponding elements are as follows.

**POWER STRATEGY A: Modification to Entitlement Policy --** Encourage
work, income preservation, and asset building through changes to
entitlement policy.

**Four elements are suggested for implementation, as follows:**

A1) Raise resource limits for SSI to \$20,000 and index it annually for
inflation thereafter with no loss of benefits for five years of working
at or above substantial gainful activity (SGA).

A2) Enact an earnings offset for SSDI beneficiaries that parallels the
work incentives for SSI.

A3) Modify income and resource limits through simplified Medicaid Buy-In
that allows work and access to health care for five years regardless of
income level.

A4) Expand Plan for Achieving Self-Support (PASS) to allow for savings
for home ownership or any asset-building goal including the purchase of
assets that will generate income in later years.

The work disincentives inherent in SSDI and SSI are well known and need
limited discussion here. Barriers are identified in NCD's Social
Security report titled *The Social Security Administration's Efforts to
Promote Employment for People with Disabilities: New Solutions for Old
Problems*
(<http://www.ncd.gov/newsroom/publications/2005/ssa-promoteemployment.htm>).
Any new model, if it seeks to promote employment, must address the
barriers in new and innovative ways.

SSDI, and SSI to a lesser extent, express a bifurcated notion of
employment as an all-or-nothing concept. An individual is deemed either
able or unable to work---a situation that has resulted in provisions
that lead to precipitous declines or total loss of cash benefits as
income is earned. The widely recognized problem is that these declines
occur with a speed and at a slope that result in benefits being lost
before income is sufficient to replace them, and certainly before income
streams from employment are stabilized and reasonably assured of
continuity.

The POWER conceptual framework proposes provisions that lengthen the
period over which cash benefits decline, reduce the steepness of the
slope of benefit loss, and more realistically reflect the experience of
people seeking to enter or to return to work. Two alternative approaches
are offered for consideration. The first is no loss of cash benefits for
a five-year period and the second is a gradual reduction of cash
benefits.

A1) Raise resource limits for SSI to \$20,000 and index it annually for
infl**a**tion thereafter with no loss of benefits for five years of
working at or above SGA.

Raising the resource limits for SSI would encourage individuals with
disabilities to save and build assets. Funds set aside in individual
accounts toward a specific asset-building goal such as purchase of a
home, transportation, or a business start-up would be exempt from any
resource limit.

A2) Enact an earnings offset for SSDI beneficiaries that parallels the
work incentives for SSI.

The alternative approach would involve not time but income. Under this
approach, benefits would fall by a specified amount as income rises, so
that, for example, once earnings from employment equaled pre-employment
benefits, benefit levels would fall by 20 percent. When earnings from
employment reached double the original benefit level, the cash payments
might decrease by an additional 20 percent, and so on. This could occur
over a short or long period of time, depending on the upward mobility
and career structure of the employment. In any event, the earnings
should be secure to some reasonable degree. A one-time consulting
contract or a temporary job after years of unemployment or a
probationary position should not be enough to trigger the reduction.

A3) Modify income and resource limits through simplified Medicaid Buy-In
that allows work and access to health care for five years regardless of
income level.

Health insurance benefits are in some respects a bigger issue in the
disincentives context than are cash benefits. Potentially, their
economic value dwarfs that of cash payments. Although there have been
several attempts to attenuate the risk of benefit loss under the
Medicare or Medicaid programs, the net result appears to be impenetrable
complexity. Here again, a simple and clear experimental solution is
required and proposed in the POWER conceptual framework.

Health insurance should be maintained without any complexity or other
source of worry for at least the first five years of employment, or
until comparable private sector coverage is obtained. In the event such
coverage is not forthcoming, the existing coverage should be continued
indefinitely. Different administrative approaches will exist under the
Medicare and Medicaid programs for bringing this about. Under Medicaid,
which would be the primary coverage at issue for SSI recipients,
expansion and federal responsibility for the Medicaid Buy-In Program
would appear to be the optimal solution. Such a solution provides a
consistent benefit option regardless of where a person lives and works
and reduces costs to states that have been reluctant to expand the
Medicaid Buy-In option for fear of their expanded responsibility to
cover their share of costs.

A4) Expand PASS to allow for savings for home ownership or any
asset-building goal including the purchase of assets that will generate
income in later years.

The fourth element of POWER Strategy A allows for expanded utility of
the PASS work incentives provisions to encourage long-term income
preservation and asset building. The purchase of a home and the creation
of equity over time is an important asset-building strategy that is out
of reach of most current SSI beneficiaries. The greater flexibility of
purpose to establish a PASS with the complementary lifting of the low
ceiling for resources, with the individual still eligible for SSI
benefits, offers a clearer path to a better economic future.

**POWER STRATEGY B: Modification to Tax Policy --** Modify tax policy to
encourage work, income preservation, access to health care,
transportation, continuing education, home ownership, and other
asset-building goals.

B1) Bundle and revise Business Tax Credits for more efficiency and use
(Disabled Access Credit, Architectural/Transportation Tax Deduction
\[barrier removal\], and Work Opportunity Tax Credit).

B2) Revise the Impairment-Related Work Expenses (IRWE) exemption so that
it applies to any reasonable expense incurred for the purpose of
employment.

B3) Revise Medical Expense Deduction threshold requirements and waive
the need for deductibility.

B4) Amend 529 Plans created exclusively for families with children going
on to higher education to include purposes and goals other than saving
for higher education that meet the needs of families that have children
with disabilities.

Three major provisions of the Internal Revenue Code are designed to
stimulate the hiring of people with disabilities. GAO studies referenced
throughout this report have found them ineffective, underutilized, and
widely unknown. Indeed, this finding suggests there is reason to doubt
that any tax-based incentives could materially improve the employment
picture for Americans with disabilities. Moreover, there are people who
question whether tax provisions aimed at achieving this goal may not
have the paradoxical effect of reinforcing antiquated notions of
disability and preserving undesirable attitudes and stereotypes. Pending
development of a wholly new tax model---which is beyond the scope of
this research---it is nevertheless useful to suggest incremental
measures by which the impact of the existing tax provisions could be
enhanced.

B1) Bundle and revise Business Tax Credits for more efficiency and use
(Disabled Access Credit, Architectural/Transportation Tax Deduction
\[Barrier Removal\], and Work Opportunity Tax Credit).

**DISABLED ACCESS CREDIT:** The Disabled Access Credit is a provision
designed mainly to encourage small businesses to provide public
accommodations to customers or clients with disabilities. It can be used
for assistive technology, specialized employment-related services such
as readers or interpreters, and other accommodations and auxiliary
services as well. Its use in this latter regard has been hindered by
several IRS interpretations of the law that drastically limit its scope
in ways never contemplated by the drafters, according to the legislative
history. One challenge is that ADA applies only to employers with 15 or
more employees, and as a result, the IRS has determined that the credit
should not be available to smaller employers since their accommodations
cannot be mandated by the law. This interpretation contradicts the fact
that the maximum size of an eligible business is 30 full-time employees
or under \$1 million per year in gross receipts. Nothing in the
legislative history suggests Congress intended to place a lower limit on
the number of employees. Additionally, the definitions of eligible
expenditures need to be clarified to make clear that the purpose of the
expenditure, rather than the a priori nature of the item or service,
will be determinative. Finally, the current limitation in the amount of
the credit to 50 percent of the first \$10,000 in eligible expenditures
should be eliminated.

**ARCHITECTURAL/TRANSPORTATION TAX DEDUCTION (BARRIER REMOVAL):** This
is an arcane provision that needs to be revised substantially. It allows
specified capital expenses to be converted into deductible ones, meaning
that instead of being amortized or depreciated over a number of years,
they are accelerated by being taken in the year incurred. The definition
of qualifying expenses is narrow and outdated, however. If the provision
is to have any meaning, the scope and definition of eligible expenses
must be broadened, the provision must be melded with the Disabled Access
Credit, and the guidelines used to determine whether claimed expenses
qualify for the deduction must be updated. Ideally, the provision should
be eliminated, merged into an expanded access credit, and available to
all businesses, with gradual phase-out based on business size or profit
levels.

**WORK OPPORTUNITY TAX CREDIT:** This tax credit provides hiring
incentives for a number of hard-to-employ groups. Two groups,
predominantly oriented toward disability, are included: SSI recipients
and people referred by state VR agencies. This is an arbitrary and
narrow slice of the job-seeking population with disabilities. Albeit
perhaps in totally different capacities, people seeking to return to
work with their former employers, should again benefit the employer with
use of the credit. The credit currently targets only first-year wages,
thus giving no incentive for retention or advancement in employment. The
proposed change would allow a continuing benefit to the employer for up
to three years.

Individual income tax provisions also play a role. Two are particularly
worth noting: the IRWE and the Medical Expense Deduction.

B2) Revise the IRWE exemption so that it applies to any reasonable
expense incurred for the purpose of employment.

IRWE is an underutilized tax deduction that allows individuals to claim
an itemized deduction for certain costs incurred "in connection with the
place of employment." Interpretations of this provision are few, but it
was intended to pay the costs of attendant services at the place of
employment. IRWE has been used more broadly, and needs to be clarified
to explain that it applies to any reasonable expense incurred for the
purpose of employment. The expense could and should include the pro rata
costs of home-based personal assistance services on days when an
individual uses such assistance to prepare for and go to work.
Modifications to IRWE also should include the add-on costs of
transportation attributable to the disability. Whatever costs IRWE does
or does not include, it will continue to be of little value to most
people with disabilities as an itemized deduction without modifications.
Fewer than 40 percent of taxpayers itemize, and such expenses are likely
to be incurred disproportionately at the outset of employment, when
income against which to offset the deduction is at its lowest.
Accordingly, an above-the-line deduction, not subject to the ability to
itemize, should be substituted. This adjustment or credit should be
subject to carryover, meaning that it can be carried forward or backward
for a specified number of years, so as to provide maximum leverage to
the taxpayer.

B3) Revise Medical Expense Deduction threshold requirements and waive
the need for deductibility.

Many disability-related costs, including costs of equipment and services
used in employment, qualify for the Medical Expense Deduction. Much
assistive technology (however and wherever used), service animals, and
other costs fall into this category. The tax case law is replete with
examples of items granted deductibility by reason of their purpose or
their features, reflecting an intention to overcome or mitigate the
consequences of a physical disability. However, this case law is little
known or understood, even by many tax professionals. One reason may be
that the Medical Expense Deduction is hard to claim. Once again,
itemization is required, but in addition, one's allowable medical
expenses must exceed 7.5 percent of adjusted gross income (AGI) before
they are deductible. This means that a certain proportion of such costs
likely will be lost, unless one has enough medical expenses from other
sources to meet the AGI threshold before taking assistive technology
(AT) or other disability-related costs into account. Accordingly, at
least so far as disability-related costs involved in achieving a level
playing field are concerned, the requirements for a threshold and the
need for deductibility should be waived. Need is not apparent for
broadening the scope or definition of what is deductible, although much
need for professional and public education on these points remains. From
the legal standpoint, all that is required is that the conditions for
obtaining the tax benefit be modified. Because timing also is a factor
here, the new above-the-line deduction or credit should benefit from the
flexibility that carryover would afford.

B4) Amend 529 Plans created exclusively for families with children going
on to higher education to include purposes and goals other than saving
for higher education that meet the needs of families that have children
with disabilities.

There are a number of additional ways the tax law could advance economic
independence with and for employment of people with disabilities. The
personal development accounts paralleling accounts for education under
Section 529 of the Internal Revenue Code present one example. The
proposed POWER framework would allow families with children to save for
purposes other than postsecondary education to create a better economic
future. Examples of what would be allowed include start-up of
microenterprise; purchases for assistive technology or transportation;
and savings for nondegree education and training. This amendment would
advance the full participation in society and self-sufficiency of young
people with disabilities transitioning into adulthood by allowing them
and their families to save and plan for the future.

**POWER STRATEGY C: Enhance Direct Asset Building --** Encourage savings
and asset building through direct opportunities. Utilize individual
budgets, matched savings plans, financial education, and cross-agency
collaboration to leverage resources and advance social and economic
status.

C1) Expand and refine Individual Development Accounts to meet the needs
of people with disabilities.

This can be accomplished through several steps. Include transportation
and technology as a purpose for saving. Provide incentives to encourage
a private match to federal funds. Allow private and state-authorized and
-funded IDAs to adopt federal IDA rules that exclude counting the
resources for purposes of continued eligibility for public benefits.
Require financial education to be conducted in accessible locations with
accessible content and be accessible online.

C2) Encourage financial education as part of an individual's education
and work plans.

This would include IEPs, Transition Plans, Plans for Employment through
VR, and the Workforce System.

C3) Issue an Executive order to federal agencies for cross-agency
collaboration and coordination.

The order would identify responsible parties and timeframes. First,
create a time-limited task force that includes these agencies and
departments: Education (Office of Special Education and Rehabilitative
Services/RSA), Labor, SSA, Treasury, HHS, Centers for Medicare and
Medicaid Services, IRS, Transportation, Office of Management and Budget,
VA, Commerce, HUD, and Small Business Administration. Set a time limit
of six months to identify policy and practices barriers and propose
interagency solutions and cross-program and funding authorities. In
addition, create a task force chaired by the Department of the Treasury
and the Office on Disability at HHS to lead the interagency
collaboration.

C4) Simplify implementation of individual budgets.

Key components are cross-agency work. Invite SSA, the Department of
Education and its Rehabilitation Services Administration, departments of
Education, Labor, Health and Human Services CMS, and Substance Abuse and
Mental Health Services Administration (SAMHSA) to collaborate in
developing a cross-agency template that simplifies the implementation of
unified individual budgets that promote self-determination and
person-centered plans for adult living. The strategy would allow savings
and asset-building rewards that permit an individual to keep 50 percent
of what he or she does not spend in an individual budget. The savings
must relate to a specific asset-building objective in an individualized
plan.

**POWER STRATEGY D: Enhance Indirect, Community-Based, and Employer
Incentives --** Provide incentives to employers and communities to offer
individuals with disabilities indirect benefits that promote affordable
and accessible housing, asset-building strategies, and a road map out of
poverty.

D1) Consider revision of housing design standards.

In two requirements, HUD would (a) adopt universal design standards
developed by the Access Board; and (b) require that the adoption of
universal design standards become a condition for any entity that
receives HUD financing for single or multifamily dwellings.

D2) Require a qualified allocation plan set-aside for 20 percent of
units.

All units receiving Low-Income Housing Tax Credits (LIHTCs) should adopt
new universal design standards and reserve 20 percent of units to be
affordable to individuals with disabilities who are at or below 30
percent of average median income (AMI).

D3) Establish a New Markets Tax Credit.

Require each federally funded project that is creating jobs to document
job creation, outreach and recruitment efforts, and the number of people
with disabilities hired.

D4) Provide employer transportation and housing deductions.

Employers receive a tax deduction for the costs of assisting employees
with disabilities with transportation and first-time home ownership.

D5) Demonstrate a tax aid program for Americans with disabilities.

The federal government would provide free tax assistance and filing
services to millions of Americans with disabilities. Use this process as
a gateway for other asset-building opportunities. In addition, build
financial and tax education and financial services infrastructure.

D6) Establish employer-matched education accounts.

Allow employees who contribute up to \$500 to an education and training
account to receive a tax credit for their contribution. Allow an equal
match from their employer that would be deducted from corporate income
taxes. Individuals must earn less than \$25,000 to be eligible for the
benefit.

[]{#__RefHeading___Toc204703711 .anchor}4.3. Application of the POWER
Framework to Case Studies

The next step in the research design was its application to four
individual situations. Three of the four case study profiles (numbers 1,
2, and 4) represent the real experiences of people with disabilities.
Case study 3 is based on a composite picture of experiences that
represent a significant number of families raising a child with
developmental disabilities. In each case study, the current experience
of the individual and/or family is described and then contrasted with
the experience that might be possible if POWER were applied.

[]{#__RefHeading___Toc204703712 .anchor}Case Study 1: Mary: SSI
Recipient Attempting to Enter the Workforce

Mary is 30 years old. She has a disability and has never held a job. She
is receiving SSI (\$603 a month), which is the federal benefit rate for
calendar year 2006. In Mary's state (Indiana) there is a state
supplement of \$85 that she is receiving, bringing her monthly cash
benefit to \$688. Mary has no other income and receives no other cash
benefits, but she does receive Medicaid and other in-kind benefits that
will be discussed later. In her state, receipt of SSI benefits
automatically confers entitlement to Medicaid.

Mary has been offered a 25-hour-a-week job. She wants to accept the
position, but she is worried. Apart from all the concerns that accompany
embarking on a new career, Mary, as a person with a disability,
confronts an additional and very distinct concern. If she takes the
25-hour-a-week job, paying \$5.15 an hour, her benefits will be
jeopardized. She understands that as an SSI recipient she will be
subject to benefits reductions because of any other income, earned or
otherwise.

Broadly speaking, Mary understands that her cash benefits will be
reduced by roughly \$1 for every \$2 she earns over the first \$85 of
income per month. She further understands that should her benefits be
reduced to zero, her Medicaid (her only source of health care) could be
jeopardized as well.

But Mary also understands that there are various provisions in the law,
called work incentives, that could reduce or prevent these adverse
consequences of employment. Before she can find out about them, she does
an initial computation of what her benefits would be if she simply
starts work.

**PRE-INCENTIVES COMPUTATION:** Mary's first problem is that she will be
paid weekly, and she knows that SSI computes income, resources, and
benefits on a monthly basis. Not knowing that the standard calculation
is 4.3 weeks per month (and even that can be disrupted by actual payroll
dates for weekly or biweekly employees), she decides to divide her
annual wage by 12. Figuring \$5.15 an hour, 25 hours a week, times 52
weeks (she assumes she is paid for holiday, vacation, and sick days) she
comes up with a salary of \$128.75 per week, or \$6,695 per year, which
when divided according to her common-sense formula is estimated at
\$557.91 per month. Mary suspects it is permissible or even necessary to
round off, so she does, to \$558. Of course, had it occurred to Mary to
round off her weekly income to \$129, then her monthly income would be
\$559 (based on 52 weeks times \$129, which equals \$6,708, divided by
12).

Mary wonders if it is not a little absurd to try to grind the gears of
income and expenses this finely. Well, Social Security does, so she
guesses she must as well.

**BENEFITS REDUCTIONS:** Mary now calculates her benefits loss---first
without reference to the even more mysterious work incentives. She first
adds her \$558 wages plus her \$688 SSI payment. That would be great; it
would be \$1,246. But she then begins the further computation as she
understands it, including how much of her first \$85 of income will be
"disregarded," meaning that it will not be included in "countability,"
which is SSA's term for income. Countable income is to the SSA recipient
what taxable income is to the taxpayer.

Mary's remaining income from her wages after the \$85 disregard is \$473
per month. She knows she will lose half of that, or \$236.50. She
subtracts \$236.50 from her \$688 SSI payment and is left with \$451.50.
She knows she can round off, but she is not sure whether to round up the
\$451.50 or the \$236.50. She decides to round up her benefit, so is
left with an SSI benefit of \$452. Adding this \$452 to her wage of
\$558, she comes up with monthly gross revenue of \$1,010 from all
sources.

**NET GAIN:** So how much better off is Mary's bottom line? She started
with \$688 a month and now, after working 25 hours a week (an average of
108 and a third hours per month \[call it 108\]) ends up with \$1,010.
This is a gain of \$322 a month. For 108 hours of work, it comes out to
\$3 an hour. Before taxes, work expenses, clothing, and transportation
on the downside, and these work incentives on the upside, this is less
than the federal minimum wage.

**INSURANCE:** Mary learns that her future employer provides
contributory health insurance to her coworkers. She is told, however,
that she would not be eligible until expiration of a six-month waiting
period. In any event, inquiry of the personnel and benefits office
reveals that the particular health services she needs to keep her
disability under control either are not covered or, if covered, are
subject to a low dollar limit (or cap). "At least," Mary sighs
gratefully to herself, "I have Medicaid. While far from ideal, it allows
me to get the basics of specialty services that I need."

Mary understands that if her cash benefits were to cease, her Medicaid
might be thrown into jeopardy. As a minimum-wage worker, she has little
immediate prospect of seeing her SSI cash benefits zeroed out, but she
does look forward to steady pay increases and promotions through her
hard work and eagerness to learn.

Mary calculates that if her salary were to reach \$1,461 a month (at 25
hours a week, about \$13.50 an hour, but less per hour if her hours are
increased), her benefits would be reduced to zero. That \$1,461 would
represent twice her full SSI payment plus \$85. At the \$1 for \$2
reduction rate, a countable income of \$1,376 would eliminate \$688 in
SSI---her whole payment. Meanwhile, at least pending these work
incentives, she knows that for every dollar her salary goes up, she
effectively will bring home 50 cents more.

**OTHER INTERIM CALCULATIONS:** Whatever her gross salary, Mary is of
course not taking home an average of \$558 a month in wages or anything
close to it. Her gross pay is reduced by 7.65 percent for her Social
Security and Medicare tax (\$42.69 a month), by one-dependent federal
and state withholding exemption (\$55.80 a month), and by other
mandatory exactions (workers compensation and short-term
disability---totaling \$5.58 a month). These deductions total \$104,
leaving her net wage, before work incentives, at \$454.

**RESOURCES:** Mary would like to save for education. She knows that
grants, VR support, and other third-party sources may be available, but
she also knows that they would not cover the entire cost of college,
especially when needed AT and personal assistant services (PAS) are
added to the mix. She is willing to work for \$3 an hour (even \$2.02 an
hour after taxes) if she can save the money toward an education. She
knows that it will take a while, but realizing that SSI limits her
countable resources to \$2,000, Mary wonders if there is any point.
Fortunately, as a determined person, she decides she will find out about
and use the work incentives if she can.

If Mary lived in one of the 11 so-called Section 209b states, where
Medicaid does not come along automatically with SSI eligibility, then
even more complexity would arise. The next case study will involve a
person residing in one of those 11 states. Since Mary is in no immediate
jeopardy of losing all her benefits, her Medicaid is safe. Therefore,
the scenario will not depict her looking into how to protect this vital
noncash benefit.

Mary's immediate problem can be understood on two levels. First, she
needs to find someone who can help her understand the work incentives.
She has looked at the Social Security Administration's Web site, finding
both the Code of Federal Regulations and the Program Operations Manual
System. These are the sources of the governing rules, she knows, but to
her, an ordinarily intelligent high school graduate, they are written in
incomprehensible legalese, even in the supposedly simplified examples,
and they use terminology, cross-references, and qualifiers that are
totally unfamiliar to her. At length she concludes sadly that she would
have about as much luck figuring out what to do with these sources as
she would by checking a medical textbook in order to perform
do-it-yourself surgery.

Mary figures that perhaps her cousin, an accountant, can help her. After
all, doesn't she help people with their taxes? However, her cousin works
only for people who can pay her, and even for a family member she cannot
help Mary because she does not know anything about the subject. She
suggests that maybe the local Certified Public Accountant association
has a pro bono division. Another cousin who is a lawyer also has no
relevant knowledge.

But Mary's VR counselor has heard that various benefits counseling
resources exist in the community. The VR counselor has some acquaintance
with the subject but is not permitted to give official advice beyond the
scope of the VR Program. Leaving aside all the twists and turns, Mary
eventually comes into communication with the WIPA Program (formerly
Benefits Planning Assistance and Outreach).

**WORK INCENTIVES:** Mary, at length, makes her way to a knowledgeable
and patient benefits counselor who could help her. She tells Mary of two
key provisions that might help. The first is IRWE, which can reduce
Mary's countable income by the amount of expenses that she incurs in
order to work. In Mary's case there are two immediate expenses: her
\$104 in taxes and the \$5 per day she spends for parking her modified
vehicle. Because she works five days a week, with an estimated 20 days
missed a year for vacation and holidays on which she does not travel to
work, the taxes (\$1,248) plus the parking total \$2,448 a year, or
\$204 a month. Subtracting this from her countable income brings the
number down to \$269 (\$473 minus \$204). At \$269, her SSI benefits
reduction is only \$134.50, making her SSI payment \$553.50 or \$554.
That \$554 plus her \$558 monthly income yields a gross cash flow of
\$1,112. With the \$104 in taxes subtracted from her monthly income, as
well as her benefits reduction, Mary's net cash flow is reduced to
\$1,008 per month. She thus is no worse off for having paid the taxes,
because SSI has made up the difference, but she is no better off either.
This is how it will be with all IRWE.

These are the expenses that Mary knows she will incur when she starts
work. Her benefits counselor needs to do further research on whether any
allocation for mileage, lunches, or other costs also might be excludable
from countability. Other expenses from which Mary would benefit include
some incidental AT devices and training in the use of such devices. The
counselor subsequently will factor in these expenses, but Mary's biggest
problem is the dawning realization that even if she can save more money
as a result of the work incentives, it still may not be worth the
trouble, since her savings (or resources) are limited to \$2,000.

That is why Mary is so excited to hear about the other work
incentive---PASS. Mary's counselor explains that by setting aside
designated funds in a separate account for specified self-support
activities and goals to be achieved over a "reasonable" period of time,
Mary can exclude more of her income and, more important, potentially can
save far more than \$2,000, which under PASS would be excluded from
resource countability. The costs of maintaining the account also will be
excludable from income, but Mary does not know the status of any
interest that she might earn.

Mary also learns that PASS is subject to approval by the SSA. She
understands that a regional work incentives team (or cadre) will review
her application, and that a lengthy, complex form, the SSA 545, must be
used to make the application. Upon obtaining the form, she finds there
are a number of troubling aspects.

For one thing, she does not have a specific vocational objective at this
early point. She knows that higher education correlates with income, and
that a college degree generally grants access to a wide range of jobs
and to various sorts of upward mobility. However, SSA seems to expect
Mary to specify a vocational objective. It is against this specified
objective that the viability of all her proposed savings, expenditures,
and time frames will be assessed. Against some standard of feasibility
or suitability, SSA experts also will adjudicate Mary's request by
considering the factor of suitability for someone with her disability.
Mary resents the notion that total strangers should have the right to
sit in judgment of her and control her life this way, but she knows she
has no choice.

There are some things that Mary does not know. Generally, she does not
know if SSA takes into account the overall correlation between education
and income in calculating whether approval of her plan is likely to save
the government money over the course of her working life, an estimated
30 years. She certainly does not know how SSA decides what work people
with her disability are capable of doing, or how SSA would factor in the
possibilities resulting from an education that she has not yet received,
with a major she has not yet picked, and an occupational goal she will
now quite probably have to fabricate.

In addition, Mary knows that, independent of her school choices, changes
in her income or work expenses could change the plan, or necessitate its
change. With events that are known to her, Mary understands it will be
possible to amend the plan, and she would do this if, for example, the
four years and six months she postulated for school (a full four-year
academic course plus six months to find a job) needs to be changed. This
change could happen if she is required to take a reduced course load.
But how long will she need to work before she is ready to quit her job
and go to school full-time, or would it be better for her to try to work
part-time while going to school part-time? These questions all have
powerful economic aspects, but they involve so much more. Mary's
benefits counselor does not feel qualified professionally to advise her
on anything beyond the legal and benefits-related dimensions. Mary's VR
counselor can tell her only the rules of the VR Program.

As Mary is considering her options, some unforeseen developments occur
that complicate her decisionmaking even further. Mary lives in
subsidized housing. She discovers that in a Section 811 project or a
Section 202 subsidized project, she pays 30 percent of her "adjusted
income" toward the costs of her rent. If her countable wages also are
treated as part of countable income for HUD purposes (a different legal
test than SSI uses), then her rent will go up and further reduce her net
gain. With SSI countable income of \$454, her housing cost could rise by
\$136 a month. This shrinks her net monthly cash flow to about \$870, or
just \$192 more than she was getting with SSI alone.

What about the food stamps that Mary also has been using? Most
jurisdictions would not curtail her food stamp allotment as long as her
income remained below the federal poverty level, and the hope is that
Mary's is one of those jurisdictions. Otherwise, potentially a third of
her average \$100 worth of food stamps per month could be at risk. If
this were the case, her real net cash flow would go down by the \$33 a
month necessary to replace this in-kind benefit.

Mary is fortunate in one regard. She does not need low-income home
energy heating assistance. If she did, and if it were tightly tied to
income, then an increase in her income, from whatever source, might lead
to a decrease in that subsidy too. But Mary's housing project pays for
utilities.

Because of her total dependence on SSI and other programs for
sustenance, Mary has qualified for lifeline telephone service, partially
subsidized under the Federal Universal Service Fund. This gives her a
guaranteed minimal amount of local phone service for about \$10 a month.
She cannot determine whether her increased income and resources will
disqualify her; her phone company's special needs center leaves her on
hold for an hour and its Web site does not say. But she calculates that
if she were to be disqualified, her basic phone bill would go up to \$22
a month, or an increase of \$12. And with respect to housing, food
stamps, utilities, and, potentially, phone, Mary knows only too well
that increases in her income will result in increases in her pro rata
costs, but on a slope that may be far too steep for her to climb.

Disdaining to calculate how much money she actually will have left, and
motivated by the desire for economic autonomy above all else, Mary
nevertheless determines to press forward. She realizes first of all that
she will need to devote inordinate time to recordkeeping, accounting,
time frames, and of course reporting to SSA. She has been told that SSA
operates along several parallel tracks, meaning that sometimes reported
earnings are not immediately or correctly credited to one's account, or
that self-reported earnings are not properly credited. Because this
could lead to erroneous allegations of income concealment, Mary needs to
decide whether to take everything to her Social Security office in
person (which costs time and money) and get a signed receipt, or to mail
each item "return receipt requested" (which also costs money but takes
less time). She does not think the costs of these precautions will be
excludable from income. Mary realizes that even if she can prove she
delivered documents, she cannot prove what was in them. She has heard
many horror stories from friends and acquaintances, but has to trust
that most of the time most systems work, even though the stakes are so
high when they fail.

But Mary's problems are not yet fully revealed. She learns that the SSA
regional work incentives team has the right to ask her questions about
her PASS before approving it, and that the team has the power to reject
or question her choice of vocational objective. What bothers her, now
that she has decided to choose accounting as her career goal, is that
the time frame for the cadre's decision is not entirely clear. Someone
tells Mary it might be two weeks. Meanwhile, Mary's prospective
employer, who will be claiming the Work Opportunity Tax Credit in
connection with Mary's first \$6,000 of first-year wages, is anxious
that she start working immediately. Mary knows that her PASS can be
approved retroactively to her employment's start date, but what if it is
rejected? Not only will she suffer the already-discussed drop in her
monthly SSI, but she fears she will be hit with an overpayment
assessment. She will not be charged with fraud since she did report her
earnings, but an overpayment is an overpayment, fault or no fault. If
she is charged with an overpayment (in the event her PASS is rejected
utterly), she probably could appeal and get it set aside, but she has
been told that under an obscure provision of the tax law she would be
liable for taxes on the amount of any overpayment claim that Social
Security waives. It seems that "debt forgiveness" is includable in gross
income for tax purposes.

Mary takes time to weigh the options, perhaps only a few hours too
long---but too long it is. Her prospective, now erstwhile, employer
reluctantly informs her that the offer has been retracted.

Disconsolate, Mary shows signs of discouragement and despair. Her
excitement about employment potential fades. She stops talking to
friends and family about her dreams and begins to withdraw from people
in general. She finds herself unable to sleep through the night and
begins sitting in front of the television countless hours each day. She
feels sad each day and cries without knowing why. The complexity of the
current rules and the limited support systems available to provide
individualized advice to help her make informed decisions are not
responsive to Mary's needs.

Case Study 1: Application of the POWER Framework to Mary's Situation

There are four parts of POWER that would encourage both work and savings
for Mary. The most relevant is the raising of resource limits for
continued SSI eligibility for a five-year period (see Element A1, p.
124). Mary would be allowed to retain her full SSI benefits (assuming
she remains otherwise eligible, of course) and save any or all of her
earnings toward self-support goals, which need not be specified in
advance.

Under current law, the objectives for which a PASS can be approved, and
hence the nature of permissible expenditures and the objectives of the
expenditures, must be employment related. For people with limited
education, limited skills, poor work experience, or limited stamina, the
prospects of self-sufficiency through employment, while always worth
pursuing, are statistically slim, even where the PASS mechanism can be
brought to bear. Data regarding the proportion of people receiving
approved PASS proposals and leaving the benefits rolls after one, five,
or ten years are not yet available, but anecdotal evidence suggests that
the number is only slightly larger than the overall number of SSI
recipients who become independent through work. This is particularly
unfortunate since PASS users are likely among the most sophisticated and
most determined of SSI recipients.

The decline in employer-sponsored fringe benefits, including health care
and pensions, and the erosion of the entry-level job market contribute
to the deterioration in upward mobility through employment for people
with disabilities. Given this trend, policymakers need to understand
that entry-level employment is unlikely to enable Mary to relinquish
benefits. Policymakers may decide to reduce or strip her benefits, and
may be indifferent to the hardship this will cause, but that is a very
different way of solving the program cost-escalation problem. What
policymakers must recognize, especially in an era when any thought of a
property or contract right in employment has been abandoned, is that
upward mobility must involve access to assets as well as access to
employment. Allowing Mary to save from her earnings without restrictions
sets the stage for both.

From the technical standpoint, there are several alternative ways the
new disregard (raising the resource limit) could be implemented. Mary
(and individuals in similar circumstances) need to have assurance of
freedom from a monthly review that could result in a reversal of all her
hopes and efforts. Additionally, she must have no incentive to conceal
income, as some recipients, regrettably, have felt compelled to do.

If Mary were able to save all her \$6,708 a year for five years, she
would emerge with a nest egg of \$33,540, not counting interest. At the
end of five years, that money would remain untouchable. If she needed to
continue receiving cash benefits, the standard rules would apply to
subsequent earnings and aggregations, but the \$33,540 would be hers,
perhaps for education, perhaps for AT acquisition, job-related or
otherwise, perhaps for the down payment on a home.

Under current law, Mary potentially could put all or most of her
earnings in a PASS, but she could not use them to buy a capital asset
such as a home or an annuity. If she worked, she could not use her
earnings to fund an IRA or employer-sponsored contributory retirement
plan.

When Mary was living under the old system, one of the things she heard
whispers about was the Individual Development Account. She learned that
IDAs represented a way to set aside earnings, as well as matching funds,
for use in meeting a variety of personal objectives. Home ownership was
included among the permissible objectives of the IDA, but the IDA
aggregation upper limit of \$10,000 was too small to hold out much hope
of propelling Mary into the asset-ownership sector. The IDA could be
used to capitalize a business start-up, but not for employment. It
could, however, be used for postsecondary education. So there was no
coordination between PASS and IDAs.

If, as part of the POWER proposal, access to IDA and PASS plans could be
unified and combined with the removal of artificial barriers between
permissible usage, account administration requirements, time frames, and
eligibility, the results could contribute significantly to the
reconfiguration of social benefits as asset-development strategies in
the ownership society. What is especially attractive about the IDA in
this connection is the leverage it offers through the use of matching
funds. With such funds available on a tax-favored basis, the nest egg
could grow substantially.

And what are the odds that the amount that could be saved from Mary's
wages for a self-actualizing, asset-development goal would be limited to
the \$33,540? Freed from worries about keeping her income down, able to
work more hours or accept raises, there is every reason to believe that
Mary will be able to earn a great deal more.

Evidence for this likelihood can be found throughout the fabric of
current economic and social policy assumptions. Incentive models, used
increasingly to structure choices in a variety of settings, are
predicated upon exactly these assumptions (see Element B2, p. 125 ). Tax
policy, favoring the liberation of larger and larger amounts of income
and capital, is predicated on the related assumptions that greater
reward will spur greater effort and that such effort will redound to the
benefit of the entire economy and society. These policies have by any
measure produced excellent results for people who already own assets.
Why should they not be deployed with similar benefits on behalf of
people who yet aspire to that status?

Available data suggest that approximately 15 percent of SSI recipients
are employed, yet fewer than 1 percent of beneficiaries leave the rolls
for economic self-sufficiency reasons (www.SSA.gov).[^369] The existing
system of work incentives does not work. Fewer than 1 percent of SSI
recipients are utilizing PASS plans to preserve income and set aside
resources for a work-related goal. POWER offers Mary a work incentive
that is simpler to understand and that makes it easier to be a
participant than does the existing system of limits, law, and
reductions. Mary's unlimited earnings accumulation for five years
enables her to set measurable and meaningful asset-building goals. The
extra cost to the government is already there as Mary, without pursuing
employment, simply continues to collect her monthly cash benefit. The
baseline costs are already there.

By itself, a proposal such as this, if it allowed 1 percent of people
who utilized it to get off the benefit rolls, would more than pay for
itself over their average working lives. Meanwhile, during the five
years, any potential excess in SSI expenditures would be partially
offset by income and payroll taxes paid by and on behalf of Mary, by
sales taxes paid by her on portions of her wages devoted to consumption,
and by related benefits associated with retention of Medicaid.

For Mary to get the full benefit of her permissible savings, coordinated
reforms will need to be implemented in related in-kind benefits
programs. Most notably, for the duration of the five years, amounts Mary
saved from employment or from matching-funds contributions to IRAs
should not be taken into account in determining her adjusted income for
housing subsidy purposes. In simplifying the administration of SSI and
housing programs, it is likely that the changes recommended here will
result in cost savings to several major public sector service systems as
well.

[]{#__RefHeading___Toc204703713 .anchor}Case Study 2: Melissa:
Working-Age Adult Acquires Disability and Starts Her Own Business

At 42 years of age, Melissa led a quiet life in a good job. The
existence of people with disabilities, and the issues facing them in
day-to-day life, had rarely impinged upon her consciousness. If she
thought about people with disabilities at all, it was with sympathy
bordering on pity when she watched a telethon and celebrities asked her
to contribute funds to find a cure. All that changed one day. She heard
the screeching of brakes, but the impact occurred before she even had
time to turn to look. In the hospital and the rehabilitation facility in
the weeks and months to come, Melissa went through despair, rage,
denial, and then acceptance of her new status in the world.

At last, Melissa was declared medically ready and stabilized to return
to her New York home. Her hospital and rehabilitation costs had been
covered substantially by her employment-based insurance, but with her
sick leave (which had provided income) exhausted, her health insurance
having reached its cap, and the possibilities of returning to her former
position as a construction worker considered infeasible, economic
concerns rapidly joined emotional ones as Melissa faced her future.

Melissa's colleagues in the building trades rallied to support her and
helped modify her apartment, including the public portions of the
building needed for entrance and exit and the laundry facilities. The
landlord initially had objected to modifications in the public spaces on
the ground that they would make other tenants feel uncomfortable, but
the landlord relented when promised that the original design would be
restored, also at no cost, if Melissa moved.

Melissa found herself living on her savings, after her short-term
disability benefits ceased and while the waiting period for SSDI ticked
off on the clock. Learning about SSI and understanding that it typically
included Medicaid coverage, Melissa thought of applying for this
program, which would be available immediately if she met its eligibility
criteria. Unfortunately, because she still had savings well in excess of
\$2,000, she was told that she would not qualify for SSI unless she
entered into a spend-down agreement or unless some other means could be
found of exempting her savings, although shrinking, from "countability."

Various strategies for sheltering her resources were suggested to her,
but none seemed appropriate. IDAs and IRWE were predicated upon the
receipt of earnings, and Melissa had none. Use of the PASS might allow
her to establish a savings process for future self-support purposes, but
then the money would no longer be available to meet her ongoing routine
cash flow needs. Though she would receive monthly SSI payments once she
qualified, these payments, without augmentation from her savings, would
not be enough to meet her needs, including needs for goods and services
that she regarded as indispensable to her care but that likely would not
be covered under the state Medicaid Program or, as she learned from a
knowledgeable benefits counselor at her local independent living center,
under any of the state's existing Medicaid waivers.

Someone pointed out to Melissa that if she owned her home as opposed to
renting it, then its value would be excluded from countability. She
thought about using her savings as the down payment on a home, but then,
just as with the spend-down, she would have to use what was left to pay
the mortgage and would in all too short a time find herself without
resources for meeting future goals that, with the passage of time and
the clearing of her mind, might emerge as viable options.

But finally, Melissa obtains SSDI, and with it a monthly payment of
approximately \$1,200. In addition, withdrawal from her remaining
savings at the rate of about 4 percent of their value per year, allows
her to subsist at current modest levels. Her life is austere, but she
has kept her home, her dignity, and a reasonable measure of autonomy.
What will come next?

Goals and Obstacles

By degrees Melissa comes to realize that her economic and personal
prospects are not good unless something changes dramatically. She would
like to get a job and feels she can work, but what could she do?
Contacting the state VR agency, she undergoes various eligibility
determinations, skills tests, and other assessments, and at length is
deemed eligible for services, but her state is operating under an order
of selection. She qualifies for services by reason of meeting the "most
significant" disabilities criteria, but none of the training and
placement opportunities known to the agency seems to interest her or
makes full use of her skills.

At length Melissa determines that self-employment represents her best
option. Inventorying her skills, she realizes that a computer-based
enterprise, utilizing her blueprint-drafting and other construction
management skills, represents the best pathway to independence. Little
does she know that the Social Security Administration may have other
ideas.

Melissa knows that she will need capital to start and sustain her
business until a client base can be developed. But her problem remains
how to get the initial funding necessary to purchase computers and other
home-based equipment she will need and begin marketing activities. Three
potential sources of this seed money come to her attention: her state VR
agency, an equipment loan through the state program operated under the
Assistive Technology Act, and a small-business loan guaranteed by the
Small Business Administration.

Melissa learns that it makes a huge difference how she obtains these
funds. If she obtains cash grants or loans, even if they are to be
converted quickly into purchases, they are subject to treatment as
income. While income per se will not jeopardize her SSDI payments,
provided the income is unearned, Melissa is given to understand that her
intended use of these funds could constitute an assertion by her that
she is able to work. That in turn could jeopardize her monthly benefit,
which is an all-or-nothing payment, depending on her eligibility status.

Though Melissa is not in immediate jeopardy of losing her monthly
benefit, let alone her irreplaceable Medicare health coverage that comes
with SSDI, she now understands that she may face real risks if she
begins to earn income that exceeds a certain limit. Unless she can
shield her income from countability, she will risk being deemed
financially ineligible for benefits if her income exceeds SGA in at
least nine months during a rolling 60-month period, thus deeming her
capable of working.

Arranging to obtain her loans through direct third-party purchase of the
work-related equipment she needs, rather than as cash, Melissa is able
to begin her business. Her equipment has not given her all that she will
need, since specialized drafting software, enhanced fiber optic
connections, and other expensive resources also will be necessary, but
Melissa begins to earn a small income from her first few contracts. A
friend tells Melissa that she will be entitled to nine months of trial
work before the amount of her earnings can become an issue, and before
SSA will consider the question of whether she is capable of engaging in
SGA. But what Melissa does not understand is that the monthly income
that constitutes SGA, an estimated \$900 as indexed for inflation this
year, is not the same amount of income as will result in a month of
trial work being charged to her record. The amount required for a month
of trial work is far less.

Realizing the imprecision and complexity of rules and the precariousness
of her situation, Melissa becomes all the more determined. As a result
of hard and disciplined work, she is able to raise her earnings to the
SGA level. But now she must be additionally concerned that her benefits
will be jeopardized, and that income that exceeds the SGA level by as
little as \$1 could jeopardize her entire benefit for the month, and
potentially her eligibility for benefits in subsequent months.

What can Melissa do? She still does not have enough money for the
equipment she needs to put her venture on a self-sustaining basis, but
she risks losing the monthly cash payment she still needs long before
she is capable of reliable self-support.

Melissa now begins to learn about Social Security work incentives. While
these incentives vary between SSDI and the Supplemental Security Income
(SSI) Program, Melissa learns that the key one for her under SSDI would
be IRWE. Under the IRWE provision, Melissa can set aside her earnings
for the purchase of work-related equipment or for meeting other
work-related goals. By use of IRWE, the income set-aside is not taken
into account in determining her countable earnings, so Melissa will be
able to remain under the income ceiling, at least for a while.

However straightforward this all may be in principle, practical
difficulties immediately begin to emerge. Because earnings are
calculated on a monthly basis, Melissa faces the problem created by the
way her earnings are received. In some months she receives no payments
at all, while in others, depending on when contract milestones are
achieved or when client's fiscal departments happen to pay invoices, her
income seems quite large. Averaged out, it is exactly what she expected
and exactly what SSA expects, but the number of months required to reach
the mean can vary.

As a result, several times Melissa has been threatened with benefit
cutoff (which would occur after a three-month grace period following the
determination of her ability to work) due to her earnings. She has
managed, but only at considerable emotional, temporal, and monetary
cost, to have these adverse determinations reversed. The experience has
left her shaken, however, and not entirely unwilling to consider
concealment of earnings or funds for what she regards as highly
regrettable but necessary reasons.

Melissa never before has been mistrustful of government, especially of a
benefit programs such as Social Security, but despite having avoided
economic ruin, the experience has left her guarded and suspicious. The
costs of this attitude, to her and to the effective administration of
the public programs in question, are impossible to quantify, but they
are eminently real and significant.

Despite recurring accounting problems due to timing discrepancies,
Melissa perseveres. Her business grows slowly, as do her savings, which
eventually will be put toward fulfillment of her professional potential.
Melissa learns of a business incubator in her area (i.e., a business
development center or business locator), but because her business is
home based she learns she is not eligible for its services and cannot
readily utilize its resources. One benefit for which she would be
eligible is participation in a local IDA Program. This would offer an
alternative means for sheltering and accruing needed funds. Perhaps
another option would involve another way, if she had earnings that
exceeded the SGA level and that did not necessarily need to be put
toward the AT. But far from being an alternative or adjunct capital
accumulation mechanism, for Melissa the IDA proves to be no savings
mechanism at all, because the goals of the local IDA Program, consistent
with the governing federal statute, include business start-up or
establishment, but do not clearly allow business expansion. Melissa
seeks guidance on this but cannot get the authoritative guarantees that
her now perhaps overly cautious nature has caused her to need. She is
left with IRWE.

As important as Melissa's SSDI has been her Medicare. Though she joins
an association of small businesses, she is unable to obtain any sort of
private coverage that would come close to meeting her needs.
Accordingly, retention of Medicare will be a key concern even should her
income continue to rise. It now has become difficult to justify enough
of a set-aside of funds to meet work-related needs. She still requires
some new access equipment, but she can afford it out of her earnings and
still will be left with income that exceeds the SGA amount.

As she faces a periodic and continuing disability review (of her
eligibility), Melissa searches for some way to decouple her Medicare
from her SSDI cash payments. She learns that several mechanisms indeed
exist for doing this, and that even if her Medicare were to be curtailed
it would be possible to reinstate both it and cash benefits on an
expedited basis in certain cases, using the extended period of
eligibility provisions of the law. But any interruption of coverage is
simply too risky.

The best solution seems to come out of the Ticket to Work and Work
Incentives Improvement Act. Melissa learns that SSDI recipients
participating in the Ticket Program ultimately can retain Medicare
coverage for as long as eight and a half years. But this avenue, too,
seems blocked to her, for she cannot find a suitable employment network
to accept her "ticket." First, she is neither employed nor seeking
employment, but already gainfully, if fragilely, self-employed. The
local ENs want to help people get jobs. Second, due to deterioration of
her functional capabilities (i.e., health), the service she most needs
through the EN is further help with environmental-control equipment
(ECU), including equipment to facilitate alternative methods of
accessing her computer system. SSA has questioned the strict
work-relatedness (and hence the income excludability) of this equipment,
characterizing it as a personal expense instead. SSA's position in this
regard derives further momentum from IRS's recent determination, in an
audit of her prior year's return, that some of the equipment costs
Melissa claimed as business expenses should have been treated as medical
expenses.

In any event, the ECU would cost more than the EN's anticipated profit
from cashing Melissa's ticket under either of the available ticket
payment systems. Accordingly, as appears to be their prerogative within
the law, they all decline to work with her.

Melissa now finds that she could obtain a catastrophic care policy.
Utilizing a health savings account (HSA), the exorbitant costs of even
this coverage could be brought down to a net figure that would be barely
tolerable, but catastrophic costs are not her immediate concern. Rather,
it is the routine costs of the specialized services and the continuity
she needs that are the issue. Neither Medicare nor any other known
source would allow her to avail herself of catastrophic care coverage.
Fearful that the next SSA eligibility review will result in a
determination that she is capable of engaging in SGA, based partly on
her productivity and partly on her income, Melissa reluctantly concludes
that her only safe course of action is to scale back her business and
reduce her income below the SGA level.

At Melissa's next SSA continuing eligibility review, she is suspected of
manipulating her earnings in order to remain eligible. She successfully
refutes this allegation, continues working productively but at a far
lower level than she would like or indeed than she is capable of
working, but she keeps her health insurance. Melissa is no quitter. She
is a survivor in every sense of the word, but the system has forced her
to make choices that, in the aggregate, appear to make no sense from any
policy point of view. Worse yet, they are not even conscious choices
made by society after coherent deliberation. They are the accidental
consequences of multiple program interactions and input lacking any
mechanism for taking one another into account.

Case Study 2: Application of the POWER Framework to Melissa's Situation

Life for Melissa under the POWER proposal would of course be quite
different. Following her accident, her entitlement to any federal income
support in the nature of SSDI and any medical insurance in the form of
Medicare would depend on some assessment of the related variables of
medical condition and present ability to make a living. For purposes of
the POWER framework proposal, the nature of the initial eligibility
assessments would not need to change. Strategies identified in the POWER
framework focus on what is involved in the retention or subsequent loss
of benefits, especially for people like Melissa who acquire disabilities
after periods of time in the workforce.

So far as her return to productivity and her self-sufficiency are
concerned, the question is the same as is confronted in all
work-incentives analyses: Do the nature, extent, and rate of benefit
loss correlate effectively with the acquisition of economic and social
resources needed to replace the benefits? In Melissa's case, as the
"before POWER" scenario has shown, again, that they do not correlate.

Applying Strategy A -- Entitlement Policy

Melissa has encountered three recurrent problems. The basic problem,
which will not be discussed here because it is ubiquitous, is that of
overwhelming legal and administrative complexity. That problem can be
solved by simplifying the rules and procedures to enhance the interest
in and use of specific work incentives. Each layer of reform that has
been imposed on the SSDI system going back to 1981 has been undermined
to some degree by the additional burdens of complexity, implementation
inconsistency, and overall uncertainty that have been added to the
decision process for program administrators and recipients alike.
Essentially, suspending the application of means testing for five years
(once a few simple, easily understood, and readily knowable conditions
are met) cuts through the complexity to the maximum degree possible. NCD
recommends suspension of means testing for only five years. Thus,
initially the changes are limited to an experimental population and
expose the government and the taxpayers to limited, indeed to minimal,
financial risk during the time its benefits and implications are being
studied.

Applying Strategy B -- Element B3, Medical Expense

Turning to Melissa's individual problems, two remain. One is universal.
This is the loss, threatened loss, or feared loss of health insurance
coverage (in this case, Medicare) under circumstances where the
combination of ongoing medical need plus the unavailability of
alternative private coverage makes this risk unsustainable.

Once again, a POWER proposal cuts through this problem by offering a
simple guarantee of the continuation of Medicare for five years. This
guarantee is subject to Medicare's continued availability, possibly as a
buy-in pursuant to the payment of a reasonable income-based premium
thereafter (and without the complexities associated with current
provisions allowing its retention for a potential eight and a half years
under the Ticket to Work Act).

Melissa's final problem is the most specific to her personal
circumstances. The twofold problem is at once the most easily resolved
and the most intractable of the issues facing her in returning to
productivity through gainful work. She is a person who to some degree
has skill and a potential to develop a small business, and she can to
some degree decide on the rate at which that business grows. Yet, the
Social Security Administration, not alone among major programs, is
poorly aligned, if not ill disposed, to maximize her ability to do this
at the rate she sees fit.

Her first problem was how to amass the capital needed to start her small
business without being deemed to have income suggestive of the ability
to work, or without risking being found capable of engaging in SGA. The
five-year grace period would solve this problem and eliminate this
worry. Her acquisition and use of capital for developing her small
business would be irrelevant, as would be the rate at which her business
expands and the levels of taxable income it yields. Continuing
disability reviews likewise would not take place, and the moratorium on
them currently contained in the ticket should be applied.

Melissa's second Social Security-specific problem was that the rules
governing IRWE and other work incentives and income/resource-sheltering
opportunities were crafted to enable her to start her business but not
to grow it, or not to grow it to a point where she could sustain herself
without benefits. Recall that once her income was sufficient that
deduction of the cost of work-related expenses no longer brought that
income below the SGA level, Melissa found herself in a vicious bind.
Every expansion of her business, every additional dollar of profit,
exposed her to greater risk. The loss of benefits would leave her in a
financially perilous position long before her business had ramped up
sufficiently to equalize the harm.

Applying Strategy B -- Tax Policy Element B2

Here, too, POWER offers a simple solution premised on the assumption
that if left free of such risks for five years, Melissa will be in a
position such that all benefits can be scaled down and eliminated. The
result should be long-term savings to the public.

One other area of concern here relates to tax law. Although POWER
includes changes to the tax law, discussion has not included the
disproportionately burdensome effects of current law upon Melissa's
prospects. Under current law, a number of the business tax benefits that
small businesses utilize would not be available to her, while the value
of some others, though technically available to her, would be lost.

With respect to business tax benefits that would be unavailable,
Melissa, though her business has fewer than 15 full-time employees (it
has just one), would not be allowed to claim the Disabled Access Credit,
unless part of her home were used exclusively for meetings with clients
or customers. Melissa does not have clients come to her home. She
conducts her negotiations, meetings, and site reviews via the Internet.

Without going into the intricacies of why the IRS has restricted
application of the tax credit on behalf of small firms with fewer than
15 employees, it is enough to note that were the tax credit available to
Melissa, it could greatly facilitate her ability to acquire the
equipment she needs to grow her fledgling enterprise. That is good for
everyone, even for her competitors, if one believes in the discipline of
competition in the free marketplace.

Other provisions such as the Architectural/Transportation Tax Deduction
(barrier removal) also are unavailable for technical reasons stemming
from their out-of-date premises. Any serious governmentwide effort to
return people with disabilities to the mainstream economy will need to
confront these issues. POWER addresses the issues in detail.

Ambiguities in the treatment of certain medical or business expenses
present further problems. In one scenario, Melissa's costs for ECU
technology for use in her home business were denied tax deductibility as
business expenses. This ruling is plausible, albeit bad policy, under
current law. But it is equally possible that a different auditor could,
under current law, have denied Melissa even a medical deduction for her
ECU and other access expenses. Moreover, even where a personal deduction
is allowed, its value may be severely limited if the cost was met out of
savings rather than out of current earnings, because an itemized
deduction is available only against current income. For someone like
Melissa, who was not necessarily relying totally on current income, and
for someone who was starting or growing a small business with loan
capital, the problem would be the same. The POWER framework also offers
Melissa the benefits of expanded eligibility for IRWE to nonitemizers
and a change in the threshold trigger to be able to utilize the Medical
Expense Deduction with a corresponding definition of coverage that
includes other disability-related expenses such as assistive technology.

An emerging new tax issue relates to the role of the New Markets Tax
Credit. Specifically, it relates to the means available to link small
businesses owned and staffed by people with disabilities, particularly
home-based businesses in targeted communities, to the benefits of the
law. Under POWER, Melissa might benefit from location of her business in
such an empowerment zone.

In conclusion, the premise undergirding Melissa's scenarios, before and
after POWER, is that the expenditure of potentially additive public
funds over the short term will yield long-term savings in program costs
as well as other measurable benefits to society. Even if these measures
cannot be proved in advance to result in these benefits, their actual
cost relative to projected benefit is sufficiently small under the
demonstration program model as to make the risk well worth taking.

[]{#__RefHeading___Toc204703714 .anchor}Case Study 3: Parents Raising a
Child with Significant Disabilities: James, a Teenager

Robert and Jill Robbins live in Hampton Roads, Virginia, with their
three children. Their oldest child, James, who at the start of this
scenario is 16 years old, was born prematurely and has multiple physical
and intellectual challenges. Through persistence and advocacy, James's
parents have been successful in negotiations with their local school
system. The result has been that James attends his neighborhood school
and participates in regular classes with students without disabilities
with the support of an aide whose duties include helping James use a
communication device. James and his parents are involved in secondary
school transition planning for postschool adult living.

Based on family assets and income, James is not eligible for SSI
benefits or Medicaid. The Robbinses estimate that extra costs of health
care, including purchase of assistive technology items that were not
included in James's Individual Education Program (IEP) through the
school system, are in excess of \$12,000 annually. The health care and
assistive technology costs also were beyond the scope of group coverage
provided through Mr. Robbins's employer. The Robbinses started 529 Plan
accounts for their two other children to plan ahead for college
education. However, as part of his involvement in IEP team transition
planning, James has indicated that he would like to work after high
school. With input from James about his preferences and interests, the
parents' postsecondary expectations are that his school training and
transition planning have prepared him to find employment after he ages
out (at age 22) of public education under the provisions of IDEA. Based
on the level of their son's functional assistance needs, as middle-aged
parents who are primary caregivers, the Robbinses also are concerned
about where James will live, how he will maintain a personal assistant
for daily living activities (including morning preparations for travel
to a workplace), and who will be responsible for helping him with a
number of other matters after they are deceased.

Mr. and Mrs. Robbins would like to set aside funds for James for his
adult years but are worried that any assets will count against him in
determining eligibility for SSI and Medicaid and other public benefits
when James is an adult. From friends, they have heard that it is not a
reasonable expectation for James to work and become self-sufficient.
Other families explained to the Robbins family that they also should be
concerned about possible loss of health benefits and disincentives to
employment and asset building inherent in means-tested public benefits.
Yet, consistent with their son's communications to them, the Robbinses
persist in their belief that someday James will be a business owner and
home owner. Struggling with the extra costs of raising a child with
significant disabilities, there are millions of families like the
Robbinses, who are unsure of their child's path to a better economic
future in his/her adulthood.

Case Study 3: Application of the POWER Framework to James's Situation

Based in part on the expectations that James will become a contributing
member of his community, the Robbins family would benefit from multiple
features of the proposed POWER framework. In accordance with amendments
to 529 Plans, families with a child who has a significant disability
would be allowed to set aside, with favorable tax consequences, funds
for purposes other than postsecondary education. The Robbins family will
set aside funds in a 529 Plan for James's purchase of assistive
technology and the start-up of a business.

The Robbins family also would benefit from changes to the Medical
Expense Deduction in two ways. The definition of medical expenses under
the POWER framework is clarified to include coverage of the costs for
the purchase of assistive technology, home and vehicle modifications,
personal assistance services, and respite care in addition to the
traditional expenses covered under the Medical Expense Deduction. In
addition, the threshold of allowable medical expenses, which currently
must exceed 7.5 percent of adjusted gross incomes, would be eliminated.
The more broadly defined medical expense and long-term supports
deduction would be available regardless of whether the taxpayer itemized
deductions.

As soon as James turns 18 years old, he will be eligible for both SSI
and Medicaid, and under the POWER framework with the raised resource
limits for SSI, he will be encouraged to work and save. The changes to
the Medicaid Buy-In would encourage James to earn more income and save
for the start-up of a business and the purchase of a home. Regardless of
income level, James would be able to work for five years before being
concerned about health benefits.

James also would be encouraged to create a PASS to preserve income and
Social Security benefits while setting as a goal to advance his
self-sufficiency the start-up of a business and the purchase of his
first home. Under the POWER framework, James would not need to create a
PASS until after his first five years of work. James also can earn and
save without current income and resource limits for the first five
years. Disincentives to savings and building assets have been eliminated
by applying POWER. James also would benefit from the blending and
braiding of funds in an individualized person-centered plan. He also
might benefit from careful management of resources in his individual
budget that leads to spending less than the allocated amount of funds.
In addition, with the application of POWER, James would keep 50 percent
of what he saves for his selected asset-building objectives of
purchasing, technology, and transportation. Of course, as IDEA requires,
throughout all the planning for transition from secondary school to
postschool living, the IEP team must involve James and consider his
interests and input.

[]{#__RefHeading___Toc204703715 .anchor}Case Study 4: Moira: Young Adult
with a Disability and Not on Public Benefits

Moira is a bright young college graduate seeking employment in the
corporate financial analysis field. Although her academic credentials
are stellar, she has found that her visual disability has presented
obstacles, both expected and unexpected. As a statistician, Moira
understands that the effect of the expected obstacles, which may or may
not amount to discrimination, is to change the sample size of available
employers, reducing the pool of otherwise available and suitable
companies through the self-selective exclusion of company
representatives who discriminate. But Moira, ever the optimist, knows
that many firms remain and that with time and patience she will find a
job.

What Moira had not, but perhaps should have, anticipated were the
environmental and infrastructural problems confronting her, not only as
a job seeker but potentially as a job holder. These are problems of
accessible transportation and housing, and of other dimensions of
access.

Moira lives downtown, in an area that is reasonably well served by mass
transit---a major factor in her choice of location, since she cannot
drive. The fact that it is a neighborhood with relatively low rents also
was a consideration. Moira reasoned that the web of metropolitan buses
converging on the area would assure her of transportation to and from a
future work location.

But the county, anxious to spend more money on prison building, and
reacting to federal cutbacks, has begun curtailing bus service, reducing
schedules on all routes and terminating service entirely on some others.
Moira gets a job offer, but under the new bus schedules, it would take
her three hours to get to work and three hours to get home, and if any
one bus were late by more than six minutes in reaching its transfer
point, she would miss the connection and have to add another hour to her
trip. Moira attempts to obtain paratransit service but is denied because
she is not physically incapable of using mass transit. Moira then tries
to find someone with whom she could ride-share or carpool, but no one
else at the company lives anywhere near her area, and it would take
anyone who picked her up at least a half-hour out of the way. Taking a
bus to a meeting point is possible, but the only viable meeting points
are in desolate locations, and Moira understandably is afraid. Her own
neighborhood's teeming streets are one thing, but desolate areas quite
another.

With deep regret, Moira is forced to decline the job offer. Angry, she
appeals to the transit agency to restore one particular bus route that
would have allowed her to take the job. By leafleting in her
neighborhood and along the former bus route, she is able to gather data
suggesting that, although the user base for the line was not large,
virtually all the people who would use it would be doing so to get to
and from work. The transit agency is unimpressed, stating tersely that
it is not an employment support program and that fairness requires that
route decisions be based on ridership demand only, not on some
assessment of which riders are worthier than others.

Moira uses simple principles to construct a chart showing that, by
dividing the cost of the mass transit service by the number of jobs made
possible or saved, taking into consideration the taxes generated by the
workers and other factors, the economy would benefit by reinstating the
service. But the mayor and city council indicate they have no control
over the transit agency, which is an independent authority.

Despite her low rent, Moira believes that, from the asset accumulation
standpoint, she would be better off as a home owner. Fortunately, she
receives a small inheritance that is just enough to make a down payment
on a suitable home. Finding one in the leafy suburbs proves problematic,
again because of transportation reasons, but eventually she finds one
that is seven blocks from a monorail station. The only trouble is that
to get there she has to cross a new kind of traffic circle that is
extremely dangerous because of uninterrupted vehicle traffic flow.

Moira petitions the local government to install lights or certain other
technology that would make the crossing safer. Claiming to have no money
and no legal obligation, the government refuses her request, instead
offering to put up a humiliating sign on the curb warning motorists:
[Drive slowly, blind person nearby.]{.smallcaps} Moira declines the
offer. Her research discloses that federal law and state traffic or
building codes do not purport to cover this situation, although
requirements bear upon major new projects paid in whole or in part with
federal funds. On behalf of all pedestrians, elders, and people with
various disabilities, she appeals to the voters, running for City
Council on a person-friendly platform. Unfortunately, Moira is defeated
and moves back downtown.

At length, Moira finds another house in a new development. Its control
features, including heating, cooling, kitchen appliances,
cable-readiness, and so forth, are all hardwired. All are inaccessible,
utilizing flat-panel, digital controls that cannot be accessed by a
person lacking vision---indeed, by a person lacking vision and motor
skills and good coordination between them. It is all the latest in high
tech, but it would cost upwards of \$20,000 to tear out and replace, and
Moira just does not have that much extra money, especially since she now
is living on her small inheritance while looking for a job.

Finally Moira finds a job. Joyously, eagerly, she begins work, after a
one-and-a-half-hour bus trip, but problems arise because the firm's
local area network is not fully compatible with the screen-reader
software she uses, and because the company utilizes spreadsheets and
other graphic materials that screen-readers cannot access. While readers
can be hired to help access them, the productivity losses cannot be made
up easily. The firm says that it would investigate systematic
retrofitting of the information technology system if tax subsidies were
available. Moira finds that the Disabled Access Credit, which would be
the most obvious subsidy, would not cover the case for technical
reasons. The barrier removal deduction is not relevant because all it
does is convert capital to ordinary expenses; since this retrofit,
unlike building modifications, would be a routine deductible cost
anyway, nothing is gained by applying the deduction. However, Moira
learns that it does not apply anyway. In the end, because the firm
insists on some advantage beyond the mere routine deductibility of the
expense---some sort of acceleration or tax credit that does not
exist---nothing is done. Moira toils on, below her potential, doing the
best she can, doing good work but nothing that on its face would justify
the advancement she truly deserves.

Moira hopes for the day when society's institutional arrangements will
gain the flexibility to allow her to be the fully engaged and productive
person she knows she can be. She has the company of many people in
similar circumstances across the country waiting with her.

Case Study 4: Application of the POWER Framework to Moira's Situation

If the POWER framework were introduced, Moira's opportunities and
resources to achieve economic self-sufficiency, productive employment,
and a higher quality of life would be greatly increased. In particular,
a number of the proposals made under Strategy B and Strategy D would
prove very valuable. Presently, Moira is not participating in any public
financial or medical assistance programs, so the measures discussed
under Strategy A would have no immediate applicability to her situation.
The measures in Strategy C will come into play after she secures
employment.

Applying Strategy B -- Modification to Tax Policy

Because employment seems to be the main issue facing Moira, discussion
of the proposed employer tax incentives represents a point of departure.
Moira was unable to work at her level of competence, or indeed to
achieve the upward mobility of which she was capable, because it was not
in her employer's financial interests to invest in the AT she needed. By
combining and revising the three employer tax provisions---Disabled
Access Credit, barrier removal deduction, and Work Opportunity Tax
Credit---the availability of instrumental tax subsidies could be
assured. In particular, allowing the Disabled Access Credit for
businesses of all sizes, combining the Disabled Access Credit and the
barrier removal deduction, and clarifying that a demonstrable purpose to
promote accessibility is the criterion for gaining the tax benefit, two
key goals could be achieved. All equipment intended for accommodation
purposes would be eligible for the benefit, and all firms, whether
treating their equipment purchases as capital or ordinary expenses,
would receive the benefits of converting the cost into a credit.

It seems likely that under the circumstances described, Moira's employer
would be willing to purchase the necessary devices. If not, the changes
proposed to IRWE and the Medical Expense Deduction might enable Moira to
buy the AT herself. Though her income remains limited, the opportunity
to deduct the costs of work-related AT without having to itemize
deductions could make the difference. Or, if the deduction is too large
to be absorbed by her income for the year, then she could carry the
unused portion forward or back to the following or to the preceding
year.

Applying Strategy D -- Indirect, Community-Based, and Employer
Incentives

The POWER framework could have helped Moira get her job. If the Work
Opportunity Tax Credit were available for the hiring of all unemployed
people with disabilities, not just people referred by state VR agencies
or members of families receiving various forms of government cash
payments, Moira and her employer could avail themselves of it.

In connection with Moira's ambition for promotion, the availability of
the credit to support upward mobility, through its provision for the
first year of work in a new position with the same employer involving a
significant increase in salary, would again increase the comfort level
for both parties.

While she is primarily focused on employment, Moira's problems reflect
the fact that employment cannot be studied in isolation from
transportation and housing. Many of the POWER framework proposals would
affect these variations of Moira's situation as well. Moira also might
benefit from an employer-matched education account to continue to build
her skills for career advancement.

Although almost every homeowner in this country is aware of the central
role of the tax law in the financial equation of ownership and mortgage,
fewer people stop to think about the numerous ways that public money is
involved in every phase of the real estate industry. It seems little
enough to ask that developers---in return for generous depreciation
provisions, tax-favored use of the bonding authority to create
investment capital, waiver of local real estate taxes, occasionally even
the use of eminent domain to acquire parcels---be expected to
incorporate minimal standards of accessibility for all units in single
and multifamily developments. The POWER framework incorporates the
principles of universal design as a requirement for all publicly
subsidized development. Such a requirement should incorporate beneficial
accessible design standards for the built environment but also extend to
technology access and use that reduces or eliminates barriers to
environmental control and communication.

Over time, tax-based and other measures that reward and encourage the
building or modifying of housing units in accordance with principles of
accessibility will make accessible housing more affordable by increasing
supply. Greater choice of location also will follow.

For the time being, Moira's choice of housing is limited, in part by the
inaccessibility of fixtures and appliances and by the proximity to
public transit. There is little that tax policy can do directly to
increase the availability of transit services, but there is much it can
do, and indeed has already done, to meet the mobility needs of Moira and
other people whose lack of transportation places them at a disadvantage.
Under current law, qualified fringe benefits that employers can deduct
and that employees can receive tax free include certain
transportation-related benefits, such as mass transit subsidies and in
some cases free parking. If the disability-related add-on costs of
commuting to and from work were similarly treated, or if such costs
could be brought within the ambit of the revised Disabled Access Credit,
the ability and willingness of employers to provide or help provide
alternative arrangements likely would be increased. If, in addition, a
share of costs that Moira might pay were deductible under the revised
IRWE category (commuting costs currently are not deductible, even if
resulting from a disability), then the resources for finding some viable
strategy might be at hand.

Taken together, the provisions discussed here would affect Moira's life
in ways that are positive for her and beneficial to society and the
national economy. All are triggered by work, and all reward employers
and employees who demonstrate an entrepreneurial spirit.

[]{#__RefHeading___Toc204703716 .anchor}4.4. Cost-Benefit Analysis for
the Proposed POWER Framework

This report provides estimates of disability and health coverage
benefits and tax revenue implications associated with changes in the
treatment of disability benefits and other financial incentives designed
to encourage people with disabilities to work, to accumulate financial
assets, and to attain and maintain financial security for three case
scenarios discussed above:

-   Case Study 1, concerning a young woman living in Indiana (Mary) who
    receives SSI and who begins to work for the first time at age 30, at
    a part-time, minimum-wage job.

-   Case Study 2, concerning a middle-aged woman (Melissa) who lives in
    New York and who, at age 42, is awarded SSDI benefits for a
    disability acquired through injury.

-   Case Study 3, concerning a young man (James) who lives in Virginia
    and has received SSI benefits since childhood. The scenario
    introduced him as a 16 year old involved in secondary school
    transition planning; now, at the age of 22, James has completed his
    education and is ready to enter the workforce. He takes a
    minimum-wage job working 30 hours per week.

Before the presentation of estimates, the report describes the
methodology, data sources, and underlying assumptions essential to
estimates of benefits and tax impacts for each case study.

[]{#__RefHeading___Toc204703717 .anchor}Methodology

For each case, the calculation included some or all of the following:

-   Annual disability benefits (SSI or SSDI)

-   Annual health coverage (Medicare or Medicaid) payments made by
    federal/state government for health services received during the
    year

-   Annual earnings, where applicable[^370]

-   Annual federal income taxes paid, where applicable

-   Annual FICA contributions (employee and employer)

-   Annual employer federal unemployment tax payments

-   Annual state income taxes paid

-   Annual employer state unemployment tax payments

Annual benefits, earnings, and tax revenues are estimated over a range
of years beginning with the start of (or return to) employment and
ending at age 64. All benefits, earnings, and tax revenue estimates are
calculated in real terms (2007 dollars), with no adjustment for
inflation. Benefits, earnings, and tax revenues estimated over the
specified number of years, as required by the analysis, are reported at
their present discounted value in 2007. There is no general agreement as
to what discount factor should be used, particularly for public policy
analysis. The Office of Management and Budget (OMB) recommends a rather
conservative discount rate of 7 percent (OMB, 1992)[^371] but also
suggests that other discount factors be used as a sensitivity check. The
selected discount rates for this study were 4 percent, 7 percent, and 9
percent.

[]{#__RefHeading___Toc204703718 .anchor}Data Sources and Assumptions

Data to develop these estimates were obtained primarily from those
published by the Social Security Administration and Centers for Medicare
and Medicaid Services, as well as from other state and Federal
Government sources.

Disability Benefits

Annual disability benefits are calculated for each case for each year
from the initial case study age to age 65. For SSI recipients, estimates
of SSI benefits also are made for the case study subject's remaining
lifetime (past age 64). All disability benefits are expressed in real
(2007) dollars, with no adjustment for inflation.

SSI benefits for Case Study 1 and Case Study 3 subjects (Mary and James)
are set at the 2007 federal monthly benefit of \$623 per individual, and
annualized over 12 months. Neither Indiana (state of residence for Case
Study 1, Mary) nor Virginia (state of residence for Case Study 3, James)
provide an SSI supplement administered by the Social Security
Administration to its SSI recipients; eligibility for state-funded
supplements in these states is restricted to residents of licensed
residential facilities (Indiana) or those in assisted living residences
or adult foster care arrangements (Virginia).

SSDI benefits for Case Study 2 (Melissa) are set at \$1,200, with
payments beginning in 2007, at a level deemed to be consistent with
Mary's work experience and earnings history.

Health Coverage Benefits

Average annual Medicaid benefits for Case Studies 1 and 3 are calculated
using state-specific data on mean Medicaid outlays for beneficiaries
with disabilities in 2003 from the FY 2006 Medicaid Statistical
Information System state summaries maintained by the Centers for
Medicare and Medicaid Services. These data are available online at
[www.cms.hhs.gov/DataCompendium](../www.cms.hhs.gov/DataCompendium). The
July CPI---Consumer Price Index---for medical services (for all urban
areas) is used to calculate an average annual reimbursement rate for
2006 (this, of course, assumes that any changes in Medicaid payments are
due to price changes only, and not to changes in utilization rates among
the Medicaid population of people with disabilities). The assumption is
based on actuarial reports (obtained from the *2005 Annual Report of the
Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds*).[^372] Expense
calculations indicate medical service costs increased by 4 percent
between 2006 and 2007, to arrive at an average annual Medicaid payment
amount of \$17,803 in Indiana and \$13,846 in Virginia per beneficiary
with a disability.

Average annual Medicare benefits are calculated using data for aggregate
Medicare fee-for-service reimbursements for hospital and
SMI---Supplementary Medical Insurance---services paid for the SSDI
population, divided by an unduplicated count of SSDI beneficiaries
enrolled in either or both of these services. These data were obtained
from Table 2.1 (Enrollees) and Table 3.2 (Reimbursements) from the
Medicare and Medicaid Statistical Supplements, published by the Centers
for Medicare and Medicaid Services, in *Health Care Financing Review*
and available online at
[www.cms.hhs.gov/MedicareMedicaidStatSupp/](../www.cms.hhs.gov/MedicareMedicaidStatSupp/).
Fee-for-service reimbursements are used because fewer than 10 percent of
SSDI beneficiaries are enrolled in Medicare managed care plans. Using
these data, calculations result in an average annual reimbursement per
enrollee for 2004, the most recent date available. The July CPI for
medical services (for all urban areas) is used to calculate an average
annual reimbursement rate for 2006 (this, of course, assumes that any
changes in Medicare reimbursement amounts are due to price changes only,
and not to changes in utilization rates among the SSDI Medicare
population). The assumption is based on actuarial reports (obtained from
the *2005 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds*), that indicate medical service costs increased by 4 percent
between 2006 and 2007, to arrive at an average annual reimbursement
amount per SSDI enrollee of \$7,901.

In most instances, the expectation would be that health care
expenditures vary with age and other factors over time. However, no
models or bases are available for incorporating the impact of age,
gender, or specific medical conditions to develop likely Medicare or
Medicaid expenditure scenarios for case study subjects. Thus, in this
report, average public expenditures on health care for each of the case
study subjects, in real terms, stay constant over their remaining work
lives.

Life Expectancy

Estimation of lifetime benefits for Case Studies 1 and 3 require some
assumption of life expectancy. Estimates provided by SSA, Office of the
Chief Actuary (2005),[^373] are used. Life expectancy estimates are
provided at birth and at age 65. This study elects the conservative
approach and uses life expectancies at birth. This is a prudent
assumption in light of the fact that what effect, if any, each subject's
disability may have on his or her longevity is unknown.

Earnings

For the case study subjects on SSI (Case Studies 1 and 3), the
assumption is that these individuals obtain part-time employment
initially at the federal minimum hourly wage of \$5.15. These
calculations are based on a further assumption that legislation to raise
the minimum wage passed by Congress early in 2007 would be signed by
President Bush on July 1, 2007. This legislation provides for an
increase in the minimum wage to \$7.25 per hour, phased in over a
two-year period. Based on the phase-in schedule specified in this
legislation, an assumption is that the hourly minimum wage will rise to
\$5.85 on September 1, 2007, or 60 days after the legislation is signed
into law. One year later (September 1, 2008), the minimum wage rate
increases to \$6.55 per hour; another year later (September 1, 2009),
the minimum wage rate increases to \$7.25 per hour.

Once the minimum wage reaches its maximum rate in 2009, the assumption
is hourly wage increases for the study subjects, based on anticipated
productivity gains. Productivity gains are estimated using the real-wage
differential assumptions (defined as the difference between nominal wage
growth and inflation) utilized by the Social Security Administration in
its actuarial studies (Social Security Administration, 2005).[^374]
However, deliberations about the anticipated legislation were unresolved
as of January 15, 2008, at the time of this publication.

Federal Income Tax

Federal income taxes paid by subjects in Case Studies 1 and 3 are
estimates using tax rates effective in 2006, assuming that subjects are
single but are not filing as head of household, that they take the
standard deduction of \$5,150, and that they each have one exemption
(\$3,200). Their only taxable source of income is their earnings[^375]
and the only tax credit that they qualify for is the EITC. Federal
income tax payments grow over time as income (earnings) grows.

FICA Taxes

By law, 6.2 percent of all earnings (up to \$97,000 in 2007) comprise
the employee's Social Security contribution; another 1.45 percent is
withheld from earnings for Medicare. Employers are required to match
this contribution. FICA taxes (combined Social Security and Medicare
contributions) are calculated at 7.65 percent of earnings for employees.
However, the employer's payroll tax contributions (an additional 7.65
percent of earnings paid) reduce taxable business income, which offsets
some of the tax revenues generated by this FICA payroll tax.

Federal Unemployment Tax Act

By law (Federal Unemployment Tax Act, or FUTA), employers are required
to contribute to the cost of unemployment insurance for workers in their
state. This payroll tax amounts to 6.2 percent of all wages paid to
their employees (on the first \$7,000 of wages paid).[^376] However,
since most of this contribution is offset by a tax credit on income
taxes paid by businesses, the effective unemployment tax rate for most
employers is 0.008 percent.

State Income Taxes

Both Indiana and Virginia levy income taxes on their residents. In each
state, the starting point for the tax calculation is the adjusted gross
income calculated for each of the study subjects. State-specific
adjustments to income for exemptions and deductions are required in
order to arrive at taxable income. Similar to the federal tax process,
calculation for this study used tax rates effective in 2006, assuming
that subjects are single, that they take the standard deduction
applicable in each state (\$3,000 in Virginia; no standard deduction in
Indiana), and that they each have one exemption (\$1,000 in Indiana;
\$900 in Virginia). Their only taxable source of income is their
earnings,[^377] and the only tax credit that they qualify for is the
state's EITC or its equivalent. State income tax payments grow over time
as income (earnings) grows.

State Unemployment Taxes

Employers also contribute to state unemployment insurance funds. State
unemployment tax rates can vary with such factors as the number of
employees, size of the payroll, and past layoff history (indicating the
probability that employees will require unemployment insurance payments
in the future). The requirement to pay state unemployment taxes applies
to most, but not all, employers in a given state.[^378]

In Indiana, state unemployment tax is charged to the first \$7,000 of
earnings for each employee, at a starting rate of 2.7 percent. This rate
may be adjusted later, based on the employer's layoff history. For
estimation purposes, an assumption is that the study subject's employer
is liable for paying state unemployment taxes and that the employer tax
rate is 2.7 percent.

In Virginia, new employers pay 2.5 percent in tax in employee earnings
(up to \$7,000 in annual earnings). One year later, the employer becomes
eligible for a computed tax rate (ranging from 0 percent to 6.2
percent), based on their layoff history and benefits paid to laid-off
workers. For estimation purposes, the application is made of a state
unemployment tax rate of 2.5 percent to the first \$7,000 of earnings
reported for the Case Study 3 subject in each year of his employment.

[]{#__RefHeading___Toc204703719 .anchor}Benefits, Earnings, and Tax
Revenue Estimates

The estimated benefits, earnings, and tax revenue impacts associated
with earnings are provided below for the three case studies. For each
case, the estimate includes the following:

-   Total benefits (disability and health coverage benefits) that would
    be paid out over the remaining benefit life of the case study
    subject. For Case Studies 1 and 3, which involved SSI benefits, the
    remaining benefit life is estimated in two parts:

```{=html}
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-   The remaining work life of the subject through age 64

-   The postretirement years, defined as age 65 through the subject's
    expected life expectancy

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```
-   For Case Study 2, an SSDI recipient, the remaining benefit life is
    defined as the subject's work life.

1\. Total benefits paid under Scenario 1, where disability benefits
cease five years into the subject's remaining work life. Disability
benefits would cease immediately after five years, while health coverage
benefits would transition out based on current extended health care
coverage provisions (extended period of eligibility for Medicare
benefits and continued Medicaid coverage under Section 1619\[b\]).

2\. Total benefits savings under Scenario 1. For the SSDI recipient in
Case Study 2, this estimate is simply total benefits paid out over the
remaining work life (Scenario 1) minus total benefits paid for five
years only (Scenario 2). For SSI recipients, total SSI benefits paid out
over remaining work life only (Scenario 1a) as the baseline for
measurement of benefit savings.

3\. Total benefits paid under Scenario 2, where disability benefits
remain in place for the first five years into the case study subject's
life and are then phased out over the next five years. This phase-out of
disability benefits proceeds as follows:

-   Year 6: Receive 70 percent benefits

-   Year 7: Receive 45 percent benefits

-   Year 8: Receive 25 percent benefits

-   Year 9: Receive 15 percent benefits

-   Year 10: Receive 10 percent benefits

> Health coverage benefits continue into the future, based on current
> regulations extending health care coverage for Medicare and Medicaid
> beneficiaries who work.

4\. Total benefits savings under Scenario 2, calculated as (1) minus (4)
for Case Study 2 and (1a) minus (4) for SSI recipients.

For Case Studies 1 and 3, which address SSI beneficiaries and workforce
entry, the estimated earnings are calculated over the remaining work
lives of the subjects and the estimated federal and state taxes that
will be collected from these earnings.

Case Study 1 (Earnings and Tax Estimates)

The case study involves Mary, a 30-year-old woman with a disability who
lives in Indiana and who has never worked. She receives Supplemental
Security Income payments at the federally mandated monthly rate of \$623
in 2007, and is eligible for Medicaid coverage. She takes a part-time
job at the current federal minimum wage of \$5.15 per hour, and works 25
hours per week. For estimation purposes, an assumption is made that this
employment position continues until she reaches age 65. Mary's life
expectancy, given that she was born in 1976, is about 77 years.

Table 2 provides estimates of SSI and Medicaid benefits that Mary will
receive over her estimated life span of 77 years. Total remaining
lifetime SSI benefits for Mary, discounted back to 2007 using a 4
percent discount rate, are \$158,455. Of these, \$139,537 are benefits
that would be paid out over her remaining work life (that is, up through
age 64); the remaining \$18,918 is the present discounted value (at 4
percent) of the SSI benefits that would be paid to her at age 65 through
age 77. Associated Medicaid benefits are \$388,681 over her entire
remaining lifetime, with \$332,286 associated with her remaining work
life and \$56,395 estimated as benefits that she would receive
postretirement. Similar interpretations apply to SSI and Medicaid
benefits estimates discounted at 7 percent and 9 percent.

Estimates of benefits impacts and savings over Mary's working life under
two alternative benefits scenarios are presented in table 3. If Mary
were to receive her SSI benefits for only five years (2007 through
2011), she would receive only \$33,282 in SSI benefits (expressed at
their present value discounted at 4 percent). Thus, the benefits savings
under this scenario, defined as total working lifetime SSI benefits
(\$139,537) less five years of benefits (\$33,282) is \$106,255. Note
the use of work life benefits, rather than total lifetime benefits, as
baseline here. This reflects the underlying premise of this scenario
that the continuation of SSI benefits for five years after the onset of
employment will enable Mary to work steadily from age 30 through age 64,
thus building up credit toward Social Security Old-Age and Survivors
Insurance (OASI) benefits. These OASI benefits will provide some offset
to SSI benefits savings. At the same time, if these benefits are not
very low, Mary still may qualify for SSI benefits. The net benefits
picture postretirement is not clear-cut. In this study, the use of work
life as the baseline for benefits scenarios provides a conservative
estimate of SSI benefits savings for Mary.

Likewise, extending SSI benefits for more than five years after
employment, with a gradual phase-down between years 6 and 10, results in
a total of \$42,633 in SSI benefits paid out. This results in lifetime
SSI benefits savings of \$96,904 (the difference between total work life
SSI benefits of \$139,537 and the \$42,633 in benefits paid out under
Scenario 2). Note that there is no change in Medicaid benefits paid out
under either Scenario 1 or Scenario 2. While Mary is working and is not
receiving SSI benefits, her earnings never exceed her state's 2007
earnings threshold for Medicaid benefits under Section 1619(b).

Earnings and tax revenues generated as a result of continued employment
until age 65 are provided in table 4. The present value of Mary's
lifetime earnings from age 30 through age 64, discounted at 4 percent,
is \$194,155. She will pay \$1,278 in federal income taxes over her work
life and \$5,813 in state income taxes. Her employment will generate a
total of \$29,706 in FICA revenues; 50 percent of these are paid by her
employer and 50 percent are paid by Mary. Her employer also will pay a
total of \$8,100 in federal unemployment taxes and \$3,528 in state
unemployment taxes over the course of her employment---all values
expressed in terms of their present discounted value (4 percent). Total
federal tax revenues generated by her employment total \$39,804, while
state tax revenues total \$9,341. Her post-tax earnings, which exclude
her portion of all tax revenues generated by her employment, come to
\$172,058 (discounted at 4 percent). Table 4 provides analogous earnings
and tax revenue estimates for discount rates of 7 percent and 9 percent.

Finally, the assumption is that Mary's SSI benefits end after five years
of employment (that is, under Case Study 1, Scenario 1). Assuming a 4
percent discount rate, it would take six years beyond this initial
five-year period to accrue sufficient SSI benefits savings to match SSI
benefits expenditures during the first five years. Comparable time
periods using 7 percent and 9 percent discount rates are eight years and
nine years, respectively.[^379]

TABLE 2: LIFETIME SSI AND MEDICAID COSTS: CASE STUDY 1 (Mary)\
(2007 Dollars)

  ------------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
                Discount                        Discount                        Discount              
                Rate: 4                         Rate: 7                         Rate: 9               
                percent                         percent                         percent               

                SSI        Medicaid   Total     SSI        Medicaid   Total     SSI        Medicaid   Total

  Total         158,455    388,681    547,136   102,649    250,766    353,415   81,730     198,522    280,262
  benefits ages                                                                                       
  30--77\*                                                                                            

  Total         139,537    332,286    471,823   96,797     230,507    327,304   78,998     188,121    267,119
  benefits paid                                                                                       
  during work                                                                                         
  life (ages                                                                                          
  30--64)                                                                                             

  Total         18,918     56,394     75,312    5,852      20,259     26,111    2,742      10,401     13,143
  benefits paid                                                                                       
  in                                                                                                  
  retirement\                                                                                         
  (ages 65--77)                                                                                       
  ------------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------

\*Mary's assumed life expectancy is 77.

TABLE 3: WORK LIFE SSI AND MEDICAID COSTS AND SAVINGS: CASE STUDY 1
(Mary)\
(2007 Dollars)

  ----------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
              Discount                        Discount                        Discount              
              Rate: 4                         Rate: 7                         Rate: 9               
              percent                         percent                         percent               

              SSI        Medicaid   Total     SSI        Medicaid   Total     SSI        Medicaid   Total

  Total       139,537    332,286    471,823   96,797     230,507    327,304   78,998     188,121    267,110
  benefits                                                                                          
  ages 30--64                                                                                       

  Scenario 1: 33,282     332,286    365,568   30,653     230,507    261,160   29,079     188,121    217,200
  Benefits                                                                                          
  paid                                                                                              

  Scenario 1: 106,255    0          106,255   66,144     0          66,144    49,919     0          49,919
  Lifetime                                                                                          
  benefits                                                                                          
  savings                                                                                           

  Scenario 2: 42,633     332,286    374,919   38,313     230,507    268,820   35,810     188,121    223,931
  Benefits                                                                                          
  paid                                                                                              

  Scenario 2: 96,904     0          96,904    58,484     0          58,484    43,188     0          43,188
  Lifetime                                                                                          
  benefits                                                                                          
  savings                                                                                           
  ----------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------

Scenario 1: SSI benefits paid over first five years only. Medicaid
extended until remaining work life, as earnings never meet the Section
1619(b) threshold. Scenario 2: SSI benefits phased out over second five
years. Medicaid extended until remaining work life, as earnings never
meet the Section 619(b) threshold.

TABLE 4: EARNINGS AND TAX PAYMENT ESTIMATES: CASE STUDY 1 (Mary)\
(2007 dollars)

  --------------------------------------- ---------- ---------- ----------
                                          4 percent  7 percent  9 percent

  Total lifetime earnings (ages 30--64    194,155    129,998    103,876
  years)                                                        

  Federal tax revenues attributable to                          
  earnings                                                      

  Federal personal income tax revenues    1,278      140        \(237\)

  FICA taxes paid (by employer and        29,706     19,890     15,893
  employee)                                                     

  FUTA taxes paid (by employer)           8,100      5,619      4,586

  Total federal tax revenues\*            39,804     25,649     20,242

  State tax revenues attributable to                            
  earnings                                                      

  State income tax revenues               5,813      3,854      3,060

  State unemployment taxes paid (by       3,528      2,447      1,997
  employer)                                                     

  Total state tax revenues\*              9,341      6,301      5,057

  Total federal and state revenues        49,145     31,950     25,299
  generated\*                                                   

  Total post-tax earnings                 172,058    115,933    92,997
  --------------------------------------- ---------- ---------- ----------

\*Does not include possible business income tax revenue offset
attributable to higher payroll tax expenses.

Case Study 2 (Earnings and Tax Estimates)

Melissa is a 42-year-old woman who has sustained a disabling injury and
has qualified for SSDI. Table 5 presents estimates of benefits savings
(SSDI and Medicare) associated with two benefits scenarios in this NCD
study.

If she remains on the SSDI rolls until she reaches age 65, when she
presumably would be eligible for Social Security retirement benefits,
her total SSDI benefits would come to \$208,169, discounted at 4
percent. Her associated health coverage benefits under Medicare total
\$114,218.

Of these total lifetime SSDI benefits, \$58,337 are received in the
first five years. If SSDI benefits ceased after five years due to
earnings in excess of the substantial gainful activity level, Medicare
benefits would continue for an additional 8.5 years. Thus, Medicare
benefits under Scenario 1 include a total of 13.5 years of benefits, or
\$78,012 (discounted at 4 percent). If SSDI benefits were to cease after
five years, total lifetime SSDI benefits savings would amount to
\$149,832, and Medicare benefits savings would total \$36,206.

Similarly, if SSDI benefits are phased out between the sixth and tenth
years, SSDI benefits paid out over 10 years are estimated at \$76,349;
Medicare benefits over 18.5 years would total \$98,731. This phase-out
of SSDI benefits, with its associated impact on Medicare eligibility,
would provide benefits savings of \$131,821 in SSDI benefits and
\$15,488 in Medicare benefits, both discounted at 4 percent. Similar
estimates using discount rates of 7 percent and 9 percent are also
provided in table 5.

TABLE 5: LIFETIME SSDI AND MEDICARE COSTS AND SAVINGS: CASE STUDY 2
(Melissa)\
(2007 Dollars)

<table style="width:100%;">
<colgroup>
<col style="width: 17%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td> </td>
<td colspan="3">Discount Rate: 4 percent</td>
<td colspan="3">Discount Rate: 7 percent</td>
<td colspan="3">Discount Rate: 9 percent</td>
</tr>
<tr class="even">
<td> </td>
<td>SSDI</td>
<td>Medicare</td>
<td>Total</td>
<td>SSDI</td>
<td>Medicare</td>
<td>Total</td>
<td>SSDI</td>
<td>Medicare</td>
<td>Total</td>
</tr>
<tr class="odd">
<td><p>Total benefits ages</p>
<p>42–64</p></td>
<td>208,169</td>
<td>114,218</td>
<td>322,388</td>
<td>156,712</td>
<td>85,985</td>
<td>242,697</td>
<td>132,450</td>
<td>72,673</td>
<td>205,123</td>
</tr>
<tr class="even">
<td>Scenario 1: Benefits paid</td>
<td>58,337</td>
<td>78,012</td>
<td>136,349</td>
<td>53,435</td>
<td>64,489</td>
<td>117,925</td>
<td>50,506</td>
<td>57,316</td>
<td>107,822</td>
</tr>
<tr class="odd">
<td>Scenario 1: Lifetime benefits savings</td>
<td>149,832</td>
<td>36,206</td>
<td>186,038</td>
<td>103,277</td>
<td>21,496</td>
<td>124,772</td>
<td>81,944</td>
<td>15,357</td>
<td>97,301</td>
</tr>
<tr class="even">
<td>Scenario 2: Benefits paid</td>
<td>76,349</td>
<td>98,731</td>
<td>175,080</td>
<td>68,190</td>
<td>77,492</td>
<td>145,682</td>
<td>63,471</td>
<td>66,926</td>
<td>130,397</td>
</tr>
<tr class="odd">
<td>Scenario 2: Lifetime benefits savings</td>
<td>131,821</td>
<td>15,488</td>
<td>147,308</td>
<td>88,522</td>
<td>8,492</td>
<td>97,015</td>
<td>68,979</td>
<td>5,747</td>
<td>74,726</td>
</tr>
</tbody>
</table>

Scenario 1: SSDI benefits paid over first five years only. Medicare
extended for 8.5 years thereafter.

Scenario 2: SSDI benefits phased out over second five years. Medicare
extended for 8.5 years beginning in year 11.

Case Study 3 (Earnings, Benefits, and Tax Estimates)

This case study focuses on James---introduced at age 16 who has received
SSI payments since turning 18 and now, at age 22, is ready to enter the
workforce. James currently receives the federally mandated minimum SSI
payment of \$623 per month, with no state supplement. James now lives in
Virginia and begins working 30 hours per week at a minimum-wage job. As
in Case Study 1, the assumption is that James works continually in this
type of position until he reaches retirement age. James's life
expectancy, given that he was born in 1985, is 70 years.

In table 6 are estimates of SSI and Medicaid benefits reveal what James
could receive over his estimated life span of 70 years. Total remaining
lifetime SSI benefits for James, discounted back to 2007 using a 4
percent discount rate, are \$159,549. Of these, \$152,292 are benefits
that would be paid out over his remaining work life; the remaining
\$7,257 is the present discounted value (at 4 percent) of the SSI
benefits that would be paid to James between age 65 and age 70.
Associated Medicaid benefits are \$295,494 over his entire remaining
lifetime, with \$282,054 associated with his remaining work life and
\$13,440 estimated as postretirement Medicaid benefits. Similar
estimates are provided for discount rates of 7 percent and 9 percent.

Estimates of benefits impact and savings over James's working life under
the two alternative benefits scenarios are presented in table 7. If
James were to receive SSI benefits for only five years (2007 through
2011), he would receive \$33,282 in SSI benefits (expressed at their
present value discounted at 4 percent). Thus, the benefits savings under
this scenario, defined as total working lifetime SSI benefits
(\$152,292) less five years of benefits (\$33,282) is \$119,010. Again,
in application of POWER, work life benefits used, rather than total
lifetime benefits, are the baseline here.

Likewise, extending SSI benefits for more than five years after
employment, with a gradual phase-down between years 6 and 10, results in
a total of \$42,633 in SSI benefits paid out. This results in lifetime
SSI benefits savings of \$96,904 (the difference between total work life
SSI benefits of \$139,537 and the \$42,633 in benefits paid out under
Scenario 2). As with Case Study 1, there is no change in Medicaid
benefits paid out under either Scenario 1 or Scenario 2.

Earnings and tax revenues generated as a result of continued employment
until age 65 are provided in table 8. The present value of James's
lifetime earnings from age 30 through age 64, discounted at 4 percent,
is \$236,897. He will pay \$6,967 in federal income taxes over his work
life and \$6,313 in state income taxes. His employment will generate a
total of \$36,246 in FICA revenues; 50 percent of these are paid by the
employer and 50 percent are paid by James. His employer also will pay a
total of \$8,206 in federal unemployment taxes and \$3,565 in state
unemployment taxes over the course of his employment; all values
expressed in terms of their present discounted value (4 percent). Total
federal tax revenues generated by his employment total \$51,419, while
state tax revenues total \$9,897. James's post-tax earnings, which
exclude his portion of all tax revenues generated by his employment,
come to \$226,841 (discounted at 4 percent). Earnings and tax revenue
estimates for discount rates of 7 percent and 9 percent also are
provided in table 7.

TABLE 6: LIFETIME SSI AND MEDICAID COSTS: CASE STUDY 3 (James)\
(2007 Dollars)

  ------------ ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
               Discount                        Discount                        Discount              
               Rate: 4                         Rate: 7                         Rate: 9               
               percent                         percent                         percent               

               SSI        Medicaid   Total     SSI        Medicaid   Total     SSI        Medicaid   Total

  Total        159,549    295,494    455,043   102,921    190,615    293,536   81,849     151,589    233,438
  benefits                                                                                           
  ages                                                                                               
  22--70\*                                                                                           

  Total        152,292    282,054    434,346   100,978    187,017    287,995   81,025     150,062    231,087
  benefits                                                                                           
  paid during                                                                                        
  work life                                                                                          
  ages 22--64                                                                                        

  Total        7,257      13,440     20,697    1,943      3,598      5,541     824        1,527      2,351
  benefits                                                                                           
  paid in                                                                                            
  retirement                                                                                         
  ages 65--70                                                                                        
  ------------ ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------

\*James's assumed life expectancy is 70 years.

TABLE 7: WORK LIFE SSI AND MEDICAID COSTS AND SAVINGS: CASE STUDY 3
(James)\
(2007 Dollars)

  ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------
             Discount                        Discount                        Discount              
             Rate: 4                         Rate: 7                         Rate: 9               
             percent                         percent                         percent               

             SSI        Medicaid   Total     SSI        Medicaid   Total     SSI        Medicaid   Total

  Total      152,292    282,054    434,346   100,978    187,017    287,995   81,025     150,062    231,087
  benefits                                                                                         
  ages                                                                                             
  22--64                                                                                           
  years                                                                                            

  Scenario   33,282     282,054    315,336   30,653     187,017    217,670   29,079     150,062    179,141
  1:                                                                                               
  Benefits                                                                                         
  paid                                                                                             

  Scenario   119,010    0          119,010   70,325     0          70,325    51,946     0          51,946
  1:                                                                                               
  Lifetime                                                                                         
  benefits                                                                                         
  savings                                                                                          

  Scenario   42,633     282,054    324,587   38,313     187,017    225,330   35,810     150,062    185,872
  2:                                                                                               
  Benefits                                                                                         
  paid                                                                                             

  Scenario   109,659    0          109,659   62,665     0          62,665    45,215     0          45,215
  2:                                                                                               
  Lifetime                                                                                         
  benefits                                                                                         
  savings                                                                                          
  ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- ---------- ---------

Scenario 1: SSI benefits paid over first five years only. Medicaid
extended over remaining work life, as earnings never meet the Section
1619(b) threshold. Scenario 2: SSI benefits phased out over second five
years. Medicaid extended over remaining work life, as earnings never
meet the Section 1619(b) threshold.

TABLE 8: EARNINGS AND TAX PAYMENT ESTIMATES: CASE STUDY 3 (James)\
(2007 Dollars)

  -------------- ------------------------------------- ---------- --------- --------- ---------
                                                       Discount                       
                                                       Rate                           

                                                       4 percent  7 percent           9 percent

  Total lifetime                                       236,897    157,402             120,372
  earnings (ages                                                                      
  22--64)                                                                             

  **Federal tax                                                                       
  revenues                                                                            
  attributable                                                                        
  to earnings**                                                                       

                 Federal personal income tax revenues  6,967                4,046     2,925

                 FICA taxes paid (by employer and      36,246               24,083    19,182
                 employee)                                                            

                 FUTA taxes paid (by employer)         8,206                5,657     4,606

  Total federal                                        51,419               33,786    26,713
  tax revenues\*                                                                      

  **State tax                                                                         
  revenues                                                                            
  attributable                                                                        
  to earnings**                                                                       

                 State income tax revenues             6,313                3,749     2,815

                 State unemployment taxes paid (by     3,565                2,364     1,897
                 employer)                                                            

  Total state                                          9,878                6,113     4,712
  tax revenues\*                                                                      

  Total federal                                        61,297               39,899    31,425
  and state                                                                           
  revenues                                                                            
  generated\*                                                                         

  Total post-tax                                       226,841              143,914   113,337
  earnings                                                                            
  -------------- ------------------------------------- ---------- --------- --------- ---------

\*Does not include possible business income tax revenue offset
attributable to higher payroll tax expenses.

Case Study 4: How to Monetize Policy/Program Impacts for Assessment
Purposes

Cost-benefit analysis provides a framework for identifying, organizing,
measuring, and comparing the costs and benefits, broadly defined, of any
proposed regulation, policy, or program. The primary question that this
analysis seeks to answer is: Do the aggregate benefits to be achieved
equal or exceed all costs associated with a new/altered regulation or
policy? Properly done, cost-benefit analyses consider all costs and
benefits, with some recognition that costs and benefits are not evenly
distributed across various stakeholders in society. Aggregation of all
benefits and all costs for comparison purposes requires the ability to
measure these costs and benefits in monetary terms. However, intangible
impacts, or costs and benefits that cannot be easily measured in
monetary terms, also should be recognized and reported. Additionally,
not all costs and benefits accrue to stakeholders who are affected
directly by the proposed regulation, program, or policy; third parties
also may be affected, positively or negatively. These indirect costs and
benefits also should be measured and considered.

For more than 25 years, the Federal Government actively has espoused the
use of some comparative analysis of costs and benefits to assess new
regulatory initiatives[^380] and, somewhat more recently, to assess the
impact of policy or programmatic changes in health and welfare programs.
The following methodologies and tools are examined briefly to explore
their efficacy when applied to disability-related issues.

[]{#__RefHeading___Toc204703720 .anchor}Use of Cost-Benefit Analysis in
the Regulatory Arena: Environmental Regulation

The Environmental Protection Agency uses cost-benefit analyses when
considering new regulations or when periodically reviewing existing
regulations. To assess and measure benefits associated with implementing
a more stringent air quality standard for a specific pollutant, analysts
typically rely on existing studies that allow some estimation of the
impact of the change in air quality on some outcome.

A relatively straightforward application of this process can be used to
assess agricultural (crop) impacts associated with changes in air
quality. There is a broad range of plant pathology studies, conducted in
carefully controlled laboratory conditions, that provide detailed
dose-response information on how specific types of plants respond when
exposed to a specified air pollutant at a specified level. These
dose-response functions can be applied on a grander scale to predict the
expected increase or decrease in yields for specific crops under
alternative ambient air quality standards. Applying these dose-response
functions to area-specific data on acreage planted with each type of
crop, and valuing projected changes in crop yields at market prices,
will provide monetary estimates of the impact of changing regulations on
the agricultural sector.

Note that this measurement of the potential benefits associated with
increasingly stringent air quality standards begins with a scientific,
laboratory-based measurement of how the outcomes (crop yields) are
likely to respond to a change in ambient air quality. A straightforward
approach is available for valuing these changes, using
market-established prices. The benefit associated with improved air
quality---higher crop yields---also is well defined. Assessing the
impact of changes in air quality on people is not as easy.

One might expect that improved air quality (resulting from more
stringent ambient air quality standards) would result in better health
among the population, measured as fewer deaths from respiratory-related
causes and lower incidence/prevalence of acute or chronic respiratory
conditions. To assess the impact of a change in air quality standards
(or to compare the relative effects of a range of standards) on human
mortality and morbidity (both acute and chronic), the investigator could
look for epidemiological studies that would allow investigators to
measure the (quantifiable) health effects associated with changes in air
quality. To be useful for replication, these studies would have to
produce a plausible dose-response curve or function that could be
applied to the alternative air quality standards under consideration. In
other words, the investigator would need to use results from existing
studies to predict, for a given increase/reduction in an air quality
standard, the likely decrease/increase in mortality and morbidity rates
associated with that change.

These impacts must then be assigned a dollar value. This can be done in
various ways. Increases or decreases in pollution-related deaths can be
valued using statistical value of life measures or other measures.
Morbidity effects can be valued as increases or decreases in direct
medical expenditures, work loss days, and reduced activity days. Work
loss days and reduced activity days also must be assigned a monetary
value, typically reflecting prevailing average wages (or some portion
thereof for a reduced activity day). Census data can be used to
extrapolate these impacts to county or other local-level populations,
and these smaller-area estimates can be combined for a national
estimate.

This brief summary about the use of epidemiological studies to assess
benefits associated with changes in air quality standards and
regulations hides a multitude of difficulties. It would be a rare event
indeed to find an epidemiological study that is perfectly suited, in
methodological and technical terms, to the task at hand. The scope and
breadth of the cost-benefit analysis is limited to the specific types of
health effects measured in these studies; there may well be other
effects for which no suitable prior studies exist. There also may be
other personal benefits to cleaner air, including reduced
soiling/cleaning expenses and aesthetic benefits; these are not captured
by these epidemiological studies (although there may be other evidence
to support estimates of these benefits).

The economic literature can provide an alternative approach to measuring
benefits for improvements in air quality by measuring the willingness to
pay (WTP) for this environmental amenity. Early, crude WTP studies
(using hedonic wage and hedonic property value models) postulated that
local differences in average wage levels or in property values
reflected, in part, differences in air quality that could be measured as
the ambient levels of specific air pollutants. The portion of the wage
or property value differential attributable to differential exposures to
a specific pollutant could be used to measure willingness to pay to
avoid this exposure. Once again, this estimate can be extrapolated over
the entire population, building up from area-specific estimates, to
arrive at a national estimate. This approach, conceptually, includes all
the perceived benefits associated with cleaner air; however, it is not
clear that WTP measures can adequately measure all benefits. While there
have been further developments in approaches to conceptualizing and
measuring WTP over the last 20 years, information has not been made
available regarding their application to environmental regulation.

The comments in the report concentrate on applications of cost-benefit
analysis to environmental regulation to measurement of benefits, based
on limited experience. Cost estimates typically are developed from an
engineering basis, looking at specific sources of pollution and
determining what equipment or other costs would be incurred to bring
emissions from each source into compliance with more stringent emissions
standards. Engineers sometimes use a narrow concept of costs, compared
to economists, who look at the impact of (and possible costs and
benefits associated with) changes. For example, changes in plant
production process and for the global market, changes in possible
standards would be very difficult to measure, and would require a highly
stylized and simplified conceptual model with some loss of "real world"
conditions.

The EPA can utilize cost-benefit analysis in its regulatory decision
process because there exists some scientific basis in vetted and
published academic research, however imperfect, for measuring the impact
of changes in air quality standards on some important outcomes. The
proposed changes in air quality standards also do not attempt to elicit
changes in human behavior, and do not require such changes among the
population at large for their successful implementation. The situation
is different when one considers policies or regulations that directly
affect human behavior or that are designed to influence human behavior
in some way.

[]{#__RefHeading___Toc204703721 .anchor}Application of Cost-Benefit
Analyses to Disability Policy Initiatives

Using cost-benefit analysis to assess proposed disability policy
initiatives is no easy task. First, in contrast to the example of the
use of cost-benefit analyses in setting or evaluation of air quality
standards, there is little, if any, hard research that directly measures
or documents how the target population (people with disabilities) will
react or be affected by the implementation of specific policy
initiatives. For example, suppose that implementation occurs during a
transition period where SSI or SSDI benefits are maintained or phased
out rather than entirely cut off once earnings eligibility levels are
exceeded. Will this motivate and assist people with disabilities to seek
employment and develop earnings capacity that will enable them to
sustain themselves in the long run without receipt of disability
benefits? No data or studies are available to answer this question,
quantify the impacts, and conduct a cost-benefit analysis.

Another example reports a fair amount of evidence (from survey
statistics and from anecdotal sources) that the lack of accessible
transportation is a barrier to employment for at least some people with
disabilities. But much remains unknown about this population. How many
people with disabilities are affected? What are their specific
transportation needs (which will vary depending on type or severity of
disability, geographic location, employment location and work
days/hours, and the availability of accessible transit options)? What
types of transportation solutions would help at least some of these
people obtain and sustain gainful employment? Would the gains to
individuals and society as a result of a specific transportation
solution equal or exceed the costs of that solution to implement and
maintain? Some interesting insights may be gained by looking at
evaluations of recent federally funded initiatives to address the needs
of a range of transportation-disadvantaged groups, including people with
disabilities, but only if program data can identify users with a
disability. Data or studies to answer the questions posed above were
unavailable for this report.

In general, if existing studies or data could be used to construct a
valid cost-benefit analysis for programs or policies that address social
needs or attempt to induce some sort of behavioral change for the
population with disabilities, the situation would be considered highly
unusual. The definition and measurement of this target population is
hampered by a lack of consistency across existing studies in how
disability is defined. And certainly the identification of what
constitutes disability can and should change, depending on the policy
issues under consideration. But this remains a key methodological
barrier that impedes any attempt to contrast, compare, and possibly
generalize from findings across existing studies that purport to examine
the same behavior or answer the same questions.

More to the point, there are no scientifically reviewed,
methodologically valid studies or other empirical evidence available
from which costs and benefits can be extrapolated for most policy
prescriptions and programs relevant to disability issues. There are good
and compelling reasons for this. To assess the economic impacts of
policies that seek to influence individual behavior and decisions, there
is need to observe and measure the behavioral response to these
policies. Methodologically sound cost-benefit analyses in the social
policy arena require significant time and resources to conduct; it also
can take years to observe the complete impact. The experience of the
welfare reform experiments conducted between late 1980s and the
mid-1990s can provide some lessons here.

Section 1115 of the Social Security Act allows the secretary of Health
and Human Services to waive specific provisions of this act within
individual states for the purpose of implementing and charting the
effectiveness of these waivered program elements and policies. During
the 1980s, the Federal Government encouraged states to use this waiver
process to develop and test new initiatives at the state level to reduce
the number of recipients of Aid to Families with Dependent Children
(AFDC), ease the transition into the labor market for AFDC recipients,
and otherwise improve the lives of AFDC recipients and their families.
Between 1987 and 1996, HHS approved 83 waiver applications. Each of
these approvals required a rigorous analysis of the costs, benefits, and
impacts of the waivered program elements, and typically imposed a
specific methodology for conducting this evaluation. The costs of these
evaluations were borne by the Federal Government.

The methodology of choice for most of these evaluations was an
experimental design in which welfare recipients were selected at random
and placed into two groups. One group, the experimental group, would be
treated under the new (waivered) welfare program or rules. The other
group, the control group, would not be subject to the new rules; the old
rules would apply to this group. Differences in measurable outcomes
(such as employment, earnings, educational attainment, and other
programmatic objectives) could be attributable to programmatic
differences. Differential costs and benefits in program elements and
administrative costs could be calculated and compared as well.
Nonexperimental methods (typically pre- or post-analyses of time series
data) were approved in a few cases where state officials argued that an
experimental design was not appropriate or not feasible.

The use of experimental methods in social policy research is more easily
described than implemented. In the context of the welfare reform
experiments described above, it typically was very difficult to
implement and maintain control conditions for the very small number of
welfare recipients who were selected at random to be treated under the
former program rules and regulations. These experiments also were
designed typically to extend over several years (the typical evaluation
had a five-year time frame) to allow sufficient time for clients to
complete job training and other program requirements and for behavioral
impacts to materialize and be observed. This long time frame added to
the costs of these evaluations. This also is a long time in terms of the
political process. Policymakers and political interests typically want
answers more quickly, particularly when an election beckons. For
example, New Jersey was the first state to implement a family cap
provision in its welfare program, in October 1992. By the following
summer, in the heat of a gubernatorial election campaign and before the
federally mandated program evaluation began, the state released
statistics purportedly showing a decline in births among women on
welfare. The family cap clearly was working, only 10 months after it
went into effect!

[]{#__RefHeading___Toc204703722 .anchor}Lessons for Application of
Cost-Benefit Analysis to Disability Issues

A cost-benefit analysis for any proposed policy or program cannot be
done without methodologically valid empirical evidence on how the target
population for that policy or program is affected. This evidence is just
not available for policies and programmatic proposals that attempt to
address barriers to employment and quality of life for people with
disabilities. However, past history indicates that if an issue matters
to the Federal Government (as was the case with welfare reform), the
Federal Government is willing to invest significant funds into economic
evaluations of various policy proposals.

Design and implementation of methodologically sound studies to measure
the impacts, costs, and benefits of proposed policies to assist people
with disabilities is no easy task, and the identified issues only
scratch the surface regarding what should be addressed. But it is clear
that specific studies must be designed and initiated to gather and
analyze impacts, costs, and benefits of specific disability policy
proposals. These studies must use appropriate methodologies. Perhaps
small-scale studies or studies that are confined to a specific location
or subject to other restrictions can be designed, which can then be
generalized to broader populations of interest. The study design should
ensure that all material costs and benefits (direct and indirect, and
tangible and intangible) are covered, and a sufficient time must be
allowed to observe a behavioral response to the program or policy.

[]{#__RefHeading___Toc204703723 .anchor}Chapter 5: Summary of Findings
and Recommendations

This report creates a four-part conceptual framework POWER, based on the
research findings from the first three chapters, to set a clear
direction for supporting increased economic status for people with
disabilities. Real-life case studies and a cost-benefit analysis
applying the POWER framework depict how a combination of strategies
might modify existing public policies. The proposed actions can enhance
indirect, community-based, and employer incentives to provide a
comprehensive blueprint for change.

The POWER framework also recognizes the complexity and scope of changes
needed to secure the full benefits of encouraging work, income
preservation, and asset building for individuals with disabilities and
their families. The range of legislative amendments for consideration
will affect tax policy and the entitlement authorities under Social
Security and Medicaid, in addition to the federal tax code, including
the existing tax incentives to employers and asset-building provisions.

In the four changes proposed to Social Security and Medicaid, access to
health care would continue for five years regardless of new income
levels to reduce disincentives to work and asset building. The changes
to Social Security rules would offer multiple options to encourage
income preservation and asset growth. Recommended changes include the
following:

1\. Raise resource limits for SSI to \$20,000 and index it annually for
inflation thereafter with no loss of benefits for five years of working
at or above SGA.

2\. Enact an earnings offset for SSDI beneficiaries that parallels the
work incentives for SSI.

3\. Modify income and resource limits through simplified Medicaid Buy-In
that allows work and access to health care for five years, regardless of
income level.

4\. Expand PASS to allow for savings for home ownership or any
asset-building goal, including the purchase of assets that will generate
income in later years.

In addition, the proposed revisions to the tax code include four changes
that will help people with disabilities and their families level the
playing field of community participation. The proposed tax code changes
support work outcomes and allow tax considerations of costs associated
with living with a disability; the changes also call for improvements in
the existing tax incentives to employers. Such changes would consolidate
and expand code provisions to encourage hiring and accommodating workers
with disabilities. Another proposed change involving a modified 529 Plan
would allow and encourage families to save to benefit their children
with disabilities who may not go on to higher education but have other
asset-building goals.

1\. Bundle and revise Business Tax Credits for more efficiency and use
(Disabled Access Credit, Architectural/Transportation Tax Deduction, and
Work Opportunity Tax Credit).

2\. Revise the IRWE exemption so that it applies to any reasonable
expense incurred for the purpose of employment.

3\. Revise Medical Expense Deduction threshold requirements and waive
the need for deductibility.

4\. Amend 529 Plans created exclusively for families with children going
onto higher education to include purposes and goals that meet the needs
of families with children who have disabilities.

The POWER framework's proposed focus on savings and asset building
through amendments to the Assets for Independence Act involve expanding
and refining opportunities for people with disabilities through IDAs and
Medicaid-funded Individuals' Budgets. The POWER framework also
recognizes the importance of financial literacy to understand and use
credit effectively and manage a budget. These critical skills should be
taught in grades K--12 and continue to be developed for adults with
disabilities.

1\. Expand and refine IDAs to meet the needs of people with
disabilities.

a\. Include transportation and technology as a purpose for saving.

b\. Provide incentives to encourage private match to federal funds.

c\. Allow private and state-authorized and state-funded IDAs to adopt
federal IDA rules, which exclude counting the resources for purposes of
continued eligibility for public benefits.

d\. Require financial education to be conducted in accessible locations
with accessible content and be accessible online.

2\. Encourage financial education as part of an individual's education
and work plans: IEPs, Transition Plans, Plans for Employment through VR,
and the Workforce System.

3\. Simplify implementation of individual budgets.

a\. Invite SSA, the Department of Education and its Rehabilitation
Services Administration, the departments of Education and Labor, CMS,
and SAMHSA to collaborate in the development of a cross-agency template
that simplifies the implementation of unified individual budgets that
promote self-determination and person-centered plans for adult living.

b\. Allow savings and asset-building rewards that permit an individual
to keep 50 percent of what he or she does not spend in an individual
budget. The savings must relate to a specific asset-building objective
in an individualized plan.

The last part of the POWER proposals for change focuses on indirect
financial incentives made available though an employer or a housing
developer. The five areas affected are as follows:

1\. Housing Design Standards

a\. HUD should adopt universal design standards developed by the Access
Board.

b\. HUD should require that the adoption of universal design standards
become a conditional requirement for any entity that receives HUD
financing for single or multifamily dwellings.

2\. Qualified Allocation Plan Set-aside for 20 Percent of Units: All
units receiving LIHTCs should adopt new universal design standards and
reserve 20 percent of units to be affordable to individuals with
disabilities who are at or below 30 percent of AMI.

3\. New Markets Tax Credit: Require each federally funded project that
is creating jobs to document job creation, outreach and recruitment
efforts, and the number of people with disabilities hired.

4\. Employer Transportation and Housing Deductions: Allow a tax
deduction to employers for the costs of assisting employees with
disabilities with the costs of transportation and first-time home
ownership.

5\. Employer-Matched Education Accounts: Allow employees who contribute
up to \$500 to an education and training account to receive a tax credit
for their deposit. Allow an equal match from their employer that would
be deducted from corporate income taxes. Individuals must earn less than
\$25,000 to be eligible for the benefit.

This report concludes with a brief review of the key findings and
recommendations for action by essential Administration, congressional,
and federal agency leaders.

[]{#__RefHeading___Toc204703724 .anchor}5.1. Summary of Key Findings on
Financial Incentives

1\. Financial incentives are complex without consensus on definition,
and need explanations about various types such as disability-based, cash
and in-kind, direct, indirect, or community-based funding streams.

2\. Financial incentives are underutilized.

3\. Individuals with and without disabilities are denied the opportunity
for savings and asset growth because of the means testing to remain
eligible for many public benefits.

4\. Low-income wage earners do not benefit from many federal tax
provisions that promote savings and asset development.

5\. Direct, indirect, and third-party financial incentives have an
important impact on people with disabilities and their families.

6\. There are no one-size-fits-all financial incentives strategies.

7\. Financial incentives funding strategies are interrelated.

8\. Opportunities for low-income individuals with disabilities that
encourage and support savings and asset acquisition are limited and need
to be expanded.

9\. Disability remains an all-or-nothing proposition based on
eligibility determination and disability definition.

10\. Several financial incentives need modification to provide parity
for people with disabilities (i.e., making opportunities available
comparable to those available to their peers without disabilities).

11\. A consensus model is unavailable for evaluating the impact of
financial incentives.

12\. Gateway costs of living with a disability are more expensive than
costs of living without a disability.

13\. Disability programs are heavily weighted toward the use of
resources for determination of status and assessment of eligibility.

14\. The conversion of federal financial disincentives to incentives is
possible.

15\. Public accounting practices, especially the practices related to
federal savings across programs and services, need review.

16\. Definite cost benefits are found when the framework and strategies
introduced in this report are applied to three of the case studies
presented.

17\. Cost benefits for Case Study 4 are unknown because scientifically
reviewed, methodologically valid studies for this purpose are lacking.

[]{#__RefHeading___Toc204703725 .anchor}5.2 Summary of Major
Recommendations According to Federal Leadership

For the Administration:

**Recommendation 1** -- NCD calls for an Executive order that identifies
actions for federal agencies, including the following:

Department of Health and Human Services/Office of Director of Disability
and the Centers for Medicare and Medicaid Services

Department of Labor

Department of Housing and Urban Development

Department of Transportation

Department of Education

Department of the Treasury

Social Security Administration

The Administration should create a federal interagency workgroup on
financial incentives for people with disabilities and their families;
develop an Executive order calling for all agencies to identify policy
barriers; and create a time-limited body to facilitate a consistent,
coordinated, comprehensive, and consumer-friendly approach to advance
opportunities for full community participation and economic
self-sufficiency.

For Congress:

**Recommendation 2** -- NCD proposes actions by the Senate Finance
Committee, House Ways and Means Committee, and House Energy and Commerce
Committee. Congress should introduce and consider adoption of the POWER
framework set forth in this report*.* It should accomplish the work by
making appropriate changes in federal legislation pertaining to Social
Security, Medicaid, savings, asset building, and the relevant aspects of
the federal tax code*.*

For Federal Agencies:

**Recommendation 3** -- NCD advises that NIDRR take the lead and work in
partnership with other federal agencies to raise the level of awareness
about financial incentives and people with disabilities and their
families. In preparation, the following lead agencies for implementation
should consider how to refocus their evidence-based research efforts to
include financial incentives.

Department of Education, Office of Special Education and Rehabilitative
Services/NIDRR

Department of Health and Human Services, Centers for Medicare and
Medicaid Services/Assistant Secretary for Planning and Evaluation

Social Security Administration

Expand the volume of and access to knowledge about the cost-benefit
outcomes of direct and indirect financial incentives that advance
self-sufficiency for people with disabilities, including the
establishment of a new financial incentives Rehabilitation Research and
Training Center to add to the sparse knowledge base.

**Recommendation 4** -- NCD identifies actions needed to increase
awareness and utilization of the financial incentives and benefits
supported by federal funding.

In partnership, the following key federal agencies need to fund
collaborative/interagency demonstration projects aimed to improve
capacity for employer and community use of financial incentives and to
advance tangible economic impact; examine the affects of applying
selected financial incentives with attention to support through tax
credits, affordable and accessible housing, transportation, continuing
education, and related life essentials; and include this work in all
agency performance plans and annual reports to Congress.

Department of Housing and Urban Development

Department of Commerce

Department of Education

Department of Transportation

Department of the Treasury

Internal Revenue Service

**Recommendation 5** -- NCD recommends that the federal agencies
identified below expand and improve financial education opportunities
and outreach to children and adults with disabilities across economic
levels and types of abilities.

Federal Deposit Insurance Corporation

Internal Revenue Service

Department of Labor

Department of Education

Social Security Administration

Through the use of direct and indirect financial incentives, federal
agencies can have a key role in advancing real economic impact. A
consumer-friendly education and information effort needs to apprise
low-income workers with disabilities about their potential eligibility
for financial incentives such as the Earned Income Tax Credit. SSA, the
Department of Labor, and the Department of Education should engage in
work to support opportunities for improving the skills linked to
empowerment, income maintenance, and asset building among people with
disabilities.

[]{#__RefHeading___Toc204703726 .anchor}Appendix: Mission of the
National Council on Disability

Overview and Purpose

The National Council on Disability (NCD) is an independent federal
agency with 15 members appointed by the President of the United States
and confirmed by the U.S. Senate. The purpose of NCD is to promote
policies, programs, practices, and procedures that guarantee equal
opportunity for all individuals with disabilities regardless of the
nature or significance of the disability and to empower individuals with
disabilities to achieve economic self-sufficiency, independent living,
and inclusion and integration into all aspects of society.

Specific Duties

The current statutory mandate of NCD includes the following:

-   Reviewing and evaluating, on a continuing basis, policies, programs,
    practices, and procedures concerning individuals with disabilities
    conducted or assisted by federal departments and agencies, including
    programs established or assisted under the Rehabilitation Act of
    1973, as amended, or under the Developmental Disabilities Assistance
    and Bill of Rights Act, as well as all statutes and regulations
    pertaining to federal programs that assist such individuals with
    disabilities, to assess the effectiveness of such policies,
    programs, practices, procedures, statutes, and regulations in
    meeting the needs of individuals with disabilities.

-   Reviewing and evaluating, on a continuing basis, new and emerging
    disability policy issues affecting individuals with disabilities in
    the Federal Government, at the state and local government levels,
    and in the private sector, including the need for and coordination
    of adult services, access to personal assistance services, school
    reform efforts and the impact of such efforts on individuals with
    disabilities, access to health care, and policies that act as
    disincentives for individuals to seek and retain employment.

-   Making recommendations to the President, Congress, the Secretary of
    Education, the director of the National Institute on Disability and
    Rehabilitation Research, and other officials of federal agencies
    about ways to better promote equal opportunity, economic
    self-sufficiency, independent living, and inclusion and integration
    into all aspects of society for Americans with disabilities.

-   Providing Congress, on a continuing basis, with advice,
    recommendations, legislative proposals, and any additional
    information that NCD or Congress deems appropriate.

-   Gathering information about the implementation, effectiveness, and
    impact of the Americans with Disabilities Act of 1990 (ADA) (42
    U.S.C. § 12101 et seq.).

-   Advising the President, Congress, the commissioner of the
    Rehabilitation Services Administration, the assistant secretary for
    Special Education and Rehabilitative Services within the Department
    of Education, and the director of the National Institute on
    Disability and Rehabilitation Research on the development of the
    programs to be carried out under the Rehabilitation Act of 1973, as
    amended.

-   Providing advice to the commissioner of the Rehabilitation Services
    Administration with respect to the policies and conduct of the
    administration.

-   Making recommendations to the director of the National Institute on
    Disability and Rehabilitation Research on ways to improve research,
    service, administration, and the collection, dissemination, and
    implementation of research findings affecting people with
    disabilities.

-   Providing advice regarding priorities for the activities of the
    Interagency Disability Coordinating Council and reviewing the
    recommendations of this council for legislative and administrative
    changes to ensure that such recommendations are consistent with
    NCD's purpose of promoting the full integration, independence, and
    productivity of individuals with disabilities.

-   Preparing and submitting to the President and Congress an annual
    report titled *National Disability Policy: A Progress Report*.

International

In 1995, NCD was designated by the Department of State to be the U.S.
government's official contact point for disability issues. Specifically,
NCD interacts with the special rapporteur of the United Nations
Commission for Social Development on disability matters.

Consumers Served and Current Activities

Although many government agencies deal with issues and programs
affecting people with disabilities, NCD is the only federal agency
charged with addressing, analyzing, and making recommendations on issues
of public policy that affect people with disabilities regardless of age,
disability type, perceived employment potential, economic need, specific
functional ability, veteran status, or other individual circumstance.
NCD recognizes its unique opportunity to facilitate independent living,
community integration, and employment opportunities for people with
disabilities by ensuring an informed and coordinated approach to
addressing the concerns of people with disabilities and eliminating
barriers to their active participation in community and family life.

NCD plays a major role in developing disability policy in America. In
fact, NCD originally proposed what eventually became ADA. NCD's present
list of key issues includes education, transportation, emergency
preparedness, international disability rights, employment, foster youth
with disabilities, vocational rehabilitation, livable communities, and
crime victims with disabilities.

Statutory History

NCD was established in 1978 as an advisory board within the Department
of Education (P.L. 95-602). The Rehabilitation Act Amendments of 1984
(P.L. 98-221) transformed NCD into an independent agency.

[]{#__RefHeading___Toc204703727 .anchor}Endnotes

[^1]: U.S. Department of Transportation, Bureau of Transportation
    Statistics. *Transportation difficulties keep over half a million at
    home.* Retrieved April 2006; January 2008, from
    [www.bts.gov/publications/issue_briefs/number_03/html/transportation_difficulties_keep_over_half_a_million_disabled_at_home.html](http://www.bts.gov/publications/issue_briefs/number_03/html/transportation_difficulties_keep_over_half_a_million_disabled_at_home.html).

[^2]: Skoto, B., et al. (2006, January). *Creating an economic future
    for adults with Down syndrome: An analysis of Social Security and
    Medicaid regulations.* Commissioned by Madeleine Will, National Down
    Syndrome Society (NDSS).

[^3]: National Organization on Disability. (2000). *2000 N.O.D./Harris
    survey of Americans with disabilities* (Study No. 12384). New York:
    Author.

[^4]: National Council on Disability (NCD). (2005, November). *The
    Social Security Administration's Efforts to Promote Employment for
    People with Disabilities: New Solutions for Old Problems.*
    Washington, DC. Author.

[^5]: NCD. (2007, October 1). *Empowerment for Americans with
    disabilities: Breaking barriers to careers and full employment.*

[^6]: NCD. (1997, September 24). *Removing barriers to work: Action
    proposals for the 105th Congress.*

[^7]: Beaulaurier, R. (2001). The financial vulnerability of people with
    disabilities: Assessing poverty risks. *Journal of Sociology and
    Social Welfare, 28*(1), 139--162.

[^8]: *Webster's Unabridged Dictionary* (p. 966)*.* (2001). (2nd ed.).
    Random House: New York.

[^9]: Levitt, D., & Dubner, S. (2005). *Freakonomics: A Rogue Economist
    Explores the Hidden Side of Everything*. New York: William Morrow.

[^10]: Ibid.

[^11]: Solomon, J. (2005, December 26). Companies not seeking AIDS cure.
    Deposition of Dr. Edmund Tramont, AIDS Director, National Institutes
    of Health. Associated Press, *Valley News*.

[^12]: Ibid.

[^13]: Ibid.

[^14]: Smith, R., et al. (2005, December). *The long-term budget
    outlook.* Washington, DC: Congress of the United States,
    Congressional Budget Office.

[^15]: NCD. (2005, December). *The state of 21st century long-term
    services and supports (LTSS): Financing and systems reform for
    Americans with disabilities.*
    [www.ncd.gov/newsroom/publications/2005/longterm_services.htm](http://www.ncd.gov/newsroom/publications/2005/longterm_services.htm).

[^16]: Pew Center on the States. (2006). *Special report on Medicaid
    2006:* *Bridging the gap between care and cost.*
    [www.pewcenteronthestates.org](http://www.pewcenteronthestates.org/).

[^17]: NCD. (2005, December).

[^18]: U.S. Government Accountability Office (GAO). (2005). *Federal
    disability assistance: Wide array of programs need to be examined in
    light of 21st century challenges*. GAO-05-626. Washington, DC: GAO.

[^19]: Ibid.

[^20]: Gist, J. R., & Verma, S. (2002). *Entitlement spending and the
    economy: Past trends and future projects*. Washington, DC: AARP,
    Public Policy Institute.

[^21]: Peterson, P. G. (1999). *The age wave*. New York: Time Books,
    Random House.

[^22]: Peterson, P. G. (1996). *Will America grow up before it grows
    old?* New York: Random House.

[^23]: Gist & Verma. (2002).

[^24]: Peterson, J. P., & Howe, N. (1988). *On borrowed time: How the
    growth in entitlement spending threatens America's future* (p. 79).
    San Francisco: Institute for Contemporary Studies.

[^25]: Gist & Verma. (2002).

[^26]: Ibid., p. 7.

[^27]: Gist & Verma. (2002).

[^28]: Ibid. Please review pp. 8--9 of Gist & Verma for more in-depth
    analysis of the "expanded income" definition used as well as figures
    6 and 7 for distribution of federal spending entitlements by income
    class, 65+ population, and the year 2000.

[^29]: Ibid.

[^30]: Ibid.

[^31]: Shackleton, R., & Foertsch, T. (2005). *Global population aging
    in the 21st century and its economic implications*. Washington, DC:
    Congress of the United States, Congressional Budget Office.

[^32]: Ibid.

[^33]: Ibid.

[^34]: Gist & Verma. (2002).

[^35]: U.S. Census Bureau, U.S. Department of Commerce Economics and
    Statistics Administration. (2005, July). *Disability and American
    families: 2000* (p. 6).

[^36]: U.S. Census Bureau. (2003, March). *Disability status: 2000* (p.
    10)*.* Census 2000 Brief. C2KBR-17.

[^37]: Burke, V. W., Gabe, T., & Falk, G. (2005). *Children in poverty*:
    *Profile, trends and issues*. CRS Report for Congress, RL 32682.
    Washington, DC: Congressional Research Service, Library of Congress.

[^38]: Based on the noninstitutionalized population ages five and older.

[^39]: U.S. Census Bureau. (2005, July).

[^40]: Ibid. For example, in Mississippi, 4.8 percent of people reported
    a sensory disability, compared to a national rate of 3.6 percent;
    11.3 percent reported a physical disability, compared to a national
    rate of 8.2 percent; and 6.4 percent reported a mental disability,
    compared to a national rate of 4.8 percent.

[^41]: Ibid.

[^42]: Ibid.

[^43]: Ibid.

[^44]: Jezewski, M. A., & Sotnik, P. (2001). *Culture brokering:
    Providing culturally competent rehabilitation services to
    foreign-born persons*. Buffalo, NY: Center for International
    Rehabilitation Research Information and Exchange (CIRRIE), State
    University of New York, University at Buffalo.

[^45]: Michigan Policy Institute. (2004, October). *Immigration facts:
    Legal immigration to U.S. still declining*. No. 9.

[^46]: Lindert, P. H. (2005). *Growing public: Social spending and
    economic growth since the eighteenth century.* New York: Cambridge
    University Press.

[^47]: Smith, R., et al. (2005, December).

[^48]: *The President's Budget*. (2006, February 7).
    [www.whitehouse.gov/omb/budget/fy2008/budget.html](http://www.whitehouse.gov/omb/budget/fy2008/budget.html).

[^49]: Lindert. (2005).

[^50]: Longman, P. (1996). *The return of thrift: How the coming
    collapse of the middle-class welfare state will reawaken values in
    America*. New York: Free Press.

[^51]: Keith, R. (2005). *Budget reconciliation legislation in 2005* (p.
    8). Congressional Research Report for Congress, RL 33132.
    Washington, DC: Congressional Research Service, Library of Congress.

[^52]: Office of Management and Budget. (2005, February 7). *Budget of
    the United States government, FY 2006*, Historical Tables, Table 7.3
    (pp. 121--24).

[^53]: U.S. National Debt Clock (2008) The Outstanding Public Debt as of
    January 14, 2008, at 04:41:17 PM GMT was \$9,203,960,254,308.93. The
    National Debt has continued to increase an average of \$1.48 billion
    per day since September 29, 2006. Retrieved January 14, 2008, from
    http://www.brillig.com/debt_clock/

[^54]: *The President's Budget* (2006, February 7).

[^55]: Ibid.

[^56]: Ibid.

[^57]: Ibid.

[^58]: Hartnett, J. H., & Morris, M. (2005). *A new model for community
    economic development and individual and family asset building for
    persons with disabilities.* National Disability Institute and NCB
    Development Corporation.

[^59]: Smith et al. (2005, December).

[^60]: Ibid.

[^61]: Lindert. (2005).

[^62]: Ibid.

[^63]: Ibid., p. 15.

[^64]: GAO. (2005). GAO-05-626.

[^65]: Woo, L. G., Schweke, F. W., & Buchholz, D. E. (2004). *Hidden in
    plain sight: A look at the \$335 billion federal asset-building
    budget* (p. 4). Washington, DC: Corporation for Enterprise
    Development.

[^66]: Ibid., p. 1.

[^67]: Ibid., p. 12.

[^68]: Ibid., p. 1.

[^69]: *Corporate income tax rates: International comparisons*. (2005,
    November). Washington, DC: Congress of the United States,
    Congressional Budget Office.

[^70]: Peterson & Howe. (1988).

[^71]: Charlton, J. I. (1998). *Nothing about us without us: Disability
    oppression and empowerment* (p. 153). Berkeley and Los Angeles:
    University of California Press.

[^72]: Minow, M. (1997). *Making all the difference*. Ithaca and London:
    Cornell University Press.

[^73]: Parrish, T. (1993). *State funding provisions and least
    restrictive environment: Implications for federal policy.* CSEF
    Brief #2. Palo Alto, CA: Center for Special Education Finance.
    Parrish, T. (1995). *Criteria for effective special education
    funding formulas.* Palo Alto, CA: Center for Special Education
    Finance. Parrish, T. (1995). *Fiscal issues related to the inclusion
    of students with disabilities.* CSEF Brief #7. Palo Alto, CA: Center
    for Special Education Finance.

[^74]: Rea, P., & Davis-Dorsey, J. (2004). ADA in the public school
    setting: Practitioners' reflections. *Journal of Disability Policy
    Studies,* *15*, 66--69.

[^75]: U.S. Department of Education. (2000). *Twenty-second annual
    report to Congress on the implementation of the Individuals with
    Disabilities Education Act.* Washington, DC: Author.

[^76]: Apling, R., & Jones, N. (2005). *The Individuals with
    Disabilities Education Act (IDEA): Interactions with selected
    provisions of the No Child Left Behind Act (NCLBA).* Washington, DC:
    Congressional Research Service, Library of Congress.

[^77]: U.S. Department of Education. (2000). *Annual Report to Congress
    on the Implementation of the Individuals with Disabilities Education
    Act*. Washington, DC: Author.

[^78]: Martin, E., Martin, R. & Terman, D. (1996, Spring). The
    Legislative and Litigation History of Special Education. Special
    Education for Students with Disabilities 6(1). Princeton University
    & Brookings Institute.
    www.futureofchildren.org/pubs-info2825/pubs-info_show.htm?doc_id=72440.

[^79]: U.S. Department of Education. (2006, October 30). *Annual Report
    to Congress on the Implementation of the Individuals with
    Disabilities Education Act*. Washington, DC: Author.

[^80]: U.S. Census Bureau. (2003, March).

[^81]: Ramirez, A. (2003). The shifting sands of school finance.
    *Educational Leadership, 60*(4), 54--57.

[^82]: Apling, R. (2005). *Individuals with Disabilities Education Act
    (IDEA): Current funding trends.* Washington, DC: Congressional
    Research Service, Library of Congress.

[^83]: Irwin, P. (2006). *K*--*12 education programs: Recent
    appropriations*. Washington, DC: Congressional Research Service,
    Library of Congress.

[^84]: Chambers, J., Perez, M., Socias, M. , Shkolnik, J., and Esra, P.
    (2004, May). *Educating students with disabilities: Comparing
    methods for explaining expenditure variation.* Washington, DC: U.S.
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[^85]: Chambers, J., Parrish, T., & Harr, J. (2004). *What are we
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[^86]: Ibid.

[^87]: Kidd, J. (1958). Special education: Fulfillment of a promise.
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[^88]: Birman, B., & Porter, A. (2002). Evaluating the effectiveness of
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[^89]: Chambers, et al (2004). Note that data from the Special Education
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    students with disabilities at approximately twice the cost of
    education for a student without disabilities (averaging more than
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[^90]: Apling & Jones. (2005).

    ^?^ Irwin, P. (2006).

[^91]: Kusler, M. (2003). The imperative of fully funding IDEA. *School
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[^92]: Greene, J., & Forster, G. (2002). *Effects of funding incentives
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[^93]: Ibid.

[^94]: Pijl, S., & Dyson, A. (1998). Funding special education: A
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[^95]: NCD. (2003). *School vouchers and students with disabilities.*
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[^96]: NCD. (1995). *Making Schools Work for All of America's Children.*
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[^97]: Parrish, T. (1993). Parrish, T. (1996). *Special education
    finance: Past, present, and future.* CSEF Brief #8. Palo Alto, CA:
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[^98]: O'Reilly, F. (1995). *State special education funding formulas
    and the use of separate placements for students with disabilities:*
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[^99]: NCD. (1995).

[^100]: McLaughlin, M., & Warren, S. (1994). *Resource implications of
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[^101]: GAO. GAO-05-626.

[^102]: GAO. (1999). *Medicaid and special education: Coordination of
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[^103]: NCD, Youth Advisory Committee. (2003, September 15). Students
    with Disabilities Face Financial Aid Barriers College and Graduate
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[^104]: GAO. (2005). *Individuals with Disabilities Education Act:
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[^105]: NCD. (1994). *Inclusionary education for students with
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[^106]: U.S. Department of Education. (2000).

[^107]: Apling & Jones. (2005).

[^108]: Livingston, A., & Wirt, J. (2005). *The condition of education
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[^109]: American Youth Policy Forum and Center on Education Policy.
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[^110]: U.S. Department of Education, Office of Special Education
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[^111]: Livingston & Wirt. (2005).

[^112]: SEELS Appendix A, August 11, 2004, Info and Reports, SRI
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[^113]: Barton, P. (2003). *Parsing the achievement gap: Baselines for
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[^114]: Barton, P. (2004). Why does the gap persist? *Educational
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[^115]: Wells, T., Sandefur, G., & D. Hogan. (2003). What happens after
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[^116]: President's Committee for People with Intellectual Disabilities.
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[^117]: Ibid.

[^118]: U.S. General Accountability Office. (2003, July). *Special
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[^119]: Youth Advisory Committee of the National Council on Disability.
    (2003). *Students with disabilities face financial aid barriers:
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[^120]: Furney, K., Hasazi, S., & Clark-Keefe, K. (2005). Multiple
    dimensions of reform: The impact of state policies on special
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[^121]: Furney, K., Hasazi, S., Clark-Keefe, K., & Hartnett, J. (2003).
    A longitudinal analysis of shifting policy landscapes in special and
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[^122]: Kosciulek, J. (2004). Research applications of the Longitudinal
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[^123]: Berry, H. G., Price-Ellingstad, D., Halloran, W., & Finch, T.
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[^124]: Blanck, P., Schartz, H. A., & Schartz, K. (2003). Labor force
    participation and income of individuals with disabilities in
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[^125]: Cimera, R. E. (2000). Improving the cost efficiency of supported
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[^126]: Lee, D. Y., Yoo, B. J., & Peters, R. (2003). Cost-benefit
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[^127]: Kosciulek. (2004).

[^128]: Tashjian, M. D., & Schmidt-Davis, H. (2000, April). *Vocational
    rehabilitation experiences among individuals who achieved a
    supported employment outcome. A longitudinal study of the Vocational
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[^129]: Mashaw, J., Reno, V., Burkhauser, R., & Berkowitz, M. (1997).
    Disability, work, and cash benefits. *Industrial and Labor Relations
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[^130]: Ticket To Work And Work Incentives Advisory Panel. *Advice
    report to the Congress and the commissioner of the Social Security
    Administration: The crisis in EN participation---A blueprint for
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    http://www.ssa.gov/work/panel/panel_documents/reports.html.

[^131]: GAO. (2005). *Social Security Administration: Better planning
    could make the Ticket Program more effective*. GAO-05-248.
    Washington, DC: Author.

[^132]: Social Policy Research Associates. (2004). *FY 2002 WIASRD
    \[Workforce Investment Act Standardized Record Data\] Data Book.*
    Oakland, CA: Social Policy Research Associates. Thomas, D. F., Menz,
    F. E., & Rosenthal, D. A. (2001). Employment outcome expectancies:
    Consensus among consumers, providers, and funding agents of
    community rehabilitation programs. *Journal of Rehabilitation,
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[^133]: Holcomb, P., & Barnow, B. (2004). *Serving people with
    disabilities through the Workforce Investment Act's One-Stop Career
    Centers*. Washington, DC: Urban Institute.

[^134]: Morris, M. (2005, November). *Disability Program Navigator
    initiative: DPN evaluation plan.* Printed copy of PowerPoint
    presentation. Washington, DC: National Disability Institute.

[^135]: Ibid.

[^136]: Berry, H., D. Price-Ellingstad, W. Halloran, and T. Finch.
    (2000). Supplemental Security Income and vocational rehabilitation:
    Early work experiences among transition-age individuals with
    disabilities. *Journal of Disability Policy Studies 10*(2):
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[^137]: Hergenrather, K. C., Rhodes, S. C., McDaniel, R. S., & Brown, C.
    D. (2003). Job placement: The development of theory-based measures.
    *The Journal of Rehabilitation, 69*(4), 27--35.

[^138]: Congressional Budget Office (CBO). (2004). *Disability and
    retirement: The early exit of baby boomers from the labor force.*
    Washington, DC: Author.

[^139]: *SSA work incentives enrollment, 1990*--*2004*. (2005). Data
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    Massachusetts-Boston.
    [www.StateData.info](http://www.StateData.info/).

[^140]: GAO. (1996). *PASS program: SSA work incentive for disabled
    beneficiaries poorly managed.* GAO/HEHS-96-51. Washington, DC:
    Author.

[^141]: Greenstein, R. (2005). *The Earned Income Tax Credit: Boosting
    employment, aiding the working poor.* Washington, DC: Committee on
    Budget and Program Priorities. Retrieved December 21, 2005, from
    [www.cbpp.org/7-19-05eic.htm.](http://www.cbpp.org/7-19-05eic.htm. Accessed 12/21/05)

[^142]: Johnson, N. (2001). *A hand up: How state Earned Income Tax
    Credits help working families escape poverty in 2001*. Washington,
    DC: Center on Budget and Policy Priorities.

[^143]: Internal Revenue Service (IRS). (2003, February 25). *Retirement
    savings contributions credit.* Tax Tip 2003-40. Retrieved February
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[^144]: Burkhauser, R. V., Glenn, A. J., & Wittenberg, D. C. (1997). The
    Disabled Worker Tax Credit. In Reno, V. P., Mashaw, J. L., &
    Gradison, B. (1997), *Disability: Challenges for social insurance,
    health care financing and labor market policy.* Washington, DC:
    National Academy of Social Insurance (available through Brookings
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[^145]: Hill, M. L., Ruth, D. J., Banks, P.D., Troxell, J.L., Carlson,
    R. M., Hine, M. J., & Jones, S.W. (2003). *WorkWORLD benefit
    planning decision support system: Assisting people with disabilities
    to find earnings and work incentive solutions to low income and
    health care problems while benefiting taxpayers and government
    policy implementers*. Employment Support Institute, Virginia
    Commonwealth University. Retrieved April 18, 2005, from
    [www.workworld.org](http://www.workworld.org/). Ruth, D. (1996).
    *WorkWORLD as a policy analysis tool*. Employment Support Institute,
    Virginia Commonwealth University. Retrieved April 18, 2005, from
    [www.workworld.org](http://www.workworld.org/).

[^146]: Levine, L. (2005). *The Work Opportunity Tax Credit (WOTC) and
    the Welfare-to-Work Tax Credit (WtW).* RL30089. Washington, DC:
    Congressional Research Service. Retrieved December 19, 2005, from
    [www.opencrs.com](http://www.opencrs.com/).

[^147]: GAO. (2001). *Work Opportunity Tax Credit: Employers do not
    appear to dismiss employees to increase tax credits.* GAO-01-329.
    Washington, DC: Author. GAO. (2002). *Business tax incentives:
    Incentives to employ workers with disabilities receive limited use
    and have an uncertain impact.* GAO-03-39. Washington, DC: Author.

[^148]: Sherraden, M. (1991). *Assets and the poor: A new American
    welfare policy*. New York: M.E. Sharpe. Sherraden, M. (2000). *Asset
    building policy and programs for the poor*. St. Louis, MO: Center
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[^149]: Leydorf, D., & Kaplan, D. (2001). *Use of Individual Development
    Accounts by people with disabilities: Barriers and solutions*.
    Policy Brief. Oakland, CA: World Institute on Disability.

[^150]: Committee on Transportation and Infrastructure, Subcommittee on
    Education and the Workforce, Joint Hearing on Coordinating Human
    Services Transportation. May 2003.
    [www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html](http://www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html).

[^151]: GAO. (2003, May 1). *Transportation-disadvantaged populations:
    Many federal programs fund transportation services, but obstacles to
    coordination persist.* Testimony before the committees on
    Transportation and Infrastructure and Education and the Workforce.
    House of Representatives.

[^152]: Ibid.

[^153]: Ibid.

[^154]: U.S. Department of Labor. (2002). *Tax incentives for providing
    business accessibility.*
    http://www.dol.gov/odep/pubs/fact/tifpba.htm

[^155]: Ibid.

[^156]: [49 U.S.C.
    §41705](http://www4.law.cornell.edu/uscode/49/41705.html). [42 CFR
    §382](http://www.access.gpo.gov/nara/cfr/waisidx_99/14cfr382_99.html)
    (1986).

[^157]: NCD. (2003). *National disability policy: A progress report*.
    [www.ncd.gov/newsroom/publications/2003/progressreport_final.htm](http://www.ncd.gov/newsroom/publications/2003/progressreport_final.htm).

[^158]: Ibid.

[^159]: Ibid.

[^160]: Ibid.

[^161]: Ibid.

[^162]: Foley, D. J., Heimovitz, H. K., Guralnik, J. M., & Brock, D. B.
    (2002). Driving life expectancy of persons aged 70 years and older
    in the United States. *American Journal of Public Health, 92*(8),
    1284­--1289.

[^163]: GAO. (2004, August 30). *Transportation- disadvantaged seniors:
    Efforts to enhance senior mobility could benefit from additional
    guidance and information.* GAO-04-971. Washington, DC: Author.
    [www.gao.gov/new.items/d04971.pdf](http://www.gao.gov/new.items/d04971.pdf).

[^164]: Ibid.

[^165]: NOD. (2000, May). *N.O.D./Harris 2000 survey of Americans with
    disabilities.*
    [www.nod.org/index.cfm?fuseaction=page.viewPage&pageID=1430&nodeID=1&FeatureID=609&redirected=1&CFID=4041484&CFTOKEN=2142693](../www.nod.org/index.cfm%3Ffuseaction=page.viewPage&pageID=1430&nodeID=1&FeatureID=609&redirected=1&CFID=4041484&CFTOKEN=2142693).

[^166]: NCD. (2005, June 13). *The current state of transportation for
    people with disabilities in the United
    States.*[www.ncd.gov/newsroom/publications/2005/pdf/current_state.pdf](http://www.ncd.gov/newsroom/publications/2005/pdf/current_state.pdf).

[^167]: Ibid.

[^168]: Hartnett, J., & Helfer, B. (2004, March 18). *Transportation:
    The vehicle to getting there*. 2004 Disability Navigator Training
    Program, Audio Conference Series. Law, Health Policy & Disability
    Center, University of Iowa.
    www.[disability.law.uiowa.edu/dpn/docs/2003-04ac_dpnacs/03182004/\
    audioconference20040318.doc](../disability.law.uiowa.edu/dpn/docs/2003-04ac_dpnacs/03182004/audioconference20040318.doc).

[^169]: Ibid.

[^170]: NOD. (2000, May). *N.O.D./Harris 2000 survey of Americans with
    disabilities.*

[^171]: Layton, L. (2006, January 14). Disabled riders stranded by
    Metro*. Washington Post* (pp. A1, A10).

[^172]: Ibid.

[^173]: U.S. Department of Transportation, Bureau of Transportation
    Statistics. *Transportation difficulties keep over half a million at
    home.*

[^174]: Ibid.

[^175]: Ibid.

[^176]: GAO. (2004, February 24). *Transportation-disadvantaged
    populations: Federal agencies are taking steps to assist states and
    local agencies in coordinating transportation services.* Washington,
    DC: Author.
    [www.gao.gov/new.items/d04420r.pdf](http://www.gao.gov/new.items/d04420r.pdf).

[^177]: Ibid.

[^178]: Ibid.

[^179]: Ibid.

[^180]: Committee on Transportation and Infrastructure, Subcommittee on
    Education and the Workforce, Joint Hearing on Coordinating Human
    Services Transportation. (May 2003).
    [www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html](http://www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html).

[^181]: Ibid.

[^182]: Ibid.

[^183]: NCD. (2003, May 1). *Testimony of David Wenzel*.
    [www.ncd.gov/newsroom/testimony/2003/wenzel_5-01-03.htm](http://www.ncd.gov/newsroom/testimony/2003/wenzel_5-01-03.htm).

[^184]: NCD. (2005, December), p. 17.

[^185]: Ibid., p. 13.

[^186]: Ibid., p. 17.

[^187]: Ibid., p. 14.

[^188]: Pew Center on the States. (2006).

[^189]: Henry J. Kaiser Foundation. (2005, February). *Navigating
    Medicare and Medicaid 2005.* Prepared by Bob Williams, et al.
    Washington, DC: Kaiser Foundation.

    ^?^ Ibid.

[^190]: NCD. (2005, December).

[^191]: Ibid.

[^192]: Ibid.

[^193]: Ibid., p. 35.

[^194]: Ibid.

[^195]: O'Shaughnessy, C. (2003, May 14). *Long-term care chart book:
    Persons served, payors and spending.* CRS #RS21518. Washington, DC:
    Congressional Research Service.

[^196]: Tritz, K. (updated 2004, February 27). *Long-term care: Consumer
    directed services under Medicaid.* CRS #RL32219. Washington, DC:
    Congressional Research Service.

[^197]: Edlund, B. J., et al. (2003, May 31). Long-term care planning
    for baby boomers: Addressing an uncertain future. Online *Journal of
    Issues in Nursing, 8*(2), Manuscript 2.
    [www.nursingworld.org/ojin/topic21/tpc21_2.htm](http://www.nursingworld.org/ojin/topic21/tpc21_2.htm).

[^198]: Ibid.

[^199]: Ibid.

[^200]: Ibid.

[^201]: Ibid.

[^202]: Ibid.

[^203]: Smith, V. K., & Moody, G. (2005, February). *Medicaid in 2005:
    Principles and proposals for reform.* Prepared for the National
    Governors Association. Lansing, MI: Health Management Associates.

[^204]: Ibid.

[^205]: Ibid.

[^206]: Ibid., p. 22.

[^207]: Ibid.

[^208]: Pew Center on the States. (2006).

[^209]: Henry J. Kaiser Foundation. (2005, February).

[^210]: Ibid.

[^211]: Centers for Medicare and Medicaid Services (CMS). (2005, April
    27). *Testimony of Mark B. McClellan, M.D., Ph.D., Administrator,
    before the Subcommittee on Health, House Committee on Energy and
    Commerce, hearing on long-term care and Medicaid: Better quality and
    sustainability by giving more control to people with a disability*.

[^212]: Ibid.

[^213]: Komisar, H. L., et al. (2005, Summer). Unmet long-term care
    needs: An analysis of Medicare-Medicaid dual eligibles. *Inquiry
    Journal, 42*(2), 171--182.

[^214]: Ibid.

[^215]: Ibid.

[^216]: Ibid., p. 25.

[^217]: www.cms.hhs.gov/medicaid/1915c/.

[^218]: GAO. (2003, June). *Long term care, federal oversight of growing
    Medicaid home and community-based waivers should be strengthened.*
    Washington, DC: Author.

[^219]: CMS (2005, April 27).

[^220]: Ibid.

[^221]: Ibid.

[^222]: [www.cms.hhs.gov/IndependencePlus/](http://www.cms.hhs.gov/IndependencePlus/).

[^223]: Ibid.

[^224]: Ibid.

[^225]: New Hampshire \[§1915(c) new waiver, approved 12/16/02,
    effective 1/1/03\]; South Carolina \[§1915(c) new waiver, approved
    3/11/03, effective 5/1/03\]; Louisiana \[§1915(c) new waiver,
    approved 4/24/03, effective 4/24/03\]; North Carolina \[§1915(c) new
    waiver, approved 12/23/03, effective 1/1/04\] \[§1915(b)/(c) new
    waiver, approved 10/6/04, effective 4/1/05\]; Florida \[§1115
    amendment to Cash and Counseling, approved 5/30/03, effective
    5/30/03\]; Maryland \[§1915(c) new waiver, approved 10/21/04,
    effective 7/1/05\]; California \[§1115 new demonstration, approved
    7/30/04, effective 8/1/05\]; Delaware \[(§1915(b)/(c) new waiver,
    approved 11/12/04, effective 12/1/04\]; New Jersey \[§1115 amendment
    to Cash and Counseling, approved 12/15/04, effective date pending
    receipt of Operational Protocol\]; Connecticut \[§1915(c) new
    waiver, approved 1/14/05, effective 2/1/05\].

[^226]: P.L. 90-248, 81 Stat. 821. (1968).

[^227]: Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35).

[^228]: Home and Community-Based Services: Medicaid research and
    demonstration waivers, chart of state participation. (2004,
    November). www.pascenter.org/demo_waivers.

[^229]: Section 4442.5(B)(5) of the *State Medicaid Manual*.

[^230]: Burke, S., Feder, J., and Van de Water, P. (eds.). (2006).
    National Academy of Social Insurance (NASI) Study Panel Reports on
    Long-Term Care. *Developing a better long-term care policy: A vision
    and strategy for America's future.* Washington: DC: NASI.

[^231]: Ibid.

[^232]: Ibid.

[^233]: Ibid., p. 21.

[^234]: Smith & Moody. (2005, February).

[^235]: Merlis, M. (1999, September). *Financing long-term care in the
    twenty-first century: Public and private roles.* Washington, DC:
    Institute for Health Policy Solutions.

[^236]: Ibid.

[^237]: [www.ncsl.org/programs/health/forum/olmsreport.htm](http://www.ncsl.org/programs/health/forum/olmsreport.htm).

[^238]: Mathmatica. (2003, January 1). *Lessons from the implementation
    of Cash and Counseling in Arkansas, Florida and New Jersey.*
    [www.cashandcounseling.org/search?TextIndex=abuse+funds](http://www.cashandcounseling.org/search?TextIndex=abuse+funds).

[^239]: NCD (2005, December), p. 21.

[^240]: Ibid.

[^241]: Ibid., p. 29.

[^242]: Ibid., p. 21.

[^243]: Ibid.

[^244]: Mendelsohn, S. (2006, June). Personal communication.

[^245]: Social Security Administration (SSA). Retrieved January 15,
    2008, from
    [www.ssa.gov/dibplan/dqualify.htm](http://www.ssa.gov/dibplan/dqualify.htm).

[^246]: Ibid.

[^247]: Mendelsohn, S. (2006, June).

[^248]: Ibid.

[^249]: COBRA, §87 and §88.
    www.dol.gov/ebsa/faqs/faq_consumer_cobra.html.

[^250]: Mendelsohn, S. (2006, June).

[^251]: Wittaker, J. M. (updated July 15, 2005). *Security Disability
    Insurance (SSDI) and Medicare: The 24-month waiting period for SSDI
    beneficiaries under age 65.* CRS Report for Congress, RS22195.
    Washington, DC: Congressional Research Service.

[^252]: Ibid.

[^253]: Ibid.

[^254]: Ibid.

[^255]: Mendelsohn, S. (2006, June).

[^256]: Ibid.

[^257]: GAO. (2003, February). *A new approach to disability
    determination. The Social Security definition of disability.*

[^258]: Ibid.

[^259]: GAO. (2004, July). *2003 SSI Annual Report*, Section II.C. FY
    2005 APP, at 20.

[^260]: Ibid.

[^261]: Ibid.

[^262]: SSA. (2007). *SSI Annual Statistical Report 2005.*
    http://www.ssa.gov/policy/docs/statcomps/ssi_asr/2005/index.html.

[^263]: Ticket to Work and Work Incentives Advisory Panel, SSA. (2004,
    February).*.*[www.ssa.gov/work/panel/panel_documents/pdf_versions/CrisisEnParticipation.pdf](http://www.ssa.gov/work/panel/panel_documents/pdf_versions/CrisisEnParticipation.pdf).

[^264]: Ibid.

[^265]: Ibid.

[^266]: Baldwin, M. L., & Johnson, W. G. (1998). Dispelling the myths
    about work disability. In T. Thomason et al., eds, *New approaches
    to dualities in the workplace.* Ithaca, NY: Cornell University
    Press. 53--55.

[^267]: Ibid.

[^268]: Skoto, B., et al. (2006, January).

[^269]: Ibid.

[^270]: Ibid.

[^271]: Ibid.

[^272]: Ibid.

[^273]: GAO. (2005, May). *Social Security Disability Insurance, SSA
    actions could enhance assistance to claimants with inflammatory
    bowel disease and other impairments.* GAO-05-495. Washington, DC:
    Author.
    [www.gao.gov/new.items/d05495.pdf](http://www.gao.gov/new.items/d05495.pdf).

[^274]: Ibid.

[^275]: Burkhauser, R., Daly, M., and Houtenville, A. (2001). How
    working age people with disabilities fared over the 1990s business
    cycle. In Peter P. Budetti, Richard V. Burkhauser, Janice M.
    Gregory, and H. Allan Hunt, eds. *Ensuring health and income
    security for an aging workforce.* Kalamazoo, MI: W.E. Upjohn
    Institute for Employment Research. 291--346.

[^276]: W.E. Upjohn Institute for Employment Research. (2003). *The
    decline in employment of people with disabilities: A policy puzzle*.
    Stapleton, D., & Burkhauser, R. (Eds.). Kalamazoo, MI: Upjohn
    Institute.
    [www.ilr.cornell.edu/ped/dep/files/2001PolicyInstitute_SampleChapter.pdf](http://www.ilr.cornell.edu/ped/dep/files/2001PolicyInstitute_SampleChapter.pdf).

[^277]: GAO. (2003, April). *Social Security and minorities: Earnings,
    disability incidence, and mortality are key factors that influence
    taxes paid and benefits received*. GAO-03-387. Washington, DC:
    Author.

[^278]: Ibid.

[^279]: Ibid.

[^280]: Ibid.

[^281]: GAO. (2004, December 10). *SSA's disability programs:
    Improvements could increase the usefulness of electronic data for
    program oversight.* GAO-05-100R. Washington, DC: Author.

[^282]: Ibid.

[^283]: Ibid.

[^284]: Ibid.

[^285]: GAO. (2005). *Social Security Administration: Better planning
    could make ticket program more effective.* Congressional Briefing.
    GAO-05-248.

[^286]: The GAO 2005 report included a review of past recommendations
    from the advisory panel.

[^287]: GAO. (2005).

[^288]: Hartnett, J. (2006).

[^289]: Mendelsohn, S. (2006). Role of the tax code in asset development
    for people with disabilities. *Disability Studies Quarterly, 26*(1).
    [www.dsq-sds.org](http://www.dsq-sds.org/).

[^290]: Farmer, P. (2005). *Pathologies of power: Health, human rights,
    and the new war on the poor*. Berkeley: University of California
    Press.

[^291]: Dohan, D. (2003). *The price of poverty: Money, work, and
    culture in the Mexican American barrio.* Berkeley: University of
    California Press.

[^292]: NCD. (2005, December).

[^293]: Herb, M., Miller, E., & O'Hara, A. (2000, June). *Housing Crisis
    Continues Findings from Priced Out in 2000.* In [Opening
    Doors](http://www.c-c-d.org/doors.html), Issue 14.

[^294]: Andersen, M. L., & Collins, P. H. (eds.). (1992). *Race, class,
    and gender*. Belmont, CA: Wadsworth.

[^295]: U.S. Census Bureau. (2003, March), p. 10.

[^296]: U.S. Census Bureau, U.S. Department of Commerce Economics and
    Statistics Administration. (2005, July), p. 5.

[^297]: Ibid.

[^298]: Shackleton & Foertsch. (2005).

[^299]: U.S. Census Bureau, U.S. Department of Commerce Economics and
    Statistics Administration. (2005, July).

[^300]: Oliver, M. L., & Shapiro, T. M. (1995). *Black wealth, white
    wealth*. New York: Routledge.

[^301]: Shapiro, T. M. (2004). *The hidden cost of being African
    American: How wealth perpetuates inequality.* New York: Oxford
    University Press.

[^302]: Sherraden, M., McBride, A., Johnson, E., Hanson, S., Ssewamala,
    F., & Shanks, T. R. (2005). *Savings in low-income households:
    Evidence from interviews with participants in the American Dream
    Demonstration*. St. Louis, MO: Center for Social Development, George
    Warren Brown School of Social Work, Washington University in St.
    Louis.

[^303]: Mendelsohn. (2006). *Role of the tax code.*

[^304]: Hartnett, J. (2006, October). *Educating democracy: Tax and
    financial service needs of Americans with disabilities.* A Report to
    the Ford Foundation Based on the 2006 Taxfacts+ Campaign Four City
    Pilot. Washington, DC: National Disability Institute and the Law,
    Health Policy & Disability Center, University of Iowa College of
    Law. [www.reitour.org](../www.reitour.org).\[Contractor\]

[^305]: Mendelsohn, S. (2005). *Disability as an emerging market
    segment. A meeting of the Federal Deposit Insurance Corporation and
    the National Disability Institute.* Washington, DC: National
    Cooperative Bank Development Corporation (October 31, 2005,
    Presentation).

[^306]: The FCDCU is part of the Asset Accumulation and Tax Policy
    Project at the Law, Health Policy & Disability Center, University of
    Iowa, College of Law, under a grant from the National Institute of
    Disability Research and Rehabilitation.

[^307]: Schmeling, J., Schartz, H., Morris, M., & Blanck, P. (2006,
    January). Tax credits and asset accumulation: Findings from the 2004
    N.O.D./Harris survey of Americans with disabilities. *Disability
    Studies Quarterly* *26*(1),1041--5718.

[^308]: Sard, B., & Fischer, W. (revised 2004, March 24).
    *Administration seeks deep cuts in housing vouchers and conversion
    of program to a block grant.* Center on Budget and Policy
    Priorities*.*
    [www.cbpp.org/2-12-04hous.htm](http://www.cbpp.org/2-12-04hous.htm).

[^309]: Disability Policy Seminar---Housing for people with
    disabilities: The crisis. (2005). Participants: The Arc, AAMR, AUCD,
    United Cerebral Palsy, NACDD.
    [www.nacdd.org/images2/pdfs/FS%20Housing%202005.pdf](http://www.nacdd.org/images2/pdfs/FS Housing 2005.pdf).

[^310]: Ibid.

[^311]: *Olmstead v. L.C. ex rel. Zimring,* 527 U.S. 581, 119 S.Ct.
    2176, 67 USLW 3683, 9 A.D. Cases 705, 99 Cal. Daily Op. Serv. 4859,
    144 L.Ed.2d 540, 1999 CJ C.A.R. 3627, 67 USLW 4567, 1999 Daily
    Journal D.A.R. 6263, 15 NDLR P 130.

[^312]: NCB Development Corporation. (2002). *Home access network*.
    Washington, DC: NCB. Retrieved from www.home-access.org/natlpic.asp.

[^313]: The Urban Institute. (2005, May). *Discrimination against
    persons with disabilities: Barriers at every step*. Prepared for
    Office of Policy Development and Research, U.S. Department of
    Housing and Urban Development by Margery Austin Turner et al.
    Washington, DC: The Urban Institute. The study was designed to
    advance the testing method of using paired testing to measure
    discrimination against people with disabilities, for research and
    enforcement purposes.

[^314]: Ibid., p. 35.

[^315]: Ibid., p. 42.

[^316]: Ibid., p. 45.

[^317]: NCB Development Corporation. (2002).

[^318]: U.S. Department of Health and Human Services (HHS). (2006).
    Substance Abuse and Mental Health Services Administration (SAMHSA),
    Center for Mental Health Services (CMS). *Transforming Housing for
    People With Psychiatric Disabilities Report.* Prepared by Bazelon
    Center. HHS publication No. 4173. Rockville, MD: HHS.

[^319]: Ibid., p. 3.

[^320]: National Low Income Housing Coalition (NLIHC). (Spring 2002).
    *The NIMBY Report: The Olmstead factor, integrating housing for
    people with disabilities.* Published by NLIHC with funding from
    Washington Mutual Foundation.

[^321]: Ibid., p. 4.

[^322]: Technical Assistance Collaborative (TAC). (2005, August).
    *Priced out in 2004.* Washington, DC. The TAC biennial study
    verifies that low-income people with disabilities are experiencing a
    national housing affordability crisis. Published in collaboration
    with the CCD Housing Task Force with funding from the Melville
    Charitable Trust. 

[^323]: Ibid.

[^324]: Law, Health Policy & Disability Center. (2004, April 15). 2004
    Disability Program Navigator Training: Affordable and accessible
    housing. Iowa City, IA: University of Iowa.
    <http://disability.law.uiowa.edu/dpn/audio/2003-04_audioconf/04152004.html>.

[^325]: NCB Development Corporation. (2002).

[^326]: Ibid.

[^327]: Ibid.

[^328]: Ibid.

[^329]: Ibid.

[^330]: Ibid.

[^331]: Ibid.

[^332]: News Release: Statement by Henry Cisneros on worst case needs in
    housing. (1996, March 14). U.S. Department of Housing and Urban
    Development (HUD).

[^333]: Edgar, E, O'Hara, A., Smith, B., & Zovistoski, A. (1999).
    *Priced Out in 1998.* From http://www.tacinc.org/Pubs/PricedOut.htm.

[^334]: HUD. (1999, March). *Waiting in vain: An update on America's
    rental housing crisis.* Washington, DC: Author.

[^335]: HUD. (1998, March). *Recent research results: A newsletter from
    HUD Office of Policy Development and Research.* Washington, DC:
    Author.

[^336]: 24 CFR §982.503.

[^337]: Sard & Fischer. (revised 2004, March 24).

[^338]: Ibid.

[^339]: Ibid

[^340]: P.L. 90-248, 81 Stat. 821 (1968).

[^341]: Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35).

[^342]: Home and Community-Based Services: Medicaid research and
    demonstration waivers, chart of state participation. (2004,
    November).
    [www.pascenter.org/demo_waivers](http://www.pascenter.org/demo_waivers).

[^343]: Saegert, S., & Benitez, L. (June 2004). *Limited equity housing
    cooperatives.* New York: City University of New York Graduate Center
    for the Taconic Foundation.

[^344]: Ibid., p. 22.

[^345]: Cotton, M., Saegert, S., & Reiss, D. (1996). *No more "housing
    of last resort": The importance of affordability and resident
    participation in in-rem housing*. New York: The Task Force on City
    Owned Property.

[^346]: NCD. (2002, July 26). *Achieving independence: The challenge for
    the 21st century; National disability policy: A progress report,
    December 2000--December 2001.* Washington, DC: Author.
    [www.ncd.gov/newsroom/publications/2002/progressreport_07-26-02.htm](http://www.ncd.gov/newsroom/publications/2002/progressreport_07-26-02.htm).

[^347]: Wright, B. (1997, Spring/Summer). There's no place like home:
    National program provides mortgage funds to people with
    disabilities. Point of Departure, Publication of the Technical
    Assistance about Transition and the Rehabilitation Act Project,
    *3*(1). PACER Center.
    [www.pacer.org/tatra/pod_summer97.htm#home](http://www.pacer.org/tatra/pod_summer97.htm#home).

[^348]: Ibid.

[^349]: Ibid.

[^350]: Ibid.

[^351]: Ibid.

[^352]: Disability Policy Seminar. (2005).

[^353]: Ibid.

[^354]: O'Hara, A., & Miller, E. (2000). *Going it alone: The struggle
    to expand housing opportunities for people with disabilities.*
    Washington, DC: Technical Assistance Collaborative and Consortium
    for Citizens with Disabilities Housing Task Force. From
    [www.c-c-d.org/task_forces/housing/going_alone.htm](http://www.c-c-d.org/task_forces/housing/going_alone.htm).

[^355]: According to CCD members' and affiliates' responses in a TAC
    survey dated July 1999.

[^356]: According to HUD data regarding Section 8 Mainstream applicants,
    years 1997, 1998, and 1999.

[^357]: Ibid.

[^358]: *STARTing line,* first quarter newsletter topics.
    [www.startsaving.la.gov/savings/news.jsp](http://www.startsaving.la.gov/savings/news.jsp).

[^359]: Ibid.

[^360]: Clancy, M., et al. (2005, February). *Section 529 savings plans,
    access to post-secondary education, and universal asset building*.
    [www.newamerica.net/publications/policy/section_529_savings_plans_access_to_post_secondary_education_and_universal_asset_building](http://www.newamerica.net/publications/policy/section_529_savings_plans_access_to_post_secondary_education_and_universal_asset_building).

[^361]: Ibid.

[^362]: Kendrick, D. (2002). One state's solution to getting more people
    on line. *AFB Access World.*
    [www.afb.org/afbpress/pub.asp?DocID=aw020203](http://www.afb.org/afbpress/pub.asp?DocID=aw020203).

[^363]: Jenson, A., & Folkemer, D. (revised draft 2002, July 26).
    *Developing fiscal estimates for a Medicaid Buy-in Program: Using
    data from early implementer states.*
    [www.uiowa.edu/\~lhpdc/work/II_Policies/Estimating_Fiscal_Impact.doc](http://www.uiowa.edu/~lhpdc/work/II_Policies/Estimating_Fiscal_Impact.doc).

[^364]: University of Nebraska Public Policy Center. (2002, December).
    *The impact of earnings of Nebraskans with disabilities on their
    eligibility for selected services and programs.* Prepared for
    Medicaid Infrastructure Grant Program, Nebraska Department of Health
    and Human Services.
    <http://ppc.unl.edu/reports_publications/price_program_integration.pdf>.

[^365]: Community Transportation Association. (2001) *Maryland passes
    legislation establishing job access transportation program.*
    [www.ctaa.org/adaview.asp?pageid=776](http://www.ctaa.org/adaview.asp?pageid=776).

[^366]: Ibid.

[^367]: Cooper, A. (2005, May). Rethinking rehab: Using vocational
    rehabilitation funds to start Individual Development Accounts.
    *EQUITY e-Newsletter.*
    www.wid.org/publications/?page=equity&sub=200505&topic=pm.

[^368]: [www.ndi-inc.org/docs/familycafe-June_4_06.ppt](http://www.ndi-inc.org/docs/familycafe-June_4_06.ppt).

[^369]: Social Security Administration. (1999). *Number of SSI
    recipients by category and age, December 1975 to September 1999.*
    Retrieved January 8, 2008, from
    <http://www.ncd.gov/newsroom/publications/2005/ssa-promoteemployment.htm>

[^370]: Case 1 and Case 3 only.

[^371]: OMB. (October 29, 1992). *Guidelines and Discount Rates for
    Benefit-Cost Analysis of Federal Programs*. (Circular No. A-94
    Revised, Transmittal Memo No. 64). Washington, DC.

[^372]: HHS, CMS. (March 23, 2005). *2005 Annual Report of the Boards of
    Trustees of the Federal Hospital Insurance and Federal Supplementary
    Medical Insurance Trust Funds*. Rockville, MD.
    http://www.cms.hhs.gov/ReportsTrustFunds/

[^373]: SSA, Office of the Chief Actuary. (2004, September). *Unisex
    life expectations at birth and age 65.* Baltimore, MD. (Actuarial
    Note No. 2004.2).

[^374]: SSA , Office of the Chief Actuary. (2005) Actuarial Study No.
    119: *Short-range actuarial projections of the old-age, survivors,
    and disability insurance program*. SSA. Baltimore, MD.

[^375]: Their only other source of income, SSI, is not taxable.

[^376]: However, we note that a tax credit on income taxes paid by
    businesses offsets much of this contribution.

[^377]: Their only other source of income, SSI, is not taxable.

[^378]: As is the case with other payroll taxes, there is likely some
    federal and state tax revenue offset associated with these high
    payroll expenses.

[^379]: These same time frames will apply in Case Study 3.

[^380]: See Executive Order 12291, Federal Regulation (1981, February
    17); and Executive Order 12866, Regulatory Planning and Review
    (1993, September 30).