February 3, 2006

The Honorable J. Dennis Hastert

Speaker of the House of Representatives

Washington, DC 20515

Dear Mr. Speaker:

I am writing regarding an urgent problem that appears to be overwhelming
the Social Security Administration.

I have obtained a January 21, 2006, email that the Deputy Commissioner
of Operations for Social Security, Linda McMahon, sent to all Social
Security Administration Operations employees. The message reads as
follows:

> Ordinarily I would be sending you a Happy New Year note at this time,
> but the circumstances we are facing seem to call for a different
> message. I didn't want you to think I'm out of touch with reality and
> don't know about the significant challenges you are experiencing.
>
> Ever since the Medicare Modernization Act passed, those of you on the
> front line have been expressing your deep concern that SSA is not
> positioned well to help people understand, enroll in and negotiate the
> new Medicare Part D Prescription Drug Program. Now we are seeing the
> consequences of that fact. Our National 800 Number Network has been
> overwhelmed for weeks, with busy rates running above 35 percent many
> days. In the last few weeks, those folks who can't get us on the phone
> have been coming into our field offices in large numbers. In fact,
> during the first two weeks in January, we had nearly 200,000 visitors
> a day --- as many as 60,000 more than we saw in the fall. We already
> had large backlogs in our Processing Centers, and those will be
> exacerbated by the need to put more people on the phone to bring down
> the busy rate and keep people from needing to visit field offices. Of
> course, if we aren't careful, we will generate more calls and visits
> from the folks whose actions will have to pend longer in the PCs.
>
> It's not a rosy picture, and the news doesn't get better. Congress
> finally passed our FY06 budget in late December, and they gave us
> \$300 million less than the President requested. That means we will
> not be able to replace all the employees we lose to retirement this
> year or accomplish all the automation projects we had intended to do
> to streamline work processes. At the same time, we have been given new
> mandates to do more thorough screening before we process Social
> Security Number applications and to include children under the age of
> one in that process.
>
> So, where does that leave us? What are we going to do to cope with
> these problems?
>
> First, we have negotiated some new workload goals with OMB.
> Specifically, we will do fewer SSI Redeterminations and Limited Issues
> as well as fewer Continuing Disability Reviews. These workloads only
> affect the field offices and are heavily weighted to Title 16, so that
> certainly doesn't solve our problems. We will be working within
> Operations to provide further guidance on workload priorities to all
> components so you can concentrate on the things that most need
> attention rather than trying to do everything. This is certainly not
> ideal, and I recognize that work delayed becomes more complicated when
> we tackle it at a later date. However, we don't have a lot of options
> at this point.
>
> Second, we are working very closely with the Centers for Medicare and
> Medicaid Services to help them find ways to improve service for the
> Part D program. For example, at our request, they have set up critical
> case units to which we can refer problem cases where people can't get
> answers from the 1-800-Medicare number or their PDP or pharmacy. We
> have also given CMS detailed information on the types of calls that
> are being referred to SSA erroneously so they can improve training and
> guidance for their Teleservice Representatives.
>
> Third, we are looking at all non-personnel-related spending to see
> what we can curtail in order to free up money for overtime.
> Unfortunately, I don't expect a lot of payoff from this effort because
> we have very little wiggle room within that portion of our budget.
>
> Finally, we are speeding up a couple of projects that will reduce the
> time it takes for 800 Number agents to answer calls and improve the
> likelihood that callers will opt for automated services. We are also
> improving our marketing of Internet services in order to get more
> people to opt for handling their business via the Internet instead of
> coming to the office or calling us.
>
> I won't try to kid you. This is going to be a very difficult year, and
> the budget picture for next year doesn\'t look any better. I commit to
> you that I will continue to work with the Commissioner to tell our
> story and enhance our chances of getting a better budget. I will be
> closely monitoring the impact of our decisions and will make
> adjustments as necessary to ensure that we maximize the use of our
> resources and minimize the negative fallout from the shortfall. Of
> course, that means we will probably be changing priorities as the year
> unfolds, so please prepare yourselves mentally for that possibility.
>
> Someone recently told me that, even though times are tough, we are
> still blessed to be doing important work and to be pretty well paid
> for the privilege. Thats something worth remembering when were feeling
> particularly pressured. Thanks for doing your best to cope with this
> difficult situation and for continuing to do everything you can to
> serve the public well despite the challenges.
>
> Best wishes to you and your families for a healthy, happy and
> fulfilling 2006.

Other emails and communications confirm the chaos that the Medicare
prescription drug program has caused for the Social Security
Administration, describing "hemorrhaging" at Social Security call
centers and the provision of inaccurate information to seniors.

If this information is accurate, the combination of the new prescription
drug program and recent budget decisions are crippling the ability of
the Social Security Administration to provide basic administrative
services. This is a matter of grave concern. As you know, almost 50
million Americans receive benefits they have paid into Social Security
and depend on those benefits to meet their everyday expenses. While
these benefits are not at risk, the ability of the Social Security
Administration to manage the program, respond to beneficiaries' basic
inquiries and questions, and prevent fraud and abuse appears to be
severely degraded.

It is imperative that we ensure the Social Security Administration is
able to fulfill its obligations to these American families and function
normally. Accordingly, I ask that you give this matter your personal
attention and direct the relevant committees to initiate immediate
oversight of this problem.

For your convenience, I am providing additional information that puts
the demands facing the Social Security Administration in context.

**Background**

The Social Security Administration was given important new
responsibilities under the new Medicare Part D program. Under the new
law, low-income Medicare beneficiaries are eligible to receive subsidies
to help pay for plan premiums and drug copays. In 2005, the Social
Security Administration was responsible for informing individuals that
they may be eligible for the subsidy and providing them with application
information. The agency is now responsible for reviewing millions of
applications for low-income assistance under the plan, handling
inquiries about eligibility from Medicare beneficiaries, and making
final assistance determinations.

The agency's workload under this new program is staggering. As of
January 2006, the Social Security Administration had received 4.4
million applications for low income assistance and had processed 3.4
million of these applications.[^1] Yet despite these new
responsibilities, the Social Security Administration budget has been
cut.

Implementation of the new Medicare drug benefit will cost the Social
Security Administration hundreds of millions of dollars. The Medicare
Modernization Act provided \$500 million in funding for the Social
Security Administration for implementations of the drug benefit in FY
2004 and FY 2005.[^2] However, the Medicare legislation provides no
direct funding for the Social Security Administration for the current
year, when the Social Security Administration is facing its largest
burdens.[^3]

At the present time, transition efforts are funded out of the standard
Social Security Administration budget. Despite the new burdens for the
Social Security Administration, the overall budget has declined in FY
2006. In FY 2005, the agency's total administrative budget (including
the MMA implementation funds) was \$9.3 billion.[^4] The President's
budget proposal called for a FY 2006 funding level of \$9.52
billion,[^5] which would not even have been enough to keep up with
inflation. However, this budget request was cut even more by Congress,
which approved a final Social Security Administration budget of \$9.1
billion --- a cut of almost \$200 million.[^6]

**[Corroborating Information]{.underline}**

Additional documents that I have obtained bolster the concerns raised by
Ms. McMahon, and raise new issues. On Wednesday, January 18, Ms. McMahon
conducted a teleconference call with Social Security Administration
employees. I understand that on this call Ms. McMahon described the
Social Security Administration telephone service centers as
"hemorrhaging"; she indicated that the Social Security Administration
budget for overtime hours for telephone hotline staff will be exceeded
by April 1; that visits to Social Security Administration field offices
had increased by hundreds of thousands of beneficiaries weekly; and that
field offices are so swamped that the Social Security Administration is
even considering closing offices for certain periods to allow staff to
complete other work.

A third document that I have obtained, an internal email from a Social
Security employee, indicates that many of the phone calls to the Social
Security Administration and the visits to the Social Security
Administration offices, are due to the operators at the 1-800-MEDICARE
hotline incorrectly referring calls to the Social Security
Administration, or to beneficiaries' inability to get through to
1-800-MEDICARE at all. According to this email, the majority of calls to
the Social Security Administration hotline involve Part D enrollment and
coverage issues. These issues (unlike the low-income subsidy) are not
under the purview of the Social Security Administration. The email also
notes that although there have been efforts by the Social Security
Administration to prevent CMS from incorrectly referring these calls,
the problems have continued. It thus appears that the problems faced by
the Medicare program in implementing the benefit are spilling over and
having significant impacts on the Social Security program.

**[Conclusion]{.underline}**

Mr. Speaker, the Social Security program may be the most successful
government program ever adopted. It has worked well for almost 70 years
and is fully funded until 2052.[^7] It is a lifeline that millions of
Americans have earned through hard work and their own financial
contributions.

The administrative crisis it is now facing is unacceptable and
avoidable. That is why I believe it is so important that the appropriate
committees begin work on this immediately and make sure that the Social
Security Administration can again meet the needs of American families.

Sincerely,

Henry A. Waxman

Ranking Minority Member

[^1]: Testimony of Linda McMahon, *Meeting The Challenges of Medicare
    Drug Benefit Implementation*, Senate Committee on Aging (Feb. 2,
    2006).

[^2]: Public Law 108-173, § 1015.

[^3]: Social Security Administration did not spend all \$500 million of
    this money in FY 2004 and FY 2005, and was able to roll
    approximately \$100 million over into the FY 2006 budget.

[^4]: Social Security Administration, *Fiscal Year 2006 Budget* (Feb.
    2005).

[^5]: *Id.*

[^6]: P.L. 109-148, *Department of Defense, Emergency Supplemental
    Appropriations to Address Hurricanes in the Gulf of Mexico, and
    Pandemic Influenza Act*; P.L. 109-149, *Departments of Labor, Health
    and Human Services, and Education, and Related Agencies
    Appropriations Act.*

[^7]: Congressional Budget Office, *Updated Long-Term Projections for
    Social Security* (Mar. 2005).