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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
  WORK INCENTIVES FOR BLIND AND DISABLED SOCIAL SECURITY BENEFICIARIES

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 23, 2000

                               __________

                             Serial 106-56

                               __________

         Printed for the use of the Committee on Ways and Means

                     U.S. GOVERNMENT PRINTING OFFICE
66-686 CC                    WASHINGTON : 2000

                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Social Security

                  E. CLAY SHAW, Jr., Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                                                                   Page

Advisories announcing the hearing................................     2

                               WITNESSES

Social Security Administration, Susan Daniels, Ph.D., Deputy 
  Commissioner, Disability and Income Security Programs..........     8
U.S. General Accounting Office, Barbara D. Bovbjerg, Associate 
  Director, Education, Workforce and Income Security Issues, 
  Health, Education and Human Services Division; accompanied by 
  Carol Petersen, Assistant Director, Education, Workforce and 
  Income Security Issues; Health, Education and Human Services 
  Division.......................................................    24

                                 ______

Arc of the United States:
    William R. VanOoteghem, Essexville, MI.......................    77
    Wendy VanOoteghem, Essexville, MI............................    78
Consortium for Citizens with Disabilities, and NISH, Tony Young..    87
Ehrlich, Hon. Robert L., Jr., a Representative in Congress from 
  the State of Maryland..........................................     6
Gillis, Brenda-Ann, Stuart, FL...................................    38
Hanes, Pamela, Oregon Health Policy Institute, Oregon Health 
  Sciences University............................................    80
Life In Time Consultation Services, Inc., David E. Gallagher.....    72
Louisiana Center for the Blind, Joanne Wilson....................    42
National Federation of the Blind, James Gashel...................    51
Cavenaugh, Brenda, Rehabilitation Research and Training Center on 
  Blindness and Low Vision, Mississippi State University.........    45

                       SUBMISSIONS FOR THE RECORD

American Council of the Blind:
    Charles H. Crawford, letter..................................   116
    Jenine Stanley, letter.......................................   117
American Network of Community Options and Resources, Annandale, 
  VA. statement..................................................   118
Davis, Richard L., Bay City, MI, letter..........................   119
English, Hon. Philip, a Representative in Congress from the State 
  of Pennsylvania, letter........................................   120
National Alliance for the Mentally Ill, Arlington, VA, Michael 
  Freedman, statement............................................   120
Nussle, Hon. Jim, a Representative in Congress from the State of 
  Iowa, statement................................................   123
Paralyzed Veterans of America, statement.........................   124
Protection & Advocacy, Inc., Los Angeles, CA.....................   126

  WORK INCENTIVES FOR BLIND AND DISABLED SOCIAL SECURITY BENEFICIARIES

                              ----------                              

                        THURSDAY, MARCH 23, 2000

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:00 a.m., in 
room 1100 Longworth House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee) presiding.
    [Advisories announcing the hearing follow:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE

March 15, 2000

No. SS-12

                       Shaw Announces Hearing on

                 Work Incentives for Blind and Disabled

                     Social Security Beneficiaries

    Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing examining work incentives in 
the Social Security disability program for those who are blind and 
those with other disabilities. The hearing will take place on Thursday, 
March 23, 2000, in room B-318 Rayburn House Office Building, beginning 
at 10:00 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include policy experts and advocates for blind and 
disabled individuals as well as beneficiaries who have been affected by 
these policies. However, any individual or organization not scheduled 
for an oral appearance may submit a written statement for consideration 
by the Committee and for inclusion in the printed record of the 
hearing.
      

BACKGROUND:

      
    Social Security provides benefits for individuals who are blind or 
disabled and unable to work because of their medical conditions. To 
qualify for benefits, an individual must be unable to perform work for 
pay due to any medically determinable physical or mental impairment. A 
person is considered able to work or engage in substantial gainful 
activity (SGA) if earning at or above a certain dollar level (known as 
the SGA level). The SGA test applies to both determining initial and 
continuing eligibility for benefits.
      
    Prior to 1977, all disability beneficiaries, as well as blind 
beneficiaries, were subject to the same SGA limit, established in 
regulation by the Social Security Administration. The Social Security 
Amendments of 1977 (P.L. 95-216) increased the amount of the SGA limit 
for blind beneficiaries to the same amount as the age 65 earnings 
limit, but did not change the SGA limit for all other disabled 
beneficiaries. The Contract with America Advancement Act of 1996 (P.L. 
104-121) increased the age 65 earnings limit, but did not change 
current law with respect to the blind.
      
    In 2000, the SGA limit for blind beneficiaries is $1,170 per month 
and this amount is indexed annually for wage growth. The limit for non-
blind disability beneficiaries was increased from $500 to $700 per 
month in July 1999, after remaining at the same level for the past 10 
years.
      
    In announcing the hearing, Chairman Shaw stated: ``We should do all 
we can so every disabled worker has opportunities and incentives to 
stay in the workforce. Everyone wants that. That is what the Ticket to 
Work legislation passed last year was all about. But we need to do 
more. This hearing will help to show us the way.''

FOCUS OF THE HEARING:

      
    The hearing will focus on the role of earnings in determining 
initial and continuing eligibility for disability benefits, a review of 
the differences in current law for blind individuals and those who have 
other disabilities, and an assessment of costs and employment 
experiences of individuals who are blind and individuals with other 
disabilities.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Thursday, 
April 6, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and 
Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements 
wish to have their statements distributed to the press and interested 
public at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Social Security office, room B-316 
Rayburn House Office Building, by close of business the day before the 
hearing.
      

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or 
MS Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committe advisories and news releases are avaailable on 
the World Wide Web at ``HTTP://WAYSANDMEANS.HOUSE.GOV''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                

                       NOTICE--CHANGE IN LOCATION

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE

March 16, 2000

No. SS-12-Revised

             Change in Location for Subcommittee Hearing on

                 Work Incentives for Blind and Disabled

                     Social Security Beneficiaries

                        Thursday, March 23, 2000

    Congressman Clay Shaw, Jr., (R-FL), Chairman of the Ways and Means 
Subcommittee on Social Security, today announced that the Subcommittee 
hearing on examining work incentives in the Social Security disability 
program for those who are blind and those with other disabilities, 
previously scheduled for Thursday, March 23, 2000, at 10:00 a.m., in 
room B-318 of the Rayburn House Office Building, will now be held in 
the main Committee hearing room, 1100 Longworth House Office Building.
      
    All other details for the hearing remain the same. (See 
Subcommittee press release No. SS-12, dated March 15, 2000.)
      

                                

    Chairman Shaw. Today, the Subcommittee is considering how 
best to encourage work and earnings for a special group, and 
that is people with disabilities. We have already taken some 
major steps to encourage work through last year's Ticket to 
Work law. This law will better help beneficiaries prepare for 
work and keep jobs. It extends health care coverage, encourages 
service providers to focus on results, and maintains the safety 
net for those who need it. But we can't stop there. 
Fortunately, as we consider ways to further improve the 
disability program, there is much we already agree on. Let us 
focus on that.
    We all agree that federal programs should promote work and 
self-sufficiency. We all agree everyone should be offered a 
``hand up'' rather than a ``handout''. And we all agree 
disability programs must protect those who are simply too 
disabled to work.
    Our commitment to the Ticket law establishes exactly that, 
but each of us must also consider some tough questions as we 
listen to today's witnesses. For example, are proposed changes 
consistent with the purposes of the disability program? Are 
they fair to all disabled beneficiaries as well as to current 
workers whose hard-earned wages support the program? And will 
they threaten the disability program's safety net, which 
already will start running in the red by 2006?
    Despite these challenges, I am convinced that we can do 
more to encourage work. Ronald Reagan once said, ``The very key 
to our success has been our ability, foremost among nations, to 
preserve our lasting values by making change work for us rather 
than against us''. Especially with complicated government 
disability programs, such change never occurs easily. But that 
is all the more reason for us to dig in and get to the bottom 
of the issues that have kept others from doing more to help 
every disabled person who wants to work.
    And I will now yield such time as he may consume to the 
gentleman from California, Mr. Matsui.
    Mr. Matsui. Thank you very much, Mr. Chairman, I appreciate 
your yielding to me, and appreciate the fact that you are 
holding this hearing.
    Over the past year, the Congress has made significant 
bipartisan progress in ensuring that the Social Security 
program encourages people to participate fully in the nation's 
economy and provides them with incentives to join, return to or 
remain in the workforce.
    At the end of last year, the Congress passed on a 
bipartisan basis and the President signed into law the Ticket 
to Work and Work Incentives Act. The Ticket to Work Act assists 
disability beneficiaries attempting to return to work or who 
are struggling to remain in the workforce by expanding their 
access to public and private vocation rehabilitation providers, 
extending the period for which they are eligible for Medicare 
coverage, and creating new options for states to allow 
individuals with disabilities to purchase Medicaid.
    Just three weeks ago, the House unanimously passed a 
bipartisan legislation to repeal the Earnings Test for Social 
Security beneficiaries who have attained the normal age of 
retirement. H.R. 5 allows the most experienced members of our 
workforce, our nation's senior citizens, to continue work 
without experiencing a reduction in their Social Security 
benefits. Despite this progress, we can still do more to look 
at Social Security programs to see where we can improve the 
ability of beneficiaries to take part in the workforce.
    As we all know, we are in an environment of budget 
constraints. On the one hand, we have a limit on budget surplus 
and budget resolutions that we are going to discuss today that 
will challenge our ability to fund health, education and social 
programs while allowing for tax cuts. And on the other hand, we 
have a Social Security surplus that we will set aside for debt 
reduction and help us pay for the benefits in the future.
    We are determined to do our best for Social Security 
recipients and to explore ways to improve their ability to 
participate in the labor force while working within our budget 
limits. One such avenue is a requirement in the Ticket to Work 
and the Work Incentives Act that the Social Security 
Administration conduct demonstration projects on possible 
modification on earnings limitation for the disabled.
    In addition, the bill mandates a GAO study on the topic as 
well. The information that we will receive on these two 
initiatives will be very useful and helpful to our 
investigation into the costs and effectiveness of various 
incentive policies.
    Today, I look forward to the testimony of the 
representatives from the Social Security Administration and the 
GAO, and I am eager to hear from disability beneficiaries about 
the impact that possible work incentive policies may have on 
them.
    In the end, enhanced work incentives in the Social Security 
program benefit more than the disability community themselves, 
they benefit the country as a whole.
    I look forward to working with Chairman Shaw and the other 
members of the Subcommittee to make the most of this very, very 
important opportunity. Thank you.
    Chairman Shaw. Thank you, Bob.
    Because of the length of our agenda today, I am going to 
try to hold all the witnesses within the five-minute limit. 
Each person to testify this morning, we have your full 
statement that will be made a part of the record, and we would 
hope that you can summarize within the time allotted, and I 
would hope we can have everyone's cooperation on that.
    Our first witness is Member from the State of Maryland. Mr. 
Ehrlich.

STATEMENT OF THE HON. ROBERT L. EHRLICH, JR., A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF MARYLAND

    Mr. Ehrlich. Thank you, Mr. Chairman. I will certainly hold 
to the daily rule with respect to the five-minute limitation. I 
really appreciate the opportunity to briefly highlight my 
written testimony which I submitted for the record, and I am 
not going to read it.
    Members of this Committee, particularly the Chairman, know 
this issue very well. And, again, I thank you for this 
opportunity today.
    Very briefly, Mr. Chairman, a couple of points I would like 
to hit with respect to history and the facts and the 
sponsorship, and then a final plea with regard to this 
particular issue.
    The Chairman and Members of the Subcommittee are well aware 
of the history of the Social Security limitation and the 
linkage between seniors and the blind. It occurred in the 
1970s, the original linkage came out of this Committee.
    As part of the Contract With America, in fact, the senior 
citizens' earnings limitation was phased in over five years 
from $11,000 to $30,000. At that time, however, not because of 
any compelling policy reasons, but because of the need to 
balance the budget, there was a de-linkage. Seniors and the 
blind were de-linked.
    It has been that case now for the past four years. This 
year, given the great work of this Committee, the Subcommittee 
and the full Committee, and now the House, with respect to the 
seniors' limitation, I thought the time would be good with 
respect to doing something for the blind.
    The Chairman is well aware that at least past leadership 
has made representations to the blind community with regard to 
``fixing'' this linkage problem, and I am truly hopeful that 
the Chairman, the Subcommittee and the full Committee will 
follow through on that promise made a number of years ago.
    The Chairman is well familiar with the facts. During a time 
of technological innovation, a steaming economy, very low 
unemployment, the blind suffer from a 70-percent unemployment 
rate. The primary reason, in my view and in the view of the 
folks you are going to hear today, is the ``disincentives'' 
built into the code with respect to this earnings limitation.
    H.R 1601 has over 280 bipartisan co-sponsors in this House. 
Nineteen Members of the Ways and Means Committee co-sponsor 
this bill.
    Mr. Chairman, we can talk about policy. We can talk about 
equity. I believe that to at least re-link the blind with the 
seniors regardless of what happens with regard to the senior 
bill, whether that is a clean bill or whether it comes back 
from the Senate with a phase-in, or whatever, is the right 
thing to do. These are people who want to work. Given the 
technology we have in this country today, they can work. I 
think this Congress should all be about empowering people who 
simply want to work, and whether it is the Social Security Act, 
whether it is our Code that provides the disincentive, I 
believe it is incumbent upon this Congress to remove those 
disincentives from the law.
    I truly thank you for your interest. I know your personal 
interest in this issue. I thank you for the time today, and I 
am going to let the folks who are impacted by this inequity in 
our law testify before the Committee. And, again, I thank you, 
and yield back.
    [The prepared statement follows:]

Statement of the Hon. Robert L. Ehrlich, Jr., a Representative in 
Congress from the State of Maryland

    Good morning, Mr. Chairman and Members of the Subcommittee. 
I appreciate the opportunity to talk to you about eliminating a 
work disincentive for blind Americans. As many of you know, I 
have repeatedly introduced and pushed for passage of 
legislation to restore work incentives for the blind. Last year 
I introduced H.R. 1601, the Blind Empowerment Act (BEA). This 
bipartisan bill has more than 280 co-sponsors. This legislation 
could positively impact as many as a quarter million blind 
Americans.
    For nearly twenty years, the blind and senior citizens were 
linked for the purposes of the Social Security Earnings Test. 
In 1996, this historic link was broken, not to make a 
significant policy change, but to balance the budget. Under 
that legislation, Congress provided seniors with an opportunity 
to increase their earnings to $30,000 by 2002 without losing 
their Social Security benefits; however, blind individuals were 
limited to earnings of approximately $14,000 in calendar year 
2000. Blind individuals who earn more than this earnings limit 
threshold lose all of their benefits. In contrast, a senior 
citizen in the same situation has their benefits reduced at a 
rate of $1 for every $3 earned over the limit.
    To be sure, this lower threshold and complete loss of 
benefits for the blind creates major disincentives to work. 
Presently, the unemployment rate for the blind is approximately 
70%. In effect, Congress penalizes blind workers for trying to 
improve their quality of life for themselves and their 
families. This is unacceptable. Congress should encourage, not 
discourage, blind individuals to work.
    My legislation (H.R. 1601) accomplishes this. Specifically, 
my bill removes the existing disincentives by re-linking the 
blind with the seniors. Most importantly, H.R. 1601 restores 
fairness for the blind by honoring the co-sponsors' pledge for 
parity with senior workers.
    The Ways and Means Committee recently voted to repeal the 
earnings limitation for seniors. Shortly thereafter, the House 
overwhelmingly affirmed this repeal and the Senate has likewise 
done the same. I strongly support the repeal of the seniors 
earnings limitation. I do believe, however, that Congress has a 
responsibility to restore fairness and work incentives for the 
blind. By adopting H.R. 1601 this Committee can accomplish this 
goal. I urge you to take this opportunity and help blind 
Americans to reach their full working potential. I pledge to 
continue my efforts on behalf of all blind Americans.
    Again, Mr. Chairman, thank you for affording me the 
opportunity to testify before the Social Security Subcommittee.
      

                                

    Chairman Shaw. Thank you, Bob. Mr. Matsui?
    Mr. Matsui. I have no questions. I would like to thank Mr. 
Ehrlich.
    Chairman Shaw. Mr. Doggett?
    Mr. Doggett. No questions.
    Chairman Shaw. Well, I do know you have talked to me on 
numerous occasions. I know your interest in this issue, and we 
appreciate your being here this morning.
    Mr. Ehrlich. Thank you, Mr. Chairman. I am going to get to 
my Commerce markup before the Chairman gets angry at me. Thank 
you.
    Chairman Shaw. We next have a panel of witnesses from the 
Social Security Administration. We have Dr. Susan Daniels, 
Deputy Commissioner, Disability and Income Security Programs; 
and from the U.S. General Accounting Office, Barbara Bovbjerg, 
Associate Director, Education, Workforce and Income Security 
Issues, Health, Education and Human Services Division; and she 
is accompanied by Carol Petersen, who is the Assistant Director 
of the Education, Workforce and Income Security Issues, Health, 
Education and Human Services Division.
    Dr. Daniels, I beg your pardon. I put everybody together, 
and that is not the way it is supposed to be this morning. So, 
everyone can remain at the table, but we will start out with 
Dr. Daniels and go to questioning, and then get to the other 
witnesses from the United States General Accounting Office. Dr. 
Daniels.

    STATEMENT OF SUSAN DANIELS, PH.D., DEPUTY COMMISSIONER, 
   DISABILITY AND INCOME SECURITY PROGRAMS, SOCIAL SECURITY 
                         ADMINISTRATION

    Dr. Daniels. Mr. Chairman, there certainly are enough 
chairs up here, so anyone could join if they would like to.
    Mr. Chairman, Members of the Subcommittee, thank you so 
much for inviting me here today to talk about the work 
incentives for blind individuals and other people with 
disabilities.
    The Social Security Act defines disability as the inability 
to engage in any substantial gainful activity (SGA) due to a 
medically determinable physical or mental impairment. We use 
how much a person earns as a guideline for evaluating whether 
work is substantial and gainful, and whether we may consider 
them eligible for benefits.
    Blindness, sometimes referred to as statutory blindness, is 
the only impairment defined in the Act itself; all other 
impairments are defined by regulation.
    The Social Security Administration has approximately 
120,000 statutorily blind individuals on our rolls, about 
100,000 of them on Disability Insurance.
    How do we determine if a person is actually working? For 
most individuals, that is done through regulation, and since 
July 1999 the SGA amount has been $700. For individuals who are 
blind, the Act itself specifies the computation of the SGA 
amount, and since January 2000 that has been $1,170 a month. 
Prior to 1978, the SGA amount for the blind and nonblind were 
identical. The Social Security amendments of 1977 linked the 
SGA amount for individuals who are blind and the retirement 
earnings test. The SGA amount for individuals who are blind and 
the retirement earnings test rose from $334 a month in 1978 to 
$980 a month in 1995. For the nonblind, the SGA amount rose 
from $260 a month in 1978 to $500 a month in 1995.
    The Contract With America Advancement Act in 1996 
significantly increased the retirement earnings test and de-
linked the SGA amount for individuals who are blind from that 
test, and it indexed the then-SGA amount for individuals who 
are blind to average wage growth. Meanwhile, SSA increased the 
SGA for nonblind individuals to $700 a month last summer.
    The Social Security disability programs that we administer 
may not be the exclusive and permanent source of income for all 
beneficiaries, but they can be a stepping stone to improve the 
economic conditions of people with disabilities through Return 
to Work initiatives.
    There are several work incentives in both the SSI program 
and in the Disability Insurance program, which were further 
enhanced by the Ticket to Work and Work Incentives Improvement 
Act of 1999.
    We also refer individuals with disabilities to private and 
public vocational rehabilitation programs. Last year, Social 
Security reimbursed State Vocational Rehabilitation agencies 
$120 million for the rehabilitation of over 11,000 
beneficiaries.
    As you well know, you have worked two hard years on 
producing legislation to improve the work incentives. Your 
success culminated in the President signing the Ticket to Work 
and Work Incentives Improvement Act into law last December. I 
want to express my thanks to you, Mr. Chairman, and to all 
members of this Committee for getting that important piece of 
work done. It is really a magnificent bill.
    A quick review. We now have tools in place under the Ticket 
to Work program in Social Security to extend Part A Medicare 
premium-free for individuals who return to work for eight and a 
half years; a quick reinstatement of benefits if working and 
the workplace doesn't work out for beneficiaries; and, finally, 
the Medicaid buy-in for states to increase economic and health 
security in the states.
    H.R. 1601 and S. 285 would reset the SGA amount for blind 
people back to the retirement earnings test amount. Currently, 
the earnings retirement test is $1,417 a month. If these bills 
are enacted in the year 2000, the five-year cost would be about 
a billion dollars and the long-term cost .01 percent of 
payroll, an impact on the long-term solvency of the trust fund.
    H.R. 5 as passed by the House and the Senate would 
eliminate the retirement earnings test completely. The 
President has promised to sign a clean bill to eliminate the 
retirement earnings test. Obviously, such enactment, combined 
with the previously discussed legislation, would completely 
eliminate the SGA for blind individuals, thus making all 
statutorily blind people eligible for our programs.
    Who would benefit? Such a significant policy change would 
benefit primarily those individuals who are currently blind and 
working because they would become immediately eligible for 
Social Security Disability.
    In the year 2000, if this bill was enacted, the five-year 
cost would be $2.6 billion and the long-term costs .03 percent 
of payroll, an even greater impact on the trust fund.
    As we think about changes, a few questions should be kept 
in mind. Have we given the time and the resources and support 
we need to achieve and measure the new work incentives you 
passed last year? Are additional ones needed now? If we 
eliminate work as a criteria for benefits, we create a new 
program that pays people based on a significant limitation. 
Which limitation should that be? Which impairments would be 
covered? Should this supplement extend to nonworking age 
people, say, children or the elderly who are in great need? And 
what is the long-term effect on the solvency of Social 
Security, and how will it be financed?
    A policy change of great significance is possible but is 
likely to require a long period of conversation and significant 
financial analysis.
    Mr. Chairman, we want to build the momentum provided by the 
enactment of the Ticket to Work bill to increase incentives for 
people with disabilities to work. Commissioner Apfel has 
reaffirmed our commitment to make every effort to bring as many 
Americans with disabilities into the workforce as possible.
    I would be delighted to take your questions. Thank you.
    [The prepared statement follows:]

Statement of Susan Daniels, Ph.D., Deputy Commissioner, Disability and 
Income Security Programs, Social Security Administration

    Thank you for inviting me to discuss current work 
incentives for blind individuals and other people with 
disabilities. This is an important issue, and the Social 
Security Administration looks forward to working with you on 
finding ways to help more Americans with disabilities 
successfully return to work.
    Today I would like to discuss the definition of disability 
and how work activity for both blind and non-blind individuals 
relates to it; our current work incentives and the recent 
changes in the law; and some pending proposals in that area.

Definition of Disability

    The Social Security Act (the Act) defines disability as the 
inability to engage in any substantial gainful activity (SGA) 
because of a medically determinable physical or mental 
impairment(s):
     That can be expected to result in death, or
     That has lasted or, that we can expect to last for 
a continuous period of not less than 12 months.
    We use earnings guidelines to evaluate whether the work 
activity is SGA and whether we may consider someone disabled 
under the law. While this is only one of the tests used to 
decide if a person is disabled, it is a critical threshold in 
disability evaluation.
    Blindness (sometimes referred to as statutory blindness) is 
the only impairment defined in the Act; all other impairments 
are defined in regulations. Blindness is defined as central 
visual acuity of 20/200 or less in the better eye with best 
correction, or a limitation in the field of vision in the 
better eye so that the widest diameter of the visual field 
subtends an angle of 20 degrees or less (tunnel vision).
    Blind individuals do not have to meet the ``regency of 
work'' test (generally, work in 20 out of the last 40 quarters) 
to be eligible for disability benefits. Approximately 120,000 
of our beneficiaries meet the statutory definition of 
blindness. (About 50,000 are Supplemental Security Income 
beneficiaries aged 18 to 64; approximately 100,000 are Social 
Security beneficiaries; about 30,000 are concurrently receiving 
benefits under both programs.)

Substantial Gainful Activity (SGA)

    The Act requires the Commissioner to prescribe in 
regulations the criteria for determining when earnings 
demonstrate an individual's ability to engage in SGA. The Act 
also specifies that a different definition of SGA applies to 
blind individuals. With an impairment other than blindness, 
effective July 1999 earnings over $700 a month generally 
demonstrate SGA. For someone who is blind, effective January 
2000, earnings over $1,170 a month generally demonstrate SGA.
    Prior to 1978, the SGA amount was the same for both blind 
and non-blind individuals. The Social Security Amendments of 
1977 made the SGA threshold for blind individuals the same as 
the monthly exempt amount under the retirement earnings test 
(RET) for individuals at or above the normal retirement age 
(NRA), an amount which has generally been indexed that amount 
to average wage growth. At the time, Senator Birch Bayh 
indicated that blindness was a ``distinct and unique 
condition'' and that ``The blind, as a group, suffer largely 
artificial impediments when they seek to enter and compete in 
the labor market.'' The two thresholds (the exempt amount and 
SGA) rose together from $334 a month in 1978 to $940 a month in 
1995, while the non-blind SGA amount rose from $260 a month in 
1978 to $500 a month in 1990.
    The Contract with America Advancement Act of 1996, enacted 
March 29, 1996, significantly increased the RET exempt amount 
(rising to $2,500 a month in 2002 for individuals at NRA). It 
de-coupled the SGA amount for blind individuals from the RET, 
and instead continued to index the then-existing SGA amount for 
average wage growth. Meanwhile, SSA increased the regular SGA 
amount in regulations to $700 a month effective July 1999.
    For individuals who are blind and age 55 or older, if their 
work requires a lower level of skill and ability than the work 
that they did before age 55, benefits are suspended, not 
terminated, when earnings demonstrate SGA. Benefits are then 
payable for any subsequent month that earnings fall below SGA.

Work Incentive Provisions

    Congress enacted work incentive provisions that were 
strongly supported by the Administration to provide 
beneficiaries with the support they need to move from benefit 
dependency to independence. Work incentives assist 
beneficiaries with disabilities to enter or reenter the 
workforce by protecting entitlement to cash payments and/or 
health care until this goal is achieved.
    Some work incentives are common to both the Social Security 
Disability Insurance (SSDI) and Supplemental Security Income 
Program (SSI), while some are unique to one program or the 
other. Because even the common work incentives may be treated 
differently by either program, I would like to briefly discuss 
work incentives as each program treats them. I would also like 
to point out the special work incentives that apply only to 
blind beneficiaries of either program. SSDI Work Incentives
    There are several work incentives for SSDI beneficiaries 
built into the Act, most notably impairment-related work 
expenses (IRWE), the trial work period (TWP), the extended 
period of eligibility for reinstatement of benefits (EPE), and 
continuation of Medicare. These are dependent upon the disabled 
beneficiary continuing to have a disabling impairment.
    When determining SGA, we deduct from gross earnings the 
cost of certain impairment-related work expenses. We deduct 
beneficiaries' IRWE paid during a period of work when:
     The item or service enables them to work;
     They need the item or service because of their 
disabling impairment;
     They pay the cost and are not reimbursed by 
another source (e.g., Medicare, Medicaid, private insurance);
     The expense is ``reasonable''--that is, it 
represents the standard charge for the item or service in their 
community.
    The TWP allows disabled beneficiaries to test their ability 
to work for at least 9 months. During the TWP, beneficiaries 
receive full benefits regardless of how high earnings might be. 
The TWP continues until the accumulation of 9 months (not 
necessarily consecutive) of ``services'' performed within a 
rolling 60-consecutive-month period. We use this ``services'' 
rule only to control when the TWP stops. ``Services'' means any 
activity in employment or self-employment for pay or profit or 
of the kind normally done for pay or profit (whether or not it 
is SGA). We currently consider work to be services if earning 
are more than $200 a month (or more than 40 self-employed hours 
in a month).
    Once benefits have been ceased due to SGA, the EPE allows 
automatic reinstatement of benefit payments for any month in 
which earnings fall below SGA. Benefits can be reinstated 
anytime during the 36-month period following the end of the 
TWP, and will continue as long as requirements are met. 
Currently, Medicare coverage continues during this period and 
for three additional months. At that point, disabled 
individuals can buy Medicare coverage. Effective October 1, 
2000, based on the new Ticket to Work Incentives Improvement 
Act, premium-free Medicare is extended an additional 4 years.
    In addition to providing incentives to work, we also refer 
disabled beneficiaries to their local State Vocational 
Rehabilitation VR agency, or to other service providers in the 
public and private sector who try to help beneficiaries return 
to work. In fiscal year 1999, SSA paid State VR agencies about 
$120 million for their services provided to

    over 11,000 beneficiaries with disabilities who worked at 
least 9 months at the substantial gainful activity level. 
Although this was a record year for reimbursements, we look 
forward to much more progress in this area.

SSI Work Incentives

    Some general information about the SSI program is useful to 
explain the work incentive provisions as they apply to that 
program. The SSI program differs from Social Security in that 
the monthly Federal benefit standard (currently, $512 for an 
individual and $769 for an individual with an eligible spouse) 
is reduced dollar-for-dollar by the amount of the individual's 
``countable'' income--i.e., income less all applicable 
exclusions. The result of this computation determines whether 
the individual (or couple) is eligible and the amount of the 
benefit payable.
    SSI law defines two kinds of income: earned and unearned. 
Earned income is wages, net income from self-employment, 
remuneration for work in a sheltered workshop, royalties on 
published work, and honoraria for services. All other income 
(including income received in kind) is unearned.
    When determining an individual's countable income, 
exclusions are taken for various types of income. There is a 
general $20 exclusion, generally applied to an individual's for 
unearned income. In the case of earned income, we exclude a 
portion of the $20 general exclusion that has not been used, 
and then exclude the first $65 and one-half of the remainder of 
the earnings. This greater exclusion for earned income acts as 
a work incentive for all SSI recipients.
    In determining the benefits of disabled individuals, we 
exclude IRWEs. For the disabled, we exclude work expenses 
directly related to the individual's disability, such as 
attendant care services, assistance in travelling to and from 
work and personal assistance related to work. I will discuss 
allowable deductions for blind SSI beneficiaries in greater 
detail later.
    Under SSI we also exclude income set aside or being used to 
pursue a plan for achieving self-support (PASS) that has been 
established by a disabled or blind person. These plans are 
established to help blind and disabled individuals become self-
supporting by excluding income that is set aside to help the 
individual reach a specific occupational goal. In December 
1999, there were 1,045 SSI recipients with a PASS established, 
although not all of those individuals reported earnings for 
that month.
    Finally, the laws governing SSI contain provisions that 
enable blind and disabled individuals to continue working and 
receiving income beyond the limit that would normally result in 
ineligibility.
    Under section 1619(a), a disabled beneficiary who would 
cease to be eligible because of earnings over the SGA limit 
(currently $700 a month) can continue to receive cash benefits 
until the amount of earnings would cause him or her to be 
ineligible for benefits under SSI income counting rules. Being 
a recipient of this special benefit equals being an ``SSI 
recipient'' for Medicaid eligibility purposes.
    Section 1619(b) provides ``SSI recipient'' status for 
Medicaid eligibility purposes for certain SSI recipients. These 
individuals have earnings which preclude the payment of an SSI 
benefit but are not sufficient to provide a reasonable 
equivalent of the SSI, social services, and Medicaid benefits 
that the individuals would have in the absence of earnings. For 
these individuals, the loss of the social service and Medicaid 
benefits would seriously inhibit their ability to continue 
working. However, these individuals have to be otherwise 
eligible except for their earnings.
    According to SSAs Office of Research, Evaluation and 
Statistics, there were approximately 340,000 SSI disability 
beneficiaries (or 6.4 percent) who were working In December 
1999. About 70,000 of these individuals were receiving benefits 
under section 1619(b). These beneficiaries do not receive an 
SSI payment but retain their Medicaid coverage. Almost three-
fourths of those who received this type of SSI benefit had 
amounts of earned income below the substantial gainful activity 
level.

Blind Work Incentives

    I have already discussed how the SGA level differs for 
blind beneficiaries and how it applies to SSDI beneficiaries 
who are blind and age 55 or older. SSA also does not count any 
earned income a blind SSI beneficiary receives that is used to 
meet any expenses needed to earn that income in determining SSI 
eligibility and payment amount. Unlike IRWE, blind work 
expenses (BWE) do not have to be related to blindness. As a 
result, any expense reasonably attributable to work is to be 
excluded, dollar for dollar, not simply those related to the 
impairment.
    Some examples include guide dog expenses; transportation to 
and from work; Federal, state, and local income taxes; Social 
Security taxes, attendant care services, professional 
association fees; and union dues.

Ticket to Work and Work Incentives Improvement Act of 1999

    As you know, the President signed the Ticket to Work and 
Work Incentives Improvement Act of 1999 (the ``Ticket'') into 
law last December. I want to express my thanks, Mr. Chairman, 
to you, and the members of the Subcommittee, for your support 
in getting the ``Ticket'' passed. This legislation will help 
disabled individuals who want to work by lessening their fears 
about losing health care coverage and income during attempts to 
work.It improves and expands their VR choices, providing 
enhanced work incentives, outreach activities and new service 
structures.

    The provisions most pertinent to today's discussion 
include:

     The Ticket to Work and Self-Sufficiency Program--
which provides beneficiaries with opportunities to get 
vocational rehabilitation services, employment services or 
other support services from approved providers that they can 
choose, and which will be phased in beginning 2001.
     Part A premium-free Medicare coverage for 
disability beneficiaries who return to work is extended for 
four and one-half years beyond the current limit effective Oct. 
1, 2000.
     Quick reinstatement within five years without 
filing a new application for beneficiaries with a disabling 
condition whose benefits have ended because of earnings from 
work.
     Prohibition against initiation of a continuing 
disability review (CDR) while a beneficiary is--using a 
ticket--or based on the work activity of an individual 
receiving benefits for at least 24 months.
    Ever since the ``Ticket'' was enacted, we have been 
actively engaged in the hard work of implementing its various 
provisions. We again look forward to working with you as the 
different provisions take shape and begin to show the results 
we anticipate--more people with disabilities entering or 
reentering the workforce.

Pending Legislation

    Legislation has been introduced in both the House (H.R. 
1601) and the Senate (S. 285) that would equate the SGA amount 
for blind individuals with the RET exempt amount at NRA. 
Currently that amount is $1,417 a month, which is scheduled to 
rise to $2,500 a month in 2002 (30,000 per year), and to be 
indexed to average wage growth thereafter. I would like to 
point out that approximately 60 percent of workers today earn 
$30,000 per year or less. If these bills were enacted effective 
2000, we estimate 5-year costs of $0.9 billion and long-term 
costs to the Social Security trust funds at -0.01 percent of 
taxable payroll; in other words, passage of such a provision 
would have a detrimental impact on long-term solvency. Any 
consideration of these proposals should be done in the context 
of Social Security solvency legislation.
    H.R. 5 as passed by the House would eliminate the RET at 
NRA effective this year. As you know, the President has 
promised to sign a clean bill to eliminate the RET at NRA. 
Obviously, such enactment would affect the preceding SGA 
proposal; that proposal, if combined with H.R. 5, would 
completely eliminate the SGA amount for blind individuals, thus 
permitting a blind individual to earn any amount and still be 
eligible for benefits. Under this scenario, effective 2000, we 
estimate 5-year costs of $2.6 billion and long-term costs at 
-0.03 percent of taxable payroll, an even greater negative 
impact on long-term solvency. Note that the elimination of the 
RET at NRA has no impact on long-term solvency, but there are 
additional Medicare and Medicaid costs as well.
Conclusion

    Mr. Chairman, we want to build on the momentum provided by 
the enactment of the ``Ticket'' and to increase incentives to 
work for all people with disabilities. Our commitment is to 
make every effort to enrich the lives of people with 
disabilities and to help those who want to work do so.
    As Commissioner Apfel testified before this Subcommittee 
last year, as a nation, we are best served when all our 
citizens have the opportunity to contribute their talents, 
ideas, and energy to the workforce. We look forward to working 
together with the Subcommittee and Congress to achieve the 
proper equilibrium of equity and actuarial balance in the area 
of disability work incentives. I will be happy to answer any 
questions the Members may have.
      

                                

    Chairman Shaw. Thank you. Mr. Matsui?
    Mr. Matsui. Thank you, Mr. Chairman. Dr. Daniels, thank you 
for your testimony, it is very helpful, obviously. You 
indicated that if we raise the earnings limit for the disabled 
to $17,000 a year--from $700 to whatever the current level 
would be, the level before the new bill becomes law, it would 
be .03 in terms of the negative impact on solvency of the 
Social Security system?
    Dr. Daniels. That is the estimate if we eliminate the SGA 
amount just for our blind beneficiaries.
    Mr. Matsui. It is my understanding that the actuaries, 
however, do take into consideration that there would be 
indexing of that earnings limit in terms of doing a calculation 
over a 75-year period, is that correct?
    Dr. Daniels. Well, yes. The notion of substantial gainful 
activity, just that notion itself, has to continue in actuarial 
terms to change and grow over time, or else it would lose all 
meaning because wages grow over time.
    Mr. Matsui. So they do expect--the actuaries, in their 
calculations over the 75-year period, do expect it to grow or 
increase over time?
    Dr. Daniels. That is correct.
    Mr. Matsui. So, if we begin today--and the only reason--
because it is such a small amount, given the fact that the CPI 
is so small, obviously it is good for our economy--probably not 
good for, obviously, people that are receiving fixed benefits--
but if you begin indexing, then this would have no impact on 
the solvency of the Social Security trust fund in terms of 
where we are today, over a 75-year period?
    Dr. Daniels. Well, what the actuaries actually do is assume 
the current law. And so they look at what the growth would be 
in SGA given current law which is right now indexing the SGA 
for blind individuals as currently indexed to average wage 
growth, but if we eliminated it, then there would be an even 
larger number of people eligible for the program.
    Mr. Matsui. You are talking about eliminating the earnings 
limit?
    Dr. Daniels. Eliminating the substantial gainful activity 
test, right.
    Mr. Matsui. Oh, but I wasn't suggesting--I was suggesting 
in my question that if you indexed it--
    Dr. Daniels. It is indexed today.
    Mr. Matsui. It is indexed today?
    Dr. Daniels. Yes, it is. The blind SGA is currently indexed 
to average wage growth.
    Mr. Matsui. Well, I thought it stated at $700.
    Dr. Daniels. No, $700 is for those individuals who are not 
blind.
    Mr. Matsui. For individuals who are--
    Dr. Daniels. Not blind. The SGA is $700 a month.
    Mr. Matsui. Okay. But if you indexed it for both the blind 
and the nonblind, would it then have an impact on the trust 
fund?
    Dr. Daniels. It would have an immediate and small impact 
because there is an assumption that SGA will grow as wages 
grow. So the long-term impact is very negligible to index the 
SGA.
    Mr. Matsui. That is because--again, I want to go back and 
repeat myself--because the actuaries take into consideration 
the indexation on the basis of wages.
    Dr. Daniels. Absolutely.
    Mr. Matsui. So it shouldn't have any impact. It shouldn't 
even be a negligible impact.
    Dr. Daniels. I can't believe it took us this long to get to 
agreeing with your statement. Yes.
    Mr. Matsui. Now, I guess if we would have been indexing 
when we decoupled the blind from those 65 and older--I don't 
know what the inflation rate would have been over that last few 
years, but it probably would have been somewhat substantial, 
and I would imagine this would make some sense to do--it 
obviously may not make a lot of folks happy--but at least it 
would be a start. Is that something that you--and I know you 
can't make a policy decision--obviously, this is a new 
discussion--but at least would that be something that you would 
consider recommending as a solution to this?
    Dr. Daniels. Well, we are not taking a position today--
    Mr. Matsui. I understand that.
    Dr. Daniels.--but what I can say to you is just to keep in 
mind that the blind SGA is currently indexed by statute--
    Mr. Matsui. Right, but not the balance of the disabled.
    Dr. Daniels.--but the balance of our beneficiaries have an 
SGA amount fixed at $700 a month, which can be changed by 
regulation.
    Mr. Matsui. Right. Okay. Well, I don't have anymore 
questions in this area. I sense that the real way we probably 
will have to address these issues when we deal with Social 
Security comprehensively, that is my belief given the fact that 
we have a lockbox, and then given the fact that the surplus is 
not as large at this time, and we obviously don't want to use 
on-budget surpluses. Is that a correct analysis of the position 
today?
    Dr. Daniels. The President is very eager to sign a clean 
bill on the retirement earnings test, and a decision to change 
substantially the role and function of the disability program, 
which the SGA is a very significant part of, is possible, but 
requires a great deal of conversation and financial analysis.
    Mr. Matsui. Thank you. Thank you very much.
    Dr. Daniels. You are welcome, Mr. Matsui. Thank you.
    Chairman Shaw. Dr. Daniels, I have a number of questions 
here that have been supplied by staff that I would like to read 
to you, and if you could answer, we would appreciate it.
    What is substantial gainful activity? You mentioned that 
SGA is a ``critical threshold'' in disability evaluation. Would 
you explain what we mean when we talk about substantial gainful 
activity? What would it mean to have a ``disability'' program 
that does not consider ability to work and the earnings as a 
test of whether someone is disabled?
    Dr. Daniels. Well, I think it is really--the words 
``substantial gainful activity'' are a lot of big legal words 
for the notion of work and ensuring work.
    When individuals pay Social Security payroll taxes, what 
they are getting is not only an opportunity to have income when 
they retire, but if they are unable to work because of a 
disability, an opportunity to have their income replaced. So 
the notion is that people of working age should work if they 
can, but if they can't they are insured against the loss of 
income due to disability.
    So, our first question when we evaluate whether or not a 
person is eligible for Disability Insurance benefits, is to ask 
it they are working. And SGA is just a way of determining if a 
person is really earning a real income, not just a token income 
from some hobby or some small activity, but substantial 
activity that produces a real income.
    That amount is set for blind individuals by statute, by the 
Act itself. For all other people with disabilities who apply, 
we set that amount by regulation. We assume that if a person 
today is earning less than $700 a month, they are not doing 
substantial gainful activity, or that is they are not really 
working enough to support themselves. And if they have a mental 
or physical impairment, they become eligible for the program.
    For individuals who are blind, however, the amount is 
$1,170 a month because that is what the statute has 
established. We do not set that by regulation.
    So, basically, the question is, do we want to have a test 
for work? Do we want to say that we provide income security for 
individuals because they are unable to work in their working 
years? And that pretty much is the question about SGA.
    Now, it is possible to have a program where people simply 
get a benefit based on a limitation that they might have and 
whether or not they work, but that has never been the role of 
the Social Security Disability Insurance program. That would be 
a supplement--or sometimes in other countries called the 
``disability allowance.'' That is a different kind of program, 
and the effect of removing SGA is basically to say that an 
individual with a significant impairment would simply be 
eligible based on that impairment, whether or not he or she is 
they are able to work.
    Chairman Shaw. Thank you. Mr. Collins?
    Mr. Collins. Dr. Daniels, how does the SGA differ from the 
earnings limit for seniors?
    Dr. Daniels. Well, today, it is not linked. In 1996, with 
the Contract with America Advancement Act, the SGA for blind 
individuals and the retirement earnings test were de-linked. 
They were no longer tracking together in the legislation. But 
the SGA for blind individuals was indexed to average wage 
growth. And the growth of the retirement earnings test from 
1996 to the year 2002 was greater than it would have been had 
it been indexed.
    So, in other words, the individuals who are blind, their 
SGA is not growing as fast as the retirement earnings test 
under current law.
    Mr. Collins. What is the difference in the principle behind 
it--not the dollar amount? Why is one set at one rate, or fee, 
or check, or benefit, than another one? Why do you do these 
things?
    Dr. Daniels. Well, I think that would be a good question 
for me to ask you because I didn't do those.
    Mr. Collins. Why did I do that?
    Dr. Daniels. I don't know why you did, but let me see--let 
me take a good guess, Mr. Collins. When we think about social 
insurance, we are thinking about individuals paying in together 
so that they can insure themselves against loss of income 
either due to aging because they are elderly, or due to 
disability, the inability to work during their working years. 
And I think that is a very wonderful idea, that we all pull 
together to take care of those who need income when they are 
elderly and should expect to get some of that back, or who in 
their working years are unable to work.
    Now, when we say that we would eliminate a retirement 
earnings test for the elderly, what we are saying is that even 
if you don't have to work or you are retired, you can work if 
you can. But we know that a lot of people, as they get older, 
find it very difficult to work full-time or to work 
consistently, and we are not expecting people who are 
retirement age to actually be able to continue to work full-
time; whereas, with the younger population, we expect all those 
who can work, to work.
    And so the SGA amount for people in their working ages can 
be different because its purpose is to say that we only give 
our benefits to individuals who are not able to work with their 
impairment.
    Now, some people are able, regardless of their impairment, 
to work, but some are not. And so SGA--the substantial gainful 
activity test--becomes a way of saying, ``Well, if you can 
work, you should work; but, if you can't, this program is here 
to help you''.
    Mr. Collins. I have talked to constituents who are blind, 
and they have expressed they don't feel like there should be a 
total repeal, that there should be some limit, do you agree 
with that?
    Dr. Daniels. Well, I certainly think that some people 
believe that if you go to work, the way the program has a 
``financial cliff''--after a year your benefits completely 
end--is quite problematic. And in the Ticket to Work and Work 
Incentives Improvement Act that you passed last year, you 
directed the Social Security Administration to do some 
demonstrations, to test out different ways of making that 
``cliff'' a ``ramp'' so that people could ease off, and we are 
preparing--very, very actively preparing to begin those 
demonstrations. I hope in the next few years we will have a 
good answer for you on that question.
    Mr. Collins. Well, that seems to be the answer because I 
see where, with the cliff, it totally can disrupt an 
individual's life. Okay. Thank you, ma'am.
    Chairman Shaw. Mr. McCrery?
    Mr. McCrery. Thank you, Mr. Chairman. I know we have a 
vote, and I apologize for being late.
    Chairman Shaw. Do you wait until after the vote, or do you 
want to go ahead now?
    Mr. McCrery. Well, I am mainly interested--and I understand 
Mr. Matsui pursued this, I am sorry I wasn't here--but I would 
like for you to explain, if you can, why there is a difference 
in the amount of income allowed blind disabled and the amount 
of income allowed nonblind disabled, if you can. Could you 
touch on that? The rationale, the policy rationale for that.
    Dr. Daniels. Well, the rationale and the why might not be 
exactly the same. The why is that the SGA for blind individuals 
is set in the statute itself, by law. The SGA, substantial 
gainful activity, amount for nonblind beneficiaries is set in 
regulation. Now, that is the way the current provisions are 
structured.
    So the reason that the SGA for the blind is what it is and 
indexed to average wage growth is because the Act says it 
should be, and the Act is silent on the SGA amount for 
nonblind, or how it is handled in terms of growth. So, that is 
the technical answer. If that satisfies you, that is fine.
    Mr. McCrery. No, it doesn't.
    Dr. Daniels. There is a philosophical answer as well, and 
that has to do with the function of the retirement earnings 
test and the function of SGA. SGA assumes, or the Disability 
Insurance program assumes that people of working age who can 
work, should work. But we know that some people can't work. 
Some people can't work because of impairments--that is, they 
have a health condition or a functional limitation that makes 
it impossible for them to work. Those people receive Disability 
Insurance. They receive that when they are unable to work, and 
that is a great safety net because that happens to many 
workers, that they are unable to work. However, it is not the 
same thing as being retired. It is not the same policy.
    We provide retirement income to people when they reach a 
certain age, based on the average--
    Mr. McCrery. Maybe I didn't make myself clear. I am 
interested--
    Chairman Shaw. Let me interrupt, if I may. If you could 
mull over that question, we will come right back. We are going 
to have to recess--
    Mr. McCrery. Let me restate the question so she can mull 
over the question that I want her to answer. The thing I am 
interested in is the difference between the earnings limit, if 
you will, or the SGA limit for blind disabled as opposed to 
nonblind disabled. Never mind the Social Security retirement, I 
understand why there is a difference there. I want to know the 
policy rationale for the difference between blind disabled and 
nonblind disabled, and what each of those categories can earn 
without losing their benefits.
    Dr. Daniels. I will focus on that when you come back.
    Chairman Shaw. And with that, stay tuned for that answer. 
We will return in approximately 15 minutes.[Recess.]
    Chairman Shaw. We had a real cliffhanger, and we were 
waiting for Dr. Daniels to reply to Mr. McCrery.
    Dr. Daniels. I guess the question is, is this my final 
answer, right? [Laughter.]
    Dr. Daniels. Mr. McCrery, I gave some thought to the 
question that you asked, and I actually consulted here with my 
colleagues and some members of the advocacy community, and I 
think here the answer goes something like this.
    The SGA for blind and nonblind were the same from the 
beginning of this program to 1978. And that is when the split 
began.
    I would imagine when the time of the split was made--and I 
wasn't there, and I wasn't in Congress at the time--but I would 
imagine that what that split represented to the Congressmen who 
made that split was a recognition that individuals with 
blindness have very significant and very serious impediments in 
getting in the workforce, and great need.
    Now, it would be hard today, looking at the changes in 
technology and the advancements in education for people with 
disabilities to actually--and I think you will hear testimony 
today about whether or not research supports that assumption--
but I would imagine that this was done in good will--that is, 
to recognize and support some people who have a very, very 
significant impairment, and it was probably done on the basis 
of that good will and that notion that they are unique and 
uniquely disabled and uniquely disadvantaged by their 
impairment.
    Mr. McCrery. Well, thank you for that answer. Have you 
thought about the fact that blindness is easily--the disability 
of blindness is easily ascertained, it is easily discovered, it 
is easily provable, as opposed to some other forms of 
disability that are more subjective in terms of medical 
analysis? Is that possibly part of--
    Dr. Daniels. There are some impairments that are very easy 
to discern, even to the layman. For instance, I use a scooter 
and that is fairly easy to discern. And people who have very 
significant hearing impairments are very easy to discern. And 
there are other impairments that are more difficult to 
discern--heart condition, diabetes, et cetera.
    I don't know if that would explain the difference in the 
amount itself, or linking one to the retirement earnings test 
and not another. But I imagine it was done on the basis of some 
notion of good will and assistance to people who are obviously 
in need.
    Mr. McCrery. Do you support the difference? Do you think 
that there is--would you recommend to us policymakers that we 
maintain a difference in the earnings limit, so to speak, for 
blind disabled and nonblind disabled?
    Dr. Daniels. I think that the road you are going down now 
is the most judicious, to listen to the constituencies and to 
hear from people about this difference, and to have the GAO 
look at the research.
    I will not be in the same position to have gathered all 
that information that you have. We have not taken, in the 
Administration, a position on this, but you are certainly going 
to hear from your customers, from people with disabilities of 
various kinds, and from the GAO, and I think that is the way to 
go. Take a look at it from all sides, and make up your own 
mind.
    Mr. McCrery. Thank you, Ms. Daniels.
    Chairman Shaw. Mr. Portman.
    Mr. Portman. Thank you, Mr. Chairman, and commend you for 
what you did last year on the Ticket to Work, which was very 
helpful, but I know you would like to do more to ensure that 
all disincentives are removed to work.
    Dr. Daniels, I was just listening to your response to Mr. 
McCrery. I am not sure that I understand the Administration's 
position, and looking at your testimony I wanted to ask a 
question, if I could. I don't think you will need a lifeline 
for this one.
    Dr. Daniels. Thank you. My mother is standing by.
    Mr. Portman. Okay. You can call or you can poll the 
audience, but--[Laughter.]
    Mr. Portman. This is sick, isn't it? We are all spending 
our time watching these shows instead of watching C-SPAN and 
these interesting hearings.
    Does the Administration take a position with regard to 
differential treatment? I know you say you haven't done some of 
the research and so on, but in looking at your testimony, it 
says ``Our commitment is to make ever effort to enrich the 
lives of all people with disabilities and to help all those who 
want to work to do so''.
    And I just wonder, are you implying there that all people 
with disability should be treated equally when it comes to 
incentives to work and, if so, do you have any specific 
suggestions for this Subcommittee as we grapple with this 
issue? What is the Administration's position?
    Dr. Daniels. Well, the Administration has no position on 
this particular piece of legislation, but there is some 
guidance, I think, that I can offer you in terms of thinking 
about it.
    You have asked the right questions, I think, of the GAO, 
and I think your question of me, is this disparate treatment 
fair? It is not necessarily fair to treat everyone alike. Some 
people have greater need. And we recognize that in the SSI 
program when people are able to work some, their check is 
reduced $1.00 for every $2.00 that they earn, and that is a 
recognition that some people can do more for themselves.
    We don't think that ``identical'' is the same thing as 
``fair''. You are about to evaluate whether or not this 
disparate treatment is based on some rational facts about the 
special circumstances of individuals who are blind. That makes 
sense to me. And you will draw your own conclusions about that. 
I think that the worst thing to do is to think that 
``identical'' is the same thing as ``fair,'' and I don't think 
it is.
    Mr. Portman. Well, I appreciate that guidance. I think it 
would be helpful if we could get a specific answer to this 
legislation from the Administration because you all do have a 
lot of research and resources, and have obviously the 
responsibility of administering these programs.
    I would just make the general comment that just as we have 
run into the earnings limit issue with Social Security, ages 65 
to 70, so we have run into it on this issue. And back home we 
have a wonderful organization called the Clovernook Center for 
the Blind, and they do a lot of work. They produce for the 
Federal Government and for the private sector lots of material 
including Braille editions of general readership magazines that 
go around the country. And they have had a hard time keeping 
and attracting blind and disabled employees because people 
worry about how it will affect their Social Security Disability 
benefits, which is very similar to what we all hear back home 
on the earnings limit on Social Security.
    And just last week, in fact, two constituents came to see 
me, both of whom are active members of the American Council of 
the Blind and are blind themselves, and talked about that in 
very personal terms. They want to work, but they feel they 
can't afford to.
    So, I do think this is an issue that the Ticket to Work 
helps a lot, but our work is not yet done. And, again, I think 
it would be very helpful if the Administration could give us 
some more specific guidance as we work through this. Thank you, 
Mr. Chairman.
    Chairman Shaw. Mr. Hulshof.
    Mr. Hulshof. Thank you, Mr. Chairman. Dr. Daniels, welcome. 
I want to make a point, and I think it is worth noting, that 
individuals with disabilities can actually earn more than the 
limits but then stay eligible, and the reason is that they can 
subtract work expenses that are related to their disability in 
determining their earnings subject to the limit, although this 
sounds to me like an administrative nightmare.
    I guess my question is, first of all, how many individuals 
who are blind take advantage of these deductions to earn more 
than the $1170 a month limit, do you know offhand?
    Dr. Daniels. Actually, I do know, and I have it on a sheet 
of paper here and I am going to take a look at it and answer 
that question for you. But the blind work incentive deduction 
is a little bit more liberal than the other, for the 
impairment-related work expenses. The impairment-related work 
expenses for nonblind have to be impairment-related whereas the 
work expenses for individuals who are blind can be any work 
expense. So, it can be a reader, or the care of a guide dog, or 
special transportation, but it also can be union dues, or 
uniforms, or any of the expenses of work can also be deducted. 
So that is a more liberal standard than for the nonblind.
    Hold on a second, I am going to look that up for you. It is 
hard to compare apples and oranges here because we have work 
incentives in the SSI program, work incentives in the 
Disability Insurance program, and we have concurrent 
beneficiaries, so you are right, it is a pretty complicated 
picture.
    But we have about 75 percent of blind DI individuals are 
not posting any kinds of earnings and are probably not using 
any of the work incentives, and about 13 percent of them are 
posting earnings under $6,000 a year. Nine percent are posting 
earnings at about between $6-12,000 a year, and 3 percent are 
posting earnings over $12,000 a year. So, 75 percent of our 
blind beneficiaries are not using the work incentives at all.
    Mr. Hulshof. Does SSA ever determine that expenses are 
``not reasonable'' and, if so, what happens then?
    Dr. Daniels. Well, certainly, when they are not reasonable, 
but we would then give an explanation to the beneficiary of why 
an expense is not considered reasonable.
     But we really do want to encourage people to tell us what 
their expenses are so that we can assist them in getting the 
maximum from the work incentives, and as good a start on that 
employment track as we can help them do.
    Mr. Hulshof. Do you have, maybe in the numbers in front of 
you, how many people actually file for these work incentives? I 
mean, you have told us how many qualify. Do you happen to have 
those numbers, or can you get them to us later?
    Dr. Daniels. Yes, we can get them to you for the record, as 
best we can.
    [The information follows:]

    For work expenses for either DI or SSI beneficiaries, no 
formal claim is filed that SSA would keep track of. These 
issues come up in the ordinary course of claims development and 
work reviews. We can deduct all, some, or none of the claimed 
expenses, but we do not track these categories. Often, the 
amount of expenses would be immaterial to the case, such as 
when earnings are below SGA without considering expenses. In 
any event, processing instructions indicate that the work 
expense provisions should be liberally construed.
    In December 1999, about 4,000 SSI recipients reduced their 
countable earnings through the Blind Work Expense provision. 
The average amount of the blind work expense was approximately 
$250.

     Mr. Hulshof. The other issue as we have been talking 
about, in 1977 the separate substantial gainful activity limit 
was established, and the new limit was increased annually for 
the blind to reflect average wage growth, and because average 
wages grow faster than prices, this SGA limit also has grown 
faster than inflation. In contrast, the SGA limit for 
individuals with other disabilities is not automatically 
adjusted either for prices or wages, and as a result the SGA 
limit for those who are not blind has fallen behind.
    Now, I recognize that the Administration just increased 
that limit from $500 to $700 a month last year. When was the 
last increase prior to 1999, if you know, Dr. Daniels?
    Dr. Daniels. Yes, I do know, it was in 1990. It was raised 
from--the two most recent changes was from 1980 to 1990, it 
went from $300 to $500. It was $300 in the entire decade of 
1980. In 1990, it went to $500, and in 1999 to $700.
    Mr. Hulshof. And do you anticipate any further increases 
for those who are not blind?
    Dr. Daniels. When we put out the regulation, the Notice of 
Proposed Rulemaking for raising the SGA to $700, we asked 
individuals for comments on all other aspects of SGA for 
nonblind, and we received many, many comments. Those are under 
consideration and analysis, at this time.
    Mr. Hulshof. Thank you, Dr. Daniels. Thank you, Mr. 
Chairman.
    Mr. McCrery. Mr. Chairman, may I follow up just very 
quickly?
    Chairman Shaw. Yes, go ahead.
    Mr. McCrery. Did the Administration make a cost estimate 
when you increased it from $500 a month to $700 a month?
    Dr. Daniels. Yes, we did.
    Mr. McCrery. And what was that?
    Dr. Daniels. I am going to have to look over here to my 
colleagues because I have a number in mind, but I want to check 
it.
    We did make a cost estimate it was included in the 
baseline, in OMB.
    Mr. McCrery. Can you get for us maybe the analysis and show 
us how much that cost was estimated to cost over, say, five 
years or ten years?
    Dr. Daniels. Okay. We certainly will, we will submit it for 
the record.
    [This information follows:]

    [GRAPHIC] [TIFF OMITTED] T6686.001
    
    Mr. McCrery. Thank you.
    Chairman Shaw. Thank you, Dr. Daniels. We appreciate your 
being here with us. As usual, you gave us a very open and very 
clear view of your responsibility.
    [The following questions submitted by Chairman Shaw, and 
Dr. Daniels' responses, are as follows:]

    1. About 100,000 individuals who are blind receive DI 
benefits. About 12% earn more than $500 per month; only 1% 
return to work each year. So if SGA was repealed for those who 
are blind, no more than 12,000 and probably more like 1,000 
people on the rolls would be helped. Is that a fair assessment? 
How many individuals who are blind are currently working and 
NOT receiving disability benefits? If SGA, were repealed, how 
many individuals would be eligible for DI benefits? Is it fair 
to say that repealing SGA would primarily help those who are 
NOT now receiving disability benefits? Does that make sense, 
given the DI program's financial prospects?
    It is fair to say that removing the SGA limit for blind 
individuals would have only a small program effect with respect 
to current DI beneficiaries.The much more substantial program 
effect is the entry onto the rolls of new beneficiaries.
    It is difficult to estimate the number of blind individuals 
who are currently working and not receiving DI benefits. 
According to the testimony of the General Accounting Office, 
about 30 percent of working-age blind individuals are employed.
    We estimate that removing the SGA limit for blind 
individuals would cause an additional 55,000 people to become 
eligible for DI benefits, with 5-year costs of $2.6 billion and 
long-term costs of 0.03 percent of taxable payroll, which would 
have a distinct negative impact on long-term solvency. Almost 
all of this would go to individuals not currently receiving DI 
benefits. As to whether such a change should be considered, any 
consideration of this and other program changes should be done 
in the context of Social Security solvency legislation.

    2. One of the work incentive provisions in current law is 
the ability to subtract the value of impairment-related work 
expenses from earnings before determining whether these 
earnings are substantial gainful activity. How many SSDI 
beneficiaries receive the benefit of this work incentive 
provision? Of this number, how many are statutorily blind?
    We do not track that data. We know from reports from our 
field office employees that only a relatively small number of 
DI beneficiaries use impairment-related work expenses to reduce 
their earnings below SGA, too small a number to justify 
building a special system to capture this information.
      

                                

    Chairman Shaw. We now have the next panel which I 
inappropriately called up a few moments ago. Barbara Bovbjerg 
is the Associate Director, Education, Workforce and Income 
Security Issues, and we have her accompanied by Carol Petersen, 
if the witnesses would take their seats. And I apologize again 
for trying to put everybody on the same panel. That was not my 
intention, it was my not looking at a few asterisks on the 
schedule which separated the two panels. You may proceed.

     STATEMENT OF BARBARA D. BOVBJERG, ASSOCIATE DIRECTOR, 
   EDUCATION, WORKFORCE AND INCOME SECURITY ISSUES, HEALTH, 
EDUCATION AND HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING 
  OFFICE; ACCOMPANIED BY CAROL PETERSEN, ASSISTANT DIRECTOR, 
   EDUCATION, WORKFORCE AND INCOME SECURITY ISSUES; HEALTH, 
             EDUCATION AND HUMAN SERVICES DIVISION

    Ms. Bovbjerg. Good morning, Mr. Chairman, Members of the 
Subcommittee. I am Barbara Bovbjerg, from the GAO, and I am 
happy to be here today with my colleague, Carol Petersen, to 
discuss the Disability Insurance program's substantial gainful 
activity level for the blind.
    The DI program requires disabled applicants to demonstrate 
they cannot earn more than the SGA both to enter DI and to 
remain in the program. Since 1977, the SGA for the blind has 
been higher than for those with other disabilities, and 
consideration is being given to raising the SGA level further.
    I would like today to focus on two aspects of this 
question. First, to what extent the blind face different 
employment circumstances than those with other disabilities; 
and, second, the potential impact of raising or eliminating the 
SGA for the blind on work effort, trust fund costs, and the DI 
program overall. My testimony is based on prior work that we 
have done on circumstances of blind beneficiaries and on our 
overall body of work in the disability program.
    First, the blind and barriers to employment. Proponents for 
higher SGA levels for the blind have suggested three ways in 
which the blind are at a greater disadvantage than other 
disabled individuals--lower employment rates, lower wages when 
they are employed, and higher work-related costs. They believe 
that these relative disadvantages are so great that the SGA for 
the blind should be higher to make the difficult search for 
employment more attractive to blind beneficiaries.
    There are few empirical studies that consider whether the 
blind are indeed more disadvantaged than those with other 
disabilities. And among those few studies, there is little to 
suggest that the blind are unique among the disabled 
population. My written statement presents the data we found, 
and it suggests that many disabled individuals, blind and 
nonblind, face barriers to obtaining well-paying jobs, and many 
experience significant work-related costs.
    I would like to turn now to the potential effects of 
raising the SGA for the blind on work effort, cost to the 
program and the trust fund, and on the nature of the program 
itself.
    Increasing the SGA may indeed motivate current blind 
beneficiaries to seek and obtain work, and this should 
represent a positive step toward increased integration with 
society and the enhanced self-esteem associated with the work 
experience. But raising the SGA would also make the DI program 
more generous and thus more costly. This is because the number 
of beneficiaries could be expected to rise. Some disabled 
individuals already working would join or rejoin the rolls, and 
those already on the rolls would retain eligibility longer than 
would otherwise be the case.
    As beneficiary rolls grow, DI costs would rise, and that is 
worse than the projected financial outlook for the Social 
Security trust funds. For example, if the SGA for the blind is 
reset to today's retirement earnings limit of $17,000 a year--
and I say today knowing that we are about to change that--
Social Security actuaries estimate that it would cost the trust 
funds $2.7 billion over the next ten years.
    Although this worsens 75-year solvency projections for the 
trust funds only relatively slightly, it still would worsen the 
financial outlook in a system already facing a $3 trillion 
actuarial deficit. Eliminating rather than raising the SGA 
would, of course, have even greater financial impact. Actuaries 
estimate that these costs would rise $6.8 billion over a ten-
year period.
    Eliminating the SGA also has the potential to change the DI 
program in fundamental ways. Historically, the program has 
insured workers against reduced earnings due to impairment. 
Without an SGA standard, DI benefits would be offered to blind 
individuals regardless of their earnings. Although this measure 
may encourage current beneficiaries who can work to work and 
earn more, it would pay the same benefits to people who earn a 
lot as to those who earn a little or nothing.
    Breaking the connection between ability to work and 
eligibility to receive DI benefits would represent a 
fundamental change in the nation's Disability Insurance policy 
and should be recognized as such.
    In conclusion, raising the SGA for the blind could increase 
work participation among blind beneficiaries, but would raise 
program costs and could widen differences in the program's 
treatment of the blind and the nonblind, even though both 
groups face barriers to obtaining well paying jobs. Eliminating 
the SGA for the blind would have these same effects, but more 
broadly, and would fundamentally change the program.
    There are a number of ways to approach incentives to work, 
some of which are being tested as part of the Ticket to Work 
and Work Incentives Improvement Act. Such other incentive 
approaches also have the potential to increase work among 
disabled individuals without altering the fundamental purpose 
of the DI program structure and deserve consideration as well.
    That concludes my statement, Mr. Chairman. Dr. Petersen and 
I are available to answer any questions.
    [The prepared statement follows:]

Statement of Barbara D. Bovbjerg, Associate Director, Education, 
Workforce and Income Security Issues, Health, Education and Human 
Services Division, U.S. General Accounting Office

    Thank you for inviting me here today to discuss the 
substantial gainful activity (SGA) level established for blind 
beneficiaries of Social Security Disability Insurance (DI). The 
DI program provides monthly cash benefits to workers who have 
become severely disabled and to their dependents and survivors. 
In addition, Medicare coverage is provided to DI beneficiaries 
after they have received cash benefits for 24 months. In fiscal 
year 1999, about 6.5 million beneficiaries received DI benefits 
amounting to $50.4 billion. Of these, about 100,000 qualified 
because of statutory blindness. \1\ The average benefit paid to 
disabled workers was $734 a month in December 1999. In addition 
to providing evidence establishing their medical impairment, 
individuals must demonstrate that they are not earning above a 
certain amount--known as the SGA level--in order to qualify for 
and maintain eligibility for DI benefits.\2\ Since 1977, the 
SGA levels have been higher for blind than for nonblind DI 
beneficiaries, and until recently the level for the blind was 
set equal to the earnings limit for Social Security retirees.
---------------------------------------------------------------------------
    \1\ To meet the statutory definition of blindness for Social 
Security purposes, a person must have either central visual acuity of 
20/200 or less in the better eye with the use of a correcting lens or a 
limitation in the fields of vision so that the widest diameter of the 
visual field subtends an angle of 20 degrees or less.
    \2\ Individuals with disabilities other than blindness must also 
demonstrate an inability to engage in substantial gainful activity.
---------------------------------------------------------------------------
    Today I would like to focus my remarks on (1) the 
differences in employment circumstances affecting people with 
blindness compared with those affecting people with other 
disabilities and (2) the potential impact of changes in SGA 
levels on the DI program and on the Social Security trust 
funds. My testimony updates and expands on our prior work on 
the circumstances of blind beneficiaries and on our body of 
work examining the DI program and SGA levels.\3\
---------------------------------------------------------------------------
    \3\ See DI Substantial Gainful Activity Levels (GAO/HEHS-96-109R, 
Mar. 20, 1996). Other related GAO products are listed at the end of 
this testimony.
---------------------------------------------------------------------------
    In summary, higher SGA levels have been established for 
blind beneficiaries primarily on the basis of the assumption 
that certain adverse economic consequences associated with 
blindness are unique. Few empirical studies have compared the 
work-related experiences of blind individuals with those of 
people who have other disabilities. However, the studies that 
we reviewed showed many disabled individuals--blind and 
nonblind--face adverse employment circumstances. Although 
raising SGA levels for the blind--or even eliminating them--
could encourage more blind beneficiaries to work, such changes 
would perpetuate differences in the treatment of blind and 
nonblind beneficiaries and could slightly worsen the Social 
Security trust funds' financial outlook. Moreover, eliminating 
the SGA level, by removing the connection between benefit 
eligibility determination and the inability to work, would 
fundamentally alter the purpose of the DI program.

BACKGROUND

    From its origin in 1956, the purpose of the DI program has 
been to provide compensation for the reduced earnings of 
individuals who, having worked long enough and recently enough 
to become insured, have lost their ability to work. \4\ The 
program is administered by the Social Security Administration 
(SSA) and is funded through payroll deductions paid into a 
trust fund by employers and workers (currently 1.8 percent of 
payroll for DI).
---------------------------------------------------------------------------
    \4\ The DI program was established under title II of the Social 
Security Act
---------------------------------------------------------------------------
    To qualify for benefits, an individual must have a 
medically determinable physical or mental impairment that (1) 
has lasted or is expected to last at least 1 year or result in 
death and (2) prevents the individual from engaging in 
substantial gainful activity.\5\ Individuals are considered to 
be engaged in substantial gainful activity if they have 
countable earnings at or above a certain dollar level. To 
calculate countable earnings, SSA deducts from gross earnings 
the cost of items that, because of the impairment, a person 
needs to work (for example, attendant care services performed 
in the work setting, wheelchairs, or Braille devices).\6\ In 
addition to determining initial eligibility, the SGA test also 
applies to determining continuing eligibility for benefits. 
Beyond a trial work period during which DI beneficiaries are 
allowed to keep any level of earnings, benefit payments are 
terminated once SSA determines that a beneficiary's countable 
earnings exceed the SGA level.
---------------------------------------------------------------------------
    \5\ To qualify for benefits, individuals with blindness need only 
show that they are not earning at the SGA level. Individuals with 
disabilities other than blindness must also demonstrate an inability to 
engage in substantial gainful activity.
    \6\ Deductions can be made only if (1) the cost of the item or 
service is paid by the person with the disability and (2) the person 
has not been, and will not be, reimbursed for the expense.
---------------------------------------------------------------------------
    The Social Security Act did not initially distinguish 
between the SGA levels for blind and nonblind DI 
beneficiaries.\7\ This was changed in 1977 when the Social 
Security Financing Amendments (P.L. 95-216) set the SGA level 
for individuals who are blind equal to the monthly earnings 
limit set for Social Security retirees aged 65 to 69.\8\ This 
link also meant that the SGA level for the blind would be 
indexed to the average wage index (AWI), a measure of average 
wages of all employees in the country. Linking the SGA level 
for the blind to the retirement earnings limit meant that 
whenever the limit was changed, the SGA level for the blind 
would change to an equal amount.
---------------------------------------------------------------------------
    \7\ SGA levels were first published in regulations in 1961 and at 
that time were set at $100 a month of countable earnings.
    \8\ The 1977 law did not affect SGA levels for nonblind DI 
beneficiaries.
---------------------------------------------------------------------------
    The provision for linking the blind SGA level to the 
retirement earnings limit remained in effect until the Senior 
Citizens' Right to Work Act of 1996 (P.L. 104-121) was enacted. 
This act mandated a substantial increase in the monthly 
earnings limits for Social Security retirees over a 5-year 
period and removed the link between the retirement earnings 
limit and the SGA level for the blind but retained the SGA 
level that was in place at that time as well as the annual 
indexing to the AWI. Currently, the SGA level for the blind is 
$1,170 a month of countable earnings.
    On March 1, 2000, the House passed H.R. 5, the Senior 
Citizens' Freedom to Work Act of 2000, which, if enacted into 
law, would eliminate the earnings limit for retirees between 
the normal retirement age (currently age 65) and age 70.\9\ The 
Senate passed its version of the bill on March 22, 2000. 
Currently, recipients aged 65 to 69 can earn up to $17,000 a 
year without having their benefits affected.\10\ For earnings 
above this limit, Social Security benefits are reduced $1 for 
every $3 in earnings. The application of this earnings test is 
generally a deferral of benefit payments to a later time when 
earnings cease or are lessened. Thus, future benefit levels may 
be increased as a result of having benefits withheld under the 
earnings limit. According to SSA's actuarial estimates, 
eliminating the earnings limit for those reaching the normal 
retirement age would increase Social Security costs over 
approximately 20 years but would be negligible over a 75-year 
period. H.R. 5 explicitly exempts blind DI beneficiaries from 
the provision that would eliminate the earnings limit.
---------------------------------------------------------------------------
    \9\ There is a different earnings limit, as well as a different 
benefit reduction rate, for retirees aged 62 to 64.
    \10\ The earnings limit does not apply to those over age 69, and it 
is increased each year on the basis of indexing to average wages in the 
economy.
---------------------------------------------------------------------------
    For individuals who have disabilities other than blindness, 
the Social Security Act gives the Commissioner of Social 
Security the authority to prescribe the SGA level by 
regulation. Over the years, SSA has increased the SGA level a 
number of times, the latest increase occurring in July 1999 
when the level for nonblind individuals was raised from $500 to 
$700 a month of countable earnings. The SGA level for nonblind 
beneficiaries is not indexed. The current SGA level for the 
blind of $1,170 a month is about 67 percent greater than the 
$700 level for people with disabilities other than blindness.
    Under the current program, a DI beneficiary may earn any 
amount for 9 months within a 60-month period and still receive 
full cash and health benefits. At the end of this trial work 
period, if a beneficiary's countable earnings exceed the SGA 
level, cash benefits continue for an additional 3-month grace 
period and then stop, causing a precipitous drop in monthly 
income from full cash benefits to none. Such a drop in income 
is a considerable disincentive to work. Indeed, less than 1 
percent of DI beneficiaries return to work each year.
    In addition to identifying this ``income cliff,'' our prior 
work has identified other program design and implementation 
weaknesses--such as limited referral to vocational 
rehabilitation services and the eventual loss of medical 
coverage after cash benefits end--that have been disincentives 
to work. \11\ To help reduce such disincentives, the Congress 
has, over the years, established various work incentive 
provisions to safeguard cash and medical benefits while a 
beneficiary tries to return to work, and recently, SSA has 
begun to place greater emphasis on assisting beneficiaries in 
returning to work.
---------------------------------------------------------------------------
    \11\ See SSA Disability: Program Redesign Necessary to Encourage 
Return to Work (GAO/HEHS-96-62, Apr. 24, 1996).
---------------------------------------------------------------------------
    In addition, the Ticket to Work and Work Incentives 
Improvement Act of 1999 (P.L. 106-170) is expected to enhance 
certain work incentives for people with disabilities through 
such measures as expanding eligibility for Medicare, creating a 
Ticket to Work voucher program that will allow people with 
disabilities a greater choice of vocational rehabilitation and 
employment service providers, and establishing new 
demonstration projects for the working disabled. This increased 
focus on work reflects a shift in societal attitudes, as 
embodied in the Americans With Disabilities Act, toward goals 
of economic self-sufficiency and the right of people with 
disabilities to full participation in society. In addition, 
medical advances, new technologies, and changes in the nature 
of work now provide people with disabilities more opportunities 
to work than ever before.

MANY DISABLED WORKERS FACE ADVERSE EMPLOYMENT CIRCUMSTANCES

    Proponents of a higher SGA level for the blind believe that 
blind individuals are at a greater disadvantage, particularly 
from an economic standpoint, than individuals with other 
disabilities. According to these proponents, the disadvantages 
facing blind people include (1) greater employment 
discrimination resulting in low employment rates; (2) greater 
likelihood that when able to find work, it will be in a low-
wage job; and (3) extra costs for supportive services or 
equipment that are necessary for the blind to find and maintain 
employment and conduct other daily activities.
    Few empirical studies rigorously compare the experience of 
blind individuals in terms of employment, earnings, and work-
related expenses with the experience of those who have other 
disabilities. The readily available studies that we reviewed 
relied on data from the mid-1990s. These studies indicate that 
many disabled workers--blind and nonblind--face adverse 
employment circumstances and high job-related expenses.
    Estimates from the 1997 Disability Statistics Report, 
published by the National Institute on Disability and 
Rehabilitation Research, show that although the 1994 labor 
force participation rates for adults with visual impairments 
aged 18 to 64 were low in comparison with the rates for some 
impairments, these rates were higher than the labor force 
participation rates for those with other impairments, such as 
mental illness or emphysema (see table 1).\12\
---------------------------------------------------------------------------
    \12\ L. Trupin and others, Trends in Labor Force Participation 
Among Persons with Disabilities, 1983-1994, Disability Statistics 
Report (Washington, D.C.: U.S. Department of Education, National 
Institute on Disability and Rehabilitation Research, 1997). This report 
is based on the most recent available data from the National Health 
Interview Survey (NHIS). The NHIS, conducted annually by the Census 
Bureau for the National Center for Health Statistics, is a cross-
sectional survey of the civilian noninstitutionalized population of the 
United States. The labor force participation rate is the primary 
measure in labor market analysis. It is a measure of everyone in the 
labor force, including people who have a job, are on temporary layoff, 
or are looking for work.

Table 1: Labor Force Participation Rates Across Various Impairment Types
------------------------------------------------------------------------
          Impairment type             Participation  rate  (percentage)
------------------------------------------------------------------------
No disability......................                                83.0
Deafness or hearing impairment in                                  80.0
 one ear only......................
Orthopedic impairments of lower                                    69.4
 extremity.........................
Blindness or visual impairment in                                  69.0
 one eye...........................
Orthopedic impairments of shoulder                                 68.6
 and/or upper extremities..........
Orthopedic impairments of back or                                  62.5
 neck..............................
Intervertebral disc disorders......                                59.8
Visual impairment in both eyes.....                                59.8
Orthopedic impairment of hip or                                    59.3
 pelvis............................
Hearing impairment in both ears....                                58.7
Amyothrophic lateral sclerosis.....                                50.1
Malignant neoplasm of female breast                                46.4
Toxic poisoning and other adverse                                  46.2
 effects...........................
Osteoarthrosis and allied disorders                                45.2
Malignant neoplasm of respiratory                                  45.0
 and intrathoracic organs..........
Rheumatoid arthritis and other                                     44.0
 inflammatory polyarthropathies....
Heart disease, excluding                                           41.5
 hypertension......................
Hypertensive disease...............                                38.2
Multiple sclerosis.................                                36.9
Absence or loss, lower extremity...                                35.0
Mental retardation/Down syndrome...                                33.5
Affective psychoses................                                30.9
Chronic liver disease and cirrhosis                                30.7
Cerebral palsy.....................                                30.7
Blindness in both eyes.............                                28.9
Mental illness.....................                                27.2
Emphysema..........................                                27.1
Depressive disorders...............                                25.4
Cerebrovascular disease............                                23.3
Nephritis, nephrotic syndrome, and                                 20.1
 nephrosis.........................
Schizophrenic psychoses............                                11.9
------------------------------------------------------------------------
Source: 1994 NHIS data, reported by National Institute on Disability and
  Rehabilitation Research.

    Data patterns from the 1994-95 Survey of Income and Program 
Participation (SIPP) are consistent with this finding.\13\ The 
SIPP provides estimates of employment rates and earnings levels 
of individuals disaggregated by various functional limitations. 
As shown in table 2, employment rates and earnings of adults 
(aged 21 to 64) with severe functional limitations were 
significantly lower than those for adults with no disability. 
Adults with limitations involving sight had a somewhat higher 
employment rate than those with limitations involving lifting, 
walking, or climbing stairs but had a significantly lower 
employment rate than for those unable to hear normal 
conversations. Monthly earnings levels of individuals with 
severe sight limitations were about the same or slightly lower 
than the monthly earnings for individuals with severe 
limitations in walking, lifting, and hearing.
---------------------------------------------------------------------------
    \13\ John M. McNeil, Americans With Disabilities: 1994-95, Current 
Population Reports, Household Economic Studies, P70-61 (Washington, 
D.C.: U.S. Department of Commerce, Economics and Statistics 
Administration, Bureau of the Census, 1997). The SIPP, an ongoing study 
by the Bureau of the Census of the economic well-being of the civilian 
noninstitutionalized population, is a nationally representative sample 
of approximately 30,000 households. Information about disability was 
collected during the period October 1994-January 1995, which represents 
the most current available SIPP data regarding employment and earnings 
of people with disabilities.

                  Table 2: Employment Rates and Earnings Across Various Functional Limitations
----------------------------------------------------------------------------------------------------------------
         Functional limitation                  Percentage  employed                       Earnings
----------------------------------------------------------------------------------------------------------------
No disability.........................                                82.1                               $2,153
Unable to hear normal conversation....                                59.7                                2,047
Unable to see words and letters.......                                30.8                                1,252
Unable to lift and carry 10 pounds....                                27.0                                1,536
Unable to climb stairs without resting                                25.5                                1,257
Unable to walk three city blocks......                                22.5                                1,346
----------------------------------------------------------------------------------------------------------------
Source: 1994-95 SIPP data, Census Bureau

    Other studies conducted by researchers in academic 
institutions and by organizations representing the disabled 
have provided some information on the work-related costs faced 
by those with disabilities. While comparisons of results across 
these studies is difficult given the varying focus, 
methodology, and measures used in each study, the results, in 
general, indicate that individuals with disabilities other than 
blindness also incur high work-related costs.
    For example, the American Foundation for the Blind and 
Mississippi State University found that legally blind 
individuals spent an average of $884 per year on readers, $57 
per year on tapes related to reading, $50 per year on 
recruiting new readers, $469 per year on work-based adaptive 
devices, and $150 per year on mobility aids. Also, over 50 
percent of the legally blind spent less than $500 for devices 
used at work.\14\ In comparison, the literature we reviewed and 
researchers we contacted indicate that people with severe 
mental illness may also require many work-related services, 
including on-the-job coaching, money management assistance, and 
mental health services. Cost estimates ranged from $1,400 to 
$3,600 annually for supportive employment services and $3,200 
to $7,000 annually for mental health services.\15\ In addition, 
researchers have noted that people with hearing impairments 
incur costs for interpreter services, telecommunications 
devices for the deaf, answering machines and ancillary 
services, retrofitting of items that use sound to operate, and 
the care of hearing dogs. Researchers have pointed out that 
most of these items require significant initial and continuing 
investment.\16\
---------------------------------------------------------------------------
    \14\ C. Kirchner and others, Lifestyles of Employed Legally Blind 
People: A Study of Expenditures and Time Use, Technical Report 
(Mississippi State, Miss.: Mississippi State University, Rehabilitation 
Research and Training Center on Blindness and Low Vision, 1992).
    \15\ G. Bond and others, ``Toward a Framework for Evaluating Cost 
and Benefits of Psychiatric Rehabilitation: Three Case Examples,'' 
Journal of Vocational Rehabilitation, Vol. 5 (1995).
    \16\ W.A. Welsh, ``The Economic Impact of Deafness,'' Journal of 
the American Deafness and Rehabilitation Association, Vol. 24, No. 3 
and 4 (Jan./Apr., 1991).

INCREASING OR ELIMINATING SGA LEVELS COULD INCREASE WORK BUT 
---------------------------------------------------------------------------
WOULD HAVE COSTS

    Recently, proposals have been put forth that would either 
raise or eliminate the SGA level for the blind. In particular, 
proposals raising the SGA level for blind individuals have been 
focused on restoring the link between this level and the 
retirement earnings limit that existed from 1977 to 1996.\17\ 
Restoring this link would allow working beneficiaries to keep 
more of their benefits, thereby reducing a significant 
disincentive to work. However, SSA estimates of the impact of 
these possible changes indicate that they all would have some 
negative effect on DI costs and the actuarial balance of the 
Old-Age, Survivors, and Disability Insurance (OASDI) trust 
funds. Moreover, if enacted, the proposals to eliminate the SGA 
requirement, by removing the connection between benefit 
eligibility determination and the inability to work, would 
fundamentally alter the purpose of the DI program.
---------------------------------------------------------------------------
    \17\ S. 285 and H.R. 1601, introduced on January 21, 1999, and 
April 28, 1999, respectively, both propose to ``restore the link 
between the maximum amount of earnings by blind individuals permitted 
without demonstrating ability to engage in substantial gainful activity 
and the exempt amount permitted in determining excess earnings under 
the earnings test.''

Increasing or Eliminating the Blind SGA Level Could Increase 
---------------------------------------------------------------------------
Work Effort but Would Raise Program Costs

    Under the current DI program, earning even one dollar above 
the SGA level for a sustained period results in loss of DI cash 
income and Medicare benefits. The prospect of losing cash and 
health benefits can reduce motivation to work, especially when 
low-wage jobs are the likely outcome. Increasing or eliminating 
the SGA level for the blind would reduce this disincentive to 
work and thus could result in more work effort by blind 
beneficiaries. However, by making the program more generous, 
this change would also increase the number of beneficiaries 
through the effects of both increased entry to and decreased 
exit from the program. Some working individuals not currently 
on the DI rolls would be newly eligible to enter the program, 
and those already on the rolls would be able to increase their 
work and earnings without losing their eligibility and thus 
would not exit the program.
    The extent to which these increased entry and decreased 
exit effects occur will affect DI benefit costs and OASDI trust 
fund balances. SSA's Office of the Actuary has estimated the 
financial impact of several options for increasing or 
eliminating the SGA level for the blind. Ten-year estimates of 
increased DI benefit payments range from $2.7 billion, if the 
SGA level for the blind is set equal to the current-law 
earnings limit for retirees, to $6.8 billion, if the SGA level 
for the blind is completely eliminated.\18\
---------------------------------------------------------------------------
    \18\ The short-range estimates cover the period 2000-09.
---------------------------------------------------------------------------
    Table 3 shows that increasing the SGA level for the blind 
also would have varying effects on the OASDI actuarial balance, 
depending upon the proposed option.\19\ In discussing these 
proposed increases, it is important to view their effect on 
trust fund costs within the context of an already large Social 
Security shortfall. Under current SSA actuarial projections, 
the OASDI trust funds will be exhausted in 2034, with the Old-
Age and Survivors Insurance trust fund being depleted in 2036 
and the DI trust fund being depleted in 2020.\20\ Over a 75-
year period, the OASDI deficit is currently estimated to be 
2.07 percent of taxable payroll--approximately $3 trillion.
---------------------------------------------------------------------------
    \19\ Although the DI trust fund is affected by changes in SGA 
levels, SSA only estimated the effects on the combined OASDI trust 
funds.
    \20\ The combined OASDI trust funds will be in cash surplus until 
2014. At that point, the trust funds will start redeeming some of their 
assets to obtain the funds necessary to pay benefits, and expenditures 
will begin to exceed revenues. By 2034, the trust funds will be 
exhausted; that is, OASDI will meet only 71 percent of its benefit 
obligations.
---------------------------------------------------------------------------
    Setting the blind SGA level equal to the current-law 
earnings limit for retirees ($1,416.67 per month) \21\ would 
have a negligible effect, less than 0.005 percent of taxable 
payroll,\22\ on the OASDI actuarial balance. However, other 
options for increasing or eliminating the SGA level for the 
blind could reduce the actuarial balance, up to .01 and .03 
percent of taxable payroll. Although these proposed increases 
would have a relatively small impact on the actuarial balance, 
the trust fund shortfall would be exacerbated under any 
increase to the SGA level.
---------------------------------------------------------------------------
    \21\ This earnings limit refers to that set for Social Security 
retirees aged 65 to 69.
    \22\ Taxable payroll is the amount of wages or self-employment 
income that is subject to the Social Security tax. For long-range 
forecasting, Social Security's income and costs are expressed as a 
percentage of taxable payroll. Measuring the program's income and outgo 
over long periods (75 years) by describing what portion of taxable 
earnings they represent is more meaningful than using dollar amounts, 
because the value of the dollar changes over time.

     Table 3: Estimated Change in the OASDI Actuarial Balance as a Result of Changes in the Blind SGA Level
----------------------------------------------------------------------------------------------------------------
                                                                              Impact on OASDI actuarial balance
              SGA option                             SGA level                   (as a percentage of taxable
                                                                                           payroll)
----------------------------------------------------------------------------------------------------------------
Set the SGA level for blind             Beginning in 2000, increase the SGA                    Less than -0.005
 individuals equal to the 2000          level from $1,170 to $1,416.67, and
 earnings limit for retirees,a and                        index thereafter
 index thereafter.....................
Set the SGA level for blind             Beginning in 2000, increase the SGA                               -0.01
 individuals equal to the 2000             level from $1,170 to $1,416.67,
 earnings limit for retirees,a            then raise the SGA level through
 allowing it to rise to the 2002                 2002 to $2,500, and index
 limit, and index thereafter..........                          thereafter
Eliminate the SGA level...............    Permit blind individuals to earn                                -0.03
                                        any amount and still retain full DI
                                                                  benefits
----------------------------------------------------------------------------------------------------------------
Note: Although the DI actuarial balance is affected by changes in SGA levels, SSA estimated the effect on only
  the OASDI actuarial balance.
a This earnings limit refers to that set for Social Security retirees aged 65 to 69.
Source: SSA Office of the Chief Actuary.

    Some advocacy and interest groups representing people with 
disabilities other than blindness have proposed establishing a 
uniform SGA level for both blind and nonblind individuals. 
Because relatively few DI beneficiaries are blind, the DI 
benefit cost of raising or eliminating the SGA level for the 
nonblind would be even higher than it would be for the blind, 
although DI benefit cost estimates for either of these changes 
were not available from SSA at the time of our review.
    However, SSA has estimated the financial impact on the 
OASDI actuarial balance of various options affecting the 
nonblind SGA level. Changes in the nonblind SGA level would 
have greater adverse effects on the OASDI trust funds than 
would changes in the blind SGA level. For example, table 4 
shows that raising the current nonblind SGA level of $700 a 
month to that of the blind SGA level of $1,170 a month would 
significantly affect the OASDI actuarial balance. These effects 
would be even greater if the SGA level for the nonblind were 
set equal to the current-law earnings limit for retirees or 
were completely eliminated. Such changes would represent a 
significant worsening of an already dire situation.

    Table 4: Estimated Change in the OASDI Actuarial Balance as a Result of Changes in the Nonblind SGA Level
----------------------------------------------------------------------------------------------------------------
                                                                              Impact on OASDI actuarial  balance
              SGA option                             SGA level                   (as a percentage of  taxable
                                                                                           payroll)
----------------------------------------------------------------------------------------------------------------
Set the SGA level for nonblind          Beginning in 2000, increase the SGA                               -0.09
 individuals equal to the current SGA       level from $700 to $1,170, and
 level for blind individuals..........                    index thereafter
Set the SGA level for nonblind          Beginning in 2000, increase the SGA                               -0.15
 individuals equal to the 2000           level from $700 to $1,416.67, and
 earnings limit for retirees,a and                        index thereafter
 index thereafter.....................
Set the SGA level for nonblind                                       -0.44
 individuals equal to the 2000
 earnings limit for retirees,a
 allowing it to rise to the 2002
 limit, and index thereafter.
 Beginning in 2000, increase the SGA
 level from $700 to $1,416.67, then
 raise the SGA level through 2002 to
 $2,500, and index thereafter.........
Eliminate the SGA level...............  Permit nonblind individuals to earn                     Not estimated b
                                        any amount and still retain full DI
                                                                  benefits
----------------------------------------------------------------------------------------------------------------
Note: Although the DI actuarial balance is affected by changes in SGA levels, SSA estimated the effect on only
  the OASDI actuarial balance.
a This earnings limit refers to that set for Social Security retirees aged 65 to 69.
b Although not estimated, eliminating the nonblind SGA level would have the greatest adverse effect on the OASDI
  actuarial balance.
Source: SSA Office of the Chief Actuary.

Proposals to Eliminate the SGA Level Would Alter the 
Fundamental Role of the DI Program

    Elimination of SGA levels for blind or other disabled 
individuals would fundamentally alter the purpose of the DI 
program. The DI program's historic role of providing 
compensation for reduced earnings due to a disability and the 
program's emerging role of facilitating severely disabled 
individuals in their return-to-work efforts are both based on 
the concept of assisting individuals whose impairments have 
adversely affected their work capabilities. The very definition 
of disability includes the requirement that a person be unable 
to perform substantial work, and the purpose of the SGA level 
is to determine if, regardless of one's medical condition, a 
person demonstrates by working that he or she is not in fact 
work-disabled. Without an SGA standard, cash benefits would be 
offered to individuals incurring a physical or mental 
disability regardless of their earnings. Removing the 
connection between benefit eligibility determination and the 
inability to work would fundamentally alter the program's 
emphasis.

CONCLUSIONS

    Current proposals ranging from increasing the SGA level for 
the blind to eliminating it completely would have the likely 
effect of increasing beneficiaries' work effort but would raise 
program costs and could widen the differences in the program's 
treatment of blind and nonblind beneficiaries, even though both 
groups face adverse employment circumstances. Moreover, raising 
the SGA level for the blind could result in further calls to 
increase the SGA level for nonblind beneficiaries, leading to 
significantly higher program costs and adverse effects on trust 
fund solvency. In addition, eliminating the SGA level would 
fundamentally alter the purpose of the DI program. Other 
changes to the work incentives--some of which are being 
implemented or will be tested by SSA as a result of the Ticket 
to Work and Work Incentives Improvement Act of 1999--are likely 
to increase work without fundamentally changing the nature of 
the DI program.
    Mr. Chairman, this concludes my prepared statement. At this 
time, I will be happy to answer any questions you or other 
Members of the Subcommittee may have.

CONTACT AND ACKNOWLEDGMENT

    For information regarding this testimony, please contact 
Barbara Bovbjerg at (202) 512-7215 or [email protected]. 
Individuals making key contributions to this testimony include 
Carol Dawn Petersen, Mark Trapani, Gretta L. Goodwin, and 
Michael J. Collins.

RELATED GAO PRODUCTS

Social Security Disability: Multiple Factors Affect Return to 
Work (GAO/T-HEHS-99-82, Mar. 11, 1999).

Social Security Disability Insurance: Factors Affecting 
Beneficiaries' Return to Work (GAO/T-HEHS-98-230, July 29, 
1998).

Social Security Disability Insurance: Multiple Factors Affect 
Beneficiaries' Ability to Return to Work (GAO/HEHS-98-39, Jan. 
12, 1998).

Social Security Disability: Improving Return-to-Work Outcomes 
Important, but Trade-Offs and Challenges Exist (GAO/T-HEHS-97-
186, July 23, 1997).

Social Security: Disability Programs Lag in Promoting Return to 
Work (GAO/HEHS-97-46, Mar. 17, 1997).

SSA Disability: Return-to-Work Strategies From Other Systems 
May Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996).

Social Security: Disability Programs Lag in Promoting Return to 
Work (GAO/HEHS-96-62, June 5, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return 
to Work (GAO/HEHS-96-62, Apr. 24, 1996).
      

                                

    Chairman Shaw. Ms. Petersen, do you have a statement?
    Dr. Petersen. No, I don't.
    Chairman Shaw. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman. I want to thank you 
for your testimony, Ms. Bovbjerg, for it is very clear and 
precise and I think pretty much lays it out.
    And I know that you probably don't want to make any 
conclusions here, but are you kind of concluding that for us to 
really do something, we have to really deal with the fact that 
maybe we need a comprehensive solution to the Social Security 
problem; otherwise, we make the Social Security problem worse 
before we make it better?
    Ms. Bovbjerg. Well, I acknowledge that the cost would be 
small, but it is going in the wrong direction if you are trying 
to deal with this $3 trillion problem.
    Mr. Matsui. I am not suggesting the cost is so small we 
should just do it, but I am just saying that, frankly, the 
way--I think the way we structured our debate--both parties 
have structured our debate in terms of not tampering with the 
Social Security surplus, and obviously the on-budget surplus 
can be used, but we certainly don't intend to move SSI 
disability and take from that at this moment, anyway. We are 
left in the position of having to deal with this 
comprehensively. Is that kind of where we are?
    Ms. Bovbjerg. I think that is a good summary, yes.
    Mr. Matsui. In terms of the actual increase in employment 
for many of the disabled if we do raise the earnings limit, do 
we get credit for that at all in terms of the budgetary impacts 
and others?
    Ms. Bovbjerg. I am not sure that it would score, and I 
can't speak to that, you would have to ask my colleagues at the 
Congressional Budget Office.
    Mr. Matsui. I doubt it would score, that is--
    Ms. Bovbjerg. You know that there would be a net effect 
that some people would work more if the SGA were higher or 
eliminated, who are currently on the rolls, but there are other 
people who are not currently on the rolls because they work, 
who would work less because they would then get benefits plus 
whatever they were earning.
    Mr. Matsui. Well, I want to thank you for your testimony. 
As I said, I think you have laid it out very well. It is a 
decision that we have to make and, obviously, we are kind of 
caught in a dilemma right now, all of us are.
    Ms. Bovbjerg. If we can provide any help, we will.
    Mr. Matsui. I appreciate that. Thank you.
    Chairman Shaw. Mr. Collins?
    Mr. Collins. No questions.
    Chairman Shaw. Mr. McCrery.
    Mr. McCrery. Would you pronounce your name for me?
    Ms. Bovbjerg. It is a hard one, it is ``Boberg'', like 
``iceberg''.
    Mr. McCrery. Thank you. I have other questions.
    Ms. Bovbjerg. I am glad you asked one I could answer.
    Mr. McCrery. You said in your testimony that if we were to 
do away with the SGA limit for the blind, that by removing the 
connection between eligibility and the inability to work would 
fundamentally alter the purpose of the disability program. I 
agree with you. But I would like for you to expound on that. 
How would it fundamentally alter the purpose of the disability 
program?
    Ms. Bovbjerg. Well, first, it would sever the linkage 
between eligibility and inability to work--that is, to engage 
in substantial gainful activity. This is a linkage that is 
intrinsic to the current program. Eligibility for benefits at 
that point would be determined solely on a medical or 
functional basis. Everyone meeting those criteria would receive 
benefits, regardless of how much they work and how much they 
earn. That removes the concept of disability insurance from the 
disability program by doing that, and makes it more of a 
payment for physical impairment. That is something the Congress 
could decide to do, but as Dr. Daniels stated, I think that is 
such a significant policy change that certainly we would want 
to know more about the implications of that on finance and 
disability policy.
    Mr. McCrery. In other words, if we were to do away with any 
kind of earnings limitation, it would undermine the original 
purpose of the disability program.
    Ms. Bovbjerg. Yes, sir.
    Mr. McCrery. Can you state for us your impression of what 
the original purpose of the disability program was?
    Ms. Bovbjerg. Well, I can, and I hope that Carol will chime 
in if I don't get everything here, but the Disability program 
is to insure people who become disabled--who have been in the 
workforce, who become disabled-against an inability to--and I 
hate to keep using these words--to engage in substantial 
gainful activity or an inability to support themselves in some 
way that we have defined.
    Mr. McCrery. So, in other words, it was not the Disability 
program under Social Security--was not intended to simply 
provide a payment to somebody who becomes disabled, it was to 
provide a safety net, if you will, for income that if a person 
is so disabled that he can't work or that his work is very 
limited, then we want to provide some income so that person can 
provide food and shelter and so forth, is that correct?
    Ms. Bovbjerg. That is right, and I think that there are 
statements made by members of Congress at the time that the 
Disability law was passed that say that very explicitly, that 
we understand that this means that only people with impairments 
who cannot work will get benefits. That was made very clear.
    Mr. McCrery. Well, Mr. Chairman, I agree with the 
analysis--Ms. Bovbjerg--and I think it would fundamentally 
alter the definition and the purpose of the Disability program 
if we were to simply do away with any earnings limitation at 
all, and to do that for the blind disabled may not cost that 
much to the Federal fisc, but again we get to this question of 
what would be the rationale, the policy rationale, for not 
doing the same thing for other categories of disabled, and if 
we do it for all then it is going to be a huge cost and it 
would not serve the same purpose that was originally intended 
by the Congress when this program was created.
    So, I think that is a fundamental question that the GAO at 
least has answered correctly, and I think this Subcommittee and 
full Committee and full Congress ought to answer the same way. 
Thank you.
    Chairman Shaw. Ms. Bovbjerg, did you touch on the effect 
that his question would have on the trust fund?
    Ms. Bovbjerg. Well, I can tell you that we have received 
from the actuary information that eliminating the SGA for the 
blind would reduce--would have an impact, an actuarial impact, 
the 75-year impact of .03 percent of taxable payroll, which is 
about $40 billion over 75 years. $40 billion even in the 
context of $3 trillion is still significant.
    Chairman Shaw. If you could address that same question as 
to what effect it would have on the date that the trust fund 
runs negative. Now I think it is 2006 on the disability side.
    Ms. Bovbjerg. We can get that.
    Chairman. Shaw. If you could supply that for the Committee, 
that is something that I think is a concern of everyone on the 
Committee. Mr. Hulshof.
    Mr. Hulshof. Thanks, Mr. Chairman. Ms. Bovbjerg, on page 4 
of your written testimony and in your oral statement, you talk 
about the disadvantages that blind people face according to the 
proponents, and you mentioned that there are really few 
empirical studies that rigorously compare the experiences of 
blind individuals as compared with the experience of others. 
And I have read your synopsis of the 1997 Disability Statistics 
Report. I know Mississippi State also has a published report.
    Are there empirical studies currently being conducted that 
could rigorously take a look at this to determine, that you are 
aware of?
    Dr. Petersen. In the short period of time we had to prepare 
for this testimony, these were the studies that we could 
identify, and we could not find any systematic studies looking 
at costs that exist to date.
    Mr. Hulshof. Could you just briefly--I know your time was 
limited in your five minutes, but could you maybe expound on 
what the studies--I mean, I have read this--but could you just 
summarize for me what at least these studies indicate regarding 
the blind versus nonblind?
    Ms. Bovbjerg. Well, we have three pieces that we have 
brought into the testimony, and some of this is from work that 
we did in 1996 on some of these same issues--one involved labor 
participation rates, another is employment rates and wages, and 
another piece is on work-related costs. And what you see there 
is there are differences among impairments, but that really it 
seemed to us that the point was that different impairments have 
tremendously adverse employment circumstances. This is not 
something that is unique to the blind.
    And we want to emphasize that we are not saying it is easy 
to be disabled and get a job, that is not what we are saying, 
but we are saying that we have not found evidence that the 
blind are unique in this regard.
    Mr. Hulshof. Regarding those work-related costs, whether 
for the blind or for those individuals with other disabilities, 
are they most often borne by the worker? Are they borne by the 
employer? I mean, how are those costs actually--who bears the 
brunt of those costs?
    Dr. Petersen. It varies. Some can be borne by the employer, 
other costs are borne by the individuals themselves.
    Mr. Hulshof. I think that is all I have. Thank you, Mr. 
Chairman.
    Chairman Shaw. Thank you very much. We appreciate your 
being with us. If you could supply us with the information I 
asked you about the trust fund, I would greatly appreciate it. 
It would add a lot to the discussion. Thank you.
    [Questions submitted by Chairman Shaw, and Ms. Bovbjerg's 
answers, follow:]

Barbara Bovbjerg, General Accounting Office, Response to Questions for 
the Record

    1. Could you elaborate on the types of adverse 
circumstances faced in today's society by individuals with 
disabilities?
    Research has shown that many disabled individuals-blind and 
nonblind-face a number of adverse employment circumstances when 
attempting to return to work. First, employers may be reluctant 
to hire individuals with disabilities. Although the Americans 
with Disabilities Act prohibits employment discrimination 
against the disabled, there is still a stigma associated with 
disability that may influence employers. This stigma may be 
related to the misconception that a disabling impairment always 
adversely affects the individual's productivity. Another cause 
of employment discrimination may arise from the fact that a 
disabled employee may require workplace accommodations, which 
the employer may be unwilling to provide.
    Second, for those individuals who do seek employment, the 
number and type of jobs available may be limited due to the 
disabling condition. Sometimes a disabling condition will lower 
a worker's productivity when he or she is unable to perform the 
same essential tasks of the job as before the disability. This 
decreased productivity may limit the pool of available jobs to 
those that require less skill and thus provide lower wages.
    Finally, disabled workers incur costs that a non-disabled 
worker does not incur for supportive devices, equipment, and 
other work-related services necessary for employment. Examples 
of these costs include readers and mobility aids for the blind, 
mental health services for people with severe mental illness, 
and interpreter services and hearing dogs for the deaf. Most of 
this assistance requires significant initial and continuing 
investment.

    2. What proportion of beneficiaries work and, among those, 
what proportion approach substantial gainful activity (SGA) 
limits?
    The Social Security Administration (SSA) has estimated that 
one half of one percent of all beneficiaries leave the program 
each year because of work, but this figure does not include 
beneficiaries who work but do not earn enough to be terminated 
from the program. According to agency officials we interviewed, 
SSA is unable to accurately determine the total number of 
disabled beneficiaries who work. Furthermore, SSA does not have 
the capability to generate a reliable and valid estimate of the 
number of disabled beneficiaries who work because the agency 
data systems cannot distinguish a beneficiary terminated due to 
a medical improvement from one who is terminated because of 
work. In addition, an agency official told us that SSA's data 
systems cannot distinguish work-related earnings from other 
disability-related payments.
    In addition to being unable to accurately determine the 
number of disabled beneficiaries who work, SSA is unable to 
accurately determine how many working beneficiaries have 
earnings that approach the SGA limit. Because an individual can 
earn any amount in a month without losing benefits when he or 
she is in a trial work period, SSA does not track the 
individual's earnings during this period. Once the individual 
finishes the trial work period, SSA verifies earnings and if 
the individual is earning above SGA then benefits continue for 
a three-month grace period and then cease. If an individual has 
monthly earnings below SGA at the end of the trial work period, 
then SSA assumes his or her earnings remain below SGA until the 
individual reports this information or if the agency's data 
systems identify earnings above the SGA limit.
    Although the agency's data systems can identify earnings 
above the SGA level, there are some limitations associated with 
this process. Some income classified as earnings may not be 
from work. In addition, earnings are only reported on a yearly 
basis, so SSA's data systems will only catch those individuals 
who earn 12 times the SGA level, which is stated in monthly 
terms. Therefore, beyond the trial work period, it is possible 
for an individual to earn above the SGA level for some months, 
but still retain benefits as long as yearly earnings are less 
than 12 times the SGA level. An agency official told us that 
there is no computerized method to identify earnings on a 
monthly basis.

    3. Is raising the SGA limits the right public policy?
    Raising the SGA limits for disabled beneficiaries would 
reduce disincentives to work and could result in greater work 
effort by beneficiaries. However, as we mentioned in our 
testimony of March 23, 2000, by making the program more 
generous, this change would also increase the number of 
beneficiaries through the effects of both increased entry to 
and decreased exit from the program. Some working individuals 
not currently on the Disability Insurance (DI) rolls would be 
newly eligible to enter the program, and those already on the 
rolls would be able to increase their work and earnings without 
losing their eligibility and thus would not exit the program.
    The extent to which these increased entry and decreased 
exit effects occur will affect DI benefit costs and Social 
Security trust fund balances. SSA's Office of the Actuary has 
estimated that raising the SGA limit for the blind to the 
current-law earnings limit for retirees is estimated to 
increase DI benefit payments by $2.7 billion over a ten-year 
period. Since relatively few DI beneficiaries are blind, the DI 
benefit cost of raising the SGA limit for nonblind 
beneficiaries would be even higher. Raising the SGA limit for 
all DI beneficiaries would lead to significantly higher program 
costs and adverse effects on trust fund solvency.
    Whether raising the SGA limit represents good policy goes 
beyond the financial considerations. Fundamental policy 
weaknesses in the DI program continue to persist. As we have 
reported in the past, these weaknesses include an eligibility 
determination process that concentrates on applicants' 
incapacities, an ``all-or-nothing'' benefits structure, and 
return-to-work services offered only after a lengthy 
determination process. To address these policy weaknesses, we 
continue to believe--as we recommended in 1996--that SSA should 
place greater priority on helping disabled beneficiaries return 
to work. We also recommended that the agency develop a 
comprehensive strategy to achieve this goal. While SSA has 
taken actions that place a greater emphasis on return to work, 
it has yet to adopt an overall strategy for implementing a new 
approach.
    In developing a return-to-work strategy, SSA can draw upon 
the experiences of other systems to identify elements of a new 
federal disability system that could help each individual 
realize his or her productive potential without jeopardizing 
the availability of benefits for people who cannot work. Having 
identified these elements, SSA would then be in a position to 
determine the legislative and regulatory changes needed to test 
and evaluate the effectiveness of these practices in the 
federal disability system. After obtaining this information, 
policymakers will be in a position to determine whether raising 
the SGA is good public policy.
      

                                

    Chairman Shaw. The next panel we have, includes Ms. Brenda 
Gillis, a Social Security Beneficiary, and she is from Stuart, 
Florida, which is just a few miles north of my district; Joanne 
Wilson, who is the Director of the Louisiana Center for the 
Blind; Dr. Brenda Cavanaugh, Research Director for the 
Rehabilitation Research and Training Center on Blindness and 
Low Vision, of Mississippi State University; James Gashel, 
Director of Governmental Affairs, National Federation of the 
Blind, from Baltimore, Maryland.
    Mr. McCrery. Mr. Chairman, while our panelists are begin 
seated, if I might take just a minute to introduce Joanne 
Wilson, from Louisiana. Ms. Wilson has been very active with 
the Association for the Blind in Louisiana for a number of 
years, and has constantly worked on behalf of the blind in our 
state. She has met with me on a number of occasions since I 
have been in Congress, and has always been extremely helpful in 
providing good information and, I will say, as much as any 
other advocate that I have come in contact with over the last 
12 years, she has been honest, straightforward, and tried to do 
her best to not only represent those that she is advocating 
for, but to be forthright and up-front with the facts and 
policy rationale, and for that I appreciate it very much. And 
we are, I think, honored to have somebody of her stature in the 
blind community here to testify today, and I hope the 
Subcommittee will pay attention to what Ms. Wilson has to say.
    Chairman Shaw. Indeed, we will, and thank you very much. 
Again, I will repeat, we have everyone's full statement to be 
made part of the record, and we invite the witnesses to 
summarize as they see fit, and we will start with Ms. Gillis.

 STATEMENT OF BRENDA-ANN GILLIS, SOCIAL SECURITY BENEFICIARY, 
                        STUART, FLORIDA

    Ms. Gillis. Good morning. I would like to thank the 
Committee for inviting me here to testify today. This is a very 
nerve-wracking experience, but I am honored to be here.
    My father always told me that when you need to consider 
things in life, especially difficult decisions, you should 
first try to walk in that person's moccasins. So, I suppose my 
role here today is to try to express to you what my moccasins 
feel like and encourage you to try to walk in them with me for 
a few moments.
    I am relatively new to blindness. I was declared legally 
blind in 1994 when my son was two years old. It was a very 
difficult transition for me, and to this day I still need some 
blindness skills that I haven't quite mastered yet. Braille is 
one of them. Otherwise, I would have note cards and be much 
more organized.
    I worked my whole life. I was encouraged to do so from the 
time I was 15. I picked corn and tomatoes in south Jersey, and 
I knew that by doing that I was contributing to my government, 
to my community, and to my future retirement benefits.
    When I was declared legally blind, I had held a job that I 
had enjoyed for 11 years, as the Parish Administrator for the 
Episcopal Church. In that job, I earned a $30,000-a-year wage 
and was provided with $5700 a year in medical benefits, and I 
had $4900 a year contributed into a retirement pension by my 
parish.
    As my sight diminished through the retinitis pigmentosa, 
which is a degenerative disease of my retina which has slowly 
robbed my vision and tunneled it down to the point where one 
day I will have no vision left, I began to realize that it was 
unfair to my parish for me to continue in my employment as I 
did not have all the skills I needed, the equipment I needed, 
and I was rapidly approaching a point in my life where I would 
no longer be able to drive. After almost having an accident 
with my three-month-old son in the car, I decided to give up my 
driving privilege.
    As time wore on, my job became more and more difficult for 
me to do effectively, so I resigned that position. At that 
point, I applied for Social Security Disability benefits. While 
I awaited a determination from Social Security as to my 
eligibility, my family faced the foreclosure of our home. It 
was a very scary time, having such a young child in the home, 
and I really didn't know where to turn.
    It was shortly thereafter that I became associated with the 
National Federation of the Blind, and I have since touted this 
relationship as the best career move I have ever made. I 
finally found a group of professionals who treated me as an 
equal and didn't judge me on the basis of my inability to see.
    I struggled quite often with my family and friends, not 
knowing how to handle me under my new set of circumstances. 
And, finally, the disability benefits arrived. I began my own 
business. I own Letter Perfect in Stuart, Florida, and do 
secretarial duties on the side. However, because of the 
earnings limit imposed upon me as a recipient of SSDI, I have 
to be very careful as to the types of jobs that I accept and 
the duration of those jobs and how they affect that income at 
the end of the month.
    The reason for this is, if I earn $14,000 a year, I lose 
$20,000 of benefits. The loss of that income would then once 
again place me in the position of facing foreclosure on my 
home. It is very difficult to juggle in one's mind how to 
manage a business under these circumstances.
    I very much want to work. I do not view my vision loss and 
my blindness as a reason not to be employed. So, with my 
benefits at $1715 a month, I encourage you to raise the 
earnings limit so that I could go back to work and augment my 
retirement and be made whole with the middle class. I guess 
that's all. I just heard my tone back here.
    My retirement benefit is important to me, and at the 
current rate I cannot augment that in any way. So, I implore 
you to consider raising the earnings limit for the blind so 
that I can compete with the other members of the middle class. 
I thank you for the time to speak.
    [The prepared statement follows:]

Statement of Brenda-Ann Gillis, Stuart, Florida (Social Security 
Beneficiary)

    My name is Brenda-Ann Gillis. I am a 35 year-old wife, 
mother, business owner and advocate for the blind community of 
Martin County, Florida. I have lived in my single family home 
since June of 1986.
    First, I would like to thank the committee members for 
allowing me to share my story. The earnings limit has a direct 
negative impact on my life and that of my family. I hope that 
my testimony will illustrate the difficult economic choices 
blind individuals must face when contemplating work.

Background

    I was born with retinitus pigmantosa (RP). My condition was 
not diagnosed until I entered college in the fall of 1982. 
Because of the degenerative nature of the disease, my vision 
was not noticeably affected for some time after the initial 
diagnosis. As a result, I was able to graduate from college and 
begin my working career without using any of the adaptive 
techniques that a blind individual uses. After college a local 
print shop employed me as their office manager. Eventually I 
accepted a position as a parish administrator for the Episcopal 
Church and worked there from 1985 to 1996. As time went on, I 
found my vision getting worse and worse. Finally I was declared 
to be ``legally blind.'' It was difficult to do my job without 
knowing how to ``function'' as a blind person. As a result, I 
had to leave my job.
    After leaving my job I applied for Social Security 
Disability Insurance (SSDI) benefits to which I was entitled. 
Unfortunately an eligibility determination did not come soon 
enough. My loss of income resulted in a possible foreclosure on 
our home. While awaiting a determination by the Social Security 
Administration, I sought service from the Division of Blind 
Services in West Palm Beach. I was able to locate an employer 
who was willing to employ me as a ``work at home'' sub-
contractor and began to operate my own business. Eventually I 
was awarded disability benefits. My disability benefit coupled 
with my part-time job, however, does not compensate for the 
loss of the previous income.
    I was frustrated with my new circumstances. I had never 
noted as a sighted member of society, that the stereotypes 
associated with blind persons were a large and seemingly unfair 
invisible barrier that could not be moved or altered with any 
measure of ease. For me, I had been a visible and active member 
of my community, but on that day when I was presented with a 
white cane all my accomplishments of my past seemed to 
disappear and even my closest friends were struggling with how 
to handle the person I had become. It was at that point that 
the decision was made to either give up or start fighting and 
this is when I came to learn of the National Federation of the 
Blind. The relationship I have developed with this organization 
since that time is in my opinion the best career move I ever 
made. I had finally found a group of professionals who 
acknowledged the skills and intelligence that I had always 
possessed but were no longer recognized by my sighted 
colleagues. So, I set to work at the business of ``Changing 
What it Means to be Blind'' everywhere I turned. In the 
furniture store when the sales woman inquired as to why my 
friend would bring a blind person to shop for furniture, my 
friend replied, ``. . I bring her along to evaluate comfort and 
texture.'' In a restaurant when the hostess literally grabbed 
my head and proceeded to demonstrate the proximity of the 
sconce on the wall to ensure that I would not injure myself. I 
made a point of contacting the management and requesting the 
opportunity to come back and place his staff under occlusion 
and allow them to experience a meal without sight. My resume to 
employers does not begin with the line ``I am a blind 
applicant,'' but when I arrive for interviews the position has 
undoubtedly been filled in the time it took me to travel to 
their office. Why then do we always seem to seek new and 
innovative ways to oppress blind individuals? Is there not 
enough in the way of daily challenges for our lawmakers to feel 
it necessary to exclude the blind when they discuss our ability 
to work and earn a decent living? Please do not take these 
comments to infer that you are not sensitive, as I am sure you 
are, but quite frankly, even I did not contemplate the impact 
being blind has on one's life until I myself became blind.

Earnings Limit Work Disincentive

    The reality for me is that I simply do not view myself as 
less employable now than I was in 1985 when I was considered to 
be a ``sighted'' member of society. The loss of my eyesight did 
not affect my ability to reason, manage, perform or 
communicate. My brain did not die. I truly wish to work. I 
truly am concerned about the need for me to provide for my 
retirement, my son's education and actively participate in my 
community. Unfortunately, because I happen to be blind, some of 
these goals are not prudent given the current restrictions 
posed upon my family and myself. The reality is that given the 
present earnings limits for blind individuals, it is not 
practical for me to seek employment. Presently I receive 
monthly checks in the amount of $933.00 for myself, $498.00 for 
my dependent son and a disability pension from church insurance 
in the amount of $292.00. This totals $1,715 in monthly 
benefits of which I pay federal taxes on only one half of the 
$933.00 and 100% on the $292.00 of 1099-R income. By not 
working I additionally save the expense of childcare, 
transportation and insurance, together with all the other 
routine incidentals associated with leaving my home to work in 
an office environment. Under this present set of circumstances, 
I would have to secure a job that paid $35,500 per year to 
simply break even. At that rate of pay, which would require 
employment that a blind individual would have to maneuver to 
secure, I would have no extra money to save for retirement. By 
not working, the prospect of retirement becomes even dimmer 
since I am not continuing to contribute to the system which 
will eventually be charged with providing my only source of 
income. It has come to my attention that upon reaching the age 
of 65 my disability pension will be reduced from $292 to $63 
per month. When my son turns sixteen I will lose $498 per 
month. While I am bright enough to comprehend the economic 
impact of my present circumstances on my eventual retirement, 
there is simply no way in my mind to prevent the inevitable. If 
I were to take a job for the average wage of approximately 
$23,000 per year in our area, I would not only lose my monthly 
benefits, but I would further be asked to pay taxes of 100% on 
this earned income. The bottom line is at that rate I would 
once again face the foreclosure of the mortgage on my home and 
still have no free dollars to invest in the augmentation of my 
retirement income. Work at this point would force me to 
significantly decrease my monthly cash flow.
    In closing, I wish to share a bit of reality with those of 
you who enjoy the privilege of being sighted and all that goes 
with it. In addition to the inconceivable notion that you would 
no longer be able to ``see'' the beauty of all that God has 
created for our enjoyment, you would also lose the respect you 
have earned from your peers despite your accomplishments. You 
would lose the self-esteem that comes with the pride of being 
employed and rewarded for a job well done. You would lose the 
privilege of driving and subsequently the loss of your personal 
freedom to travel when and where you wish to go. And you would 
face on a daily basis the uninformed and sorely uneducated 
general public who would view you as a person who deserves 
their pity and constant assistance. If you were blind, I am 
certain that you would evaluate your situation and do as I have 
done, pick yourself up and start fighting for the truth to be 
revealed. You would realize without a doubt that the only way 
to effect change under such circumstances is to teach by your 
example, to earn respect through your accomplishments; and you 
would be forever transformed into the mind set that the 
democratic process requires your personal involvement.

Conclusion

    Therefore, I ask that you thoughtfully consider what your 
life would be like if you woke one day to find yourself in my 
moccasins. Would you view your circumstances as a really good 
reason to continue in the status quo and never consider the 
possibility of obtaining a job? Would you view the work 
disincentives imposed upon you by your government as fair and 
just? Would you be content to live in this manner when you know 
the best way to change public perceptions is by doing precisely 
what others may think is simply not possible for you to do?
    If it is your intention to provide an environment that 
fosters the pursuit of life, liberty, and happiness, then you 
have no choice than to find a way for blind persons to earn a 
comfortable way of life. Solutions must be found to make it 
feasible for us to contribute to our communities and our self-
esteem. As the population of the blind and visually impaired 
grows across our nation we must find ways to ensure that they 
are accepted as functional members of society and not simply 
brushed aside or ignored as a dirty little secret. It is 
inconceivable to me to imagine that here in the land of 
freedom, the home of the brave, we find ourselves too fearful 
of the consequences to do what we know in our hearts to be the 
right thing. If we are to tout the virtues of independence then 
we need to ensure that every citizen is afforded the 
independence necessary to succeed and prosper here and now in 
the United States. This is precisely why I traveled here today. 
I truly appreciate the opportunity to express to each of you 
why it is imperative that you increase the earnings limits of 
the blind to the extent that the blind of our nation can be 
made whole. If provided a limit of earnings that will afford me 
the opportunity to actually seek employment that would place me 
in a position of equality with the middle-class citizens who 
are considered to be ``able-bodied,'' then I promise to each of 
you I would happily welcome the chance to avail myself to being 
the responsible citizen who works hard to earn all the benefits 
and privileges associated with living in our free country. It 
has truly been an honor to address you today, and I will leave 
our Capitol now with the knowledge that you have carefully 
listened to my personal story and will seriously consider the 
impact the choices you make today will have on at least one 
blind person from the state of Florida who stood before you 
praying that you will listen to your hearts and do that which 
is only right and just. Thank you.
      

                                

    Chairman Shaw. Thank you, Ms. Gillis. Ms. Wilson.

STATEMENT OF JOANNE WILSON, DIRECTOR, LOUISIANA CENTER FOR THE 
                    BLIND, RUSTON, LOUISIANA

    Ms. Wilson. Thank you, Congressman McCrery, for your kind 
words. I want to talk to you today about fleas and about blind 
people. Scientists have taken fleas and they have put them in a 
jar and put a lid on that jar, and the fleas would try and jump 
out of the jar. And after hitting their heads on the lid 
several times, they would realize they could only jump just so 
high, right under where that lid would be.
    Now, if the scientists take the lid off the jar, the fleas 
will continue to jump just so high, just right below where that 
lid was, and never realize that if they made one more jump they 
would be set free.
    This is very much like what happens to blind people. I run 
the Louisiana Center for the Blind. I have been doing that for 
15 years now. We bring in students from all over Louisiana and 
all over the country, who say they want to go back to work, 
that they are coming there for training so they can go back to 
work. We have had 521 students now enrolled at our Center.
    I recently did statistics that said that 41 percent of 
those students came in on Social Security Disability, and out 
of that 41 percent, unfortunately, only 15 percent ultimately 
left the Social Security rolls and went back to full-time 
competitive employment. Some of the others went to work, but 
just under the earnings limit.
    Now, I thought, 15 percent, we are doing something wrong, 
until I found figures that in the general disability population 
it is less than 5 percent that ultimately leave the Social 
Security disability rolls and go back to work.
    We are thought of as one of the best agencies in this 
country for rehabilitation, but yet we are not getting to some 
of these folks. The Ticket to Work program has some good things 
in it, but it is not hitting the real problem that is faced by 
blind people. In most polls and anybody that you ask, cancer, 
AIDS and blindness are the three most dreaded things that could 
happen to you.
    The real problem with getting blind people off of Social 
Security disability is a psychological one. It is a fear of 
risk. The real problem of blindness is not the loss of 
eyesight, it is the misconceptions and stereotype notions that 
exist about blindness, and these stereotype notions exist with 
the sighted public, but they also exist with the blind. Blind 
people themselves really don't believe in what they can do. 
When they leave our center, they know what they should do, but 
they don't really know in their hearts what they could do.
    Just last Tuesday, I met with our students and I told them 
I was coming for this testimony, and I said to them, ``I want 
to speak to you, you that are getting Social Security 
Disability. Tell me how you are thinking''.
    Jack immediately piped up and said, ``Well, you know, I am 
kind of old, and I don't want to go back to work, and it is 
time for the younger folks to take my place, and I don't need 
all that pressure''. And another student said, ``Wait a minute, 
Jack, how old are you?`` And he said, ``Well, I am 40''. And 
they all started laughing, and they said, ``Jack, what is the 
real problem?'' The real problem, after we prodded a little 
bit, was Jack didn't really believe that he could go back to 
work, that he could take the risk and become competitive again.
    Brenda, one of our students, said, ``Well, it is really 
hard for me to give up the certainty of a check when I have two 
children, and rent to pay, and food to put on the table. I just 
can't take the risk when I know I am going to get probably a 
minimum wage job''.
    Janice spoke up and said, ``I can't afford to go back to 
work. By the time the taxes are taken off and the huge cost of 
transportation and accessible means of working as a blind 
person, I can't afford to go back to work. It doesn't pay for 
me to work''.
    The stories went on and on, but what is happening is that 
we are denying people that have paid into the system, that have 
paid into the system and that have talents and experiences and 
things to give back. We are denying society the opportunity for 
those talents to be utilized and for them to become taxpaying 
citizens.
    I ask for all of you--I know we have the votes, if we could 
just get it up for a vote--to help us take off the lid, take 
off the lid for blind people so we really don't have these 
psychological and emotional barriers caused by Social Security 
work incentives, and we could really get back to work. Thank 
you.
    [The prepared statement follows:]

Statement of Joanne Wilson, Director, Louisiana Center for the Blind, 
Ruston, Louisiana

    My name is Joanne Wilson. I am director of the Louisiana 
Center for the Blind in Ruston, Louisiana. My address at the 
Louisiana Center is 101 South Trenton, Ruston, Louisiana 71270. 
The telephone number at the Center is (318) 251-2891.
    I want to thank the distinguished members of this Committee 
for an opportunity to testify regarding the issue of Social 
Security earnings limitations for the blind.
    Approximately 15 years ago we opened the Louisiana Center 
for the Blind as a private, non-profit rehabilitation training 
facility for blind and visually impaired adults. With support 
from the membership of the National Federation of the Blind of 
Louisiana, we willingly undertook the imposing task of opening 
a facility that would provide training for blind and visually 
impaired individuals. Foremost in our thought was that if we 
were to ever gain the acceptance of a society which for 
centuries had regarded blind people as severely limited and 
unable to lead full lives which include productive work and 
full participation in the affairs of their communities, then we 
needed to establish ourselves within those communities as 
respectable citizens, with the same hopes and expectations as 
our sighted peers. We knew that with proper training and 
opportunity a blind person could become a contributing member 
of our complex society, but such achievement had to begin with 
instilling a positive philosophy about blindness in blind 
people themselves.
    What is of paramount importance for your deliberations 
today is understanding that for a blind person, the real 
problem of blindness is not the loss of sight, although this is 
significant. Rather, it is the attitudes which exist, both 
among the sighted public and among the blind themselves 
concerning blindness and the ability of the blind to compete 
with their sighted counterparts.
    Certainly, it is well documented that historically blind 
individuals have always been last in line when they must 
compete with the general public for services, and more often 
than not they are denied access to employment and full societal 
access. While training facilities like the Louisiana Center for 
the Blind and others across the country can address societal 
attitudes, employment is a persistent problem. Many members of 
the public have long assumed that blind people could not engage 
in productive work, at least not at a level that would allow 
them to be economically self-sufficient. To many in our 
society, a legally blind person is presumed to be unemployed, 
if not unemployable. Imagine, if you will, being a blind person 
growing up in a society that has embraced this notion 
wholeheartedly, with its formidable misconceptions about who 
you are and what you are able to do. Every fiber of your being 
would long for the opportunity to compete for a job and succeed 
or fail on your abilities--not on preconceived notions about 
your blindness.
    Emerging from a long history of dependence and lack of 
opportunity to escape from it, with its stifling of the human 
spirit and its degrading effect on self-esteem, has presented a 
tremendous challenge to individuals who are blind. They know 
that most employers can see and cannot imagine even being able 
to get to the job (let alone doing the job) without their 
sight. In this respect, blindness is unlike most other 
disabilities in that the effects of not seeing are believed to 
be all-pervasive. We as blind people have struggled mightily 
for the small advances we have made, yet clearly individuals 
who are blind are not yet realizing the ``American Dream'' even 
in the best of economic times.
    The nation's policy is to promote opportunity. In the 
Rehabilitation Act of 1973, for example, Congress defined the 
purpose and mission of the rehabilitation program as follows:

``Sec. 2. (B)(1) to empower individuals with disabilities to 
maximize employment, economic self-sufficiency, independence, 
and inclusion and integration into society. . . ``(2) to ensure 
that the Federal Government plays a leadership role in 
promoting the employment of individuals with disabilities, 
especially individuals with significant disabilities. . .''

    Inclusion of the Rehabilitation program in the Workforce 
Investment Act of 1998 reinforces the intent of Congress that 
persons with disabilities can and should participate fully in 
the American labor force. However, according to a study 
published in Americans with Disabilities: 1991-1992 U.S. Bureau 
of the Census, Current population Reports (870-33), Washington, 
DC: U.S. Government Printing Office, the employment rate among 
those with visual disabilities is approximately 26%, with the 
remaining 74% either ``out of the labor force'' or 
``unemployed.'' Since clearly Congress has provided a system to 
promote inclusion of persons with disabilities in meaningful 
employment, why then does such an alarming rate of unemployment 
among the blind persist?
    It is well documented that a major disincentive to the 
blind considering work is the loss of cash benefits under 
Social Security Disability Insurance. This program provides 
support to meet subsistence-level needs, and eligibility for 
this assistance is virtually automatic for a blind person. 
Although the benefit payments are modest compared to earnings 
from most (even entry-level) employment, the security it 
provides is highly valued. The fear of losing those benefits is 
great, due primarily to uncertainty about the impact of working 
on benefits and the belief that future assistance may not be 
available if work stops. Blind people are aware that, under the 
current limitations, one dollar over the earnings limit for the 
blind will result in complete loss of cash benefits. Think, if 
you will, about your own work here. Clearly if work defines us, 
as many contend, blind and visually impaired persons do not 
find it easy under the current limitations to resist becoming 
``underachievers'' or ``second-class'' participants in 
America's workforce.
    In my position as director of a training facility, I have 
personally counseled with hundreds of individuals who are 
convinced that they must remain dependents of, rather than 
contributors to, the system. Examples which immediately come to 
mind are two individuals who became blind in mid-career. In 
both instances, their blindness was sudden because of medical 
conditions which did not affect them in any other way-only 
their vision was affected. Both were professionals with 
established careers, who realized that in order to regain their 
confidence and possess the ability to travel and care for 
themselves independently, they needed to learn alternative 
techniques of doing so as blind persons. Incidentally, not only 
did they need to learn skills, but they also needed desperately 
to re-gain their self-esteem. After completing training, they 
fully expected to return to their respective fields, James as a 
construction engineer with 25 years' experience building major 
highways across the country and Robert as an claims adjuster 
with a national insurance corporation. However, when job 
placement efforts began near the end of their training, it 
became apparent that their respective companies were not 
interested in their knowledge and experience but rather were 
consumed with imagined barriers and false misconceptions about 
the abilities of these two formerly valued employees who were 
now blind.
    At that point they faced a dilemma: Should they return to 
work for mediocre wages which wouldn't cover their mortgages, 
or should they become dependent upon Social Security benefits, 
which would at least provide some reliable income for their 
families? Senior citizens in similar situations do not have to 
make this choice. Why then, should a blind person? Had these 
individuals been given an opportunity to work, even at modest 
wages, and to keep their earnings without loss of Social 
Security benefits, I could tell you today that they are 
contributing to and not drawing support from the system. Sadly, 
I cannot do that. They returned home with their hopes and 
careers dashed, facing uncertainty about their ability to care 
for their families.
    When I think of James and Robert, I am reminded on the 
other hand of two elderly individuals I know-both of them quite 
financially secure, who decided because of boredom to return to 
work when they were well into their 70's. An attorney and a 
rancher, respectively, they have generously endowed 
universities and institutions with their gifts, yet they still 
earn Social Security benefits, earn wages which are never 
questioned, and complain when Medicare doesn't cover the cost 
of a medical procedure. No earnings limitations are imposed on 
the elderly. The system did not encourage these two to stay 
dependent and to remain idle from fear of losing everything. 
Nor did it strip them of their dignity as it did James and 
Robert. My question then, is why earnings limitations are 
imposed on the blind. Is it because our aspirations and our 
sense of personal responsibility are those of such a relatively 
small number that they go unnoticed? If that is the case, I ask 
you to consider these two facts: Blind individuals do compose 
only a very small segment of our society. If 74% of that small 
number are either ``out of the labor force'' or ``unemployed,'' 
then the current system with its disincentives to work has 
failed.
    Removing attitudinal barriers, raising expectations on the 
part of employers and individuals who are blind, and instilling 
the work ethic in those who have experienced little opportunity 
for meaningful work-these are the needs and challenges which we 
address today. Eliminating the earnings limit for blind 
individuals will ensure that more blind Americans have the 
opportunity to participate in the workforce, express their 
strong work ethic, and exercise personal responsibility as they 
long to do. We ask that you help us achieve our goal to be 
recognized as contributing members of society and to gain 
respect for our abilities by giving them free rein to help 
build a more productive nation. Thank you.
      

                                

    Chairman Shaw. Thank you, Ms. Wilson. Dr. Cavenaugh.

  STATEMENT OF BRENDA S. CAVENAUGH, PH.D., RESEARCH DIRECTOR, 
 REHABILITATION RESEARCH AND TRAINING CENTER ON BLINDNESS AND 
            LOW VISION, MISSISSIPPI STATE UNIVERSITY

    Ms. Cavenaugh. Good morning, Mr. Chairman, Members of the 
Subcommittee. Thank you for the opportunity to testify. I have 
worked in blindness rehabilitation since 1972. Today, my 
testimony is based upon findings from research conducted at the 
Rehabilitation Research and Training Center on Blindness and 
Low Vision at Mississippi State University. The RRTC, was 
established in 1981, through the support of the National 
Institute on Disability and Rehabilitation Research. We are the 
only NIDRR-funded center studying blindness and low vision. Our 
mission is to conduct research activities focused on improving 
the employment and independent living outcomes of consumers who 
are blind.
    I would like to present findings on the costs and 
employment experiences of blind individuals. First, findings 
from an analysis of data on consumers served in the State-
Federal Vocational Rehabilitation Program, will be presented, 
followed by findings a national survey of blind consumers.
    The Rehabilitation Act of 1973, as amended, authorizes the 
allocation of federal funds on a formula basis to the states 
and territories for the administration of a vocational 
rehabilitation VR program to assist individuals with 
disabilities in preparing for and engaging in gainful 
employment. State VR agencies provide a wide variety of 
services. The following findings are based on data from the 
1998 Rehabilitation Services Administration, RSA, 911 National 
database of all clients/consumers exiting the VR program from 
the 50 states and from the District of Columbia.
    The number of persons who had been accepted for and 
received services who exited the program in 1998 was around 
360,000. Four percent of those 360,000 consumers were legally 
blind, and about 96% or 345,000 had other disabilities.
    When comparing competitive closure rates of consumers--and 
I am using RSA's definition of competitive employment which 
includes those consumers with competitive employment closures, 
self-employment closures, or business enterprise program 
closures--35 percent of blind people were closed in competitive 
employment, 60 percent of other people with other disabilities 
were closed in competitive employment.
    In comparing costs, the mean cost of services of blind 
persons with competitive employment outcomes was approximately 
$8,200. The mean cost of services for consumers with other 
disabilities was approximately around $3500. The average mean 
number of services for blind persons was approximately 6; the 
mean number of services for other persons with disabilities was 
around 4.5. The mean length of services of legally blind 
consumers was about 4 years; for people with other 
disabilities, the length of services was approximately 3 years.
    Included in my written testimony is a list of 17 services 
that people can receive through the State-Federal VR program. I 
have included the percentage of legally blind people receiving 
each service, and the percentage of people with other 
disabilities receiving each service.
    This information indicates that blind people are five times 
more likely to receive rehabilitation engineering services. 
They are three to four times more likely to receive assistive 
technology devices and assistive technology services--services 
that are critical to maintaining employment.
    To further investigate differences in cost of services, I 
categorized people with disabilities into 16 sub-groups. Again, 
the cost for legally blind people was $8200. Cost of services 
was highest for people who are deaf-blind--approximately, 
$8600. Cost of services was least expensive for people with 
nervous system disorders--approximately $2700.
    To summarize, the mean cost for serving blind people is 
double the cost for serving other persons with disabilities. In 
addition to services noted above, blind people are twice as 
likely to need adjustment training, twice as likely to need 
personal assistance, and unlike other impairment-related 
services such as occupational or physical therapy, blindness-
specific services and equipment--critical to acquiring and 
maintaining employment--are rarely, if ever, reimbursable 
through Medicare or other health plans. Additionally, these are 
generally not one-time expenses. For example, blind persons 
must purchase new--or upgrade, if it is an option--speech, 
Braille, and large-print computer access technology when new 
versions of mainstream computer operating systems and software 
are released. Orientation and mobility services may be required 
when employment settings change.
    Finally, with respect to findings from the national 
telephone survey. Legally blind persons were asked if 
specialized technology assistive technology was needed to 
perform their job effectively, eightly nine percent of the 
participants said yes. When asked if they would like a regular 
job, 92 percent of those participants who were unemployed said 
yes, they wanted a job.
    In conclusion, blind people want to work. Blind people 
require specialized skills, services, technology, and equipment 
not covered by insurance. Many blind people can pay for these 
expenses because this higher SGA level. Thank you.
    [The prepared statement follows:]

Statement of Brenda S. Cavenaugh, Ph.D., Research Director, 
Rehabilitation Research and Training Center on Blindness and Low 
Vision, Mississippi State University

    Good morning, Mr. Chairman and Members of the Subcommittee. 
Thank you for inviting me to testify on issues related to work 
incentives for blind and disabled Social Security 
beneficiaries. I have worked in vocational rehabilitation since 
1972 and am currently the Research Director at the 
Rehabilitation Research and Training Center (RRTC) on Blindness 
and Low Vision at Mississippi State University. The RRTC was 
established in October, 1981, through support from the National 
Institute on Disability and Rehabilitation Research (NIDRR) of 
the U. S. Department of Education. As the only NIDRR-funded 
RRTC studying blindness and low vision, our primary mission is 
to conduct research, training, and dissemination activities 
focused on improving the employment and independent living 
outcomes of consumers who are blind or severely visually 
impaired. Dr. J. Elton Moore serves as our Executive Director.
    Today, I will be reporting findings on the costs and 
employment experiences of individuals who are blind or severely 
visually impaired (hereafter referred to as blind persons). 
First, results of analysis of national data on consumers served 
in the state-federal vocational rehabilitation (VR) program 
will be presented. These findings indicate that although the 
substantial gainful activity (SGA) level for blind 
beneficiaries is higher than the SGA level of other disabled 
persons ($1170 vs. $700 per month), blind persons must purchase 
specialized blindness-related services and equipment which are 
not reimbursable through Medicare or other health plans. 
Further, these are critical to their achieving and sustaining 
employment. Second, preliminary results from a national survey 
on the employment status of working-age persons who are blind 
will be presented. These findings provide more detailed 
information on the relationship of work disincentives and 
employment.

Analysis of State-Federal Vocational Rehabilitation Data

    The Rehabilitation Act of 1973, as amended, authorizes the 
allocation of federal funds on a formula basis to the states 
and territories for the administration and operation of a 
vocational rehabilitation (VR) program to assist individuals 
with disabilities in preparing for and engaging in gainful 
employment. State VR agencies provide a wide range of services 
(e.g., physical restoration, counseling and guidance, 
vocational training, maintenance, job referral, job placement, 
rehabilitation engineering, assistive technology) to assist 
people with disabilities in becoming employed. VR program data 
were derived from the 1998 Rehabilitation Services 
Administration (RSA) 911 National data base. All cases exiting 
from the VR program from the 50 states and the District of 
Columbia were used in the analysis.

Consumers Exiting VR program after ``Individualized Plan for 
Employment'' Initiated (Includes both ``rehabilitated'' and 
``not rehabilitated'' closures)

Total Served.......................                         n = 359,913
Legally blind consumers............                     n = 14,732 (4%)
Consumers with other disabilities..                   n = 345,181 (96%)

Consumers Exiting VR program ``Rehabilitated'' with Competitive 
Employment Outcomes includes competitive, self-employment, or 
state-agency-managed business enterprise work statuses

Competitive Outcomes...............                         n = 212,082
Legally blind consumers............           n = 5,201 (35% of 14,732)
Consumers with other disabilities..        n = 206,881 (60% of 345,181)

Service Intensity Variables (computed only for consumers with 
competitive employment outcomes)

Mean Cost of Services..............
Legally blind consumers............                              $8,184
Consumers with other disabilities..                              $3,488

Mean Number of Services............
Legally blind consumers............                        6.0 services
Consumers with other disabilities..                        4.5 services

Mean Duration of Services..........
Legally blind consumers............                           4.0 years
Consumers with other disabilities..                           3.0 years

    The Rehabilitation Services Administration defines cost of 
services as the total amount of money spent by the State VR 
agency in providing or arranging for services on behalf of the 
consumer. Expenditures are ``life-of-the-case'' costs and do 
not refer to any particular year. In addition, the RSA requires 
the VR agency to include information on whether the client did, 
or did not, receive a specific service sometime during the VR 
process. To further explore possible reasons for differences in 
costs and numbers of services between blind consumers and those 
with other disabilities, percentages from cross-tabulations 
were computed. Results from this analysis are reported in Table 
1.

                                Table 1: Percent Receiving Services by Disability
----------------------------------------------------------------------------------------------------------------
           Types of Services                       Legally Blind                       Other Disability
----------------------------------------------------------------------------------------------------------------
Assessment............................                                 84%                                  82%
Physical Restoration..................                                 39%                                  29%
University Training...................                                 10%                                  16%
Business or Vocational Training.......                                  7%                                  14%
Adjustment Training...................                                 50%                                  20%
On-the-job Training...................                                  5%                                   7%
Miscellaneous Training................                                 24%                                  16%
Counseling and Guidance...............                                 79%                                  76%
Job Referral..........................                                 18%                                  38%
Job Placement.........................                                 15%                                  29%
Transportation........................                                 30%                                  30%
Maintenance...........................                                 14%                                  16%
Personal Assistance (includes reader).                                 12%                                   2%
Rehabilitation Engineering............                                 12%                                   2%
Assistive Technology Devices..........                                 42%                                   8%
Assistive Technology Services.........                                 45%                                  12%
Other Services........................                                 42%                                  23%
----------------------------------------------------------------------------------------------------------------

Comparisons among ``other disability'' group. To explore 
differences within the ``other disability'' group, those 
consumers with competitive sector outcomes ((n = 206,881) were 
further categorized into disability sub-groups. Sample size, 
cost of services and percent competitively closed (i.e. 
competitive, self-employed, and BE closures) are reported in 
Table 2.

                   Table 2: Disability by Cost of Services and Percent Competitive Employment
----------------------------------------------------------------------------------------------------------------
          Disabling Condition                  Mean Cost of Services                 Competitive Closure
----------------------------------------------------------------------------------------------------------------
Deaf-blind (n=166)....................                              $8,602                                  45%
Legally blind (n = 5,201).............                               8,230                                  35%
Orthopedic conditions (n = 44,229)....                               4,608                                  62%
Genitourinary system (n = 2,249)......                               4,557                                  70%
Visual impairments, but not legally                                  4,418                                  57%
 blind (n = 5,242)....................
Neoplasms (n = 846)...................                               4,404                                  65%
Traumatic brain injuries (n = 3,990)..                               4,393                                  55%
Allergic endocrine, nutritional                                      4,112                                  62%
 diseases (n = 3,557).................
Hearing impairments (n = 15,458)......                               3,761                                  72%
Speech impairments (n = 591)..........                               3,682                                  68%
Respiratory conditions (n = 787)......                               3,492                                  56%
Diseases of the blood (n = 4,524).....                               3,204                                  67%
Mental and emotional conditions (n =                                 3,155                                  56%
 85,265)..............................
Digestive system conditions (n =                                     3,111                                  83%
 3,345)...............................
Cardiac and circulatory conditions (n                                2,920                                  64%
 = 3,537).............................
Nervous system disorders (n = 23,961).                               2,688                                  63%
----------------------------------------------------------------------------------------------------------------

Conclusions

     Mean cost of VR services for legally blind 
consumers reaching competitive employment outcomes is more than 
twice the cost of services for consumers with other 
disabilities ($8,184 vs. $3,488).
     When consumers with other disabilities are grouped 
into smaller categories of disability-specific conditions, only 
deaf-blind consumers (n = 166) have a higher mean cost of VR 
services when compared with legally blind consumers $8,602 vs. 
$8,230). Consumers with orthopedic conditions have the third 
highest cost of services ($4,608).
     Legally blind consumers are more than twice as 
likely than consumers with other disabilities to receive 
adjustment training and approximately four times more likely to 
receive personal assistance (includes reader services), 
rehabilitation engineering, assistive technology devices, and 
assistive technology services. (Adjustment training includes 
training in blindness-specific skills, such as Braille, 
orientation and mobility, and activities of daily living. 
Rehabilitation technology devices and training includes 
purchase of and training to use blindness-specific technology, 
such as computer speech, Braille, and large print plus low 
vision optical and non-optical devices.)
     Unlike other impairment-related services such as 
occupational or physical therapy, blindness-specialized 
services and equipment--critical to acquiring and maintaining 
employment--are rarely, if ever, reimbursable through Medicare 
or other health plans. Additionally, they are generally not 
``one-time'' expenses. For example, blind persons must purchase 
new (or upgrade if an option) speech, Braille, and large print 
computer access technology when new versions of mainstream 
computer operating systems and software are released; 
orientation and mobility services may be required when 
employment settings change.

Factors Affecting Employment Status of Persons who are Blind: 
Preliminary Analysis of National Telephone Survey

Research Question:

    What employment-related factors have the most impact on 
employment status and occupations of working age adults with 
blindness or visual impairment?

Participants:

    Working-age adults who are legally blind (N = 279)

Sampling Frame

    National Library Service (NLS) subscribers designated as 
blind or visually impaired

Sampling Design:

    Systematic sampling with random start -every kth element in 
the total list chosen (first chosen at random). Sample size 
chosen to ensure findings are accurate within plus or minus 
five percentage points of the population parameters (95 percent 
confidence level). Sampling tolerances (intervals) range from 
3-5 points, depending upon percentage result (worst case 
scenario 50% would be 5 points; best case 10% or 90% would be 3 
points.

Selected Findings related to SSDI ``Income Cliff'':

    When asked if ``risk of losing benefits or insurance 
payments'' was a employment barrier that they had personally 
encountered in trying to find a job, 27% of participants 
answered affirmatively.
    When asked if ``risk of losing benefits or insurance 
payments'' was an important reason they were not working full-
time, 34% of participants working part-time or unemployed 
answered affirmatively.
    When asked if ``risk of losing benefits or insurance 
payments'' was an important reason they were not working full-
time, 39% of participants working part-time answered 
affirmatively.
    When asked if specialized assistive technology was needed 
to perform job effectively, 89% of participants answered 
affirmatively.
    When asked if they would like a regular job, 92% of those 
participants who were unemployed, but not currently looking for 
employment, answered affirmatively.

References

    Cavenaugh, B. S. (2000). [Analysis of Rehabilitation 
Services Administration R-911 National Data, Fiscal Year 1998]. 
Unpublished raw data.
    Cavenaugh, B. S. (2000). [Analysis of National Telephone 
Survey on the Employment Status of Blind Persons]. Unpublished 
raw data.
    The Rehabilitation Research and Training Center (RRTC) on 
Blindness and Low Vision at Mississippi State University was 
established in October, 1981, through support from the National 
Institute on Disability and Rehabilitation Research (NIDRR) of 
the U. S. Department of Education. As the nation's only RRTC 
studying blindness and low vision, our purpose is to enhance 
employment and independent living outcomes of consumers who are 
blind or severely visually impaired through the conduct of 
research, training, and dissemination activities.
      

                                

    Chairman Shaw. Thank you. Mr. Gashel.

  STATEMENT OF JAMES GASHEL, DIRECTOR, GOVERNMENTAL AFFAIRS, 
     NATIONAL FEDERATION OF THE BLIND, BALTIMORE, MARYLAND

    Mr. Gashel. Thank you, Mr. Chairman. I am appearing today 
on behalf of the National Federation of the Blind, and I 
appreciate the opportunity to testify.
    It is no secret that the NFB has sought removal of the 
earnings limit just like seniors. We hold this view because the 
work and beneficiary status of the vast majority of blind 
people is just like seniors.
    We had a policy in this country until yesterday, telling 
seniors not to work and paying them not to. Congress was right 
to end that policy. The earnings limit stifles initiative and 
kills the spirit.
    It is one thing when this happens to someone at age 65, who 
has worked a lifetime and had opportunities throughout that 
lifetime. It is a different thing all together, and it is very 
sad, when this happens to a person who is blind at age 25, told 
not to expect very much of themselves for the future, and then 
to have that confirmed by the earnings limit.
    I have witnessed this throughout my 30-year career in 
counseling blind people about going to work and helping them 
struggle with the earnings limit.
    You should see the letters they receive from Social 
Security, from Susan Daniels over here. They don't thank you 
for going back to work. What do you think it says to a person 
when you get a letter from Social Security that goes like this: 
``We are writing to give you new information about the benefits 
you receive on this record, and the rest of this letter will 
tell you how we overpaid you $45,000''--or pick some other 
number, it is usually real high--``too much in benefits, and 
how you can pay us back.''
    People are devastated by this. They are trapped in a system 
that doesn't help them go to work and doesn't really seem to 
want them to. It penalizes them if they do. Our country can do 
better. We are going to do better for seniors, and I think that 
reflects a great deal of credit on you.
    I have been around this issue for many, many years, and I 
think that it is right--no person at age 65 will ever get an 
overpayment notice like that anymore, regardless of how much 
they earn.
    I was present when Mr. Archer created the concept of the 
equivalent status through the identical earnings limit for 
seniors and the blind. He told me that he wanted to remove the 
limit all together, but he knew it wouldn't pass right then. 
His alternative was five mandated adjustments followed by 
automatic indexing applied to seniors and the blind. This did 
pass.
    With removal of the earnings limit for seniors, a choice 
was made to exclude the blind, so what should the policy be? We 
have been fighting for years just like seniors, to have 
meaningful work incentives just like seniors, so blind people 
could go to work and not have any reason not to do so just like 
seniors. Is that wrong? Was Mr. Archer wrong when he thought 
that linkage up in 1977? Why isn't it right now if it was right 
then?
    Frankly, I don't know what to say to blind people who are 
caught in the earnings limit trap. If Congress has really 
adopted a ``just say no'' stance, then I don't know how to 
answer that issue. I don't think people can accept the fact 
that it is right to pay benefits for someone who earns, let's 
say, as much as a member of Congress, over $140,000 a year, and 
then just say ``no'' to members of a group who are otherwise 
eligible, if they earn $14,000.
    On the matter of disability and blindness, I am troubled by 
the fact that disability still means the inability to work. I 
honestly don't know another definition, but I worry that no 
progress will really be made on the earnings limit as long as 
there isn't a different definition.
    With blindness, SGA is applied as a pure earnings limit, 
which could be changed without changing or redefining 
disability. I think Congress should look at doing it that way.
    Mr. Chairman, the economics of the circumstances of the 
blind--low income, intermittent employment, and lots of 
unemployment--clearly justify removing limits and providing 
resources to members of this population. Our country would be 
richly rewarded if you would use your leadership to do this.
    There will be no reward if the blind are simply held back 
and told that we have to wait again. This is not to say that 
something else should not be done apart from blindness relating 
to disability because that, too, should be done.
    On behalf of the National Federation of the Blind, I thank 
you.
    [The prepared statement follows:]

Statement of James Gashel, Director, Government Affairs, National 
Federation of the Blind, Baltimore, Maryland

    Good morning, Mr. Chairman. My name is James Gashel. I am 
the Director of Governmental Affairs for the National 
Federation of the Blind.
    The National Federation of the Blind (NFB) has a membership 
in excess of 50,000, representing all states, the District of 
Columbia, and Puerto Rico. All of our officers and the vast 
majority of our members are blind. Local chapters of the 
Federation can be found in most sizable population areas in the 
United States. In the words of our monthly publication, the 
Braille Monitor, ``We are not an organization speaking for the 
blind; we are the blind speaking for themselves.''
    This hearing is being held in the wake of legislation 
passed to remove the earnings limit altogether for people who 
reach age 65. The NFB has sought identical treatment for blind 
people. In this statement I will explain how the blind person's 
earnings limit presently works and why we think it should be 
changed.

How the Blind Person's Earnings Limit Works:

    At least two provisions of the Social Security Act work 
together to form what I have called ``the blind person's 
earnings limit.'' These are section 216(i) (in which blindness 
is defined) and the second sentence of section 223(d)(4) (which 
specifies that earnings not exceeding the exempt amount for 
age-65 retirees are not considered to be substantial gainful 
activity (SGA) for someone who is blind). This latter provision 
has been amended to exclude the changes in the exempt amount 
made in 1996 and the removal of the earnings limit altogether.
    This means that the blind person's earnings limit (or 
exempt amount--whichever term you like) is now set at $1,170.00 
per month. This is $14,040.00 annually, indexed to coincide 
with average wage growth determined from year to year. As with 
seniors, only Congress can change this limit.
    I have used the term ``earnings limit,'' because this is 
the best way to describe the situation for the blind. The 
technical term formerly used for seniors was the ``retirement 
test,'' but members of Congress and the public called it the 
earnings limit. With blindness, the technical term is the 
``substantial gainful activity test,'' but this too is just an 
earnings limit.
    SGA is an earnings limit for the blind but an entirely 
different concept when used in determining disability. An SGA 
determination in disability cases is intertwined with the 
decision as to whether or not the person is disabled. The 
person found able to perform SGA is not disabled according to 
the law.
    This is not how it works with blindness. I say this because 
of the plain language of section 216(i) of the Act:
    ``. . .the term 'disability' means (A) inability to engage 
in any substantial gainful activity by reason of any medically 
determinable physical or mental impairment which can be 
expected to result in death or has lasted or can be expected to 
last for a continuous period of not less than 12 months, or (B) 
blindness; and the term ``blindness'' means.....''
    This language is certainly not new. It has been in the law 
this way for at least 35 years. If blindness is established, 
the only remaining question is, do earnings (if any) exceed (or 
not exceed) SGA? If earnings exceed SGA, no benefit can be 
paid. Conversely, benefits are payable when earnings are below 
SGA. So--technical term or not--SGA is really an earnings limit 
imposed on the blind.

How the Earnings Limit Works as a Disincentive:

    I have already said that only Congress can change the blind 
person's earnings limit, but why do so? In my mind, the 
foremost reason is that only 26 percent of blind adults age 18 
to 65 are working to any extent at all. According to a 
November, 1999, report of the American Association of Retired 
Persons, 12 percent of persons age 65 and older work. So the 
vast majority of blind adults, 74 percent, are just like 
seniors in regard to work and beneficiary status.
    There are many reasons why so few blind people work. Lack 
of self-confidence and lack of employers willing to hire them 
are two reasons. The imposition of the earnings limit is by far 
the reason most often given, however. I say this from 30 years' 
experience in counseling blind people to go to work.
    Consider the economics in a fairly simple but typical case. 
Assume annual cash benefits of $9,000.00 or $750.00 per month. 
At this rate for a single person with no other income, the 
benefits are tax-free. Taking this into account, plus the 
expenses that also go with working (such as commuting and 
buying clothing appropriate to the workplace) $15,000.00 in 
gross pay would be needed to replace $9,000 in benefits.
    Annual pay of $15,000.00 is $7.20 an hour. At $16,000.00 or 
$7.70 an hour, the average net gain for working full-time for 
an entire year would be about $1,000.00. Earnings below 
$15,000.00 will mean a loss. Some will do this, but most won't 
because they can't afford to lose income. If the beneficiary 
has dependents, the situation is even more troublesome.
    With two dependents, the total benefits are likely to 
average $18,000.00 annually. Therefore, earnings of $15,000.00 
or $16,000.00 (just above the limit) will not replace benefits. 
Using conservative assumptions, such as taxes figured at 25 
percent of gross pay and child care for two children at $300.00 
per month, I conclude that replacement of $18,000.00 in 
benefits would require about $33,000.00 in gross pay. When 
dependents are involved, the choice to work or not to work is 
far more constrained, and the amount needed to replace 
everyone's benefit far exceeds the blind person's earnings 
limit.
    From this it is clear that a typical blind person is apt to 
face a severe income penalty with earnings at the entry level. 
Most people will not lose with gross pay above $33,000.00, but 
most blind people are not being offered that much money to 
start or return to work. So most blind people accept their 
benefits and often do intermittent work to supplement them. 
This way, with benefits of $9,000.00 and earnings of $13,000.00 
(just under the earnings limit), the beneficiary can have 
$22,000.00 and often do better financially than accepting a 
full-time entry-level job.
    This is the sad reality that most blind people face day 
after day: not getting ahead, just getting by. It would be one 
thing if employers were opening their arms to accept us, but 
that is not happening. For most blind people, just getting a 
chance to have a job is a job itself. This condition, combined 
with the earnings limit, leads to lost opportunities and lost 
potential for far too many blind people.

Creating Incentives:

    Congress is very good at using laws--especially tax laws 
and Social Security--to create incentives. There are many 
examples of subsidies paid to certain groups or industries to 
achieve desirable national goals. The removal of the earnings 
limit to subsidize working seniors' wages is a relevant 
example. In this instance, one goal is to help employers 
maintain an experienced workforce. This responds to current 
needs, but many years ago when economic and employment 
conditions were different, the earnings limit was a means of 
encouraging seniors to vacate their jobs for younger workers.
    This brings me to the earnings limit policy for the blind. 
What should the policy be? Frankly, the removal of the earnings 
limit at age 65 looks like a choice has been made to pay 
benefits to seniors who work and pay blind people on the 
condition that they don't work. Since both ``retirement age'' 
and ``blindness'' are defined--so establishing basic 
eligibility is really not the question--the policy of no limit 
for seniors compared to $14,040.00 for the blind is unjust. 
That point is not lost on blind people.
    People have asked, ``Would you really pay benefits to blind 
people who earn as much as a member of Congress?'' My answer 
would be ``yes.'' If benefits are paid to members of Congress 
(or others who earn as much as a member of Congress), then I 
would not exclude the blind. With the removal of the earnings 
limit, benefits will now be paid to thousands of seniors who 
will continue to work and earn as much as $141,300.00 and more. 
The goal achieved by this policy is valid, but continuing an 
earnings limit of $14,040.00 on work performed by the blind is 
not.

    CONCLUSION:

    Mr. Chairman, the economic circumstances of blindness--low 
incomes, intermittent work, and lots of unemployment--clearly 
justify removing limits and providing resources to members of 
this population. This is not to say that issues relating to 
disability apart from blindness don't deserve attention--they 
do. So, on behalf of the National Federation of the Blind, I 
urge you to examine the impact of the earnings limit with the 
wisdom, caring, and foresight shown in removing the limit for 
seniors. If you do that, I am confident that new opportunities 
will result from new incentives. I thank you.
      

                                

    Chairman Shaw. Thank you. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman. I would like to thank 
all four of the panelists for their testimony, it was very 
precise and very moving.
    Dr. Cavenaugh, you indicated that there was a difference in 
terms of expenses for those that are blind and other disabled, 
and you related a number of numbers. Could you perhaps--and not 
go into a lot of detail because it would probably take a long 
time--explain where the difference is and why the blind have a 
larger expense than the other disabled?
    Dr. Cavenaugh. The Rehabilitation Services Administration 
requires the state agencies to report ``yes'' or ``no'' if a 
person received a specific service during the VR process. RSA 
also requires data on total cost of services. So, we know the 
total cost of services and which services a consumer received. 
There are about 17 different types of services.
    Using cross-tabulations, percentages, frequencies, I looked 
at the types of services different disability sub-groups 
actually received. First, I compared legally blind consumers 
with all other consumers. Then I grouped consumers with other 
disabilities into 16 sub-groups. I again looked at the services 
received by consumers in these subgroups.
    I found that blind people were receiving many more of those 
services which we would expect to be more expensive. Why is it 
two times more expensive for a legally blind person to go 
through the VR system? Well, I think it is to some extent 
because of the huge cost for rehabilitation engineering. For 
example, among legally blind people, 12 percent receive 
rehabilitation engineering; in the other disability group, 
about 2 percent receive rehabilitation engineering. Forty-two 
percent of legally blind people receive assistive technology 
devices; 8 percent of other disability groups receive 
technology devices. Forty-five percent of blind people receive 
assistive technology services; 12 percent of other people do.
    So, from this data, that blind people are receiving those 
services that are more expensive and, unfortunately, these are 
services, as I earlier indicated that are necessary for finding 
employment and are also necessary for maintaining employment.
    Legally blind consumers are twice as likely to receive 
adjustment services. Adjustment services include training in 
blindness-specific alternative techniques critial to living 
independently. So, I think cost of services is higher because 
blind clients receive these services more frequently than other 
VR consumers.
    With respect to job placement services, other disability 
groups are twice as likely to receive job placement services. 
When I was a VR counselor, job placement services were provided 
by the rehabilitation counselor and were not included in cost 
of services. So, I think differences in costs can be explained 
by the types of services received.
    Mr. Matsui. Thank you, I appreciate that response. Mr. 
Gashel, how is your building coming along?
    Mr. Gashel. We are making good progress. We have raised 
about $3.5 million, but we have got to raise $18 before we--
    Mr. Matsui. You are moving along, anyway. It is coming 
along.
    Mr. Gashel. Yes, we are.
    Mr. Matsui. Congratulations.
    Mr. Gashel. Thanks for asking.
    Mr. Matsui. The unemployment rate among the blind is, what, 
75 percent?
    Mr. Gashel. Seventy-four percent.
    Mr. Matsui. I want to ask a two-part question. If you raise 
the earnings limit and eliminate it completely, do you have any 
estimates what the unemployment rate would be for the blind? 
And, secondly, if you raised it to $17,000, do you have an 
estimate or studies that would indicate what the unemployment 
rate for the blind would be? Maybe you don't.
    Mr. Gashel. I think it would be a guess, but we are talking 
about 100,000 beneficiaries who would be the target group, and 
all of them are receiving benefits now, very few of them are 
working, as we have heard today. So, what you are trying to do 
is attract as many of them as possible into the workforce.
    There are probably only about 30,000 blind people who are 
earning above the earnings limit, according to the information 
that we have assembled, so you are not going to add that many 
beneficiaries to the rolls, and it would be a great trade-off 
to attract, you know, 50,000 of these people, or even 30-40,000 
of these people into the workforce who are not now paying in.
    Now, if you figure--we could do the math sometime--but if 
you figure that those people are going to earn, say, average 
incomes of $25,000, they are going to pay taxes when they earn 
that money. Right now, they are just drawing benefits.
    So, I think this is a great way for the program--just like 
seniors--to pay for itself.
    Mr. Matsui. Thank you, all of you.
    Chairman Shaw. Mr. Collins.
    Mr. Collins. You heard Dr. Daniels talk about a 
demonstration project. My question is going to be aimed at her 
comment, and the question is, what change would be better, a 
higher SGA or no ``cliff``, and that is open to all.
    Mr. Gashel. I would like to try first. I will go for it, 
Mr. Collins. Well, probably both. I think this is really an 
analogous situation to seniors, I hope that comes through. With 
seniors, you know, there was no cliff for a long time, and even 
a 2-for-1 offset wasn't considered enough of a work incentive, 
and so then they went to a 3-for-1 offset and that wasn't 
considered enough of a work incentive, and so now it is no 
limit.
    I don't know why it would be any different for blind 
people, but some people have talked about a 2-for-1 offset. 
Well, that would be one way to look at it, or maybe a 3-for-1 
as was done for seniors.
    I certainly think that the threshold has to be higher. 
$11,000 wasn't a good enough threshold for seniors, and so now 
it is $17, and it will be nothing. So the threshold clearly has 
to be a lot higher than it is to help people get into the 
workforce. Average incomes are about $25,000, entry level 
incomes. Now, different jobs, of course, have different entry 
level incomes, but I think you have got to get above $25,000 
for an entry level job to encourage people to enter the 
workforce.
     Mr. Collins. Anyone else want to tackle that one?
    Ms. Wilson. I wanted to make a comment on that, if I could. 
In my roomful of students last Tuesday, they all unanimously 
agreed that they were afraid to go off of Social Security 
Disability because they basically do not trust the system.
    Don said, ``I would be afraid to go off of it even though 
there are some of these incentives because I don't want to face 
Mrs. King, my Social Security worker again, she was just awful, 
and I don't want to get entrenched--have to deal with that 
system anymore than I do''.
    Fifteen years ago when we started the Louisiana Center for 
the Blind, we got a Social Security demonstration grant to 
prove some of the things that I think are, again, going to be 
coming around to be proven, and some of those demonstration 
grants have been going around for 15 years that I know of 
straight up from Social Security. Nothing much is changing, I 
think, because we are missing the point. We are going all 
around it, but we are not hitting the real basics, and that is 
the emotional thing.
    I would love to see what blind people could really do and 
really work if they really had the real incentives to do it. I 
think we could change the whole way people view blindness.
    Mr. Collins. If I understood you right then, you are kind 
of from the old school--a bird in the hand is worth two in the 
bush--stay on Social Security to keep from wrestling with the 
system itself, and the fear of losing income totally. Is that 
the way I interpret it? Ms. Gillis?
    Ms. Gillis. For me, in order to replace my benefit, I would 
have to secure a job for $35,500 a year. Those jobs are few and 
far between in Martin County. The entry level jobs there start 
at $23,000 a year, and I would need to work at a $35,500 a year 
level just to break even with where I am presently at. So that, 
to me, is scary. At that level, even if I broke even, I am 
still in the position I am in now where there are no extra 
dollars to augment my eventual retirement. And the scariest 
part of this, in my mind, is when I turn the magic age of 65 
and my benefits all convert over, my benefits will be so 
reduced, my pension with the church which is $292 now will be 
reduced to $63. I don't know what Social Security will do with 
the $933 a month benefit, but I bet you it will be at least 
half of that, and that is a scary thing. And then what is my 
employment outlook when I am 65 and blind, when I get to that 
age, even though there is no limit, I will have been out of the 
workforce for almost 30 years. So that concerns me.
    Mr. Collins. Thank you very much.
    Chairman Shaw. Mr. McCrery.
    Mr. McCrery. Ms. Gillis, would you explain to us why it 
would take a $35,000 a year job to replace what you are getting 
from Social Security?
    Ms. Gillis. With the additional expenses that I incur to go 
back to work--well, first of all, the taxability of the income. 
Presently, I pay tax on one-half of the $933 a month I receive 
for myself, and pay no income tax on the $498 I receive for my 
dependent son, and I pay tax on 100 percent of the $292 of 
1099-R income on my tax return. When you factor in the 
difference of the taxability of the income, in itself, when I 
go back to work and my income is all earned income, that is all 
subject to taxes. So that is part of the problem.
    I would have additional expenses that I would need to incur 
to secure the adaptive technology, the equipment, the 
maintenance thereof, the transportation, child care, the list 
goes on and on, all the incidentals associated with leaving my 
home and going back into the workforce.
    Mr. McCrery. Anything else? You are not counting loss of 
medical benefits, are you?
    Ms. Gillis. Yes, the medical benefits, as well, Medicare. I 
am sorry.
    Mr. McCrery. But you know you would continue to receive 
Medicare for nine years after you broach the earnings limit.
    Ms. Gillis. Right, and I would have to get additional 
medical insurance as well, yes.
    Mr. McCrery. Within that nine-year period, yes, you would 
have to obtain other medical insurance, but your medical 
benefits would continue even after you lost your cash benefits 
under current law, do you know that?
    Ms. Gillis. I do now, sir. I am not an expert.
    Mr. McCrery. I thought you might have been counting that in 
your estimate, and it doesn't exactly fit as neatly as that.
    Ms. Wilson came to my office about a month ago and brought 
with her a group of about 15 blind individuals, and we talked 
for about an hour about this subject, and Ms. Wilson knows that 
I disagree with Mr. Gashel and Ms. Wilson on severing--I mean, 
on doing away with any earnings limitation for the disability 
program under Social Security. So, I am over that hurdle with 
Ms. Wilson. I haven't talked with Mr. Gashel about it.
    I really believe, in brief, that the disability program 
under Social Security is completely different from the earned 
retirement benefits under Social Security, and I really think 
it is apples and oranges.
    The incentives are the same, yes, I agree with that, and 
certainly, as Ms. Gillis has pointed out, if we keep this very 
low limit as a cliff, it serves definitely as a disincentive 
for people to work, no doubt about that. And I, and I think 
other members of this Subcommittee, would like to do something 
about that. I don't think the right thing to do, though, is 
just to say there is no earnings limit. That, as GAO testified, 
just fundamentally changes the purpose of a disability program 
under Social Security.
    For example, if you have a blind individual who makes 
$100,000 a year, it doesn't make sense for him to receive 
disability benefits from the government, from the taxpayers. 
And you say, okay, $100,000--well, $80,000--$50,000--you know, 
where do you stop? I don't know. But I do think there is a need 
for an earnings limit when somebody has demonstrated an ability 
to earn enough clearly to take care of his needs, his family's 
needs, then the taxpayers don't need to supplement that.
    But I think this issue of a cliff is something that we need 
to look at. I think that is the most detrimental part of this 
whole system. Ms. Gillis already testified, gosh, she has got 
to be very careful to not make just over that limit because, if 
she does, boom, she loses everything except her medical 
benefits.
    So, I think one of the most important things we could do, 
Mr. Chairman, is to smooth out that cliff, to provide a slope 
so that Ms. Gillis doesn't have to watch everything so closely 
for fear of losing everything. She can smoothly transition into 
that slope and not have to be so precise about counting every 
penny, and I think that would be a big help.
    I would like to raise the earnings limit and I think Dr. 
Cavenaugh has done this Subcommittee some service in pointing 
out some of the underlying rationale for the difference in 
treatment between blind disabled and nonblind disabled and, Dr. 
Cavenaugh, I appreciate your giving us those statistics which I 
think bolster the argument for separation of the two.
    So, with that, Mr. Chairman, I see my time has expired. I 
appreciate your giving me the time, and thank all the witnesses 
for your testimony.
    Chairman Shaw. Mr. Hulshof.
    Mr. Hulshof. Thank you, Mr. Chairman. Dr. Cavenaugh, in the 
interest of full disclosure, I have a degree from the 
University of Mississippi and, as you know, there is the 
intense rivalry between Ole Miss and Mississippi State. So, if 
you promise not to hold it against me, I promise not to hold it 
against you.
    Dr. Cavenaugh. You know what we do when we say the prayer 
at Mississippi State, do you know how we respond?
    Mr. Hulshof. How is that?
    Dr. Cavenaugh. Go to hell Ole Miss. We really don't mean 
it.
    Mr. Hulshof. I will resist the urge to respond in kind.
    Dr. Cavenaugh. Well, actually, we have stopped saying the 
prayer, so it doesn't happen anymore.
    Mr. McCrery. We do the same thing at LSU, for that matter, 
so, Hulshof, you are in bad company here.
    Mr. Hulshof. I feel outnumbered by other SEC teams, but I 
do want to ask you just quickly, because we are also being 
called for a vote, in looking over your study, you mention 
that, or your conclusions that the cost of VR services for 
those legally blind are more than twice that of VR services for 
people with other disabilities, and I want to ask, does that 
category of other disabilities include people that are not on 
the Disability rolls?
    Dr. Cavenaugh. Yes, it does. There are people who are 
served in the State-Federal program who are not on the 
Disability rolls.
    Mr. Hulshof. Is that a fair comparison, because wouldn't 
you expect VR costs--and you have worked in VR, as you 
mentioned--wouldn't you expect VR costs to be lower for people 
who are not disabled enough to qualify for Disability benefits?
    Dr. Cavenaugh. Absolutely.
    Mr. Hulshof. We talked about, with the previous panel, that 
the SGA limit for those who are blind is about 67 percent 
higher for those with other disabilities. I assume your 
research findings justify that disparity?
    Dr. Cavenaugh. The disparity that--I am sorry, I didn't 
hear.
    Mr. Hulshof. Does your research--do you agree that is an 
appropriate--
    Dr. Cavenaugh. What is an appropriate?
    Mr. Hulshof.--that there is a 67 percent higher SGA limit 
for the blind as opposed to those that are other individuals 
with disabilities?
    Dr. Cavenaugh. Do I agree with the higher SGA level for 
blind people?
    Mr. Hulshof. Yes, ma'am.
    Dr. Cavenaugh. The data seem to indicate yes.
    Mr. Hulshof. What about, as Dr. Daniels mentioned for us, 
that any individual who is disabled can actually earn more than 
the SGA limits and still stay eligible because they can 
subtract work expenses that are related to their disability in 
determining the earnings subject to the limit. I mean, the fact 
that we are trying to help provide a deduction or subtraction 
of work-related expenses. Including that, does that also 
continue then to justify this disparity between individuals who 
are blind and those disabled who are not blind?
    Dr. Cavenaugh. Yes, I would think so. And I think my 
reasoning is, are we talking about those work-related expenses 
through Schedule A? You are talking about the IRS deductions?
    Mr. Hulshof. Yes.
    Dr. Cavenaugh. You have to make it first, and using 
Schedule A precludes people from taking the Standard Deduction, 
so I think there continues to be real problems. In response to 
your question regarding non-recipients, I could select out 
those VR clients receiving SSI or SSDI and I compare cost of 
services for blind persons versus consumers with other 
disabilities. I would expect similiar results to those I have 
reported.
    Mr. Hulshof. Mr. Chairman, I know we have got this vote on, 
so I yield back my time.
    Chairman Shaw. Mr. Gashel, are you aware of a proposal that 
was in the President's budget to exempt the disabled employees 
and the sheltered workshops from receiving Social Security 
credits to withholding of FICA? I would like you to comment on 
that because I think it is important that everybody who is 
working continue to build up Social Security credits that will 
help them when they reach retirement.
    Mr. Gashel. Well, I agree with that, Mr. Chairman, and I 
think it is an outrageous proposal. I honestly don't know where 
it came from, but I can see some of the workshops that employ 
the disabled might want to exempt themselves from coverage 
under the--with FICA, paying into Social Security, because a 
lot of the people might be getting Supplemental Security Income 
anyway, but it is outrageous to end up denying people Social 
Security coverage.
    It is kind of like, in our case, we get paid the sub-
minimum wage in these workshops, too, which again is 
outrageous. So, I think that what we have got to do is look at 
blind and disabled people more along the lines of the way we 
look at other workers in this country, including seniors. We 
want people to work and we want them to earn as much as they 
possibly can, and we want them to earn Social Security credits. 
I think this proposal might end up having to come to this 
Subcommittee--I am glad you brought it up because I hope you 
don't approve anything like this.
    Chairman Shaw. I am also concerned about the fact that so 
many of these sheltered workshops do not pay minimum wage. It 
is something that has come up in my office in talking with some 
of the blind representatives. Chris Cox brought it up to me. I 
see she is in the audience today. She brought it up to me in 
the office sometime ago. And it is something I would like to 
look into.
    Do we have any data--and I address this to any of the 
witnesses at the table here--do we have any data as to what 
effect that would have on the employment of the blind within 
the workshops, if we were to do away with that exemption and 
provide that the workshops pay minimum wage just like everybody 
else?
    Mr. Gashel. You are going to have trouble believing this, 
but according to the people that pay the sub-minimum wages, 
there are only 150 blind people, nationwide, that are paid less 
than the minimum wage. So, really, we are talking almost 
academics here. It is close enough for government work to pay 
everybody at least the minimum wage.
    Chairman Shaw. Yes, but I think it is insulting. I think it 
is insulting.
    Mr. Gashel. It is absolutely insulting. And so the impact 
would be 150 people. The guy who runs the workshop umbrella 
called National Industries for the Blind, is paid $200,000 a 
year, which is as much as the President. And I have said, you 
know, at a salary like that, he ought to be able to figure out 
a way to bring 150 blind people up to at least the minimum 
wage.
    Chairman Shaw. I think you just figured out a way to do it.
    Mr. Gashel. I hope so.
    Chairman Shaw. Well, we do have two votes on the Floor, 
which is going to take us away, so I am going to recess until 
1:00 o'clock. It is now a quarter after 12:00. We will come 
back at 1:00 o'clock. That will give everyone a chance to take 
a little break and have lunch and be back here. This panel is 
excused, we have completed, and we are down now to the final 
panel. Thank you. And I want to thank all you witnesses. Ms. 
Gillis, I was particularly impressed with your comment that to 
walk in your shoes. I think that we should pay heed to that and 
do that.
    Ms. Gillis. Thank you.
    Chairman Shaw. Thank you for being here.
    [Recess.]
    [Questions submitted by Chairman Shaw to Ms. Cavenaugh, Mr. 
Gashel, Ms. Gillis, and Ms Wilson, and their respective 
answers, follow:]

Brenda Cavenaugh, Ph.D.
Rehabilitation Research and Training Center on Blindness and Low Vision
P.O. Box 6189
Mississippi State University, MS 39762

Dear Dr. Cavenaugh:

    Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following questions:
    1. Individuals who are disabled, including those who are blind, can 
actually earn more than the SGA limits and stay eligible for benefits. 
The reason is they can subtract work expenses related to their 
disability in determining earnings subject to the limit. (For example, 
if a person who is blind earns $1,500 per month but has $500 in work 
expenses, their SGA is $1,000--below the $1,170 limit.) Are you 
familiar with the provision? Is it being used? How many individuals who 
are blind take advantage of these deductions? Is it effective? Should 
it be changed?
    2. Your analysis of the costs of vocational rehabilitation services 
compares the costs of blind individuals with the costs of individuals 
with other disabilities. Do all of these blind individuals meet the 
definition of statutory blindness used by Social Security? Do all of 
the individuals with other disabilities have impairments that are 
severe enough to qualify for Social Security disability benefits? If 
you compared the costs of only those blind individuals who qualify for 
Social Security with those individuals with other disabilities who 
qualify for Social Security disability benefits, what would be the 
difference in these costs?
    I thank you for taking the time to answer these questions for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.
            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
House of Representatives
Washington, DC 20515

Dear Congressman Shaw:

    Thank you for the opportunity to further respond to your questions 
regarding work incentives for Social Security Disability Insurance 
(SSDI) beneficiaries who are blind.
    In response to questions regarding my analysis of the costs of 
vocational rehabilitation (VR) services:
     Legally Blind consumers are those with ``center visual 
acuity 20/200 or less in the better eye with best correction or widest 
diameter of visual field subtending an angle of no greater than 20 
degrees.'' All blind individuals used in this analysis as reported in 
my March 23, 2000 testimony meet the definition of statutory blindness 
used by Social Security.
     Although the Rehabilitation Services Administration 
database used in this analysis does not include direct data indicating 
if VR consumers have impairments severe enough to qualify for SSDI, it 
does include information indicating if individuals received SSDI at 
application, at closure, or at any time during the VR process. With the 
expectation that an analysis of this specific population of SSDI 
beneficiaries would be helpful in answering your questions, I am 
attaching findings from this analysis.
     Based on an extensive search, I have not found any 
research that has shown that costs of VR services for those who qualify 
for SSDI are significantly different from those reported in my 
testimony of March 23, 2000 or in the enclosed attachment.
    With respect to your other questions regarding work-related 
expenses:
     Although SSDI and Supplemental Security Income (SSI) 
beneficiaries can deduct Impairment Related Work Expenses (IRWEs) in 
determining earnings subject to SGA limits, an extensive review of the 
literature revealed no empirical data on the use of IRWE's by blind 
recipients. My personal experience has been that blind individuals are 
generally unaware of work-incentive provisions, such as IRWE, the Trial 
Work Period (TWP), and the Extended Period of Eligibility (EPE).
     Dr. John Hennessey, Office of Research and Statistics, 
Social Security Administration, has authored several publications 
focusing on factors (e.g., work incentives, job accommodations, VR, 
age, sex, race, and marital status) that Honorable E. Clay Shaw, Jr. 
affect the ability of SSDI recipients to sustain their work effort. In 
addition, researchers at the Rehabilitation Research and Training 
Center (RRTC) for Economic Policy for People with Disabilities, Cornell 
University, have investigated earnings and program participation rates 
of SSI recipients. You may want to contact Dr. Suzanne Bruyère, 
RRTC Director, at (607)255-7727 for information on related ongoing 
studies. My review indicated that neither of these sources reported 
findings on utilization of IRWE's across disability groups.
    Please, do not hesitate to contact me it you have further 
questions. My telephone number is 662-325-2001. I can also be contacted 
by e-mail at [email protected].
            Sincerely,
                            Brenda S. Cavenaugh, Ph.D., CRC
                                                  Research Director
      

                                

Analysis of State-Federal Vocational Rehabilitation Data

    The Rehabilitation Act of 1973, as amended, authorizes the 
allocation of federal funds on a formula basis to the states 
and territories for the administration and operation of a 
vocational rehabilitation (VR) program to assist individuals 
with disabilities in preparing for and engaging in gainful 
employment. State VR agencies provide a wide range of services 
(e.g., physical restoration, counseling and guidance, 
vocational training, maintenance, job referral, job placement, 
rehabilitation engineering, assistive technology) to assist 
people with disabilities in becoming employed. VR program data 
were derived from the 1998 Rehabilitation Services 
Administration (RSA) 911 National data base. All cases exiting 
from the VR program from the 50 states and the District of 
Columbia were used in the analysis.

Consumers Accepted for Service and Exiting VR program after 
Individualized Plan for Employment Initiated (Includes both 
``rehabilitated'' and ``not rehabilitated'' closures)

----------------------------------------------------------------------------------------------------------------
                                                   All Consumers                       SSDI Recipients*
----------------------------------------------------------------------------------------------------------------
Total Served..........................                             359,913                               53,416
Legally blind consumers...............                              14,732                                4,229
Consumers with other disabilities.....                             345,181                               49,187
----------------------------------------------------------------------------------------------------------------

Consumers Exiting VR program ``Rehabilitated'' with Competitive 
Employment Outcomes--includes competitive, self-employment, or 
state-agency-managed business enterprise (BE) work statuses

----------------------------------------------------------------------------------------------------------------
                                                   All Consumers                       SSDI Recipients
----------------------------------------------------------------------------------------------------------------
Competitive Employment Outcomes.......                             212,082                               25,123
Legally blind consumers...............                               5,201                                1,774
Consumers with other disabilities.....                             206,881                               23,349
----------------------------------------------------------------------------------------------------------------

Service Intensity Variables (computed for consumers with 
competitive employment outcomes)

----------------------------------------------------------------------------------------------------------------
                                                   All Consumers                       SSDI Recipients
----------------------------------------------------------------------------------------------------------------
Mean Cost of Services.................
Legally blind consumers...............                              $8,184                               $9,052
Consumers with other disabilities.....                              $3,486                               $4,767
Mean Number of Services...............
Legally blind consumers...............                                 6.0                                  6.7
Consumers with other disabilities.....                                 4.5                                  4.7
Mean Duration of Services (Yrs.)......
Legally blind consumers...............                                 4.0                                  3.8
Consumers with other disabilities.....                                 3.0                                  3.1
----------------------------------------------------------------------------------------------------------------

    Disability by Mean Cost of Services

----------------------------------------------------------------------------------------------------------------
                                                   All Consumers                       SSDI Recipients
----------------------------------------------------------------------------------------------------------------
Deaf-blind (n = 166)..................                              $8,602                              $10,179
Legally blind (n = 5,201).............                               8,230                                9,076
Orthopedic conditions (n = 44,229)....                               4,608                                7,212
Genitourinary system (n = 2,249)......                               4,557                                4,300
Visual impairments, not legally blind                                4,418                                6,970
 (n = 5,242)..........................
Neoplasms (n = 846)...................                               4,404                                4,278
Traumatic brain injuries (n = 3,990)..                               4,393                                5,877
Allergic endocrine, nutritional                                      4,112                                4,315
 diseases (n = 3,557).................
Hearing impairments (n = 15,458)......                               3,761                                5,216
Speech impairments (n = 591)..........                               3,682                                5,999
Respiratory conditions (n = 787)......                               3,492                                3,264
Diseases of the blood (n = 4,524).....                               3,204                                3,252
Mental and emotional conditions (n =                                 3,155                                3,833
 85,265)..............................
Digestive system conditions (n =                                     3,111                                3,483
 3,345)...............................
Cardiac and circulatory conditions (n                                2,920                                4,043
 = 3,537).............................
Nervous system disorders (n = 23,961).                               2,688                                3,933
----------------------------------------------------------------------------------------------------------------

References

    Cavenaugh, B. S. (2000). [Analysis of Rehabilitation 
Services Administration R-911 National Data, Fiscal Year 1998]. 
Unpublished raw data.
    Cavenaugh, B. S. (2000). [Analysis of National Telephone 
Survey on the Employment Status of Blind Persons]. Unpublished 
raw data.
      

                                

Mr. James Gashel
Director of Government Affairs
National Federation of the Blind
1800 Johnson Street
Baltimore, MD 21230

Dear Mr. Gashel:
    Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following question:
    Individuals who are disabled, including those who are blind, can 
actually earn more than the SGA limits and stay eligible for benefits. 
The reason is they can subtract work expenses related to their 
disability in determining earnings subject to the limit. (For example, 
if a person who is blind earns $1,500 per month but has $500 in work 
expenses, their SGA is $1,000--below the $1,170 limit.) Are you 
familiar with the provision? Is it being used? How many individuals who 
are blind take advantage of these deductions? Is it effective? Should 
it be changed?
    In your testimony, you indicate that one reason to increase the SGA 
limit is because of work-related expenses which make it less profitable 
to work. However, aren't work-related expenses excluded from the SGA 
limit?
    I thank you for taking the time to answer this question for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.
            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 18, 2000
The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Washington, D.C. 20515

    Dear Mr. Chairman:

    Thank you for your letter of April 26, 2000, including questions 
resulting from our recent hearing. I certainly appreciate you 
continuing interest in this matter as well as the opportunity to 
respond to the additional questions.
    You ask if I am aware of allowed deductions for disability-related 
work expenses, how many blind people take advantage of these 
deductions, and whether the law should be changed. To answer the last 
question first, I certainly think the law should be changed. In the 
rest of this letter I will explain why.
    According to the Social Security Administration, 120,000 blind 
persons receive disability insurance benefits. I saw an official 
estimate several years ago that about eleven percent of beneficiaries 
who are blind have earnings. This means that approximately 13,200 blind 
people work while continuing to receive benefits. Based on my 
experience, I would estimate that about 40 percent, or 5,300, claim 
impairment-related work expenses.
    This means that 89 percent of blind beneficiaries don't work. Of 
those who do, the majority still don't claim impairment-related work 
expenses. Therefore, this is not a significant work incentive. At best, 
it only serves to compensate a few people for some of their work-
related costs.
    For the blind, I think there are several reasons why this deduction 
is not effective as a work incentive. Most work expenses cannot be 
counted. For example, the cost of transportation to and work does not 
count, since the Social Security Administration does not consider 
taking the public bust to be blindness-related. Costs that may relate 
to impairments, other than blindness, don't count if eligibility is 
based on blindness. Costs that are paid by an employer don't count 
either. So, the result is that most work-related expenses really don't 
count.
    Also, the application of this deduction is very discretionary with 
the Social Security Administration. Therefore, beneficiaries are left 
with considerable uncertainly as to whether a particular deduction will 
be allowed or disallowed. No process for reliable and consistent 
advance determination exists.
    Work incentives are only effective if they as seen as clearly 
addressing and favorably resolving perceived penalties. It is a 
fundamental principle that beneficiaries will not use what they cannot 
understand or do not trust. This-in addition to the narrow scope of the 
allowed deduction itself-is the primary reason why only a small 
minority of blind beneficiaries claim deduction for impairment-related 
work expenses.
    I believe these comments provide answers to you questions about 
impairment-related work expenses, although no necessarily in the order 
of the questions themselves. The following comments will address you 
final question, which is: ``Aren't work-related expenses excluded from 
the SGA limit?'' The answer is ``no.'' Only impairment-related work 
work expenses are excluded.
    In one of her responses to a question during the hearing, Deputy 
Commissioner Susan Daniels said that all ordinary work expenses can be 
deducted from gross earnings for blind people. However, Dr. Daniels 
either misspoke or was confused. In either case her information was 
factually incorrect. This demonstrates the problem. If officials of the 
Social Security Administration cannot accurately explain the deductions 
that all allowed and not allowed, how can claimants be expected to know 
where they stand?
    This is really the underlying problem which why work incentives are 
not used. They are just too complex for beneficiaries or their 
advocates to understand and for Social Security personnel to 
administer. As long as there are penalties to working and there is no 
certainty as to whether they will or will not be applied, beneficiaries 
will choose security over work.
    I hope this information will be useful to you in your further 
deliberations on this issue. Please not that a letter (copy attached) 
which I sent to you after the hearing provides further information to 
consider. Essentially this letter explains that extra expenses were not 
used to justify the higher SGA level for the blind. In view of your 
questions, I though it might be helpful to include this explanation 
with this response.

            Very truly yours,
                                               James Gashel
                                   Director of Governmental Affairs
                                   NATIONAL FEDERATION OF THE BLIND

JG/mrb
Attachments
      

                                

                                                     March 27, 2000
The Honorable E. Clay Shaw, Chairman
Subcommittee on Social Security
Committee on Ways and Means
House of Representative
Washington, D.C. 20515

    Dear Mr. Chairman:

    I am writing to provide additional information for the Subcommittee 
in light of testimony given at the March 23, 2000, hearing on work 
incentives for blind and disabled persons.
    (1) There appears to be an assumption that the blind SGA law 
enacted in 1977, was based anticipated higher costs resulting from 
blindness. This is an important issue. Extra costs were not the basis 
for the higher SGA. I know this. I was present when Mr. Archer first 
expressed the idea that the earnings exemption threshold should be the 
same for the blind as it was for seniors, and I heard every word he 
said to explain this position.
    The blind SGA law was an Archer amendment offered in conference in 
lieu of a Senate amendment which called for a complete removal of the 
earnings limit for the blind. The legislative history on this amendment 
consists solely of the discussion which occurred among the conferees 
who were meeting to reconcile the differences in the Senate- and House-
passed versions of the 1977 Social Security financing bill.
    Mr Archer propounded the provision which became law when the House 
confesses refused to go along with the Senate position. He was asked 
directly for the rationale of treating blind people differently from 
persons with other disabilities. His explanation did not include extra 
costs as the basis. He relied instead on the fact that blindness has 
its own definition apart from disability.
    Mr. Archer said that determining the inability to work was not at 
issue in applying the definition of blindness. As he explained it, he 
viewed the legal status of the blind as similar to reaching age-65 in 
that both conditions are clearly defined. He contrasted this with 
disability and explained that the inability to perform SGA was at the 
heart of the definition, unlike blindness.
    I was presented in Mr. Archer's office in January, 1995, when the 
subject of blindness, disability, and the earnings limit again arose. 
Valerie Nixon of the Subcommittee staff was also present. When Ms Nixon 
presented the view that blindness and disability are essentially 
equivalent, Mr. Archer returned to the same explanation he gave in 
1977--that blindness is defined apart form disability, and the ability 
to work is not at issue.
    I am not suggesting that Mr. Archer currently believes in removing 
the earnings limit for the blind. Apparently he does not, even though 
he expressed the desire to do so in 1977. My point is that Mr. Archer's 
reasoning for the blind SGA law had nothing to do with an excess cost 
justification. It was solely based on the view that--with blindness 
being defined--the payment or denial of benefits is really a pure 
earnings limit question.
    The GAO questions the extra cost justification, but extra costs 
were not the justification. The assumption that they were seems to come 
from statements made by Senators on the floor when the amendment to 
remove the earnings limit for the blind was passed. I acknowledged that 
Senators may have attempted to cite extra costs, but their position did 
not prevail in the end. Mr. Archer's position that blindness and 
retirement age are defined, and an identical exemption of earnings 
would be appropriate, did prevail. This is an important distinction to 
make in giving further consideration to the blind person's earnings 
limit.
    (2) The GAO has failed to acknowledge that major costs relating to 
disability, such as supported employment and extra medical expenses, 
are often covered by federal or state programs. The record should be 
clear on this in the interest of accuracy, even though ``whose costs 
are higher'' was really not Mr. Archer's rationale in the first place.
    (3) Dr. Daniels testified that expense deductions used to reduce 
gross earnings and determine SGA are different for the blind as 
compared to the disabled. She said that all reasonable work expenses 
can be deducted for the blind and only impairment-related work expenses 
can be deducted for the disabled.
    This statement is incorrect. The work expense deducted for the 
blind and disabled is identical in the Disability Insurance program. 
Only impairment-related work expenses (more common for disability than 
for blindness) can be deducted. There is a difference in the deduction 
of expenses in the SSI, title XVI program, but that would not be 
relevant to SGA evaluation under title II.
    (4) Concern was expressed that raising or eliminating the earnings 
limit altogether would change the nature of the Disability Insurance 
program. There is no question that the program would be changed, but 
the change would be essentially the same as removing the earnings limit 
at retirement age. With the removal of the earnings limit at age 65, 
the original purpose of the retirement program has now been changed. 
Before this change (and particularly before other changes made more 
gradually over the years), benefits were paid if a person actually 
retired-that is, stopped working.
    The earnings limit was called the ``retirement test.'' Anyone who 
continued to work beyond certain limits applied to earnings and amount 
of services performed was not ``retired'' and not eligible for 
benefits. The purpose of Social Security was partially to replace 
earnings lost due to retirement.
    The concept has been changed altogether in the current program with 
no earnings limit. Benefits are not paid to anyone who reaches 
retirement age, regardless of whether or not the person retires. The 
same thing could be done in the case of blindness, since blindness is 
already defined as an eligibility condition. It is only the earnings 
limit that prevents actual payment of cash benefits and results in a 
severe work disincentive.
    Thank you for the opportunity to present this additional 
information. The NFB is anxious to assist you on legislation to reduce 
the disincentive of the earnings limit.

            Very truly yours,
                                               James Gashel
                                   Director of Governmental Affairs
                                   NATIONAL FEDERATION OF THE BLIND
      

                                

                                                     April 26, 2000
Ms. Brenda Gillis
c/o Kristen Cox
National Federation of the Blind
1800 Johnson Street
Baltimore, MD 21230

    Dear Ms. Gillis:

    Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following questions:
    1. In your opinion, what is the role and purpose of the Disability 
Insurance program? Do you believe it is successful in achieving its 
purpose? What changes would you make?
    2.Individuals who are disabled, including those who are blind, can 
actually earn more than the SGA limits and stay eligible for benefits. 
The reason is they can subtract work expenses related to their 
disability in determining earnings subject to the limit. (For example, 
if a person who is blind earns $1,500 per month but has $500 in work 
expenses, their SGA is $1,000--below the $1,170 limit.) Are you 
familiar with the provision? Is it being used? How many individuals who 
are blind take advantage of these deductions? Is it effective? Should 
it be changed?
    I thank you for taking the time to answer these questions for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.

            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 17, 2000
The Honorable E. Clay Shaw
Committee on ways and Means
United States House of Representatives
Washington, DC 20515
RE: Re: SSDI Program Inquiry

    Dear Congressman Shaw:

    In the words of Social Security's own publication, ``Understanding 
the Benefits,'' the agency states, ``. . .the disability is one of the 
most complicated of all Social Security programs.'' We can certainly 
agree on this point. Throughout this publication an SSDI recipient is 
instructed to request publication after publication from their local 
office for additional information. However, the ``bible'' for disabled 
persons who wish to work is publication 05-10095, ``Working While 
Disabled . . . How We Can Help.'' The best part is that it only takes 
several months, countless phone calls and four to six weeks for mailing 
to obtain this ``additional information,'' only to discover that if you 
are disabled due to blindness you require an additional booklet. These 
are the moccasins I told you about on March 23, 2000.
    You have asked in your letter for me to tell you if I understand 
the purpose of the SSDI program and if I believe it is presently 
meeting its intended purpose. It is my opinion that the ultimate 
purpose is to provide financial security for individuals faced with 
life changing circumstances who are looking for a hand up, not a hand 
out. However, because of the reasons I have outlined below I do not 
believe the program is meeting it's intended purpose. Allow me to ask 
you to once again place yourself in my moccasins. Unlike the SSI 
program, SSDI is an insurance program for which I am eligible because I 
had worked in the past, paid into the system, and have qualified to 
have my contributions repaid to me in an amount determined by the 
credits earned. SSDI is not a gift of the Federal Government bestowed 
upon a disabled person because you want to help out; it is something I 
have earned.
    Social Security representatives at a local level have demonstrated, 
in my opinion, that they know less about this program and how it 
pertains to blind workers than do I, the lay person. As a matter of 
fact, when I first applied for benefits they were denied because SSA 
failed to read the entire definition of ``legal blindness'' and this 
oversight delayed the start of my benefits by more than three months. 
Furthermore, I feel that our panel efficiently demonstrated to the sub-
committee that blindness in and of itself is a unique condition that is 
easily defined.
    When I was declared legally blind and began to receive my benefits, 
I was finally in a position where I could learn the new skills required 
to re-enter the workplace without fear of financial hardship. The first 
step was to obtain these new skills and the adaptive equipment and 
software that would make my ``rehabilitation'' possible. The Division 
of Blind Services (DBS), the Florida state agency in place to assist 
blind persons to this end, was my sole source of information and 
assistance. Because I desired to operate my own business, DBS was able 
to provide me with the adaptive technologies I would require to achieve 
this goal. Once I demonstrated that I was earning money, my case was 
closed and I was left to my own devices to become self-sufficient. 
After doing a little homework, I learned about earnings limits, 
reporting requirements and how they would affect my benefits. One of 
the requirements is to report to SSA my earnings during the ``trial 
work period.'' At the end of the first month I called the local Social 
Security office and no one seemed to know what it was I was attempting 
to do nor did they seem to have a clue as to what form should be 
utilized. I was told they would make a note of my comments and there 
was no need for me to contact them again citing that the forms I needed 
would be sent to me in the mail. When my first year of operation had 
concluded and still no forms had arrived, I contacted Social Security 
again to report my work activity. Again I was simply told they would 
make a note in my file and they refused my offer to fax over my balance 
sheet and profit & loss statement for the year. This did not agree with 
what I had read in the SSA publication. Not knowing where to turn (if 
the supervisor was instructing me in this manner) I determined to 
follow the local office's instructions. This situation has not changed 
at any point during the past five years my business has been in 
operation. At this point I have assumed that when SSA finally gets 
around to reviewing my status in seven years, I will at that time be 
expected to produce my shoebox full of receipts and paperwork. 
Therefore, I look at the whole program and its requirements as being 
far too burdensome for the beneficiary. There is no systematic and easy 
method to report qualifying deductions, changes in income, and 
impairment related work expenses.
    The reality for most blind individuals is that they will be worse 
off financially by working as compared to receiving SSDI benefits. The 
financial loss creates a persuasive work disincentive. Let's say for 
the purpose of discussion that instead of operating my own business, I 
had opted to go to work for ABC Distributors making $24,000 per year. 
The Division of Blind Services would provide to me the adaptive 
technology I required, supply a personal employment consultant to 
integrate the adaptive technology into my work situation and coach me 
on how to improve my productivity. The agency then closes my case and 
deems me rehabilitated. However, the time and energy that has gone into 
securing my employment, (paid for by the tax payers) it is likely that 
I would be worse off financially. This is true because the minute I 
earn over $1,170 per month gross I will lose all of my SSDI benefits. 
Not only do I lose my benefits, but also I now will incur additional 
expenses such as childcare and transportation specifically related to 
my employment.
    Furthermore, by working at ABC Distributors 100% of my income would 
be taxable. Using a conservative tax rate of 25%, my net monthly income 
would be approximately $1,500 per month. My SSDI benefits totaled 
$1,715 per month. As you can see, I would net nearly 200 dollars less 
by working than staying at home and collecting benefits. This is true 
without considering the negative impact that work related expenses 
would have on my net earnings (not to be confused with impairment 
related work expenses). Let me also add here that it was pointed out to 
me that the costs associated with medical insurance should not be part 
of this equation as Medicare would still be available for nine years 
after benefits are discontinued. What the Congressman failed to point 
out is that an employed individual in this situation would have to pay 
a premium for those benefits. So while they may be an option, there is 
a definite cost associated to it. To complicate things further a blind 
worker still endures lack of ``job security'' in the workplace. But 
still we are grateful to have our jobs.
    Now three years down the road the ABC Distributors Company decided 
to change accounting software. I come to work one day to discover that 
the screen reading software will not work with the new accounting 
package and a major incompatibility has cropped up overnight. This is 
not an uncommon scenario. I call the screen reader software 
manufacturer and they send someone out to see if their product can be 
adapted to function properly. In the best case I find myself unemployed 
for two or three weeks while the problem is resolved and I have a 
receipt of a hefty bill for their ``on site'' services. In the worst 
case, a solution cannot be found and I am now on the unemployment line 
again with that hefty bill still in hand. Under this latter situation, 
I am by myself reapplying for SSDI benefits and the process would start 
over again. A vicious cycle, wouldn't you agree?
    As to your second question about ``impairment related work 
expenses'' and whether I believe that blind persons take advantage of 
them. Well, in my opinion based on my interpretation of the ``rules'' 
in this game, I truly believe that Ms. Daniels should read some of her 
Administration's publications and clear things up in her own mind 
before making blanket statements like those she made on March 23, 2000. 
It is my opinion that Ms. Daniels, like many of the SSA employees, do 
not fully understand the differences between the SSI and SSDI programs 
offered to disabled persons. While many of the expenses she referred to 
are ``deductible'' from the SGA under the SSI program, those same 
deductions do not always pass the test for SSDI. As I understand it, 
one can only deduct impairment related work expenses. If Mrs. Daniels 
does not fully understand work incentive under the SSDI program, you 
can imagine the confusion that exists among beneficiaries, like myself. 
For blind individuals, there are so few impairment related work 
expenses that one can legitimately deduct that they do not 
significantly impact one's income. This may be a different scenario for 
people who need full time attendant care or have other substantial 
costs related to work and impairment. As I mentioned above there 
doesn't seem to be an adequate way for the SSDI recipient to report 
them even if they do exist. Do blind persons take advantage of the 
``work incentive,'' as you like to call it? Well, the best answer I can 
give you is we sure try like hell.
    The confusing and abundant policies surrounding SSDI often result 
in beneficiaries fearing the system itself. Blind people know that it 
is not a matter of ``if'' SSA will send a letter outlining how we can 
repay what they believe to be an ``overpayment'' of benefits--it's a 
matter of ``when'' we will receive it. And, let me assure you that if 
you opened your mailbox to find that you owe the federal government 
tens of thousands of dollars, you would carefully consider if the 
personal rewards and satisfaction you get from being employed is worth 
the financial risk. In fact, I have heard from many of my blind friends 
that even though they write and call SSA over and over to discontinue 
benefits, should they land a really good job, the checks keep coming 
month after month until that one day when the strong arm of SSA marches 
in to collect it all back.
    In closing, think about your many blessings. You are sighted, able 
bodied and have a good job. Your life is not filled daily with the 
challenges of living with blindness and the stereotypes associated with 
your ``condition'' that you would experience each day you ventured out 
into the general public. You enjoy the privilege of driving where and 
when you want. You open your mailbox and go inside to read it, tossing 
the junk out without even opening the envelope. There is no need for 
you to invest thousands of dollars and countless hours learning new 
skills simply to find the important items or wait until Saturday when 
your neighbor has time to come over and read it all to you. What needs 
to be done with SSDI and what it will cost, I leave to you the expert. 
But I would make these two suggestions. First, create a system in which 
blind beneficiaries are not worse off financially for working. This 
primarily could be done by increasing the earnings limit to such an 
extent that you demonstrate a genuine effort to afford the blind 
community with a hand up not a hand out. Second, the SSDI system must 
be simple and easy for the lay person to understand. I ask that you 
stop the vicious circle of revolving through an endless stream of 
employed, unemployed, in this agency and then out to another. The blind 
community needs to have the opportunity to show the world blindness is 
not something to be feared and that it ultimately, in this day and age, 
has little impact on our ability to be productive and responsible 
citizens. There is far too much to do in this country to ``Change What 
it Means to be Blind'' and worrying about our financial security should 
not be one of the battles we must fight. I sincerely hope we can count 
on you to seek an appropriate solution and provide the blind citizens 
of our Nation a real incentive to work.

            Faithfully,
                                          Brenda-Ann Gillis
                                                   Stuart, FL 34997
      

                                

                                                     April 26, 2000
Ms. Joanne Wilson
Director
Louisiana Center for the Blind
101 South Trenton St.
Ruston, LA 71270

    Dear Ms. Wilson:

     Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following questions:
    1. Individuals who are disabled, including those who are blind, can 
actually earn more than the SGA limits and stay eligible for benefits. 
The reason is they can subtract work expenses related to their 
disability in determining earnings subject to the limit. (For example, 
if a person who is blind earns $1,500 per month but has $500 in work 
expenses, their SGA is $1,000--below the $1,170 limit.) Are you 
familiar with the provision? Is it being used? How many individuals who 
are blind take advantage of these deductions? Is it effective? Should 
it be changed?
    2. In your testimony, you ask why should a person who is blind have 
to make the choice between work or becoming dependent on Social 
Security benefits. You add that had these individuals been given an 
opportunity to work, even at modest wages, and to keep their earnings 
without loss of benefits, they would be contributing to and not drawing 
support from the system. Are you saying that individuals should be 
allowed to work and earn as much as they want, and still draw full 
benefits for a certain time limit? Or are you saying there should be no 
time limit, but individuals will choose to leave the rolls at some 
point?
    I thank you for taking the time to answer these questions for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.

            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 18, 2000
The Honorable E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
Committee on Ways and Means
United States House of Representatives
Washington, D.C. 20515

    Dear Chairman Shaw:

    Thank you for your letter of April 26, 2000, concerning work 
efforts of blind persons in the Social Security Disability Insurance 
program. The information below is provided in response to your specific 
questions:
    1. You describe the policy of deducting disability-related work 
expenses and ask several questions. I am, of course, familiar with this 
policy. While the example you provide is plausible, it is far from 
typical for blind persons. This is because the deduction is limited to 
``impairment-related work expenses,'' excluding most costs that blind 
people will pay when they work. For example, transportation to and from 
work is often not deductible for blind persons because a specialized, 
disability-related service is not needed.
    I don't have access to statistics. However, I doubt that this 
deduction is used very much. I say this because the ``if's,'' 
``and's,'' and ``but's,'' of the deduction are far too complex for most 
people to understand or apply. When a person could be working with 
gross earnings marginally above the SGA limit, there is usually a fear 
of taking a chance. Beneficiaries have good reasons for not relying 
upon what someone in the Social Security office might tell them. 
Therefore, they have no way of knowing whether or not a particular 
work-related expense deduction will be allowed or counted against them. 
For this reason the law should be changed. If deductions are part of 
the law, they should be straightforward, easy to understand, and not 
discretionary with the Social Security Administration.
    2. You ask if blind persons should be able to work and retain 
benefits under a time limit, or whether they will leave the rolls on 
their own without a time limit. My answer is that work should not be 
penalized at any point. In other words, a policy that encourages work 
should not be withdrawn or time-limited. If a beneficiary works, the 
contributions made to the system are savings to the trust funds. The 
continued payment of benefits for people who work has been adopted as a 
policy for seniors. Frankly, I don't think the policy should really be 
any different for the blind. If Congress does adopt a different policy, 
however, it should clearly include a guarantee of not losing by 
working.
    I hope this information helps. Please contact me if I can respond 
to any other questions.

            Sincerely,
                                    Joanne Wilson, Director
                               Louisiana Center for the Blind, Inc.
      

                                

    Chairman Shaw. This will be our final panel of the day. We 
have David Gallagher, Social Security Beneficiary, from 
Eastpointe, Michigan; William VanOoteghem, Father of Social 
Security Beneficiary, from Essexville, Michigan, on behalf of 
The Arc of the United States, and he is accompanied by Wendy 
VanOoteghem, who is a Social Security Beneficiary. We have Dr. 
Pamela Hanes, Associate Professor, Public Health and Preventive 
Medicine, Oregon Health Sciences University, and Tony Young, 
who is Co-Chair, Social Security Task Force, Consortium for 
Citizens with Disabilities.
    As with the other witnesses, we have your full statements 
which will be placed in the record, and we would invite you to 
proceed and summarize as you see fit. Mr. Gallagher.

 STATEMENT OF DAVID E. GALLAGHER, SOCIAL SECURITY BENEFICIARY, 
   AND CONSULTANT, LIFE IN TIME CONSULTATION SERVICES, INC., 
                      EASTPOINTE, MICHIGAN

    Mr. Gallagher. Thank you. Mr. Chairman and Members of the 
Subcommittee, thank you for the opportunity to share my 
testimony. This testimony is not just about me, but it is about 
many people who are consumers of mental health services.
    I was diagnosed as having manic depressive disorder in 
February 1978. I have been hospitalized over 20 times since 
that time. I have a Master's Degree in social work from Wayne 
State University in Michigan, and I am currently working as a 
peer counselor at Northeast Drop-In Center, a place for mental 
health consumers to meet and receive services.
    I am currently on Social Security Disability Insurance and 
Medicare, but I also pay for Blue Cross/Blue Shield 
Supplemental to pay for the things that Medicare does not pay 
for. The cost of mental illness is staggering.
    My medications alone cost over $1,000 a month for the 
psychotropic medications, and another $49 a month for high 
blood pressure medication. These costs are pretty typical for a 
person with severe mental illness. I could not work without 
these medications. In addition, I have chronic renal failure, 
chronic bronchitis, I have had lymph nodes removed from my 
larynx twice, I have had a history of seizure disorder, I have 
had two mini-strokes, I am in need of extensive dental work, I 
have glaucoma which affects my night vision.
    Although I have worked from the time I was 15, because of 
my mental illness I have not been able to work continuously at 
full-time employment. In spite of my illness, I have had 
periods where I have worked years at a time, but not always at 
the same job. In between, I have been hospitalized because of 
my illness. My current job as peer counselor is my longest 
history of employment, but currently it is only part-time. 
However, I could work more if I knew my benefits would not end 
right away, and I could work at an income level above poverty 
with full health benefits.
    To be able to work full-time, I need full Blue Cross/Blue 
Shield insurance. Managed care coverage is not adequate due to 
the cost of medications and the need for mental health services 
both of which are costly and extremely limited by almost all 
health plans. Most importantly, medications are not covered by 
Medicare or my Blue Cross/Blue Shield Supplemental insurance. 
Another factor is because of our pre-existing conditions, most 
health insurance providers will not extend us coverage.
    Consequently, due to the lack of parity, we are forced into 
continual dependency on Disability rolls. A key point I need to 
stress is that I was taken off Social Security Disability 
benefits after being on Disability for three years because 
Social Security said I was gainfully employed. I was making 
just $560 a month as a direct care staff person. This is not 
gainful employment for a person who has a thousand dollar 
prescription drug cost that no health plan pays for. Worse, 
because I am currently paying back Social Security Disability 
benefits because of the cost of my medication and because of 
the cost of my medication I have to continue to be on Social 
Security Disability. I am currently paying $100 a month to 
Social Security Administration because they said I was overpaid 
back when I was making $560 a month. I reported my earnings to 
Social Security Administration, so I don't know why I have an 
overpayment, but Social Security says I do.
    These two issues, the restrictions on my earnings that keep 
a person from earning above what they need to make in order to 
live and the fact that consumers always feel that Social 
Security is out to get them when we try to do work is enough to 
keep people from doing the best they can do.
    I do want to work, and so do many mental health consumers, 
but we are unable to work above the poverty level without 
losing our insurance benefits, then we have little choice but 
to stay on the rolls. I hope, and all consumers hope, that 
Congress fixes this program.
    Honorable Chairperson, thank you for allowing me to speak. 
Have a wonderful day.
    [The prepared statement and attachment follow:]

Statement of David E. Gallagher, Social Security Beneficiary, and 
Consultant Life in Time Consultation Services, Inc., Eastpointe, 
Michigan (Social Security Beneficiary)

    Thank you for the opportunity to allow me to share my 
story. This testimony is not just about me, but it's about many 
people who are consumers of mental health services. I started 
out my journey with mental health when I was diagnosed as 
having manic-depression in February 1978. I have been 
hospitalized over twenty times since that time. My last 
hospitalization was in 1995. I spent over 13 months in Clinton 
Valley Center, a state hospital in Michigan. I was put in 
Clinton Valley when my Blue Cross/Blue Shield ran out. My last 
hospitalization was due to the fact that I had a blood clot in 
my leg and I had to have a DVT. Also, I had neuroleptic 
malignant syndrome, which caused my liver functions to fail and 
my kidneys to go toxic. I was pronounced dead twice. I am 
fortunate to be alive.
    I have a family history of mental illness. My parents dealt 
with the suicide of my maternal grandfather when I was an 
infant. They were raised with a strong work ethic, they were a 
byproduct of an agrarian agricultural life style and then 
thrust into an industrial revolution. My father raised us as 
practicing Roman Catholics. My parents' struggle to give their 
three boys the best material things in life robbed them of 
their serenity and ultimately produced a family of 
overachievers. Throughout their heartache and pain they have 
tried to understand and cope to the best of their ability. And 
I love them for that.
    By the time I graduated from high school, I was searching 
and seeking hope. My life had no plan. I wanted to marry my 
first love, but I was being prompted to ``go to college and 
make something of myself.'' So off I went to Michigan State 
University with absolutely no idea what the college experience 
was all about. I had a three-hour orientation, and I was left 
to figure out the rest. Being alone with complete freedom, 
sometimes one makes bad choices. At the end of the year I was 
on social probation, academic probation, and was asked to leave 
the University. I left Michigan State University with a 1.9 
grade point average.
    That summer I worked for Ford Motor Company, a lifestyle I 
did not enjoy, so I enrolled in Eastern Michigan University. 
Again, I had a three-hour orientation and was off to school. I 
knew that I liked money so I thought I'd take business 
administration. I joined a social fraternity and soon I was 
active in everything. I was hypermanic, enjoying the attention, 
the prestige. I was out of balance. By the end of 1977 I was 
like a runaway locomotive. My grade point average at Eastern 
dropped to a 2.39. My need to be important and accepted by 
others drove a wedge between my girlfriend. Other people close 
to me were fearful of me.
    There were many precipitating psychosocial stressors 
leading to my first hospitalization, in February 1978. I lost 
my part-time job, my funding sources dried up, my finals went 
poorly, and my parents decided that this would be an opportune 
time to practice tough love, which is a good concept when 
alternate supports are in place. I went to unemployment, I was 
turned down. I went to social services, I was turned down. I 
was physically, emotionally, socially, and spiritually 
bankrupt. And, in psychosis, I collapsed emotionally
    From 1978 to 1980, I worked part-time at Kroger's and then 
I worked in the field of collections at a bank. I struggled to 
get back to school. I was fortunate that in 1980, Vocational 
Rehabilitations offered to sponsor me to go back to school if I 
could complete two semesters at Schoolcraft Community College, 
then they would re-evaluate the possibility of me finishing up 
my Bachelor's in Business Administration Degree. I was doing 
well; I had a good support system. I felt so good that I 
decided, against medical advice, that I did not need my Lithium 
or other neuroleptics. Within three months of discontinuation 
of my medication, I was hospitalized in a state institution for 
one of my longest periods ever. The years 1980 through 1985 
involved a rapid succession of hospitalizations. I was put on 
Social Security Disability for approximately three years. I 
worked part-time at a Clark Gas station. When I felt strong 
enough, I worked in a flower delivery business full-time. Then 
Social Security Disability was discontinued.
    In 1985 I started to play guitar at a mission in Detroit. 
Working with individuals who were homeless, I decided to be an 
advocate by becoming a social worker. The people I met that 
year had touched my heart. I formulated a plan, and started the 
process of getting admitted to Wayne State University School of 
Social Work. I filed for financial aid and applied for 
guaranteed student loans. In my personal statement to Wayne 
State's University School of Social Work, I stated the reason 
for my desire to become a social worker was that I am a 
consumer and I wanted to help other consumers. I had two 
entrance interviews for admission to the Bachelor of Social 
Work program. I felt discriminated against in the verbal 
questions asked of me. I really wanted to be a social worker, 
so I accepted the situation and the decision made. I was to go 
through the College of Life Long Learning process of admission, 
and take the Introduction to Social Work class as well as 
getting a recommendation from the professor. I took the class 
and received a 4.0 grade point average and the instructor 
sponsored my entrance into the program.
    The university experience can be frustrating to the average 
person, let alone to a person who is perceived as different. I 
found in my personal situation that when I was open about my 
emotional recovery, many persons in academia were guarded, 
apprehensive, and at times obtrusive when it came to evaluating 
my ability to function as a student. It may be noted that 
during 1985 to 1990, when I attended Wayne State University, I 
was completely medically stabilized; I was not hospitalized 
during that period. I did find some supportive faculty at 
Wayne. One professor taught me the prevention model of social 
work. His teachings were in part responsible for the substance 
abuse prevention program I later designed and implemented at 
William Dickerson Detention Facility through People's Community 
Services of Metropolitan Detroit.
    I graduated from Wayne State University in 1989 with a 
Bachelor's Degree in Social Work, and a grade point average of 
3.18. The next year in the advanced standing program was like 
being in boot camp. I did not work, I lived off guaranteed 
student loans. I was totally immersed in social work, day in 
and day out. I knew that a failure at this level would 
devastate me.
    Graduating from the Master's Program in 1990 was one of the 
highlights of my life. I graduated with a 3.54 grade point 
average. I had a new girlfriend. My family showed complete 
acceptance for the first time in my life. I was interviewing 
all around the state for jobs. I was doing consultant work. 
Once again, I tried being captain of my own ship, but I lacked 
humility. I concealed my feelings from my psychiatrist, because 
I truly enjoyed having / I the illusion of complete control.
    I was hired as coordinator of an assertive community 
treatment team at a community mental health agency. They were 
looking for someone who had control capabilities. In the 
interview process, I told the director I was I being treated 
for manic-depressive disorder when he asked me, `` Is there 
anything you want to share about your personal life?'' He hired 
me anyway. Life was great; I had a good job, a company car, 
good benefits. Boom, I started not sleeping! I did not tell my 
doctor. Eight business days after starting to work, I totaled 
out the company car. I broke my collarbone and was in full-
blown mania.
    While I was in the psychiatric hospital, I received notice 
that I was fired. After recovering from the broken collarbone 
and thirty days in the hospital, I was hired by another 
community mental health agency. The clinical supervisor was 
truly happy to have me on staff because of my background at 
Sinai, which was also her orientation towards therapy.
    Soon after being hired, I confided in one of my coworkers 
that I was being treated for a bi-polar condition. It got back 
to my clinical supervisor. She called me into her office and 
told me that she had heard that I was a consumer of mental 
health and asked me if it was true. I said yes. She told me 
that due to the nature of my illness, it would be important 
that all the staff in our department know. She asked me to 
announce this at the next staff meeting. I told her no problem. 
So at the next staff meting, I explained the nature of my 
illness to approximately ten people, all professionals. Soon 
there were rumors that I was not doing my job. I was called 
into the clinical supervisor's office and told that someone had 
been listening in and documenting my sessions. I was never late 
for work, I never took time off from work, all my paperwork was 
up to date. Six weeks after being hired, I was fired without 
cause.
    I was hospitalized for depression. When I got out of the 
hospital, I was broke, depressed and socially isolated. No one 
wanted to hire me, so I went to the Clark gas station, handed 
the manager my resume, told him that I could learn his computer 
cash register system and he hired me that day. It was a very 
humbling experience, but it paid some of the bills, brought up 
my self-esteem and got me out of the apartment. I sent out over 
200 resumes. Finally, I was hired part-time contractually at a 
private practice doing individual and family counseling. I 
continued to work at the Clark gas station. With both jobs, I 
was able to pay the rent, but I was having a difficult time 
paying my health insurance and medical bills. This continued 
for 8 months.
    I was hired at People's Community Services of metropolitan 
Detroit in 1991, to be a social group worker. Soon after, I 
became the supervisor for the Hamtramck programs. I was able to 
develop a social adjustment group at the consumer-run Northeast 
Drop-In Organization Center (NEDO). It was my pride and joy. 
Using the concepts of self-help, affirmation and empowerment 
from NEDO, I then developed the program and directed it at the 
detention facility.
    When I was taken off social security benefits after being 
on disability for three years it was because they said it was 
because I gainfully employed. At the time I making just $560 a 
month as a direct care staff person. My main need was insurance 
benefits. I was a melarill and lithium patient for 20 years. 
Fortunately, the community mental health system was able to 
help me with my benefits.
    Due to the fact that I am currently paying back social 
security benefits and the cost of medication, I have to 
continue to be on social security disability. I am currently 
paying back social security benefits of $100 a month to SSA 
because they said I was overpaid back when I was making $560 a 
month. I reported my earnings so I don't understand why I have 
an overpayment, but Social Security says I do.
    The costs faced by consumers who want to work are enormous. 
Medications make it possible for me to work, but Medicare 
doesn't pay for them. So I have to pay for them. The cost of my 
current medication is as follows: Closeral is $800.00 a month, 
Depokote is $150.00 a month, Cogentine is $49.00 a month. My 
hypertension medication is $49.00 a month. My blood is drawn 
twice a month, I see a Psychiatrist twice a month, a case 
manager every three months and a Medical Doctor every three 
months.
    I have chronic renal failure, chronic bronchitis, and I 
have had lymph nodes removed from my larynx twice. I have a 
history of a seizure disorder. I have had two mini-strokes. I 
am in need of extensive dental work. I have glaucoma that 
affects my night vision.
    I currently have Medicare and Blue Cross/Blue Shield 
supplemental insurances. Without which I could not function. I 
do want to work but like many consumers who also want to work, 
we are unable to secure gainful employment above the poverty 
level with insurance benefits. Another factor is because of our 
pre-existing conditions most insurance providers will not 
extend us coverage. Consequentially, due to the lack of parity, 
we are forced into continual dependency on Medicare rolls.
    My goal one day is to be an advocate for all consumers of 
mental health services. I no longer look at my illness as a 
debilitating situation, but rather a medical condition. It has 
become the motivation and catalyst for my desire to help others 
to understand themselves. I have found that by helping others, 
I help myself.
    Many understanding and compassionate people have helped and 
inspired me along the way. Many medical doctors and the mental 
health professionals have contributed to the stabilization of 
my condition. These professionals went beyond the call of duty 
and I am truly grateful to them for their compassion to myself 
and others. My brother, Greg, has dedicated the last twenty 
years to being a mental health professional. He has reached 
countless thousands, directly and indirectly. His insight into 
the human psyche as well as his understanding of the need for 
advocacy has influenced the availability of least restrictive 
environments for consumers of mental health services. His faith 
in me gave me hope when I lacked all faith in myself I love him 
for that; I love him for his strength and his courage. My 
younger brother, Leonard has also been an encouragement to me. 
His past role as a consumer advocate combined with his doctoral 
training in neuropsychology has given him a unique perspective 
on recovery issues. I love him and I am encouraged to see him 
work through the trials and tribulations of his own life. Above 
everyone else, I would like to thank God, who has allowed me 
choices in life; He does not make junk. I have learned that He 
loves us all.

Additional Testimony of David Gallagher

    Community Mental Health Organizations, and Client Centered 
planning, are at risk due to the current policies of our HMO's, 
PPO's, and EAP's. As an at risk agency, CMH's will be forced to 
reduce, restrict, and in some cases deny services to many who 
can not afford traditional treatment. Managed care will be 
devastating to many of the neediest clientele. Client centered 
planning is supposed to put the consumer in control of his/her 
treatment plan. Unfortunately client centered planning is not 
being followed in most cases. What is needed is more Consumer 
Advocates, especially, professionals who are themselves 
mentally ill.
    As both a Consumer and a professional certified social 
worker I can afford the luxury of being an advocate no matter 
where I go or to whom I speak. I have learned to walk in other 
people's moccasins and have empathy for those who suffer the 
disease called mental illness. What will be needed is 
psychosocial rehabilitation combined with self-help 
initiatives. We need to aid and assist consumers of mental 
health through self help alternatives, consumer initiatives 
counseling and education. Our goal is to promote a better 
understanding of the potential of all persons who suffer from 
the condition called mental illness. Organizations are in place 
such as Manic Depressive Depressive Association (MDDA), 
International Association of Psychosocial Rehabilitation 
Services (IAPSRS), Schizophrenics Anonymous (S.A.), and 
Michigan Supported Education Program, (MSEP). They are just a 
few of the many support groups available.
    The objective for the year 2002 will be to lower recidivism 
rates and optimize resources. The stigmatization that causes 
the Not In My Backyard (NIMBY) syndrome is going to have to be 
overcome. Revolving door hospitalization is going have to end. 
What we are finding is that our jails and prisons are being 
filled due to homelessness and valid medical needs. 
Misdemeanors are being committed just to get three squares and 
a cot. By the year 2002 each CMH should be required to have a 
Consumer run drop-in center. Utilizing the Fountain House 
Model, these outreaches fill in the gap where the CMH's 
currently are lacking. It may be noted that I am affiliated 
with North East Drop In Center (NEDO), and I also circulate 
with the Odyssey House Drop IN, and the Liberty Drop IN Center.
    While education and counseling play a major role for the 
struggling consumer, it is imperative that pharmacology not be 
disregarded. The newer medications like Closeral, Depokote and 
Respitol work wonders with little side effects. With proper 
medication mental illness can be arrested and treated as any 
other physical disability. With the new millennium we must 
empower our consumers; they are a valuable resource. The 
American work ethic is very important to all. It gives a person 
a sense of accountability. In order for Workfare to work 
though, a living wage and a national insurance program will be 
needed. The programs will have to be innovative. Unlike Social 
Security Insurance, which is over three trillion dollars in 
debt, these programs will have to be self-sustained. Social 
Security was never set up to be lived on but to supplement ones 
income.
    Our greatest resource is our intelligence and ability to 
learn. You can give a person fish for a day and he will eat for 
a day but if you teach a person how to fish he can eat for a 
life. All colleges must be cost affordable to be utilized by 
consumers. The need for tutors will be in demand for this 
special population. Drop In Centers should be on campus just as 
they are at Wayne County Community College and Henry Ford 
Community Colleges. Peer support groups should be available at 
all colleges.
    By the year 2002 we will need more Occupational Therapists, 
Recreational Therapists, and Music Therapists. Lay people and 
para-professionals with shared life experiences will be in high 
demand. Due to the fact that many Consumers are dual diagnosed 
with substance abuse as a secondary diagnosis, self-help groups 
such as Narcotics Anonymous (N.A.) and Alcoholics Anonymous 
(A.A.) will be in high demand. Group therapy as well as 
behavior modification techniques combined with cognitive short-
term therapy will be the standard. Because many of our 
consumers are addicted to tobacco, and the cost of 1 pack of 
cigarettes will probably be well over $5.00 a pack, the 
emphasis will be on prevention as well as the importance of not 
smoking in public places due to the hazards of secondary smoke. 
As a former smoker myself I recognize how difficult it is to 
quit smoking, it was the hardest addiction to overcome. 
However, for many clients caffeine and nicotine are the only 
pleasure they have in life.
    We will be watching and waiting for continued client 
recipient rights as well as policies related to the Americans 
with Disabilities Act. We must become our own lobbyists and 
take responsibility for informing legislatures of our needs. It 
is a myth that consumers are not capable of being lobbyists. We 
have been doing this at NEDO and have actually been written 
back by President Clinton and Governor Engler, as well as 
several other elected officials. There is however an element of 
stigmatization that prevents many clients from ``coming out of 
the closet.'' We will need more mentors, such as MSEP provides, 
to be peer counselors.
    The family stresses related to being a caregiver, guardian 
and/or payee have to be addressed. Mental illness can destroy a 
family. Usually there is a trust broken in the relationship and 
anger inhibits the relationship. Groups like MDDA and IAPSRS 
will be imperative to support the family. With the onset of 
HMO's, PPO's, and EAP's traditional treatment will not be 
available for family counseling.
    Finally spirituality should be addressed. With the dawn of 
the new century ones faith is important. Scriptures state that 
we need faith, hope, and love. We must never discount a 
client's faith, no matter how delusional it may sound, it may 
be the only hope they have. This combined with genuine love 
will heal.
      

                                

    Chairman Shaw. Thank you, Mr. Gallagher. Mr. VanOoteghem.

STATEMENT OF WILLIAM R. VANOOTEGHEM, FATHER OF SOCIAL SECURITY 
      BENEFICIARY, AND WENDY VANOOTEGHEM, SOCIAL SECURITY 
  BENEFICIARY, ESSEXVILLE, MICHIGAN, ON BEHALF OF ARC OF THE 
                         UNITED STATES

    Mr. VanOoteghem. Good afternoon, Chairman Shaw and members 
of the Subcommittee. My name is William R. VanOoteghem and this 
is my daughter, Wendy. Before I get started, I would like to 
thank the Arc, and your Committee for the work that you did on 
the work incentives bill last year.
    Wendy and I are here to talk to you about what will happen 
to Wendy if her work increases her wages over the SGA level of 
$700 per month--which, by the way, is just about the poverty 
level for an individual. We are here to talk to you about SGA 
and what it means to all people with disabilities across the 
country.
    I have been able to observe people with disabilities for 
over 25 years. I have seen them grow over the years with the 
desire to have a better life, especially in this growing 
economy. Last summer, allowable monthly earnings went from the 
$500 level to $700 a month. People with disabilities have more 
opportunities now to get better paying jobs as the business 
community now recognizes that they can do the same jobs as 
persons without disabilities.
    I have seen my daughter Wendy's life begin to take a real 
positive outlook as she did more productive work that paid her 
more money and made her look forward to every payday. The more 
work skills people with disabilities acquire, the more money 
they make, the more part of the community they become. They 
have more buying power and also pay taxes, therefore, they 
become an asset to their community.
    Wendy has mental retardation, and limitations in physical 
movement. She functions at the third-grade level in reading, 
spelling and arithmetic. She enjoys work and is a dedicated 
worker on a production line.
    I believe that working is important for Wendy and other 
people with disabilities, just as it is for people without 
disabilities. But we actually cause a hardship to many people 
with disabilities if they are penalized and have to lose basic 
supports as a result of work. Now Wendy and her co-workers have 
to worry about going over the $700 a month that the Social 
Security Administration sets for the SGA level per month. That 
means that if they make more than $700 per month, they will 
eventually give up all their cash benefits and will eventually 
lose Medicare health insurance and have to pay out of their own 
pocket to get insurance. If a person with a disability works 40 
hours per week, at a minimum wage of $5.15 per hour, they will 
earn $824 per month. That is $124 above the current SGA level 
of $700 per month. This will cause the loss of benefits that 
they need to survive.
    Under the work incentives available in the SSI program, 
Wendy would have been able to earn more, but because she 
receives Title II benefits as a disabled adult child since I 
retired, she is limited by the $700 a month amount.
    For many like my daughter, their disabilities are lifelong 
and severe and they cannot afford to lose the basic safety net 
supports of Social Security and Medicare. That is why we are 
asking for the same financial advantage that a person who is 
blind gets at $1,170 per month, with annual indexing or COLAs. 
In doing this, we will never again hold people back from being 
productive in the years to come.

 STATEMENT OF WENDY VANOOTEGHEM, SOCIAL SECURITY BENEFICIARY, 
                      ESSEXVILLE, MICHIGAN

    Ms. VanOoteghem. My name is Wendy VanOoteghem, I am 39 
years old. I have been working at Do-All in Bay City, Michigan, 
for 13 years. Right now I am working 30 hours a week on a 
packaging line, packaging zip-loc bags and doing other 
specialty packaging. I believe I could make more than $700 a 
month, but I cannot afford to lose Social Security and 
Medicare. I have to make sure that I do not make more than $700 
each month. It makes me angry. I want to be able to work more.
    Mr. VanOoteghem. My wife and I are in our 60s, like a lot 
of other families, and if something would happen to us, we want 
Wendy to be able to make it on her own. Yet she must depend on 
her Social Security and Medicare as a safety net, especially 
when we can no longer assist her.
    What the SGA level amounts to is a wage ceiling for people 
with severe, lifelong disabilities, a ceiling that is created 
in federal policy. We need your help to bring the SGA level up 
to a reasonable amount and index it for inflation.
    Thank you for giving us this opportunity to testify here 
today.
    [The prepared statement follows:]

Statement of William VanOoteghem, Father of Social Security 
Beneficiary, and Wendy VanOoteghm, Social Security Beneficiary, on 
behalf of Arc of the United States

A Parent's Perspective on SGA

    My name is William R. VanOoteghem and this is my daughter 
Wendy. We are here to talk to you about what will happen to 
Wendy if her work increases her wages over the SGA level of 
$700.00 per month (which, by the way, is just about the poverty 
level for an individual). We are here to talk to you about SGA 
and what it means to all people with disabilities across the 
country.
    I have been able to observe people with disabilities like 
my daughter for over twenty-five years. I have seen them grow 
over the years with the desire to have a better life, 
especially in this growing economy. Last summer, allowable 
monthly earnings went from $500.00 to $700.00. People with 
disabilities have more opportunities now to get better paying 
jobs, as the business community now recognizes that they can do 
many of the same jobs as a person without disabilities. I have 
seen my daughter Wendy's life begin to take a real positive 
outlook, as she did more productive work that paid her more 
money and made her look forward to every payday. The more work 
skills people with disabilities acquire, the more money they 
make, the more part of the community they become. They have 
more buying power and also pay taxes, therefore, they become an 
asset to their community.
    Wendy has Down syndrome, mental retardation, and 
limitations in physical movement. Her reading, spelling, and 
arithmetic are at the third grade level. She enjoys work and is 
a dedicated worker on a production line.
    I believe that working is important for Wendy and other 
people with disabilities, just as it is for people without 
disabilities. But we actually cause a hardship to many people 
with disabilities if they are penalized and have to lose basic 
supports as a result of work. Now Wendy and her co-workers have 
to worry about going over the $700.00 a month that the Social 
Security Administration sets for the SGA level per month. That 
means that if they make more than $700.00 per month, they will 
eventually give up all their cash benefits and will eventually 
lose Medicare health insurance and have to pay out of their own 
pocket to get insurance. If a person with a disability works 
forty hours per week, at a minimum wage of $5.15 per hour, they 
will earn $824.00 per month. That is $124.00 above the current 
SGA level of $700.00 per month. This will cause the loss of 
benefits that they need to survive.
    Under the work incentives available in the SSI program, 
Wendy would have been able to earn more; but because she 
receives Title II benefits as a ``disabled adult child'' since 
I retired, she is limited by the $700.00/month amount.
    For many, like my daughter, their disabilities are lifelong 
and severe and they cannot afford to lose the basic safety net 
supports of Social Security and Medicare. That is why we are 
asking for the same financial advantage that a person who is 
blind gets at $1170.00 per month, with annual indexing or COLAs 
(cost of living adjustments) for all people with disabilities. 
In doing this, we will never again hold people back from being 
productive in the years to come.

Wendy's Perspective on SGA

    My name is Wendy VanOoteghem; I am thirty-nine years old. I 
have been working at Do-All in Bay City, Michigan, for thirteen 
years. Right now, I am working about thirty hours a week on a 
packaging line, packaging zip-loc bags and doing other 
specialty packaging. I believe I could make more that $700.00 a 
month, but I cannot afford to lose Social Security and 
Medicare. I have to make sure that I do not make more than 
$700.00 each month. It makes me angry. I want to be able to 
work more.

Preparing for the Future

    My wife and I are in our sixties, like a lot of other 
families, and if something would happen to us, we want Wendy to 
be able to make it on her own. Yet she must depend on her 
Social Security and Medicare as a safety net, especially when 
we can no longer assist her.
    What the SGA level amounts to is a wage ceiling for people 
with severe, lifelong disabilities -a ceiling that is created 
in federal policy. We need your help to bring the SGA level up 
to a reasonable amount and index it for inflation.
    Thank you for giving us this opportunity to testify here 
today.

    The Arc of the United States is a membership organization 
made up of people with mental retardation, their families, 
friends, interested citizens, and professionals in the 
disability field. Together they form approximately 1,000 state 
and local chapters of The Arc and the largest voluntary 
organization in the United States devoted solely to working on 
behalf of people with mental retardation and their families. 
The Arc works through education, research, and advocacy to 
improve the quality of life for children and adults with mental 
retardation and their families and works to prevent both the 
causes and effects of mental retardation.
      

                                

    Chairman. Shaw. Thank you, sir. Dr. Hanes.

   STATEMENT OF PAMELA HANES, PH.D., ASSOCIATE DIRECTOR FOR 
RESEARCH, OREGON HEALTH POLICY INSTITUTE, DEPARTMENT OF PUBLIC 
    HEALTH AND PREVENTIVE MEDICINE, OREGON HEALTH SCIENCES 
                           UNIVERSITY

    Ms. Hanes. Mr. Chairman and Members of the Subcommittee, I 
want to thank you for the invitation to present testimony at 
your hearing today. I am Research Director at the Oregon Health 
Policy Institute, and in this capacity I am currently directing 
an evaluation, a three-year evaluation, of a three-state work 
incentive initiative demonstration project that is being 
conducted in Oregon, Vermont and Wisconsin, and is being funded 
by the Robert Wood Johnson Foundation. This research is 
attempting to better understand the perceived and real barriers 
to employment as experienced by Social Security beneficiaries 
who live with a severe disability, and to understand how these 
perceptions influence their return to work efforts.
    We are confident that this research effort will illuminate 
the individual structural factors that contribute to the high 
rates of unemployment and under-employment among Social 
Security beneficiaries.
    I am presenting to you today preliminary findings from our 
Employment Barriers Survey. This survey was first developed in 
1993 and conducted with a group of severely physically disabled 
beneficiaries in Wisconsin, and has more recently been 
administered to Social Security beneficiaries not only in 
Oregon, Wisconsin and Vermont, but also the State of Alaska.
    The survey data reports the collective experiences, 
beliefs, attitudes and fears about returning to work, pursuing 
gainful employment, and the potential impact of this pursuit on 
the preservation of their essential income and health insurance 
benefits. We have learned from our participants that SGA is a 
major basis for the fears that are experienced by 
beneficiaries.
    To focus our attention on today's hearing, I would like to 
quickly summarize some of the findings from the Alaska survey, 
which has been more extensively analyzed than the three-state 
evaluation, and then I would like to summarize what the 
findings of these surveys are pointing to.
    In Alaska, of 354 individuals who returned the survey, 59 
percent reported that they would like to return to work if 
employment didn't jeopardize their eligibility for needed 
benefits.
    What we are hoping to learn in the three-state work 
incentive evaluation is what happens to thwart these 
expectations about employment.
    This is the primary finding that we hope to learn from the 
participants of the three-state study over the next two and a 
half years. When this study is complete, the Institute will 
have not only self-reported data from individuals that has been 
collected at three points in time, but we will be linking this 
information to earnings, public program participation, cost of 
disability-related benefits and services, and health care 
utilization. These data will be reported on approximately 600 
program participants and a comparable group of nonparticipants.
    I mention this to tell you that it is a very unique study 
in the country in terms of our ability to understand the impact 
of employment barriers on the personal lives of a cross-section 
of individuals who have severe disabilities.
    Fifty-eight percent of the survey respondents in Alaska 
reported that they had been employed prior to receiving 
Disability benefits. Only 96 of these individuals were employed 
at any time after collecting Disability benefits. At the time 
the survey was administered, only 39 individuals of the full 
354 people were working. Of these 96 individuals who reported 
working, we had some very interesting findings about what the 
supports were that allowed them to continue to work. Support 
from family and friends, as we just heard from the presenters 
right before me, was a very important factor in individuals 
with severe disabilities to get and keep a job. In addition to 
that support from family and friends, having convenient and 
accessible transportation, and most especially and somewhat 
surprising, is employer and co-workers' attitudes toward people 
with disability was reported to be a major support in the 
reason that people were able to remain at their job.
    Finally, 70 percent of these few people who told us they 
had worked since their disability, told us that continuing to 
be able to get their SSI checks while working was a very 
important factor for getting and keeping a job.
    Now, among the majority of people who didn't work, we had 
findings about what were the barriers to pursuing gainful 
employment, and I am sure this committee has heard these 
factors many times as we were hearing testimony for the Ticket 
to Work and Work Incentives Improvement Act.
    Disability and health problems was the most important 
factor to keep people out of the labor market but, after the 
disability itself, not having affordable health insurance, not 
being able to earn enough money to make up for lost benefits, 
not being eligible for Medicare and Medicaid were top vote-
getters in the reasons that people perceive it is not in their 
best interest to go back to work.
    I would just like to say that it is very instructive when 
we looked at the information that came from people who had 
worked since collecting Disability benefits and those who had 
not, the differences in their perceptions of these barriers. 
Twice as many people were likely to report they couldn't work 
because of their disability, if they had never worked. Three 
times were more likely to say that their inability to get time 
off for disability-related benefits was a major reason for not 
working, and six times more people were more likely to report 
that not having control over the pace and scheduling of work 
was a major barrier to working.
    I mention these barriers because we are learning from the 
research that we are doing that many of these are perceptual 
barriers that don't hold up once people have successes in the 
workplace. And this is a very powerful message, I think, to 
those of us who are interested in looking at policy and system 
level modifications that help get folks with severe 
disabilities back into the labor market.
    And almost every employment barrier measure presented, 
individuals who were currently working did not express major 
concern about the effect of working public benefits. It is a 
powerful and instructive finding.
    I would like to complete my comments by just suggesting one 
thing that is particularly relevant to the hearing here today, 
and that has to do with the challenge facing--the changing face 
of disability and the challenge of reshaping and modifying 
policy that is disability sensitive.
    Individuals with differing types of disabilities have very 
differing needs in terms of getting back to work. Individuals 
with physical and sensory disabilities depend heavily on 
adaptive equipment and devices, durable medical equipment and 
personal support. There is no ``one size fits all'' 
accommodation to overcome the misfit between individuals' 
functional limitations and their work environment.
    It is incumbent on all of us to acknowledge that employment 
barriers are equally disempowering for all individuals who live 
with a severe disability, whether it be physical, psychiatric, 
sensory, or developmental in nature.
     Structural barriers to employment, therefore, must be 
resolved based on the unique needs and differences of the 
different types of disabilities that present in the Social 
Security beneficiary rolls. Thank you, and I would be happy to 
answer any questions about the data that are contained in my 
written testimony.
    [The prepared statement follows:]

Statement of Pamela Hanes, Ph.D., Associate Director for Research, 
Oregon Health Policy Institute, Department of Public Health and 
Preventive Medicine, Oregon Health Sciences University

    Chairman E. Clay Shaw, Honorable Robert Matsui, and 
distinguished subcommittee members, thank you for the 
invitation to present testimony at today's hearing. My name is 
Dr. Pamela Hanes. I am the Associate Director for Research at 
the Oregon Health Policy Institute (OHPI) in the Department of 
Public Health and Preventive Medicine at the Oregon Health 
Sciences University. I am here today to discuss early findings 
from an important research project currently underway at the 
Institute. This research is attempting to better understand the 
barriers to employment experienced by a population of SSA 
beneficiaries who live with severe disabilities. Further, the 
research will help us learn the extent to which mitigation of 
these barriers will lead to increased rates of gainful 
employment among severely disabled workers.
    I come today with findings from an Employment Barriers 
Survey that has been administered to SSA beneficiaries in four 
states. These findings are unique in several ways. The data are 
derived directly from individuals who live with a severe 
disabling condition and represent their collective experiences, 
beliefs, attitudes and fears about returning to work, pursuing 
gainful employment, and the potential impact of this pursuit on 
the preservation of their essential income and health insurance 
safety net. This survey was conducted with SSA beneficiaries 
who live in Oregon, Vermont and Wisconsin and are participating 
in the 3-State Work Incentive Initiative currently underway in 
these three states. In addition to the self-reported 
experiences of individuals participating in the 3-State 
Initiative, comparable data are presented from a representative 
sample of 1000 low-income SSDI and SSI beneficiaries on 
Medicaid in Alaska who were mailed in an earlier version of the 
Employment Barriers Survey in 1998.
    These data are unique because they represent a true cross 
section of a severely disabled population in terms of geography 
and the types of disabilities experienced. The data include a 
representative sample of SSDI and SSI beneficiaries living with 
psychiatric, physical, sensory, and developmental disabilities. 
This information gives voice to over 1000 SSA beneficiaries in 
these four states.
    When this 3-state study is completed in 2002, we will have 
individually reported attitudinal data that is linked to the 
earnings, public program participation, and health care 
utilization data of approximately 600 program participants and 
a comparable group of non-participants. This uniquely linked 
data set will provide a comprehensive picture of the 
relationship between living with a severe physical, psychiatric 
or developmental impairment and the structural factors in the 
policy and physical environment that both thwart and facilitate 
gainful employment. I look forward to a future date when I can 
report these very important research findings to the Social 
Security Subcommittee of Ways and Means.
    The field of disability policy research has been slowly and 
steadily building a body of evidence to support policy and 
systems change at the state and federal levels. These changes 
can be seen in both the re-structuring of SSA benefits and work 
incentives as well as in the new options and protections 
available in the Medicare and Medicaid programs. AK, OR, VT, 
and WI, along with several other states, have taken a strong 
leadership role in these reform efforts. The Robert Wood 
Johnson Foundation has provided generous support to the 3-State 
Work Incentive Initiative (OR, VT, and WI) currently being 
evaluated by OHPI. Additionally, Vermont and Wisconsin are 
among ten other states that have cooperative agreements with 
the Social Security Administration to further support the 
individual states' work incentive efforts.
    The Ticket to Work and Work Incentives Improvement (TWWIIA) 
Act of 1999 is another vitally important foundation to 
facilitate these knowledge-building and policy reform 
processes. My research team at OHPI will be closely monitoring 
the early impact of TWWIIA on the 3-State Work Incentive 
Demonstration programs in Oregon, Vermont, and Wisconsin.
    The initial ``pictures'' we have taken of individuals 
participating in the 3-State Work Incentive Initiative and 
those taken in Alaska have produced somewhat differing images 
of living with a severe disability. A primary reason for these 
differences can be explained by certain characteristics of the 
underlying populations sampled. In Alaska, a randomly selected 
sample of SSA beneficiaries who receive Medicaid was drawn from 
the state Medicaid files. Therefore, this sampled population 
represented a particularly low-income group of individuals. 
Although likewise SSA beneficiaries in OR, VT, and WI, the 
survey respondents also are current or past clients of their 
states' vocational rehabilitation agencies. Thus, this group 
represents a population of beneficiaries that has demonstrated 
some vocational readiness to enter or re-enter the labor 
market.
    To set the context for the reported attitudes, beliefs and 
fears associated with being gainfully employed, I have provided 
a brief description of educational and employment history 
characteristics of the population surveyed in AK and also those 
found among participants in the 3-State Work Incentive 
Initiative.

Alaska Profile

     Almost 30% of Alaskan respondents had less than a 
high school education;
     96% reported an annual income of less than 
$15,000;
     In spite of full Medicaid coverage among survey 
respondents, 46% reported having out-of-pocket medical 
expenses; of these, \2/3\ reported spending between $50-100/
month on medical and health-related expenses;
     35% of all respondents had been on disability 
benefits for over 10 years;
     63% of all respondents reported having more than 
one diagnosed disability; the group least likely to have a 
second disability was those with a primary sensory disability;
     58% of all survey respondents reported being 
employed prior to receiving disability benefits. Of those with 
an employment history, the majority held non-professional 
positions and had substantial work histories (53% worked over 5 
years and 32% of these over 10 years);
     Wages from prior employment were low, in most 
cases near the poverty level;
     Of the 29% of respondents who reported being 
employed at any time since collecting disability benefits 
(n=96), 41% were working at the time of the survey.
    To summarize this respondent profile, survey responders in 
Alaska were an extremely disadvantaged group as noted in their 
pre-disability as well as post-disability demographic profiles. 
Because the sample was stratified to capture the voices of 
rural as well as urban dwellers, a disproportionately high 
response from the frontier areas of the state (49%) is 
reflected in the prior occupation of beneficiaries, with almost 
one-third of formers workers in the manual laborer category 
prior to becoming a SSA beneficiary.
    Of the individuals who reported having worked since 
becoming eligible for SSA benefits:
     69% said that having support from family and 
friends was an important factor in getting or keeping a job;
     71% reported having convenient and accessible 
transportation was important;
     76% reported that positive employer attitudes 
about people with disabilities was important; likewise 74% said 
co-workers attitudes were important; and
     70% said that continuing to get SSI checks while 
working was important to getting or keeping a job.
    When the group of respondents who never worked since 
collecting SSA benefits was asked about the major barriers that 
keep them from working:
     77% said their disability was a major barrier to 
work;
     51% reported not having affordable health 
insurance was a major barrier;
     57% reported not being able to earn enough money 
to make up for lost benefits as a major barrier to work;
     65% reported not being eligible for Medicare or 
Medicaid as a major barrier to work;
     61% said losing eligibility for Medicare or 
Medicaid as a major barrier to work;
     56% reported that employment would affect their 
ability to keep disability-related benefits as a major barrier 
to work; and
     52% reported employment making it harder to get 
disability-related benefits in the future as a major barrier to 
work.
    To summarize the major barriers to work reported by a 
representative sample SSA beneficiaries on Medicaid in Alaska, 
it is instructive to note the differences in perception of what 
constitutes a barrier to work between respondents who had 
worked at some time since collecting benefits and the majority 
of respondents who had not returned to work. Respondents who 
hadn't worked since collecting disability benefits were:
     Twice as likely to report they couldn't work 
because of their disability;
     Three times more likely to say that their 
inability to get time off disability-related reasons was a 
major barrier to work;
     Three times more likely to say that lack of 
convenient transportation was a major barrier to work; and
     Almost six times more likely to report that not 
having control over the pace and scheduling of work was a major 
barrier to working.
    Even more dramatic are the differences in perceptions of 
barriers between those who were currently working at the time 
of the survey and those who had not worked since collecting SSA 
benefits. Current workers were:
     Six times LESS likely to report that employment 
affecting their benefits in the future was a major barrier to 
working;
     Six times LESS likely to report that employment 
affecting their ability to keep disability-related benefits was 
a major barrier to working;
     Six times LESS likely to report that not having 
the ability to receive Medicare and Medicaid was a major 
barrier to working; and
     Three times LESS likely to report that not being 
able to earn enough money to make up for lost benefits was a 
major barrier to working.
     Current workers reported no major concern about 
negative employer or co-worker attitudes as a major barrier to 
working.
    On almost every employment barrier measure presented, 
individuals who were currently working did not express a 
significant level of fear about the effect of working on public 
benefits compared to those who had not worked since collecting 
benefits. This is a powerful and instructive finding about the 
support that is needed and the positive impact of successful 
employment on dispelling the fear of loss of benefits. This 
support will come, in part, through education about the 
informed use of existing and the new work incentive programs 
that are embodied in TWWIIA. It also will come when 
beneficiaries have reason to believe and trust in a solid 
safety net that exists should their disability or health worsen 
while attempting or engaging in gainful employment.

Oregon, Vermont, Wisconsin Profiles

    The data reported today from the 3-State Work Incentive 
Initiative is preliminary. We are currently in the process of 
tabulating information from the baseline Employment Barriers 
Survey that was administered to all individuals who are 
participating in the three states' programs and a cohort of 
non-participants who are being tracked in the same way as 
program participants. The full population of program 
participants has not been enrolled in the three states' 
programs. Enrollment will continue through the end of April 
2000.
    A modified version of this survey will be re-administered 
two more times during a three-year study period. I am reporting 
preliminary baseline data today. The data have been presented 
by type of disability to reinforce the fact that type of 
disability DOES make a difference in how individuals relate to 
their physical environment, therefore impacting their ability 
to work, and subsequently affecting their belief in their 
ability to work.
    Individuals with sensory disabilities have been included 
the ``physical disability'' category. We estimate that 
approximately 10% of the individuals in this group have a self-
reported primary or secondary sensory disability. In terms of 
the preliminary data: 44% of participants reported a physical 
disability, 28% a psychiatric disability, 11% a developmental 
disability, and 13% reported more than one primary disability.
    % Of participants reporting ever being employed before 
collecting SSA benefits:
     84% Physical
     89% Psychiatric
     42% Developmental
     76% More Than One Primary Disability
    % Of participants reporting working full-time prior to 
collecting SSA benefits:
     81% Physical
     67% Psychiatric
     41% Developmental
     74% More Than One Primary Disability
    % Of participants reporting working more than 10 years 
prior to collecting SSA benefits:
     59% Physical
     40% Psychiatric
     17% Developmental
     53% More Than One Primary Disability
    % Of participants reporting being currently employed at the 
time of the survey:
     58% Physical
     50% Psychiatric
     35% Developmental
     57% More Than One Primary Disability
    % Of participants reporting working full-time at the most 
recent job lasting 30 days or more:
     36% Physical
     23% Psychiatric
     8% Developmental
     27% More Than One Primary Disability
    % Of participants reporting their ability to work is 
limited because of their disability:
     59% Physical
     46%% Psychiatric
     41% Developmental
     63% More Than One Primary Disability
    % Of participants reporting strong concern that working 
will affect their ability to keep their SSA cash benefits:
     52% Physical
     54% Psychiatric
     41% Developmental
     46% More Than One Primary Disability
    % Of participants reporting that unless a job offers 
prescription drug coverage they can't afford to work:
     34% Physical
     45% Psychiatric
     13% Developmental
     42% More Than One Primary Disability
    % Of participants reporting that it would be hard to earn 
enough money to make up for lost SSA benefits:
     45% Physical
     51% Psychiatric
     34% Developmental
     40% More Than One Primary Disability
    % Of participants reporting a major concern about not being 
eligible for Medicare and Medicaid if they return to work:
     19% Physical
     29% Psychiatric
     16% Developmental
     30% More Than One Primary Disability
    From these preliminary data we can see that earnings from 
return to work does pose a significant threat to beneficiaries 
in terms of their fear of loss of essential safety net 
benefits. Tracking these beliefs and fears over time, and being 
able to link them to participants' back to work efforts will 
provide a critical body of information that is currently 
missing from our knowledge base. We do know that in Vermont 
when policy analysts looked at the successful closures of their 
SSA beneficiary clients in 1995 there was a strong tendency to 
``park'' earnings right under $500/month which, at the time, 
was the level of Substantial Gainful Activity (SGA). This 
parking behavior was in stark contrast to their successful 
closures of non-SSA beneficiaries--the non-SSA clients 
demonstrated a steady upward trend in earnings out to 18 months 
after closure.
    The take away messages I would like to leave with 
subcommittee members today are based on ten years of policy 
research in this area.
    First, the problem of un-and underemployment among SSA 
beneficiaries living with a severe disability represents a 
complex web of personal, policy, and environmental factors, and 
as such, any potential policy or systems reform solutions must 
both recognize and appropriately deal with this complexity.
    Second, the severity of an individual's disability, that 
is, the degree of functional limitation one experiences in 
pursuing normal activities of daily living is ultimately a 
function of an individual's fit with his or her physical 
environment. Disability describes a misfit between an 
individual and his physical environment. As such, much of what 
we call disability can be ameliorated through accommodation, 
modification of the built and policy environment, and changing 
societal attitudes from those that use the label of disability 
to those that put the focus on individuals with differing 
abilities.
    Third, the face of work disability has changed dramatically 
since the disability insurance (DI) amendments were added to 
the Social Security Act in 1958. In the late 1950s, a DI 
beneficiary characteristically would be described as a 50-
something ``worn out worker'' -a male with a life expectancy of 
60 (+/-a few years), laboring in a production-oriented, heavy 
industrial position who exits the labor force with a physical 
disability. In the 1990s a younger worker in his 30s or 40s who 
is increasingly exiting from an information-based, high 
technology or service-based labor market with a severe mental 
disorder is more characteristic of a DI beneficiary. The 
profile of the 1990s beneficiary is supplementing, if not 
replacing, the earlier profiled disabled worker, this is 
especially true in the northern tier states of the U.S. The 
largest single category of disability in the DI and SSI 
population is mental disorders followed by muscular-skeletal 
disorders. In the past 10 years alone, the number of disabled 
beneficiaries under age 30 has more than doubled from 116,000 
to 275,000. With this growth in the younger disabled population 
is a projected lifetime stay on SSI disability benefits of 25 
years for recipients between the ages of 0-17 and 16 years for 
those between the ages of 18-34. The primary reasons 
individuals leave the SSDI rolls are death (55%), followed by 
reaching retirement age (34%), disability cessation (8%) and 
Other (2%). The ``other'' category includes return to work. 
These sobering statistics require a re-thinking and subsequent 
re-engineering of the disability safety net.
    Fourth, with the changing face of disability comes the 
challenge of re-shaping and modifying policy that is 
disability-sensitive. Work patterns, earnings, and employment 
barriers differ on the basis of the underlying disabling 
condition. Individuals with psychiatric disabilities are the 
most vulnerable to starts and stops in employment because 
disability management is so heavily dependent on professional 
involvement and strict adherence to drug regimens that often 
outlive their usefulness. On the other hand, individuals with 
physical and sensory disabilities depend heavily on adaptive 
equipment and devices, durable medical equipment, and personal 
support services. There is no one-size-fits-all accommodation 
to overcome the misfit between an individual's functional 
limitations and his or her work environment. Each individual's 
experience of functional impairment is unique and yet we know 
that what facilitates employment for individuals with spinal 
cord injuries or blindness will not necessarily lead to gainful 
work activity for individuals with bipolar disorder or 
schizophrenia.
    It is incumbent on all of us to acknowledge that employment 
barriers are equally disempowering for all individuals who live 
with a severe disability, whether it be physical, psychiatric, 
sensory, or developmental in nature. Structural barriers to 
employment for individuals with severe disabilities are no 
respecter of person based on their particular type of 
disability. Policy solutions that promote access to the world 
of work therefore must be equally and equitably available to 
all SSA beneficiaries regardless of their underlying 
disability. Only when this happens will the full legislative 
intent of the ADA become realized and the potential for fuller 
employment of individuals with severe disabilities embodied in 
the TWWIA be fully utilized.
      

                                

    Chairman Shaw. Thank you, Dr. Hanes. Mr. Young.

  STATEMENT OF TONY YOUNG, DIRECTOR OF GOVERNMENT ACTIVITIES, 
  NISH, VIENNA, VIRGINIA, AND CO-CHAIR, SOCIAL SECURITY TASK 
      FORCE, AND VICE CHAIR, CONSORTIUM FOR CITIZENS WITH 
                          DISABILITIES

    Mr. Young. Thank you. Good afternoon. I would like to start 
this afternoon by thanking the Subcommittee and the staff for 
the time and energy that went into passing the Ticket to Work 
and Work Incentives Improvement Act. The leadership of this 
Subcommittee was crucial to ensuring this legislation became 
law.
    As you well know, the Social Security Disability Insurance 
was established to protect workers against the loss of income 
due to a disability that prevented them from working. When SSDI 
was established 50 years ago, it was reasonable to expect that 
people with the most severe disabilities would almost certainly 
never work. The technologies, services, supports, and 
medications that exist today would seem like science fiction to 
those who wrote the original SSDI law.
    Let me put this in some perspective. A popular comic of the 
1950s portrayed a character whose car had a telephone in it. 
Another had a car that could display maps on a television in 
the dashboard. Today, this is no longer science fiction, this 
is reality.
    The reality for people with disabilities has changed also. 
Work, a job, a career, things that were not possible 50 years 
ago today can be an expectation for people with even the most 
severe disabilities. These expectations can be a reality when 
we have access to new technologies, new services, supports, and 
medications, yet we struggle to work under SSA rules that were 
created when things were quite different. The automobile 
industry has kept up with the times, and so, too, should 
disability policy.
    On many occasions CCD has testified about the difficulties 
posed by the SSDI earnings limit. The earnings limit, also know 
as the ``cash cliff'', creates an all-or-nothing situation that 
forces beneficiaries to forego all cash benefits after only a 
meager level of earnings. This earnings limit is now $700 per 
month, $8400 per years. Earning just one dollar over this limit 
can cause an SSDA beneficiary to be determined no longer 
eligible for cash benefits. Oftentimes, the benefit amount lost 
is nearly equal to the earnings limit, subjecting the 
beneficiary to a whopping 50 percent drop in net income.
    Further, all individuals with severe disabilities incur 
substantial costs in attempting to work. In my case, I pay over 
$10,000 a year just for personal assistance services. The 
wheelchair that I use to get around and go everyplace and go to 
work, cost $20,000. I spent another $20,000 buying a van to 
transport me and my wheelchair, and then had to spend another 
$15,000 to make it accessible. Assistive technology, hearing 
aids, animal companions, medical equipment and supplies, 
deductibles and co-payments, communications devices and the 
maintenance of all this equipment all increase costs faced by 
individuals with severe disabilities who work.
    As a result, far fewer beneficiaries attempt work than 
would under a more rational policy. Many never work above the 
earnings limit, even if they can. This policy creates financial 
costs for the government because beneficiaries who could work 
and pay taxes aren't. It costs the government because people 
fear they can't jump the cash cliff to achieve a level of 
earnings that allow them to live above poverty, so they remain 
on full benefits.
    It took ten years for SSA to raise the earnings limit to 
$700 from $500. It took just as long to go to $500 from $300. 
And those increases weren't even enough to keep up with the low 
rate of inflation our economy experienced during that time.
    For more than 20 years, the disability community has 
advocated for changes in the SSDI program, particularly about 
the SSDI cash cliff. Legislative addressing the earnings limit 
could take many forms. However, certain key principles should 
form the foundation for any congressional action addressing the 
earnings limit. These principles are: (1) Do No Harm. Changes 
made by Congress to earning limit, or to the Social Security 
Disability programs as a whole, should ensure that no 
disability group is negatively affected. Whatever Congress 
does, it must not enact policy detrimental to any category of 
DI beneficiaries; (2) Equity. Should Congress take favorable 
action on legislation that addresses earnings limits, Congress 
must ensure equity among all DI beneficiaries.
    There are a variety of options available to Congress that 
would eliminate the cash cliff. We would welcome the 
opportunity to work with you and your Subcommittee staff in 
developing a proposal that eliminates the cash cliff.
    We urge Congress to finish the work begun with the 
enactment of the Ticket to Work and Work Incentives Improvement 
Act by removing the cash cliff barrier to work.
     Again, I thank the Subcommittee for this opportunity. I 
will be glad to answer any questions you might have.
    [The prepared statement follows:]

Statement of Tony Young, Director of Government Activities, NISH, 
Vienna, Virginia, and Co-Chair, Social Security Task Force, and Vice 
Chair, Consortium for Citizens with Disabilities

    Thank you Chairman Shaw, Mr. Matsui and members of the 
subcommittee, for the opportunity to testify today on the SSDI 
earnings limit. I am Tony Young, the Director of Government 
Activities for NISH and Vice Chair of the Consortium for 
Citizens with Disabilities. CCD is a coalition of nearly 100 
national organizations advocating on behalf of people with all 
types of physical and mental disabilities. I am testifying 
today in my role as a Co-Chair of the CCD Task Force on Social 
Security.
    Mr. Chairman, I want to begin this morning by thanking you 
and Mr. Matsui, the subcommittee, and your staff, for the hard 
work and commitment that went into passing the Ticket-to-Work 
and Work Incentives Improvement Act. Your leadership and that 
of the subcommittee were crucial to ensuring that legislation 
became law. We especially appreciate your decision to hold this 
hearing so quickly after the recent approval of H.R. 5, 
legislation that completely eliminates the earnings test for 
people over age 65.
    As you know, the Social Security Disability Insurance 
Program was established to protect workers against the loss of 
income due to a disability that prevented them from working. 
When SSDI was established some fifty years ago, it was 
reasonable to expect that people with the most severe 
disabilities would almost certainly never work. The 
technologies, services, and medications that exist today would 
seem like science fiction to those who wrote the SSDI law in 
the 1950s. Let me explain by putting this in some perspective. 
A popular comic of the 1950's portrayed a main character whose 
car had a phone in it, and a wristband that had a television 
screen. Another had a car that could produce maps on a 
television in the dashboard.
    Today, this is not science fiction, it's reality. We have 
cell phones that can call anywhere in the world, and cars can 
be equipped with a map system that uses satellites to find your 
location and give you directions. You can even watch your 
favorite 1950's cartoon show via satellite broadcast to the on-
board television.
    The reality for people with disabilities has changed too. 
Work, a job, a career, things that were not possible fifty 
years ago are today an expectation for people with even the 
most severe disabilities. New technologies, new services, 
evolving employment supports, and better medications have made 
those expectations a reality. Yet we struggle to work under 
rules created when things were quite different. The automobile 
industry has kept up with the times, and so too, should 
disability policy.
    On many occasions in the past CCD has testified about the 
difficulties posed by the SSDI earnings limit on the ability of 
people with disabilities to achieve meaningful employment 
before losing all cash benefits. The earnings limit, known as 
the ``cash cliff'' creates an all-or-nothing situation that 
causes people with disabilities to forgo all cash benefits 
after only a meager amount of earnings are achieved. Currently, 
the earnings limit is at $700 per month, or $8,400 per year. 
This amount is at just about the federal poverty level for a 
single individual. Earning just one dollar over this amount, 
can cause an SSDI beneficiary to be determined no longer 
eligible for cash benefits. Often times, the benefit amount 
lost is nearly equal to the earnings limit, thus subjecting the 
beneficiary to a whopping 50% marginal tax.
    Further, workers with disabilities incur substantial 
expenses in attempting to work. The cost of personal 
assistance, of a wheelchair, an accessible van or hand 
controlled car; assistive technology, hearing aids, animal 
companions, computers, communications devices and the repair 
and maintenance costs of the equipment all increase the costs 
faced by individuals with severe disabilities who want to work.
    As a result, far fewer beneficiaries attempt work than 
would under a more reasonable, rationale policy. Many never 
work above the earnings limit, even if they could. This policy 
is just plain wrong. Worse, this policy creates financial costs 
for the government, and the SSDI program. It costs the 
government because people who could be working and paying taxes 
aren't, and people who are working might be working more, but 
aren't. It costs the SSDI program because people fear they 
can't jump the cash cliff to achieve a level of earnings that 
allow them to live above poverty, so they remain on full 
benefits.
    Further, although the earnings limit was recently raised to 
seven hundred dollars from five hundred dollars, it took ten 
years for the Social Security Administration to act on that 
increase. And it took just as long to raise the earnings limit 
to five hundred dollars from three hundred dollars in the mid-
1980's. These increases weren't even enough to keep up with the 
low rate of inflation our economy has experienced these past 15 
years.
    For more than twenty years, the disability community has 
advocated for changes in the SSDI program, and particularly 
about the SSDI earnings cliff. Legislative advocacy concerning 
the earnings limit has often taken many forms. However, certain 
key principles should form the foundation for any congressional 
action addressing the earnings limit. Those principles are:
    1) Do No Harm--Changes made by Congress to earning limit, 
or to the Social Security disability programs as a whole, 
should ensure that no disability group is negatively affected. 
Whatever Congress does, it must not enact policy detrimental to 
any particular category of DI beneficiaries.
    2) Equity--Should Congress take favorable action on 
legislation that addresses earnings limits, Congress must 
ensure equity among all DI beneficiaries.
    There are a variety of options available to Congress that 
would deal with the ``earnings cliff'' that beneficiaries face 
if they try to work. We would welcome the opportunity work with 
you, and subcommittee staff in developing a proposal that 
eliminates the earnings cliff.
    In this time of profound fiscal growth and economic 
prosperity, Congress should ``fix'' the SSDI earnings limit to 
allow all people with disabilities the opportunity to 
contribute to this unprecedented economic expansion. We urge 
Congress to finish the work substantially started with the 
enactment of the Ticket-to-Work and Work Incentives Improvement 
Act by removing the ``earnings cliff'' barrier to work.
    Finally, while not directly on point regarding SGA, several 
issues have come to the attention of the CCD Social Security 
Task Force that we believe merit further attention. It is our 
understanding that, for a ``disabled adult child,'' leaving the 
Title II program as a result of earning above SGA after the EPE 
has expired means the loss of ``disabled adult child'' status 
for life. Many people do not understand that the benefits that 
the parent has earned for the disabled adult child (severely 
disabled since childhood) are permanently lost, and there is no 
re-entry under SSA's current interpretation. We believe that 
this must be fixed; otherwise, the purpose of the Ticket-to-
Work & Work Incentives Improvement Act will be thwarted for 
those who qualify as disabled adult children. We believe that 
the TTWWIIA clearly contemplated the ability of disabled adult 
children to move on and off the program to the same extent that 
other people with disabilities will be allowed to do so. The 
statutory language establishing the eligibility category for 
disabled adult children was clearly cited in every case that 
eligibility for the SSDI program was cited.
    In addition, we understand that SSA's interpretation 
regarding the value to be placed on a worker's work effort 
(regarding whether it exceeds SGA or not) is different for 
people in supported employment depending upon whether the 
individual is supported directly by an employer or whether the 
individual is supported by services from an outside source, 
such as a state-funded supported employment agency. Due to this 
distinction, an individual's work effort could be found to 
exceed SGA when the support is from a third party while that 
same work effort could be found not to exceed SGA when the 
support is from the employer. From the perspective of the 
individual, this is an arbitrary distinction. Further, there 
may be additional complications in that the nature and scope of 
the support provided to the individual may be misunderstood 
when making the valuation of work effort. For instance, while 
the individual may be performing the actual task (bagging 
groceries, assembling a package, etc.), it may be that the 
individual would be unable to perform the task without the help 
of the job coach in ensuring that the individual arrives at 
work on time properly attired, that he/she interacts 
appropriately with customers and co-workers, and that he/she 
remains focused on the assigned job tasks, among other things. 
We believe that this is an area that also needs further 
examination if work incentives are to work as intended by 
TTWWIIA.
    Again, I thank the subcommittee for this opportunity to 
testify. I will be glad to answer any questions you may have.

                                                 Tony Young
                                                               NISH
                                Director of Governmental Activities
      

                                

    Chairman Shaw. Thank you. Mr. Matsui
    Mr. Matsui. Thank you, Mr. Chairman. I want to thank all 
five of the panelists for their testimony today. I just have 
one series of questions of Dr. Hanes.
    Dr. Hanes, it is my understanding that in your written 
testimony you talk about the profile of a disabled individual 
when the program was first established, and then you have a 
profile today of that same disabled individual. The original 
profile was somebody who was in the workforce for years and 
became disabled perhaps at the age of 50 or thereabouts, and 
then received some benefits. Today's disabled individual is 
somebody that perhaps has mental problems, emotional problems, 
is much younger. Is that a correct representation of your 
findings?
    Dr. Hanes. Yes. I would like to just clarify that. If you 
look at the prevalence of disability across the country, there 
is a very interesting difference between the prevalence of 
mental disorders as the primary disabling condition in both the 
SSI and the DI beneficiary population. It appears to be much 
more linked to the kind of industrial base that workers are 
coming from.
    We still see a lot of the musculoskeletal, the bodies that 
are breaking down under manual labor in the southern areas of 
the country, and it is very interesting, and it is an area that 
I think merits further research. But I do think it is correct 
to say that the face of disability has changed since the 
Disability Insurance program was first enacted, and the most 
single prevalent category of disability is mental impairment, 
mental condition.
    Mr. Matsui. And I guess the conclusion I am reaching from 
your findings there is that the earnings limit years ago is 
probably in need of significant adjustment for the nonblind 
disabled today because they are younger and they still have a 
lot of work years left, perhaps unlike those that were defined 
as disabled 30 years ago, is that correct?
    Dr. Hanes. I think that is an appropriate conclusion to 
make, and some of the data that have actually been analyzed by 
Social Security Office of Statistics and Evaluation have 
projected the lifetime of benefits for this younger disabled 
population, and it is very true that the younger--obviously, 
the younger someone goes on the Disability rolls, the longer 
the projection is that individual will be on the rolls.
    The other piece of my testimony that is written, that I 
would like to reinforce with you, is the primary reason for 
leaving Disability Insurance is death. Fifty-five percent of 
the people exit the program because of death. The next largest 
category, I believe around 35 percent, is retiring or moving 
from Disability Insurance to retirement benefits. And I think 
there is fairly persuasive evidence that less than 1 percent of 
people leave the Disability rolls permanently because of 
employment, and the impact of a younger disabled population it 
doesn't take heavy mathematics to understand the impact on the 
trust fund, in particular, of having people on the Disability 
rolls for much longer periods of time.
    Mr. Matsui. Well, I want to thank you and the other four 
panelists as well for their testimony. Thank you.
    Chairman Shaw. Mr. McCrery.
    Mr. McCrery. I am sorry I missed the first two witnesses' 
testimony. Mr. VanOoteghem, could you expound a little on the 
work-related expenses associated with your daughter's work?
    Mr. VanOoteghem. Right now, she rides the bus to work, they 
supply it, and she pays for the fare which is $2.87 per trip. 
She doesn't really have any other expenses. We don't claim any 
other expenses for her.
    Mr. McCrery. How about Mr. Young?
    Mr. Young. Yes, I would be happy to talk about my expenses.
    Mr. McCrery. Well, the work-related expenses that would be 
deductible from your income for purposes of staying under the 
limit.
    Mr. Young. Under impairment-related work expenses for 
nonblind people, it has to be an expense that is incurred at 
work. The majority of the expenses aren't incurred at work, it 
is getting ready for work and getting to and from work. The 
personal assistance that I use to get dressed in the morning, 
people that need cuing and supervision to get ready, the 
transportation to and from. If you have an employer, especially 
one of the nonprofit employers, that provides transportation 
for you, it is not a problem. If you don't, then you are stuck 
with a huge bill every month trying just to get to and from 
work.
    Under the ADA, the employer can provide reasonable 
accommodations that takes care of some of the work expenses, 
and the other things are deductible. But by that time, you have 
already incurred 75 percent of the work-related expenses that 
you are going to get to in a situation.
    Mr. McCrery. But those expenses you cannot deduct from--
    Mr. Young. Those we cannot deduct, not from earnings to 
bring it down below $700, nor are they available for deduction 
on Schedule A of the 1040 Form.
    Mr. McCrery. If you were here earlier today when we had 
other panels, there was a lot of discussion about the 
difference in the earnings limit for the blind disabled and the 
nonblind disabled. Would any of you like to comment on that? Do 
you agree or disagree that there is a rationale for the 
disparity?
    Mr. Young. I would certainly like to say that there is no 
rationale that I can think of for treating one disability group 
differently from another disability group int he types of 
expenses that we incur. The level of expense is much more 
related to the severity of disability and, frankly, the 
geographic location in which one lives than it is to whether 
you are of one type of disability or another. I can cite any 
number of examples of people with various kinds of disabilities 
that are going to have huge costs--a person with very high 
technological needs, no matter what type of disability, is 
going to have huge costs. A person on DI who is going to be 
much more severely disabled is going to have higher costs than 
a person not on DI, whether they are served by the VR program 
or not. Persons who are not on DI are not going to be that 
disabled and are not going to have the kind of work-related 
costs that somebody who is on DI who, by definition, is more 
severely disabled will have.
    Mr. McCrery. Anybody else? Yes?
    Mr. VanOoteghem. We watched in 1977 when people who are 
blind received the retiree's earning limits. We didn't say much 
then and there was no change until 1990 when the SGA level was 
raised to $500 per month. I know our folks had to fight to make 
this happen. In 1999, SGA went to $700, but with the raises in 
minimum wage within the next three years, that is going to out 
of our league again. We need some help, and we need indexing 
for future increases in the SGA level. Even if it is not 
retroactive, we need to be brought up to what people who are 
blind have for their SGA level.
    Dr. Hanes. I would like to comment just for a moment on 
that.
    Mr. McCrery. If you don't mind, comment on that, and also 
comment on the cliff situation, would it be more helpful for us 
to smooth out the cliff, or more helpful to just raise the 
earnings limit and still have a cliff.
    Dr. Hanes. Well, I wanted to comment on the cost because 
some of the previous testimony talked about the cost in the 
Vocational Rehabilitation Program, for example, and I think it 
is very important that we consider the total cost of living 
with a severe disability. And when we think about the total 
cost and the costs that are incurred to the individual, and 
also the costs that are incurred in the Medicaid program--for 
example, I can speak with some knowledge about people with 
psychiatric disabilities are incurring tremendous costs through 
prescription drugs and intensive case management and 
psychotherapy.
    When you look at costs across type of disability, I think 
it is very easy to make a persuasive argument how all people 
with severe disabilities incur a tremendous amount of cost, 
both personal and to the system, in order to be able to be job 
ready.
    And so, although I would not make a statement that one type 
of disability is more deserving than the other, I think that it 
is incumbent on all of us to factor in the total cost of living 
with a disability.
    And in terms of the cliff, I think anything to mitigate the 
cliff is going to get people back to work. In my own research--
and now I have heard from probably 1700 people across the 
country--the fear factor that someone spoke about earlier is so 
strong that until you can deal with that fear in ways that 
people trust, that they know there is a safety net there that 
they can trust, I don't think we are going to see large numbers 
of people going back to work no matter how you deal with SGA.
    Mr. McCrery. Thank you. Anybody else?
    Mr. Gallagher. I was director of a program for five years, 
earning over $35,000 a year with full Blue Cross, and when I 
had my last esposode due to neuroleptic malignant syndrome, I 
had a ventricular drillout, which means I had a blood clot, I 
had to change my medications to Closeral and Depokote. These 
medications, while the technology is new, are very expensive. 
It is close to $1,000 a month, which I don't have the insurance 
to pay for. Blood is drawn when you first start out, you get 
your blood drawn every day, then it is every week, and after 
three years now I have been taking it, it is every two weeks. 
The cost factor of the medications alone, the factors of going 
back to seeing the psychiatrist, your medical doctor, and all 
the medical problems that come because of the medications, it 
is keeping me on Disability. It makes no sense at all. I am 
capable of working. I do want to work. It is just it is very 
frustrating. Right now, I owe the Social Security 
Administration I don't know how many thousand dollars. My dad 
is my payee. I am 42 years old, and I have a Master's Degree. I 
have been successful over the last ten years. I don't know. I 
don't have the answers, that is why I am here today, because I 
am looking for you all to help find the answer. I don't know 
what the answer is. I do know that I am sure you will figure it 
out.
    Mr. Young. If I might, just briefly, obviously, I think we 
need to take care of this earnings cash cliff because it is a 
huge barrier. But the SGA level, because it is the first 
determiner of disability, work disability, if you don't index 
it to wage inflation, every year the wages go up, the 
definition of disability changes for the worse for people. It 
is like nonlegislative clamping down on the definition because 
it just keeps crashing down on people. And if it goes ten 
years, then you have got a substantial change in the 
definition.
    So, I would very much urge you guys to look at the 
possibility of indexing that SGA.
    Chairman Shaw. Mr. Gallagher, I am interested. You said 
that you earned more. How far over the limit does the Social 
Security Administration claim you went?
    Mr. Gallagher. I don't know. This is back when I was the 
direct care staff. I was three years on Disability back in the 
1980s, and I was earning over $560 a month at the time. My dad 
has been taking care of my finances, and my dad and I are not 
on the the best of relationship we have a business 
relationship, we don't have a very emotional relationship. I do 
not know the financial parameters. I do know that he is paying 
back out of my Social Security check $100 a month back to SSA 
because of the overpayment. I do know that much.
    Chairman Shaw. As I understand the law you may have just 
stepped over the line slightly and now are incurring a huge 
debt.
    Mr. Gallagher. That was back in the 1980s, I believe it 
was. Correct.
    Chairman Shaw. Who is your congressman?
    Mr. Gallagher. I am from Detroit, Michigan area.
    Chairman Shaw. That could be any number of people. You 
might want to contact their office and ask them to take a look 
at it for you. If you don't know the figures, you are certainly 
entitled to know them.
    Mr. Gallagher. The problem is, my dad is so private about 
things. He is paranoid that I am going to lose all my benefits, 
so he doesn't disclose anything to me about my finances. I live 
in his house. I pay him $400 rent. It is a $150,000 house. I 
could not live there without the support you know, it is just 
very frustrating. I don't have the answers. I am estranged with 
my father. He is my payee, but I do work part-time currently.
    Chairman Shaw. Well, this hearing is held for a definite 
purpose, it is not just to allow people to vent their anger. I 
know Wendy told us that she was very angry, and I think that 
certainly adds to the intensity of the testimony that we have 
gotten today, and I think it has been very open and forthright, 
and I think all the witnesses have been great.
    We are taking a look at the figures and what we can do, and 
we recognize the problem. I think the abruptness of the cutoff 
is very troublesome to me. Mr. Matsui and I--you wonder 
sometimes, when we start whispering to each other up here, what 
we are talking about--we weren't talking about the ballgame, we 
were talking about the subject at hand and what we might be 
able to do.
    Mr. McCrery has talked about putting up some type of 
gradual tapering of benefits after you reach the limit. I am 
very troubled by your situation, Mr. Gallagher, where you 
stepped over the line and now you have got all hell to pay for 
it. That is a big problem, and the law should not be that way 
and we need to take a close look at it. On the other hand, we 
also have to be careful that these programs don't get out of 
hand and that we are concerned about the solvency of the 
system, and that is something we have to constantly work on. 
And we are not going to stop with this hearing, we are going to 
continue to work and see what we can do to change things.
    I want to thank this panel and all the panels and the 
people who stayed with us all afternoon. Thank you very much 
for being here, and this hearing is adjourned.
    [Questions submitted by Chairman Shaw to Mr. Gallagher, Dr. 
Hanes, Mr. VanOoteghem, and Mr. Young, and their respective 
answers, follow:]

Mr. David Gallagher
c/o Paul Seifert
International Association of Psychosocial
Rehabilitation Services
10025 Governor Warfield Parkway, #301
Columbia, MD. 21044-3357

    Dear Mr. Gallagher:

    Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following questions:
    1. Individuals with disabilities can actually earn more than the 
SGA limits and stay eligible for benefits. The reason is they can 
subtract work expenses related to their disability in determining 
earnings subject to the limit. (For example, if an individual who is 
disabled earns $900 per month but has $300 in work expenses, their SGA 
is $600 -below the $700 limit.) Are you familiar with the provision? Is 
it being used? How many individuals with disabilities take advantage of 
these deductions? Is it effective? Should it be changed?
    2. Does working help your medical condition? Would you work more if 
you weren't afraid of losing your disability benefits?
    I thank you for taking the time to answer these questions for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.

            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 19, 2000
The Honorable Clay Shaw
Chairman, House Social Security Subcommittee
B-316 Rayburn House Office Bldg.
Washington, DC 20515

Attn: Kim Hildred, Staff Director

    Dear Mr. Chairman,

    Thank you for the opportunity to address questions regarding 
Impairment Related Work Expenses (IRWEs) and other work-related issues. 
First, I want to thank you for holding the March 23rd hearing on the 
Substantial Gainful Activity level in the Social Security Disability 
program. For too long beneficiaries have struggled against the unfair 
SGA limit placed on their ability earn. I hope that the hearing, and 
these answers, will help the Subcommittee develop a response to the 
concerns expressed on March 23rd.
    I am aware of the IRWE provision but have never used it. Further, 
although I have been on and off benefits I have never been informed by 
Social Security about how the provision could benefit me. I hope that 
the Work Incentive Planners that are a part of the Ticket-to-Work & 
Work Incentives Improvement Act will change this all beneficiaries.
    Also, as you know I have a Master's of Social Work and conduct 
group self-help counseling sessions for mental health consumers at my 
program in Michigan. All the people in my groups have severe mental 
illnesses, and many work, yet none had heard of the IRWE benefit. 
Further, no other consumers I have talked with seem to be aware of this 
benefit. I should qualify this statement by saying that many 
beneficiaries do not fully grasp the complicated work incentives in 
SSDI and SSI. So the fact that everyone I talked with didn't know what 
an Impairment Related Work Expense deduction was or if they used it 
does not mean that a case manager or other counselor didn't utilize the 
deduction on their behalf.
    The IRWE could benefit some SSDI beneficiaries, but overall it is a 
limited answer to a bigger problem, namely the SSDI SGA earnings limit/
cash cliff. The IWRE is limited in several ways. First, the beneficiary 
has to incur the expense in the first place, and pay for it out of 
pocket. Second, to be effective the amount of the IRWE has to equal or 
surpass the amount of income above SGA. If not, then the IRWE doesn't 
protect you. Third, once you use an IRWE, you have to keep it to remain 
on benefits. For example, if the costs of medications are paid for out 
of pocket then they can be used as an IRWE. (The amount spent on 
medications, which incidentally might be more than the benefit, can't 
be used for other necessities). If a person changes jobs and the 
employer's health plan pays for part of the medications, they might 
lose enough of the IWRE to lose benefits without earning enough to 
cover the non-reimbursed cost of the medications.
    Here's how loss of an IWRE could affect a beneficiary:
    If the beneficiary's DI check is $500 and they earn $1,300, they 
need over $600 in IRWEs to keep $500 of benefits. (i.e. $500 in 
benefits and $700 in earnings after the IRWE ($1,300 -$600) for a total 
income of $1,200). Now that works out better than losing one's benefit 
AND having to pay for the medications. However, if the employer's 
health plan picks up $300 of the medication cost, the beneficiary loses 
$500 in benefits and still must pay the $300 co-pay for the medications 
(MH parity notwithstanding, 50% co-pays are NOT unusual for mental 
illness), plus the other costs of the plan. The beneficiary earns 
$1,300 but loses all the DI benefit because the IRWE is too low ($300). 
They also pay the $300 in co-pay for the medications, and now has only 
$1,000. Now, I suppose the person could refuse the healthcare, but how 
wise is that?
    Also, not every one with a disability has impairment related work 
expenses or has enough expenses to keep from losing all their benefits. 
Because of this, the IRWE program is at best a selective solution to 
the cash cliff problem. I believe that the IRWE program working in 
conjunction with sliding-scale cash offset in the SSDI program would 
better address the cash cliff and more fairly benefit ALL working SSDI 
benefits rather than just a lucky few.
    Finally, in response to the second set of questions, there is much 
research that proves that work does help a person cope better with 
their mental illness. Work can't be called ``treatment'' nor does it 
have a direct medical impact on mental illness in terms ``curing'' the 
medical condition (at least not that any research has proved). However, 
by adding a strong sense of self-worth and providing an opportunity at 
independence and self-reliance, work does improve the lives, outlook, 
and overall psychosocial/life condition of people with mental illness. 
In this respect, work can be extremely beneficial for consumers and it 
has been for me.
    As for working more, if the SSDI program was geared to encouraging 
more work I could work more. The cash cliff is tremendously 
discouraging and consumers are acutely aware of it and avoid it at any 
cost. Almost every consumer I talked to about IRWEs mentioned the cash 
cliff as being a problem. Even if earnings don't approach the cliff 
people fear that some unforeseen circumstance, like an increase in the 
minimum wage or a bonus, might push them over the cliff. This keeps 
people from doing the best they can.
    In closing, I urge you Mr. Chairman and the Congress to eliminate 
the cash cliff. Again, thank you for the opportunity to testify and to 
respond further to your questions.

            Sincerely,
                                       David Gallagher, MSW
                                               Eastpointe, MI 48021
      

                                

                                                     April 26, 2000
Pamela P. Hanes, Ph.D.
Oregon Health Sciences University
3181 Southwest Sam Jackson Park Road
Portland, OR 97201

    Dear Dr. Hanes:

    Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries New 
Roman. In order to complete our hearing record, I would appreciate your 
answering the following questions:
    1. Your testimony indicates that the face of disability has changed 
dramatically since 1958. The largest single category of disability in 
the DI and SSI population is mental disorders followed by muscular-
skeletal disorders. Each individual's experience of functional 
impairment is unique and what may facilitate gainful work activity for 
individuals with one disability may not necessarily lead to gainful 
work activity for an individual with another disability. You indicate 
that we should re-think and subsequently re-engineer the disability 
safety net. In addition, you refer to employment and structural 
barriers that need to be overcome. To accomplish what you suggest, what 
factors should we be focusing on?
    2. Individuals with disabilities can actually earn more than the 
SGA limits and stay eligible for benefits. The reason is they can 
subtract work expenses related to their disability in determining 
earnings subject to the limit. (For example, if an individual who is 
disabled earns $900 per month but has $300 in work expenses, their SGA 
is $600--below the $700 limit.) Are you familiar with the provision? Is 
it being used? How many individuals with disabilities take advantage of 
these deductions? Is it effective? Should it be changed?
    3. In your research about barriers to work, did you find that 
barriers to work differ considerably depending on the type of 
impairment an individual has? Did you find that individuals who are 
blind faced greater barriers than those who are not blind?
    I thank you for taking the time to answer these questions for the 
record and would appreciate your response by no later than May 19, 
2000. New Roman In addition to a hard copy of your response, please 
submit your response on an IBM compatible 3.5-inch diskette in 
WordPerfect or Microsoft Word format. New Roman If you have any 
questions concerning this request, please feel free to contact Kim 
Hildred, Staff Director, Subcommittee on Social Security at (202) 225-
9263.

            Sincerely,

                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 16, 2000
E. Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515

    Dear Chairman Shaw:

    Thank you for allowing me to present further information on work 
incentives and disincentives for blind and disabled beneficiaries for 
your hearing record. As I stated during my oral testimony, the Oregon 
Health Policy Institute is currently engaged in a very unique research 
project that will, when completed, provide a comprehensive picture of 
the dynamic relationship between disability, health, public benefits, 
employment, and overall quality of life. Part of the uniqueness of this 
research effort is that the detailed picture presented in our 
evaluation findings will focus on the social and economic experience of 
living with a disability based on whether an individual's primary 
disabling condition is physical, developmental, sensory, or 
psychiatric.
    At this time I will respond to each of the three questions you 
presented in your April 26, 2000 letter.

    1. What factors should the subcommittee focus on in re-thinking and 
subsequently re-engineering the disability safety net?

    I suggest that a primary focus should be on understanding the 
differing experience of disability that derives from whether an 
individual lives with a physical, cognitive, mental, or multiple 
impairments. For too long disability policy has assumed a homogeneous 
population, that is, that all functional limitation on a continuum from 
major to minor, and regardless of the underlying condition, produces 
the same outcome -disability. Disability research has suffered from the 
same myopic view, we study the health status of people with 
disabilities or the employment status of people with disabilities and 
have engaged in very few, if any, disability studies of employment 
behavior that control for type of disability and its effect on 
individuals' employment patterns and earnings histories.
    Although our current understanding of cross disability employment 
dynamics is still quite limited, we can learn from what is known about 
the employment patterns, health status, and employment-related support 
needs within particular disability groups.
    I suggest that a major disability-specific focus to be considered 
in re-engineering the safety net ought to concern the issues 
surrounding reasonable accommodation, assistive technology and devices, 
and the supportive services necessary to return to work or increase 
earnings to a level of economic self-sufficiency.
    To illustrate this point, there have been significant advances in 
the development of assistive technology and devices that allow 
individuals with quadriplegia to drive their own vehicles, manage 
computer websites, become professional artists and craftspeople--in 
each case, a technological breakthrough or device has been so designed 
as to overcome historic misfits between person and environment. For 
individuals with sensory impairments the technological advances are 
different but equally impressive, for example the growing availability 
and uses of service dogs, large print books and publications, advances 
in telecommunications and electronic media access, and the increasing 
numbers of individuals trained in American Sign Language, these 
technologies and adaptive devices have served to mitigate many of the 
barriers that previously prevented individuals with sensory impairments 
from full integration into community affairs and the world of work.
    Among the most challenging and intractable problem areas in terms 
of accommodation and assistance are those faced by individuals with 
severe psychiatric disabilities. The primary work and community 
integration support available to these individuals comes in the form of 
pharmacological assistance. Because mental disabilities are largely 
invisible when the symptoms are controlled, the true costs associated 
with drug therapies at the personal and societal level are not widely 
known or understood. Just as the gentleman who testified at your 
hearing reported, the drugs that are necessary to stabilize acute 
psychiatric symptoms are often toxic to the user, producing potentially 
life-threatening side effects that exacerbate rather than ameliorate 
the misfit between individual and environment. Another important 
component of the support needed by individuals with psychiatric 
disabilities is on-going and intensive clinical case management that 
relies on professional assistance as opposed to technological devices 
or equipment.
    It is important to recognize that costs incurred in getting 
individuals with severe disabilities into competitive employment are 
borne throughout a large number of federal, state, and private agencies 
and organizations and therefore cost comparisons between disabilities 
groups must be made with extreme caution. For example, a large portion 
of the costs associated with supporting individuals with psychiatric 
disabilities in their return to work efforts is borne through the 
Medicaid program. Vocational rehabilitation services have historically 
underserved individuals with psychiatric disabilities so a cost 
comparison across disability types in this program is not appropriate; 
particularly when the underlying assumption is that costs associated 
with vocational rehabilitation service agencies are the sole input in 
the vocational rehabilitation process.
    Another critical dimension of a disability-specific focus is 
sensitivity to the impact that the underlying disabling condition has 
on overall work effort, particularly from a longitudinal perspective. 
For many individuals with physical disabilities once the needed 
technology has been employed, there is a high likelihood of stability 
in the work environment. The caveat to this statement is of course the 
effect that the underlying disabling condition can have on compromising 
the health status of individuals with physical disabilities. Many 
physical disabilities derive from a chronic health condition that 
manifests itself in progressive loss of function, acute medical 
episodes, chronic pain, and physical deterioration. Individuals with 
multiple sclerosis, HIV/AIDS, Parkinson's Disease, all will experience 
setbacks in their work effort that are directly related to their 
disabling condition. The same is true among individuals with severe 
psychiatric disorders whose medications cease to be effect or worse 
yet, become toxic.
    The primary point I want to make about a disability-sensitive focus 
is to encourage subcommittee members to look beyond the label 
'disability' and instead to focus on the personal dynamics of living 
with a severe disability, recognizing that these dynamics manifest 
themselves differently based on the type of disabling condition and the 
anticipated course of the disease or chronic condition.
    Reengineering the disability safety net requires an acknowledgement 
of the predictable nature of disability -disability does not go away 
over time, nor does it disappear because of earnings in excess of some 
fixed, albeit, arbitrary dollar figure. It is important to remember 
that without accommodations, technological advances, and changing 
societal attitudes, competitive employment among individuals with 
severe disabilities would be an unrealistic and unattainable policy 
goal.
    I suggest that the policy goal of the disability safety net should 
be to maximize the number and types of opportunities available to 
individuals with severe disabilities who want to work and to allow them 
to pursue competitive employment at whatever level is reasonably 
possible in terms of hours worked and monthly earnings. We know from a 
growing body of survey research conducted at the Oregon Health Policy 
Institute that the vast majority of individuals with significant 
disabilities want to be employed, want to have meaningful life rolls, 
and strongly believe that work is a primary way to give something 
important back to their community. The fear that gets played out in 
high rates of unemployment in this population is quite understandable 
when the choice is between living entirely on poverty level or near 
poverty cash assistance with health insurance or the possible permanent 
loss of a cash assistance and health care safety net when the 
possibility of failure in the workplace looms largely.

    2. Are you familiar with existing Social Security work incentives 
and how widely are they being used?

    Yes, I am familiar with the impairment-related work incentive 
(IRWE) program as well as the 1619 (a) and (b) Work Incentive 
provisions and the Plan to Achieve Self-Sufficiency (PASS) program. The 
best source for tracking the impact of these work incentive programs on 
the work efforts of Social Security beneficiaries is the Quarterly 
Report on SSI Disabled Workers and Work Incentive Provisions issued by 
the Social Security Administration and available on their website. The 
short answer to your question is that, with the exception of 1619, 
these work incentive programs are largely unutilized. A snapshot from 
the March 1999 report reveals:
     Only 6% of the total SSI caseload were working during the 
first quarter of 1999
     72% of SSI disabled workers had earned income below $500/
month; 30% earned $65 or less
     In general, the percentage of SSI disabled workers was 
higher in the Northern states than in the Southern states
     The greatest use of a work incentive provision was 1619 
-30% of disabled workers used this provision
     3% of SSI disabled workers used the IRWE provision
     1% of blind disabled workers used the Blind Work Expense 
(BWE)
     .3% of disabled workers used the PASS program
    My opinion about these work incentive programs is largely shaped by 
the professionals and advocates in the field who work on a daily basis 
with individuals with severe disabilities who want to return to work, 
are returning to work, or are choosing not to return to work because 
they fear the loss of disability status, health benefits, and a cash 
assistance safety net. The overwhelming sentiment expressed is that 
existing work incentive programs are too complicated, result in 
overpayments, lack real protection against set backs in the workplace, 
and are subject to interpretation based on who one talks to at which 
agency. More importantly, there has been a lack of trust in the past in 
the individuals who administer these programs. I have come to 
appreciate the elegance of the strategies employed by Wisconsin and 
Vermont in their work incentive demonstration projects which are 
designed, simply stated, to make return-to-work incentives as simple 
and straightforward as possible for the consumer.
    Work incentives that support individuals on the path to economic 
self-sufficiency, that allow them to gradually work off benefits, that 
recognize the extraordinary expenses associated with accommodating 
functional impairments in the workplace and community, and that 
function as a true safety net, not a way of life, should be the goals 
of an efficient, user friendly disability safety system.

    8. In my research did we find that barriers to work differed 
depending on type of impairment? Did we find that blind individuals 
face greater barriers than others?

    Our preliminary baseline data suggest that significant differences 
exist in perceived employment barriers faced by individuals based on 
type of impairment, particularly striking differences appear to exist 
between individuals with physical as contrasted with mental 
impairments. The total number of individuals who are blind and 
participating in the 3-state work incentive initiatives is too small to 
segregate their responses from other types of physical disabilities.
    I am happy to share with you and your staff the baseline 
frequencies related to work attitudes and motivation, attitudes and 
beliefs about work and benefits, and issues of self-esteem among 
individuals participating in the Wisconsin Pathways to Independence 
program. These data represent 187 program participants as of 4/00. 
Because of the preliminary nature of these data, I respectfully request 
that these data not be made a part of the public record and that they 
are not duplicated or disseminated until such time that our research 
team does so.
    These data provide an as yet incomplete picture of the individuals 
who are participating in the 3-state work incentive projects, what they 
do illustrate is a range of beliefs and perceptions about the value of 
work, fears about working, and the profound impact that living with a 
disability has on the self-esteem of individuals. When our study is 
completed in December, 2001 we will have linked these perceptual data 
with the actual work experiences and earnings of participants and be 
able to discuss more fully the impact that type of impairment has on 
the work efforts of a group of severely disabled Social Security 
beneficiaries.
    Please feel free to contact me for further information as needed. I 
am happy to be able to add our research findings and policy experience 
to this important public policy discussion.

                                       Pamela P. Hanes, PhD
       Associate Professor of Public Health and Preventive Medicine
                                                 Associate Director
                                     Oregon Health Policy Institute
      

                                

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Mr. William VanOoteghem
c/o Marty Ford
The ARC
1730 K Street, N.W.
Washington, DC 20006

    Dear Mr. VanOoteghem:

     Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following question:
     Individuals with disabilities can actually earn more than the SGA 
limits and stay eligible for benefits. The reason is they can subtract 
work expenses related to their disability in determining earnings 
subject to the limit. (For example, if an individual who is disabled 
earns $900 per month but has $300 in work expenses, their SGA is $600--
below the $700 limit.) Are you familiar with the provision? Is it being 
used? How many individuals with disabilities take advantage of these 
deductions? Is it effective? Should it be changed?
     I thank you for taking the time to answer this question for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.

            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                       May 18, 2000
The Honorable E. Clay Shaw
Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    This is in response to your letter of April 26 requesting 
additional information on work incentives for blind and disabled Social 
Security beneficiaries. Specifically, you asked:
    Individuals with disabilities can actually earn more than the SGA 
limits and stay eligible for benefits. The reason is they can subtract 
work expenses related to their disability in determining earnings 
subject to the limit. (For example, if an individual who is disabled 
earns $900 per month but has $300 in work expenses, their SGA is $600 -
below the $700 limit.) Are you familiar with the provision? Is it being 
used? How many individuals with disabilities take advantage of these 
deductions? Is it effective? Should it be changed?
    According to the Social Security Administration, about 9,500 people 
with disabilities take advantage of this provision. It can be effective 
in assisting an individual to show the net value of their work efforts, 
after all of the disability-related expenses of work are deducted. 
However, I believe that it is important to point out that a distinction 
is made between the expenses that an individual can deduct depending on 
whether they are blind or not. As I understand it, people who are blind 
can deduct anywork-related expense, while all other people with 
disabilities who are not blind can deduct only disability-related work 
expenses.

    In my daughter Wendy's case, she does not have many disability-
related work expenses. Her transportation costs are minimal since her 
workcenter provides transportation. However, I do know that for many 
people with mental retardation who cannot drive, transportation costs 
to and from work can be very high in relation their earnings, 
particularly in rural areas or in cities without adequate public 
transportation systems. As I understand it, these transportation costs 
are excludable. This provision should be continued.
    There are also many people with needs for services while they are 
working. One typical service is that of a ``job coach'' in a supported 
employment setting. While many other services are deductible from SGA, 
supported employment services are treated differently depending upon 
who provides such services. This is a problem for many people with 
mental retardation and is discussed in the statement for the record 
submitted by the Consortium for Citizens with Disabilities. I urge you 
to address that issue as well.
    Thank you for this opportunity to provide additional information. 
Please let me or Marty Ford (202/785-3388) know if I can help you in 
any further way.

            Sincerely,
                                        William VanOoteghem

William VanOoteghem
c/o The Arc of the United States
1730 K Street, NW Suite 1212
Washington, DC 20006
      

                                

                                                     April 26, 2000
Mr. Tony Young
NISH
2235 Cedar Lane
Vienna, VA 22182

    Dear Mr. Young:

     Thank you for testifying before our Subcommittee regarding work 
incentives for blind and disabled Social Security beneficiaries. In 
order to complete our hearing record, I would appreciate your answering 
the following question:
     Individuals with disabilities can actually earn more than the SGA 
limits and stay eligible for benefits. The reason is they can subtract 
work expenses related to their disability in determining earnings 
subject to the limit. (For example, if an individual who is disabled 
earns $900 per month but has $300 in work expenses, their SGA is $600--
below the $700 limit.) Are you familiar with the provision? Is it being 
used? How many individuals with disabilities take advantage of these 
deductions? Is it effective? Should it be changed?
     I thank you for taking the time to answer this question for the 
record and would appreciate your response by no later than May 19, 
2000. In addition to a hard copy of your response, please submit your 
response on an IBM compatible 3.5-inch diskette in WordPerfect or 
Microsoft Word format. If you have any questions concerning this 
request, please feel free to contact Kim Hildred, Staff Director, 
Subcommittee on Social Security at (202) 225-9263.

            Sincerely,
                                          E. Clay Shaw, Jr.
                                                           Chairman
      

                                

                                                      June 11, 2000
The Honorable E. Clay Shaw, Chairman
Subcommittee on Social Security
House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:

    This is in response to your letter of April 26 requesting 
additional information on work incentives for blind and disabled Social 
Security beneficiaries. Specifically, you asked:

    Individuals with disabilities can actually earn more than the SGA 
limits and stay eligible for benefits. The reason is they can subtract 
work expenses related to their disability in determining earnings 
subject to the limit. (For example, if an individual who is disabled 
earns $900 per month but has $300 in work expenses, their SGA is $600--
below the $700 limit.) Are you familiar with the provision? Is it being 
used? How many individuals with disabilities take advantage of these 
deductions? Is it effective? Should it be changed?

    I am familiar with this work incentive provision, although I did 
not personally make use of it when I was on SSDI. This provision is 
being used to a limited extent by beneficiaries. According to the 
Social Security Administration, about 9,500 people with disabilities 
take advantage of this provision.
    In my view, Impairment-related work expenses could be effective in 
assisting an individual to show the net value of their work efforts, if 
certain improvements are made.
    1. Currently, a distinction is made between the expenses that an 
individual can deduct depending on whether or not they are blind. Blind 
beneficiaries can deduct any work-related expense, while people with 
disabilities who are not blind can deduct only disability-related work 
expenses. Beneficiaries who have multiple significant disabilities have 
as many or more expenses related to work as do Blind beneficiaries. All 
beneficiaries who work should be allowed to deduct all work-related 
expenses
    2. The Social Security Administration field office determines 
whether expenses may be deducted from earnings. The determinations are 
rarely done on a consistent basis. These expenses are often disputed by 
SSA as to whether they are disability-related, and are excluded 
inconsistently. SSA must issue better guidance to Field Office 
personnel and improve consistency in work incentives determinations.
    3. Beneficiaries need better decision making tools to determine how 
IRWE can work for them. SSA should make available decision-support 
software, such as WorkWORLD, to beneficiaries and their families so 
that truly informed decisions can be made.
    While the IRWE could benefit some SSDI beneficiaries, overall it is 
a limited answer to a bigger problem, namely the SSDI SGA earnings 
limit/cash cliff. The IRWE is limited in several ways.

    1. The beneficiary has to incur the expense in the first place, and 
pay for it out of pocket.
    2. To be effective the amount of the IRWE has to equal or surpass 
the amount of income above SGA. If not, then the IRWE doesn't protect 
you.
    3. Once you use an IRWE, you have to keep it to remain on benefits. 
For example, if the costs of personal assistance services are paid for 
out of pocket then they can be used as an IRWE. (The amount spent on 
PAS, which might be more than the benefit, can't be used for other 
necessities).
    Also, not every one with a disability has impairment related work 
expenses or has enough expenses to keep from losing all their benefits. 
Because of this, the IRWE program is at best a selective solution to 
the cash cliff problem. I believe that the IRWE program working in 
conjunction with sliding-scale cash offset in the SSDI program would 
better address the cash cliff and more fairly benefit ALL working SSDI 
benefits rather than just a lucky few.
    Thank you for this opportunity to provide additional information. 
Please call me at 703-425-8633 or e-mail at [email protected] if 
I can help you in any way.

            Sincerely,
                                       Tony Young, Director
                                NISH Governmental Activities Office
                                                   Vice Chairperson
                          Consortium for Citizens with Disabilities
      

                                

    [Whereupon, at 1:50 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

The Honorable E. Clay Shaw, Chair
House Committee on Ways and Means
Subcommittee on Social Security
B316 Rayburn House Office Building
Washington, DC 20515

                                                     March 27, 2000
American Council of the Blind

    Dear Chairman Shaw and Members of the Subcommittee:

    Please accept the appreciation of the membership of the American 
Council of the Blind for the serious consideration your subcommittee is 
exercising in reviewing the Social Security Administration's program of 
disability insurance that impacts upon our members throughout this 
land. We offer the following testimony to assist the subcommittee with 
this important albeit daunting task.
    There is no question that the pace of our economy is outstripping 
the allowable income that a blind person can make before SSDI benefits 
are lost. The net effect of this phenomena is to discourage those 
receiving benefits from going to work in fear of losing the financial 
and medical security provided through SSDI. This situation is further 
complicated by the fact that blind persons must rely upon the cash 
value of benefits plus whatever limited earnings we can make to pay for 
service and equipment needs not available under other programs that 
currently address many similar needs of persons with other 
disabilities. These expenses include, but are not limited to readers, 
adaptive hardware and software, low vision magnification devices, dog 
guide medical costs, orientation and mobility equipment, and a high 
reliance upon taxi and other transportation costs.
    If we are to arrive at a solution to the problems described above, 
while maintaining faith with the workforce paying into Social Security, 
then we simply must find a way to help beneficiaries locate employment 
that offsets or eliminates reliance on the SSDI program while 
contributing to the revenue base of Social Security. Here is how.
    ACB suggests that the earnings limit for blind persons be either 
totally removed (See attached letter of personal testimony from a woman 
who is blind) or set to the earnings limits of what elders had before 
the passage of HR5. In the former case, all disincentives to work would 
be removed and increased revenues to the treasury would result. In the 
latter case, this would allow for an eventual $30,000 in earnings 
before benefit loss. ACB further proposes that the earnings limit be 
automatically raised based upon inflation in order to avoid recreating 
the current situation where the SSDI program has become counter-
productive to its original intent. Moreover, ACB recommends eliminating 
the cliff effect of benefits lost at a certain income level by 
decreasing the SSDI benefit by one dollar for every three earned over 
the earnings limit. These approaches would resolve the cash benefit 
issues and ACB suggests that the medical issues could be resolved by 
allowing the previous cash beneficiary to purchase Medicare for his or 
her health needs.
    ACB further believes that raising the SGA levels for other 
disability groups to that of the earnings limits for the blind would be 
appropriate if expanded Medicare coverage of blindness related services 
and equipment were to occur as a question of equity with other 
disabilities. Only in this fashion could a ``do no harm'' and fairness 
oriented approach to blind persons be accomplished.
    These concepts represent a way to provide real incentives for 
recipients to work, greater revenue growth to the Social Security trust 
fund, equity in disability policy, and a new view of disabilities as 
participating in the national economy rather than being viewed as a 
cost to it.
    Please feel free to communicate with me to further explore the 
options presented above, and I and ACB wish the subcommittee every 
success in your efforts.

            Sincerely,
                                        Charles H. Crawford
                                                 Executive Director
      

                                

                                             Jenine Stanley
                                                     March 22, 2000
House Ways & Means, Social Security Subcommittee

    RE: Earnings Income Limits for Blind People

    I am writing this letter in hopes that it will be shared by 
representatives of the American Council of the Blind with the House 
Ways & Means, Social Security Subcommittee. I would like the members of 
this committee to know, through my own personal story, why removing the 
earnings limits for blind people is so crucial to maintaining or even 
establishing independence.
    I am a college graduate and have been employed in the not-for-
profit sector since 1988. Since 1991 I have been receiving Social 
Security Disability Insurance due to my blindness. I have also 
attempted to work, within the limits imposed by the Social Security 
Administration. For me, the ability to work, to sustain gainful 
employment, is vital to my mental and physical well being.
    In America, people are measured, rightly or wrongly, by the work 
they do. What one does for a living is often the first question asked 
in social conversation. For people with disabilities, especially blind 
people who have been the recipients of some of the most negative 
stereotyping in history; being able to state a profession or employer 
holds a very important place. It equalizes ``us'' with ``them'' and 
removes the stigma of ``charity for the blind.''
    The ability to be gainfully employed also removes those old 
stereotypes of blind people as simply musicians, chair caners or 
helpless wards of the state or their families. This ability to work, 
however, is often marred by the complex rules and regulations of the 
Social Security Administration.
    Blind people are faced with significant lag time in processing any 
changes to their Social Security status, such as reporting of 
employment or benefits decisions because all applications noted as 
being from ``blind'' recipients must go through a special office in 
Baltimore. As a result, I and many other blind people who want to work, 
do so under the threat of having our benefits, income tax returns and 
even salaries garnished upon decision that are often up to four years 
in the making.
    I have worked as a private contract employee for the State of Ohio 
in two different departments since 1996. In 1998 my income tax refund 
was garnished because I failed to appeal a decision of the Social 
Security Administration I knew nothing about. This decision involved me 
making an amount over and above the Substantial Gainful Activity limit. 
When I looked into the matter, I was told that there was nothing I 
could do. My debt to the SSA was paid and it was just too bad that I 
lost my tax return, but. . .
    Now, I continue to work as a contract employee. I keep meticulous 
records and only work eight hours a week as I continue my education. At 
some point, I will want to work more. Logic says that I should be able 
to simply end my reliance on SSDI benefits and return to work, but 
things are not that simple.
    Like many Americans, I live in an urban area that suffers from 
``urban sprawl.'' Many of the jobs I am qualified for are located far 
from public transportation. I do not drive. Due to the low unemployment 
rate in my city, Columbus Ohio, it is very difficult to secure 
dependable transportation, either by taxi or paratransit services. This 
is only one expense associated with my blindness that keeps me from 
employment at the level I desire. I must also purchase my own computer 
equipment and other adaptive devices if I expect to have tools to help 
me do my job. The consumer, the blind person, to assure a proper fit of 
technology, best purchases these devices. Although state rehabilitation 
services may cover some of the items I need, the time
    lag is too great for my employment prospects.
    Just as people over sixty-three years of age want the freedom to 
continue to work while earning Social Security benefits, I, as a blind 
person, want and need the extra assistance provided by SSDI. I have 
paid into the system for over ten years now. I truly deserve its 
benefits, including the ability to work without the fear of having 
everything taken away.
    This fear, this reluctance to seek employment that is equal to my 
potential, is specific to blindness in that our claims, our decisions 
and our appeals are significantly delayed by being sent to Baltimore 
rather than decided at the local SSA office as such situations are for 
people with other types of disabilities. I would think that the blind 
population is so small compared to the rest of the SSDI or SSI 
recipient population, that allowing no cap on Substantial Gainful 
Employment would not effect the budget any more significantly than 
doing so for seniors who have just received such benefits through House 
and Senate actions.
    I urge you to please consider lifting the cap on earnings for blind 
people. Otherwise, we will continue to be under or unemployed and 
painful destructive stereotypes will continue both in the workplace and 
the public. I appreciate your attention to my opinions and sincerely 
hope that you will take them into consideration in your debate.

            Sincerely,
                                             Jenine Stanley
      

                                

Statement of the American Network of Community Options and Resources, 
Annadale, Virginia

    The American Network of Community Options and Resources 
(ANCOR) commends the subcommittee for its work to remove work 
barriers for individuals with disabilities through passage last 
year of the Ticket to Work and Work Incentives Improvement Act 
of 1999 and for its continued work in examining remaining work 
disincentives in the Social Security Disability Insurance 
program (SSDI). ANCOR is concerned about the changes being 
considered to the Social Security earnings limit for SSDI 
beneficiaries, also known as the substantial gainful activity 
(SGA) level. If there are to be changes to the earnings limit 
for SSDI beneficiaries, ANCOR urges the Committee to make 
changes that will ensure equity among benefits for all people 
with disabilities who receive SSDI benefits, not just for 
individuals with one type of disability.
    As the Committee members know, most SSDI beneficiaries must 
limit their earnings to $700 per month. At any amount over 
$700, beneficiaries lose all cash benefits. However, SSDI 
beneficiaries who are blind are allowed a greater monthly 
earnings limit--up to $1170--before they lose their cash 
benefits. While the loss of cash benefits to beneficiaries if 
they earn too much money is one of the major disincentives for 
SSDI beneficiaries to return to work, ANCOR has long advocated 
to end the disparity in the SGA for SSDI beneficiaries who are 
blind and those who are not blind.
    When the Committee considers reforms to the earnings limit 
for SSDI beneficiaries, ANCOR believes such reforms should 
ensure that no individuals with disabilities--whether they are 
blind or non-blind--should be adversely affected by these 
reforms. ANCOR also believes that reforms to the Social 
Security earnings limit should ensure equity in earnings among 
all people with disabilities.
      

                                

                                         Bay City, MI 48708
                                                     March 29, 2000

Testimony on work incentives for Blind and Disabled Social Security 
    Beneficiaries

Richard L. Davis (Father of a son that is disabled)

    Congressman Shaw and other distinguished members of the Committee 
on Ways and Means. I am the father of a son 33 years of age that is 
disabled and is eligible to receive Social Security Benefits under 
title II of the Social Security Act.
    I have elected to continue working and not collect benefits for the 
past year and one half so that my son would not suffer from the 
indignity of losing all benefits because he wants to work. This could 
soon change due to the bill that you have just passed that will enable 
me to receive the benefits of social security now. I think this is good 
legislation and I thank you for it. I hope that what you do on SGA 
legislation will enable David to continue working. As an advocate for 
people with a disability, I recognized many years ago that a person 
with mental retardation or other related disabilities could be a 
productive individual within their own community. I believe and it has 
been proven that these people can work side by side with their non-
disabled counterparts. The unfortunate part of this is that these 
people usually only get jobs at minimum wage and without benefits.
    My son David works on a packaging line with Wendy VanOoteghem whom 
you heard testimony from on March 23, 2000. David earns $5.43 per hour. 
If David would work 40 hours per week, he would earn $217. This would 
put him at $241 over the $700 SGA level. Because of this, David can 
work no more than twenty-nine hours per week. This penalizes both him 
and his employer. With the expected increase in minimum wage, which 
will be passed on through other wage levels, David will only be able to 
work twenty-seven hours a week. Two years from now with the second step 
of the minimum wage increase,David will only be able to work twenty-
five hours per week. This is certainly a disincentive for David and for 
his employer to keep him. If this continues, why should David continue 
to work? He can receive his Social Security benefits and Medicare, 
after all he is totally and permanently disabled. Why should it matter 
that his parents have encouraged the work ethic within him to help him 
be a better person and citizen?
    I have found that the work incentives that congress has passed this 
past year, when they are activated, will benefit people with 
disabilities to get and maintain jobs within their community. The 
raise, in minimum wage, will help people to make more to support 
themselves. This is good for people with a disability, but all of the 
good we may have done may cause a hardship to others. If a person works 
a 40-hour week at minimum wage of $5.15 per hour, they will earn $893 
per month, which is $193 above the current SGA wage level of $700 per 
month. This will cause the loss of all of the benefits that they need 
to survive such as SSI, SSDI, RSDI, Medicaid and Medicare.
    In 1999, the SGA level was increased from the $500 per month level 
set in 1990 to $700 per month. This will not keep all people with a 
disability working a full 40-hour workweek from loosing their benefits. 
I ask you to increase the SGA level for all people that are Blind or 
Disabled and make them equal. Additionally, SGA should be indexed or 
have a cost of living attached to it so that the inequities never occur 
again.
    I ask that you do your job so that my son David can continue to do 
his.

            Respectfully,
                                           Richard L. Davis
      

                                

                                                     March 23, 2000
The Honorable Clay Shaw
Subcommittee on Social Security
Committee on Ways and Means

    Dear Chairman Shaw:

    I would first like to commend you and the Social Security 
Subcommittee for holding a hearing to examine the work incentives in 
the Social Security Disability program for the blind and those with 
other disabilities. I share your commitment to ensure that disabled 
workers have the opportunity and incentive to remain in the workforce.
    As you are aware, the Social Security Administration increased the 
monthly substantial gainful activity (SGA) level from $500 to $700 for 
non-blind disabled adults. I believe that this was an important first 
step in correcting a deterrent in the system which in effect pushes 
disabled adults out of the workforce.
    I feel that a further increase is necessary and should be addressed 
this year. Time and time again, disabled citizens have proven their 
invaluable contributions to the U.S. workforce. These individuals, like 
our seniors and the blind disabled, should be encouraged to work when 
able to do so.
    I am particularly pleased that The Ticket To Work and Self-
Sufficiency Act of 1999, H.R. 1180, requiring the Social Security 
Administration to conduct a demonstration project providing for Social 
Security Disability Insurance (SSDI) reductions based on earnings. 
Currently, disabled workers who earn over the SGA levels face an 
``income cliff'' -in effect they lose their benefits. The demonstration 
project would examine the effects of gradually reducing SSDI benefits 
$1 for every $2 in earnings over a level determined by the 
Commissioner. This is a serious problem for disabled workers and I look 
forward to the Commissioner's findings.
    Thank you again for holding a hearing on this important issue. I 
look forward to working with you in the future on this issue.

            Sincerely,
                                               Phil English
                                                 Member of Congress
      

                                

Statement of Michael Freedman, Member, Board of Directors, National 
Alliance for the Mentally Ill, Arlington, Virginia

    Chairman Shaw and Representative Matsui, on behalf of the 
more than 210,000 members of NAMI (The National Alliance for 
the Mentally Ill) and the 50 state organizations and over 1,240 
local affiliates across the nation and in Puerto Rico, American 
Samoa, and Canada, I would like thank you for this opportunity 
to submit testimony on work incentives for disabled 
beneficiaries of the disabled and income security programs of 
the Social Security Administration.
    NAMI is the nation's leading grassroots organization 
dedicated solely to improving the lives of persons with severe 
mental illnesses such as schizophrenia, bipolar disorder 
(manic-depressive illness), major depression, obsessive-
compulsive disorder, and anxiety disorders. NAMI's efforts 
focus on support to persons with these serious brain disorders 
and to their families; advocacy for ending discrimination in 
federal income support and health insurance programs and 
education to eliminate the pervasive stigma surrounding severe 
mental illness. NAMI also endorses efforts to promote 
employment opportunities and greater independence through 
increased access to rehabilitation and job training programs 
and extended health care coverage to workers who need treatment 
in order enter and stay in the workforce.
    I am Mike Freedman, member of the Board of Directors of 
NAMI, and a former president of the NAMI Consumer Council, the 
nation's largest organization of consumers of mental health 
services. I was diagnosed with Clinical Major Depression, 
extreme Panic/Anxiety Disorder, and Post Traumatic Stress 
Disorder as a result of a genetic disposition that came to the 
surface in 1976 after experiencing both war and the suicide of 
my father, a decorated Air Force Pilot, and later a Federal 
Narcotics Officer. In addition, my spouse, a former mental 
health crisis counselor, became afflicted with Bi-Polar 
Disorder and was very suicidal until she was properly diagnosed 
and medicated. During this long period of stabilization, 
rehabilitation, and recovery, we did the best we could raising 
a child in deprivation and poverty caused by the existing rules 
governing state and federal policies that deal with assistance 
to the psychiatrically disabled on SSI and SSDI. I know first 
hand the struggles that consumers face in getting and keeping a 
job, and attempting to leave the Social Security disability 
programs for a productive and independent life. As a State 
Program Director with the New York Association of Psychosocial 
Programs, I encounter consumers every day who struggle with the 
confusing, unfair and complicated rules governing the SSDI 
program.
    At the outset, I would like to express our deep 
appreciation to every member of the Subcommittee for the 
important role and leadership displayed in the passage of the 
Ticket to Work and Work Incentives Improvement Act late last 
year. This law takes important steps toward self-determination 
in the rehabilitative process for people with disabilities, 
including people with severe mental illnesses, and removes 
barriers for disability beneficiaries who wish to enter the 
workforce and lead independent lives. NAMI is extremely 
grateful for the bipartisan leadership that you and your 
colleagues exhibited in passing this long overdue reform.

Substantial Gainful Activity's (SGA's) Impact on Work

    Individuals with disabilities, including people with severe 
mental illnesses, want to work, but are often discouraged by 
many barriers existing in the current public system. A recent 
Harris survey showed that 72% of unemployed people with 
disabilities, including people with severe mental illnesses, 
have a strong desire to have a job. Several recent surveys have 
found this rate to be even higher for adults with severe mental 
illnesses, as high as 80%. Yet 69% of those surveyed by Harris 
say that their need for benefits is a major impediment to 
seeking employment. Employment is an essential part of recovery 
for people with severe mental illnesses and recent advances in 
treatment services and medications have increased the capacity 
of people with severe mental illnesses to join the mainstream 
and live independently. NAMI has heard the frustration from 
countless members who would like to begin the road to recovery 
by gaining employment but cannot risk losing their benefits by 
exceeding the SGA.
    Employment assistance is critical for people with severe 
mental illnesses to regain independence, dignity and purpose. 
People with severe mental illnesses are the fastest growing 
population within both the SSI and SSDI programs. More 
importantly, SSA data reveal that people with mental illnesses 
are joining the disability rolls at an earlier age. Given how 
difficult it is to get off the rolls through employment--less 
than 1% successfully do so--it becomes imperative to enact 
reforms that end the severe penalties for those who are willing 
to take the tremendous risks inherent in entering the 
workforce. Increasing the SGA level will certainly have a 
positive impact on individuals who would like to work but 
cannot afford to lose their eligibility for disability 
benefits.

The Current SGA Level is Outdated

    Although NAMI strongly supported the increase of SGA to 
$700 a month in 1999 and acknowledged the intent of SSA to 
create an environment where more beneficiaries with 
disabilities can ``enter the workforce and lead more productive 
self-sufficient lives,'' this figure does not reflect an 
adjustment based on the national average wage index since the 
inception of SGA in 1979. SGA was designed as an indicator to 
signal whether a beneficiary is capable of earning significant 
wages and provides an incentive to enter the workforce. 
However, the current earnings limit of $700 a month reflects an 
income of only $8,400 per year, which barely raises an 
individual who wants to become independent of public support to 
the federal poverty level. Once making it to this meager 
plateau, a demarcation point that usually signals a crisis in 
an unimpaired workers life, a person with a disability that 
makes one dollar more can lose their eligibility for cash 
benefits. This is referred to as the ``cash cliff'' and 
represents an all-or-nothing design that encourages people with 
disabilities to remain in poverty and dependent on the system. 
NAMI believes that a more equitable approach would be to 
increase SGA and index it to wage growth since the 
establishment of SGA.

Indexing SGA to Wage Growth

    Since the establishment of SGA over twenty years ago, it 
has been increased only twice, in 1990 and just recently last 
July in 1999. Obviously, those modest increases have not kept 
up with inflation over that period. This is especially the case 
with respect to cost increases in treatment, medications and 
support services. As wages have increased over that same 
period, people with severe mental illnesses and other 
disabilities receiving SSA benefits have been forced to reduce 
the amount of hours they work in order to keep from exceeding 
SGA. Thus, SGA has become a very unreliable indicator of a 
beneficiary's ability to work. As you know, Social Security has 
stated that the past increase in SGA has resulted in 
substantial cost increases to both the SSI and SSDI programs. 
Likewise, any proposed increase is projected to increase the 
overall cost of Social Security's disability programs.
    However, indexing SGA to wage growth, as is currently done 
for the SGA amount for the blind, would result in costs going 
gradually over time. Such a move would allow SGA to be a more 
reliable indicator of an individual's ability to earn wages and 
work. It would also more effectively incentivize work for all 
people with disabilities, including people with severe mental 
illnesses. This would mean that the federal government would 
not be hit by substantial periodic cost increases that are 
needed to correct an antiquated and unreliable SGA. Finally, 
such a move would also avoid placing an unfair burden on 
beneficiaries who are eager to attempt to work.

Equivalence to the SGA Level for Blind Beneficiaries

    NAMI believes that SSI and SSDI beneficiaries with severe 
mental illnesses and other disabilities should have an SGA 
level equivalent to the level established for the blind, around 
$1,170 per month, which is about 67% greater than the SGA level 
for non-blind beneficiaries. Such an adjusted level should also 
be adjusted annually for the cost of living, as is done for 
blind beneficiaries. This figure currently allows a blind 
disabled beneficiary to earn minimum wage (or a little more) 
and work a 40 hour week, without a substantial loss of cash 
benefits.
    Currently, people with disabilities (excluding blind 
beneficiaries), can work barely more than 30 hours a week at 
minimum wage before exceeding SGA and thus risk losing all, or 
part of their cash benefits. It is likely that increasing SGA 
for non-blind beneficiaries to that for the blind disabled 
would create an additional fiscal burden for Social Security's 
programs. However, this change would create greater equity and 
fairness in both the SSI and SSDI programs and would more 
effectively incentivize work for many beneficiaries.
    The difference in SGA levels for people disabled by 
blindness, and for people disabled by severe mental illnesses 
or other disabilities, has been supported by a rationale that 
has not been proven by research. In fact, evidence shows that 
the very characteristics thought to distinguish blind from non-
blind disabled beneficiaries accurately describe the fate of 
non-blind beneficiaries disabled by severe mental illnesses. As 
was reported to the Subcommittee in the GAO testimony given by 
Barbara D. Bovbjerg, associate director, Education, Workforce, 
and Income Security Issues, Health, Education, and Human 
Services Division, disadvantages thought to separate people 
disabled by blindness were greater employment discrimination 
and low rates of employment.
    The GAO noted that likely job prospects were low-wage jobs, 
and higher costs for supportive services. However, research 
done by the National Institute of Disability and Rehabilitation 
Research shows that while people disabled by blindness are 
participating in the workforce at a rate of only 28.9%, they 
exceed the overall participation of rate of individuals 
disabled by severe mental illnesses (27.2%). In fact, NIDRR 
found that within the broad category of severe mental illness, 
the participation rate of persons with depressive disorders was 
only 25.4% and that the rate for individuals with schizophrenia 
was 11.9%, the lowest among any measured category.
    The GAO testimony further compares evidence of cost 
differentials of supportive services associated with disabled 
blind beneficiaries and beneficiaries disabled by severe mental 
illnesses. A study conducted by the American Foundation for the 
Blind and Mississippi State University found that over 50% of 
legally blind individuals spent less than $500 for devices used 
to support work. In comparison, literature reviewed by GAO 
showed that on average, people with severe mental illness incur 
costs of $1,400 to $3,600 annually for supportive employment 
services and annual costs for mental health services range from 
$3,200 to $7,000.
    If the presuppositions that led to the original segregation 
of beneficiaries with severe mental illnesses and other 
disabilities are not supported by research evidence, how can 
the disparities remain. If the evidence actually points to 
people disabled by severe mental illnesses having a greater 
disadvantage, how can the disparities remain?
    NAMI does not seek to single out any group in determining 
fair and legitimate SGA levels or their complete removal for 
all groups of people with disabilities. On the contrary, NAMI 
wishes to advance fair and equitable treatment for all 
disability groups. NAMI endorses the goals cited by the 
Consortium of Citizens with Disabilities that congressional 
action regarding SGA should:
    1) Do No Harm--Changes made by Congress to the earnings 
limit, or to the Social Security Disability programs as a 
whole, should ensure that no disability group os negatively 
affected. Whatever Congress does, it must not enact policy 
detrimental to any particular category of DI beneficiaries.
    2) Establish Equity--Congress should take favorable action 
on legislation that addresses earnings limits and must ensure 
equity among all DI beneficiaries.
    NAMI would like to thank the Subcommittee for taking this 
important look at long overdue steps toward greater fairness in 
the SSI and SSDI programs. NAMI is hopeful that congressional 
action will allow more beneficiaries with severe mental 
illnesses to reach their potential through employment. Thank 
you for the opportunity to comment on this important work 
disincentive in Social Security's disability programs.

            Thank you, and with deep respect,
                                           Michael Freedman
      

                                

Statement of Hon. Jim Nussle, a Representative in Congress from the 
State of Iowa

    I appreciate this opportunity to express my views to the 
Subcommittee on the issue of the Social Security Disability 
Insurance (SSDI) program's substantial gainful activity (SGA) 
level. I would like to acknowledge the Subcommittee's great 
work on securing the enactment of the Ticket to Work and Work 
Incentives Act of 1999 (H.R. 1180) last fall. This legislation 
promotes independence and will lead to greater employment for 
individuals with disabilities. If people with disabilities want 
to enter the working world or return to their career or 
workplace, we should do everything we can to make that happen. 
We currently have a system that not only discourages people 
from going to work but also encourages them to continue 
collecting public benefits. The enactment of the H.R. 1180 was 
the first step in providing disabled Americans with the means 
to add to the productivity of our nation's workforce.
    We must now continue the efforts we made last fall by 
exploring ways to allow blind and non-blind disabled 
individuals to increase their earning potential while securing 
their SSDI benefits. As you are aware, during the Committee's 
consideration of the Senior Citizens' Freedom to Work Act (H.R. 
5) on February 29, I was prepared to offer an amendment to re-
establish the link between the SGA level for SSDI beneficiaries 
and the earnings limit for individuals receiving Social 
Security Retirement benefits. I believe the SSDI proves to be a 
disincentive to work. While Americans take pride in their 
strong work ethic, not all Americans are given to opportunity 
to work towards their full potential.
    Throughout my career in Congress, I have heard from many 
Iowans who believe they are treated unfairly by the SGA levels. 
Iowans are dependable and honest Americans who work hard to 
support themselves and their families. However, many disabled 
Iowans are being held back because of the SGA limit. I would 
like to share with you a few stories of Iowans who are effected 
by the SGA limit.
    Doug Elliott of Grinnell, Iowa, was serving his country in 
the Vietnam War when he lost his sight. After the war, Doug was 
able to not only to get his GED, but also graduate college and 
receive his masters degree. He is now a social worker in the 
state of Iowa. However, Doug had to make the tough decision 
that many other blind individuals in the country face to choose 
between being active in the workforce and losing his SSDI 
benefits, or remaining unemployed and retaining his full 
benefits. Doug had a wife and two children and wanted to work 
to support them. Doug is unlike other blind Iowans in the fact 
that he had a little security behind him. Because Doug is a 
veteran and was injured while in the service, he is able to 
retain his service-connected compensation. This is the only way 
Doug could remain economically stable.
    Priscilla McKinney of St. Ansgar, Iowa, is currently a 
graduate student at the University of Iowa pursuing a maters 
degree in education. Priscilla is blind and also has a young 
son to look after. While Priscilla is currently receiving SSDI, 
she will have to soon make the unfortunate choice of pursuing a 
teaching job or remaining on SSDI. If Priscilla finds that the 
economic benefits of staying on SSDI and not entering the 
workforce far out weigh the benefits of leaving the SSDI rolls 
to pursue teaching, Iowa stands to lose a much needed qualified 
teacher.
    Cathy Reinehart and Bruce Bivens, both of Clarksville, 
Iowa, have bipolar disorder. Cathy is a college graduate and a 
certified nurses aid. She currently works intermittently out of 
fear of exceeding the $700 SGA monthly threshold. Bruce is also 
a college graduate and is working in a meat locker in 
Clarkville. Bruce faces the similar obstacle of having to 
carefully regulate his working hours in order to remain below 
the SGA limit.
    The federal government is contradicting the American work 
ethic by not allowing these individuals to expand their 
employment opportunities. Disabled Americans should not have to 
choose between government assistance or the opportunity to seek 
meaningful employment. For many disabled Americans, such as 
those with mental retardation, the only employment they 
currently are eligible for is low-paying jobs that do not offer 
health benefits or job security. If these individuals do have 
the opportunity of earning just slightly above the current 
minimum wage, they will lose their SSDI benefits, even though 
they have no health benefits or job security through their 
employment.
    As the Subcommittee continues to explore this matter 
legislatively, I would like to express my support for a 
resolution in the most fair manner to all disabled Americans. I 
am currently aware of many proposals that address ways do so. 
Members of the blind and non-blind disabled communities would 
ultimately hope for complete re-linkage of the SGA level to the 
Social Security earnings limit. However, if we cannot achieve 
complete re-linkage, we'll have to look at alternatives to give 
some relief to blind and non-blind disabled people. I would 
like to offer my assistance to the Subcommittee in any way 
possible to seek the best legislative avenue.
      

                                

Statement of Paralyzed Veterans of America

    The Paralyzed Veterans of America commends the subcommittee 
for its interest in ongoing work disincentives in the Social 
Security Disability Insurance Program [SSDI]. We appreciate 
having the opportunity to share with you our thoughts on the 
substantial gainful activity [SGA] level as it affects the 
ability of SSDI beneficiaries to go to work.
    Over half of PVA's members have spinal cord injuries that 
are not connected to their military service. As a result, they 
are not eligible for many of the benefits offered to service-
connected disabled veterans through the Department of Veterans 
Affairs. Instead, they have turned to the SSDI program that has 
provided invaluable support and assistance to them and their 
families. In fact, a survey of our members found that over 60 
percent were on SSDI and another 22 percent received 
supplemental security income or SSI.
    Over the years, many of our members on SSDI have expressed 
frustration with the SGA because of its adverse impact on their 
ability to return to work. Consider PVA member Michael W. from 
Maryland. Michael is a fairly young man, in his mid-40s, who 
was injured in the early 1980s. He has been on SSDI since 1982. 
Several times he considered going back to work. However, he 
always rejected that course of action because even modest 
earnings above SGA would have meant both the loss of his cash 
benefits before he was able to support himself and his health 
care coverage through Medicare. He once determined that, if he 
went back to work, and lost his SSDI benefits, he would be 
working, after taxes, for $4000 a year. Not too long ago, he 
was approached for a part time job but had to ask his 
prospective employer if he could limit his work hours so that 
his pay would not exceed $700 a month [the current SGA level].
    Last year, with significant assistance from the members of 
this committee, Congress passed the Ticket to Work and Work 
Incentives Improvement Act, Public Law 106-170. PL 106-170 was 
a major step forward in eliminating many of the barriers to 
employment that kept recipients of federal disability benefits 
out of the workforce. An important provision of that law was 
the extension for another four and a half years of premium free 
Part A Medicare. Beginning this October, someone like Michael 
W. could return to work with the assurance of that additional 
Medicare coverage.
    However, SSDI recipients will still confront the ``earnings 
cliff'' should they attempt to enter the workforce. As you 
know, an SSDI recipient who is blind faces loss of cash 
benefits when his or her monthly income surpasses approximately 
$1170. As noted earlier, people like Michael W. and other SSDI 
beneficiaries with non-visual impairments lose their cash 
benefits once their earnings reach $700 a month.
    Last year, Social Security raised the SGA for SSDI 
beneficiaries with non-visual impairments from $500 to $700 a 
month. PVA supported this action, particularly since the last 
such increase occurred on January 1, 1990. Even at $700, this 
SGA level is still lower than what the SGA level would have 
been had it been indexed to inflation.
    Indeed, at $700, the SGA level is still below minimum wage. 
Someone working at the current minimum wage full time over a 
year would earn slightly over $10,000. An individual on SSDI 
whose average monthly earnings reached $700 for a full-time job 
over a full year would earn $8,400, at which time his or her 
cash benefits terminate. True, the rapid loss of Medicare 
coverage, which once served as an impediment to going to work, 
is no longer as much of a threat. However, the prospect of 
immediate elimination of cash benefits when yearly earnings 
reach $8400 can be intimidating to someone who may not have 
been in the workforce for many years or who may never have 
worked. What incentive is there for someone to take a low-
paying entry-level job when it would jeopardize approximately 
half of his or her income [assuming he or she receives the 
average SSDI benefit of roughly $700 per month]?
    PVA has long believed that the approach used for SSI 
recipients, in which benefits are gradually reduced as earned 
income rises, should be applied to SSDI. We know that Public 
Law 106-170 directed SSA to examine ways to phase out SSDI 
benefits as earned income increases to alleviate the ``income 
cliff'' now faced by SSDI beneficiaries who go to work. 
However, today's fiscal climate is such that immediate action 
by Congress may be more advisable than waiting for a study to 
be completed. Congress has signaled its willingness to 
reconsider earnings limits with the passage of HR 5, lifting 
the earnings cap for retired Social Security beneficiaries. 
With the robust economy and positive budget numbers we are now 
enjoying, this may be a once in many decades opportunity to 
address the problems in the current SGA for people with 
disabilities.
    PVA has always objected to the bifurcation of the 
substantial gainful activity level for persons with visual 
impairments and all other people with disabilities on SSDI and 
SSI. Individuals on SSDI who are blind can, at least, earn 
minimum wage with an SGA level set at $1,170 per month and that 
is adjusted for inflation. The General Accounting Office has 
found that the costs and rates of unemployment do not appear to 
be necessarily higher for the blind than those who have other 
disabilities. Indeed, a study sponsored by PVA found that 
someone with spinal cord injury faces initial hospital and 
medical costs of over $95,000. He or she will spend 
approximately $8000 on home modifications and will incur yearly 
average medical costs of over $14,000. Average lifetime costs 
associated with spinal cord injury range from $500,000 to 
$1,000,000 and include high medical expenses, costs of personal 
assistance services and the costs of special transportation. 
[M. Berkowitz, Ph.D., The Economic Consequences of Traumatic 
Spinal Cord Injury (1992).] PVA urges Congress to rectify the 
imbalance in treatment of those with spinal cord and other non-
visual disabilities under SSDI earnings limits.
    Another inequitable factor in SGA is the manner in which 
Social Security treats impairment related work expenses [IRWEs] 
that can be used to keep an SSDI recipient below the 
substantial gainful activity level. Blind SSDI recipients can 
claim far more costs as IRWEs than non-blind recipients can. 
For non-blind beneficiaries, IRWEs must be directly related to 
work, thus eliminating expenses associated with getting ready 
for and travelling to and from work.
    Many people on SSDI would embrace the opportunities offered 
by our new economy if they did not feel they would be punished 
by Social Security policies for doing so. By addressing the 
disparities in the SGA level, this committee can complete the 
work begun by the Ticket to Work and Work Incentives 
Improvement Act.
    In sum, PVA supports:
     An SGA level that is made consistent by raising 
the level for non-visually impaired recipients to, at least, 
the level for blind SSDI beneficiaries.
     Indexing all SGA levels to average wage growth to 
prevent its value as a work incentive from eroding over time.
     Changes in the impairment related work expenses 
policy for non-blind SSDI recipients to allow for costs 
associated with preparing for and getting to and from the 
workplace.
     Ongoing efforts to implement a sliding scale 
reduction in SSDI cash benefits when beneficiaries go to work.
    PVA appreciates your attention to our comments. We look 
forward to working with your subcommittee in the future on 
improvements in Social Security policy to help people with 
disabilities return to work.
      

                                

Statement of Protection & Advocacy, Inc., Los Angeles, California

Contacts:

    Marilyn Holle [[email protected]], (213) 427-8747
    Guy Leemhuis [[email protected]], (213) 427-8747
    Diana Honig [[email protected]], (916) 488-9950

    Protection & Advocacy, Inc. 3580 Wilshire Blvd., Suite 902, 
Los Angeles CA 90010-2512 Protection & Advocacy, Inc., of 
California appreciates the opportunity to comment on how Social 
Security applies its substantial gainful activity (SGA) rules 
to persons who work in supported work programs and particularly 
to persons who qualify for disability benefits based on the 
work history of a parent and who receive ``disabled adult 
child'' or DAC benefits under the parent's Social Security 
number. One of your witnesses at the March 23 hearing--Wendy 
VanOoteghem--is someone who works in a sheltered or supported 
work program and who receives DAC benefits. Statistics gathered 
by the Rehabilitation Research and Training Center of the 
Virginia Commonwealth University indicate that nationally, two-
thirds to three-quarters of the supported employment 
participants have mental retardation diagnoses. Of the balance, 
the majority have diagnoses of severe psychiatric disabilities.
    Protection & Advocacy, Inc., is a nonprofit agency that 
works with Californians with disabilities to protect and 
advocate for their human, legal and service rights.
    This statement is prompted by Protection & Advocacy's work 
with persons with the most severe disabilities who receive DAC 
benefits based on their parent's work history and who are 
working through a supported work program. It is also prompted 
by our representation of Fred Innerebner \1\ who lost forever 
his DAC benefits \2\ because of his earnings through supported 
work program.
---------------------------------------------------------------------------
    \1\ See Innerebner v. Apfel, 2000 WL 274185, Case No. C-99-00794-
WHA (N.D. Cal. 3/3/00) involving a DAC beneficiary whose mental 
retardation met Social Security's listing of impairments and who lost 
his DAC benefits because his gross earnings through a supported work 
program eventually averaged more than $500 a month, the then applicable 
SGA level.
    \2\ Section 202(d)(6)(B) of the Social Security Act, 42 U.S.C. 
Sec.  402(d)(6)(B), provides that a DAC beneficiary whose benefits 
stopped before because he ceased to be under a disability, may be 
reinstated to benefits if he ``is under a disability . . . which began 
before the close of the 84th month following the month in which his 
most recent entitlement to child's insurance benefits terminated 
because he ceased to be under such disability.'' See also 20 C.F.R. 
Sec.  494.351(c). The legislative history indicates that this provision 
[added by Sec.  108(d) of Pub.L. 92-603 in 1972] was intended to enable 
persons whose benefits ceased because of work to be reinstated. Social 
Security, however, has treated this provision as a nullity saying that 
performing SGA makes you ineligible for re-entitlement. Social Security 
has not identified anyone who could qualify for re-entitlement under 
this provision.
---------------------------------------------------------------------------
    How Social Security applies its SGA rules to this 
particularly vulnerable group--persons on DAC benefits and in 
supported work programs--frustrates a national policy of 
encouraging individuals with significant disabilities to 
participate in competitive employment. Social Security 
interprets its regulations in a way that penalizes persons in 
supported employment because their supports come from an 
outside publicly or charitably funded agency rather than from 
the employer itself. A private employer is asked to determine 
the amount of any subsidies including special conditions 
provided to an employee when determining the value to the 
employer of the employee's work. 20 C.F.R. 
Sec. 404.1574(a)(2).\3\ Those calculations would necessarily 
include the cost of extra supervision, extra training, services 
to address behavior problems, etc. Initially Social Security 
took the position that it would not consider at all any subsidy 
including special conditions provided by a supported work 
program. Social Security has changed its position in that it 
will recognize to a limited degree subsidy provided by a 
supported work program \4\ but not to the extent SSA will 
recognize subsidy provided directly by an employer -and not to 
the extent SSA will recognize subsidy provided by a third party 
to someone who is self-employed.\5\
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    \3\ ``An employer may set a specific amount as a subsidy after 
figuring the reasonable value of the employee's services.''
    \4\ Per the August 17, 1999, Program Memorandum from Ken McGill, 
Social Security will consider only a limited number of service hours 
provided by a supported employment program--hours when the supported 
work program is actually doing the employee's job -and values those 
services at the employee's rate of pay. Not covered are all the other 
tasks performed by the supported employment program which are necessary 
to maintain employment. Those services include providing extra 
supervision, training the supervisors on how to work with the employee 
in light of his disability, working with the employer to restructure 
the job to accommodate to the employee's disability limitations, 
incorporating sequencing cues to the work site, developing positive and 
appropriate interactions with coworkers, working with employer and 
employee to address problem behaviors, etc.
    \5\ See the section on unincurred business expenses in Social 
Security Ruling (SSR) 83-34 about SGA determinations for self-employed 
persons. In that Section Social Security says it will deduct from 
earnings ``any business expenses which were incurred and paid for by 
another agency'' including expenses paid for by the State 
Rehabilitation Agency: ``This policy is consistent with the principle 
that only income attributable to an individual's own productive work 
activity should be considered in determining SGA.'' See, also, 20 
C.F.R. Sec.  404.1575(c).

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About Supported Employment

    Supported employment programs administered by state 
rehabilitation agencies were established by Congress ``to serve 
individuals with severe disabilities for whom competitive 
employment has not traditionally occurred or has been 
interrupted or intermittent.'' \6\ They target ``those with the 
most severe disabilities who may have been thought to be too 
disabled to benefit from rehabilitation services to achieve 
successful employment outcomes.'' \7\ They target those who 
have been traditionally served in segregated sheltered 
workshops and ``day activity programs because they appear to 
lack the potential for unassisted employment.'' \8\
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    \6\ House Report (Education and Labor Committee) No. 102-822 
(August 10, 1992) to accompany H.R. 5492 that became Pub.L. 102-569, 
1992 WL 202382, page 175.
    \7\ Id. at page 123.
    \8\ House Rep. No. 99-571 (Education and Labor Committee), May 5, 
1986, accompanying H.R. 4021 that became Pub.L. 99-506, at page 31, 
reporting on testimony of Madeleine Will, Assistant Secretary for 
Special Education and Rehabilitative Services, U.S. Dept. of Education, 
1986 U.S. Code Cong. & Adm. News 3471, 3501.
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    A person with a disability cannot qualify for supported 
employment unless he is someone who cannot keep a job in the 
competitive labor market without intensive and ongoing support 
services.\9\ Because federally funded state rehabilitation 
programs serve persons in supported employment for only a 
limited initial period of not more than 18 months, eligibility 
also requires the availability of a state program to provide 
the ongoing support needed to maintain someone in a competitive 
sector job.\10\
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    \9\ See, e.g., 29 U.S.C. Sec.  795j(2).
    \10\ 29 U.S.C. Sec. Sec.  705(36)(C), 705(13), 722(b)(3)(F)(ii), 
795i.

The Role of SGA Determinations in the title II Disability 
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Programs for Persons in Supported Employment

    SSA's regulations defining what is and is not ``substantial 
gainful activity'' are all regulations adopted to define who 
does or does not meet the statutory definition of disability 
under the Social Security disability programs.\11\ Thus the 
determination that a title II disability beneficiary performed 
substantial gainful activity based on earnings from one 
particular job is also a generalized determination of the 
person's ability to perform substantial gainful activity 
outside that one particular job.
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    \11\ The term `disability' means--(A) inability to engage in any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or which has lasted or can be expected to last for a continuous period 
of not less than 12 months;'' Section 223(d)(1)(A) of the Social 
Security Act, 42 U.S.C. Sec.  423(d)(1)(A). ``The Secretary shall be 
regulations prescribe the criteria for determining when services 
performed or earnings derived from services demonstrate an individual's 
ability to engage in substantial gainful activity.'' Section 223(d)(4) 
of the Social Security Act, 42 U.S.C. Sec.  423(d)(4), emphasis added.
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    For a person in supported employment, a finding that work 
constitutes substantial gainful activity based on earnings is a 
finding that the supported employment participant has 
demonstrated the general ability to perform work at the 
substantial gainful activity level. This is so even if there is 
no dispute that the person could not work at all outside the 
supported employment program \12\ and even if there is no 
dispute that the cost of the supported employment program 
exceeded the gross earnings so that, if the employer were 
providing the supports, the person would be found not to be 
performing SGA. \13\
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    \12\ In Fred Innerebner's case, for example, the Administrative Law 
Judge ruling against him also concluded that ``the claimant would have 
been unable to perform the job without the support services he received 
from the various social service agencies.''
    \13\ In Fred Innerebner's case, for example, there was no month in 
which his earnings came close to SGA if the cost of his supported 
employment services were deducted and many months where he was in minus 
territory or close to zero if the cost of supported employment services 
were deducted.
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Conclusion & Request for Oversight

    Supported employment provides a significant opportunity for 
those closed out of competitive employment because of their 
disabilities. Supported employment has increasingly come to 
replace the more traditional sheltered workshop because it 
provides a more realistic opportunity for some to transition 
into self-support with little or no ongoing supports. Social 
Security's interpretation of its own regulations, however, 
frustrates the goals of supported employment programs. Because 
Social Security does not consider the actual subsidy 
represented by supported employment services, participants in 
supported employment cannot risk earning above the SGA level. 
They cannot risk getting to the point of where they have a 
chance of becoming self-supporting with little or no supports. 
If they do, they will suffer Fred Innerebner's fate: 
termination forever from DAC benefits even though they in fact 
have not demonstrated a general ability to perform SGA.
    Protection & Advocacy respectfully requests that the 
Subcommittee on Social Security review how Social Security 
determines when the earnings of supported employment 
participants constitute SGA. That would include looking at how 
Social Security evaluates the support services provided by 
supported employment programs in that process and how the 
purposes of the Social Security Act and the Rehabilitation Act 
may be harmonized for Social Security title II disability 
beneficiaries participating in supported employment.
    Protection & Advocacy respectfully requests that the 
Subcommittee on Social Security review how Social Security 
applies Section 202(d)(6)(B) and whether Social Security is 
correct in treating that provision as a nullity without force 
or effect.

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