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S. HRG. 109–733

ADMINISTRATIVE CHALLENGES FACING THE

SOCIAL SECURITY ADMINISTRATION

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 14, 2006

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

CHARLES E. GRASSLEY, Iowa, Chairman

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

RICK SANTORUM, Pennsylvania

BILL FRIST, Tennessee

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

MAX BAUCUS, Montana

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JAMES M. JEFFORDS (I), Vermont

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

KOLAN DAVIS, Staff Director and Chief Counsel

RUSSELL SULLIVAN, Democratic Staff Director

(II)

(III)

C O N T E N T S

OPENING STATEMENTS

Page

Grassley, Hon. Charles E., a U.S. Senator from Iowa, chairman, Committee

on Finance ............................................................................................................ 1

Baucus, Hon. Max, a U.S. Senator from Montana ................................................ 3

WITNESSES

Barnhart, Jo Anne B., Commissioner, Social Security Administration, Baltimore, MD .............................................................................................................. 7

O’Carroll, Patrick P., Jr., Inspector General, Social Security Administration,

Baltimore, MD ...................................................................................................... 27

Warsinskey, Richard E., president, National Council of Social Security Management Associations, Inc., Cleveland, OH ....................................................... 28

Sweeney, Eileen, co-chair, Social Security Task Force, Consortium for Citizens

With Disabilities senior fellow, Center on Budget and Policy Priorities,

Washington, DC ................................................................................................... 30

Hathaway, Erwin, Social Security disability insurance beneficiary, Trego, MT;

accompanied by Michael Bliven, Esq. ................................................................ 32

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Barnhart, Jo Anne B.:

Testimony .......................................................................................................... 7

Prepared statement .......................................................................................... 39

Responses to questions from committee members ......................................... 55

Baucus, Hon. Max:

Opening statement ........................................................................................... 3

Grassley, Hon. Charles E.:

Opening statement ........................................................................................... 1

Hathaway, Erwin:

Testimony .......................................................................................................... 32

Prepared statement .......................................................................................... 64

O’Carroll, Patrick P., Jr.:

Testimony .......................................................................................................... 27

Prepared statement .......................................................................................... 68

Responses to questions from committee members ......................................... 75

Sweeney, Eileen:

Testimony .......................................................................................................... 30

Prepared statement .......................................................................................... 78

Warsinskey, Richard E.:

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 87

Responses to questions from committee members ......................................... 92

COMMUNICATIONS

AFGE Council 224 ................................................................................................... 95

National Association of Disability Examiners ....................................................... 97

National Council on Disability (NCD) ................................................................... 106

Social Security Advisory Board .............................................................................. 109

(1)

ADMINISTRATIVE CHALLENGES FACING THE

SOCIAL SECURITY ADMINISTRATION

TUESDAY, MARCH 14, 2006

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC.

The hearing was convened, pursuant to notice, at 10:10 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Charles E.

Grassley (chairman of the committee) presiding.

Also present: Senators Snowe, Thomas, Bunning, Baucus, and

Lincoln.

OPENING STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S.

SENATOR FROM IOWA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. Many times when Senator Baucus and I have

hearings, we have people before us we want to complain about.

That is not the case with Social Security this time, but we do have

primary responsibility for overseeing, and we are here to get an update, basically.

The primary responsibility of the Social Security Administration

is to ensure the timely and accurate payment of monthly payments.

That is to, I believe, now about 52 million people. To accomplish

this task, the Agency has 65,000 Federal employees, 1,500 offices,

and tele-service centers as well.

The Agency also relies on 15,000 State employees to assist in disability determination. By most accounts, the Agency is doing a remarkable job, providing $550 billion in annual benefits, with an administrative budget of less than $10 billion, or just 2 percent.

Various measures of payment accuracies suggest the right person

receives the right amount more than 95 percent of the time. Of

course, in a program this large, even the tiniest error is a problem

for a lot of people that have that error made for them.

Ironically, the Agency’s accomplishments have led to growing demands of its resources. In recent years, Congress has imposed significant new duties. The Medicare Modernization Act requires the

Agency to identify low-income seniors eligible to receive extra

Medicare Part D assistance, as the latest example.

The Intelligence Reform and Terrorism Prevention Act of 2004 is

a more recent example of imposing additional safeguards when

issuing Social Security cards. We have the Deficit Reduction Act of

2005, requiring the Agency to conduct additional reviews before

SSI Disability benefits are first paid.

Now, while these provisions improve program integrity, they will

also add to your responsibilities and costs, of course. Compared to

2

many other Federal agencies, Social Security has fared reasonably

well. Its administrative budget has increased between 4 percent

and 5 percent in recent years.

However, these budget increases have apparently not been

enough to address this increased workload. This fact is no more apparent than in the area of disability benefits.

Recent data suggest that the backlog of pending disability cases

is rising, while program integrity activities are declining. There is

undue hardship when continuing disability reviews and SSI redeterminations are not performed. It wastes limited taxpayers’ dollars.

Resolving these issues, of course, is challenging enough, but a

new and even more difficult task may lie ahead as we look at immigration reform, as an example, a bill passing the House of Representatives, a bill pending now before the Senate Judiciary Committee creating mandatory employment verification systems.

This system, of course, relies heavily upon the resources of Social

Security. As outlined in various competing versions of the pending

legislation, employers would be required to verify the names and

Social Security numbers of their employees. So, that is an additional burden.

Under current immigration law, employers are required to examine, but not independently verify, the documents presented to them

by prospective employees. A number of systems have already been

created to allow employers to voluntarily verify names, Social Security numbers, and employment authorization. Most employers do

not use these systems, especially those who are most likely to hire

illegal workers.

One recent study suggests that there are more than 7 million illegal workers employed in the United States. This number is

roughly consistent with the number of W–2s filed each year that

contain names and Social Security numbers that do not match

those in the records of the Agency.

In theory, it might be possible to identify all the employers who

file mismatched names and Social Security numbers and thereby

target immigration work site enforcement efforts, but relying on

Social Security records to enforce immigration laws raises a number of critical issues for this committee, ranging from its impact on

the Agency’s ability to perform its primary functions and the increased potential for identity theft, the impact on taxpayer compliance, the potential for increasing the tax gap, the impact on confidential taxpayer return information, and potential for abuse. So,

all sorts of problems.

On identity theft, illegal workers often use fake Social Security

cards with bogus numbers. This would no longer be possible with

mandatory verification, thus, illegal workers would try to use fake

documents to obtain real Social Security numbers, or they would

try to steal someone else’s name and Social Security number.

Without adequate safeguards, millions of law-abiding citizens

would soon be getting letters from the IRS, demanding to know

why they did not pay income taxes on the wages earned by illegal

workers using their stolen numbers.

3

Another one on the tax gap. It is illegal to hire unauthorized

workers. It is also illegal to fail to withhold taxes that are owed

on workers’ wages, regardless of their legal status.

Total wages reported as mismatched W–2s in 2003 were $58 billion. That represents nearly $9 billion in Social Security and Medicare payroll taxes. Without adequate IRS oversight, thousands of

employers are now withholding taxes on legal workers and may decide to join the underground economy.

On taxpayer privacy, the protection of taxpayer information is a

cornerstone to the voluntary tax system. These protections are in

section 6103. They are designed to strike the balance between taxpayer privacy on the one hand and legitimate law enforcement on

the other.

The administration has proposed a very open-ended use of taxpayer information by Homeland Security to identify illegal workers.

Such a proposal must be looked at very closely by this committee.

Back in 2004, the Appropriations Committee tried to end-run the

privacy protections, and we had a lot of Senators—this one included—very upset, and their proposal was voted down. So, we

need to proceed with caution in this area.

The need for caution is underscored by the Taxpayer Advocate,

who has come out very forcefully in a letter to me raising serious

questions about the administration’s proposal, particularly with regard to the impact on taxpayers’ compliance.

Immigration law does not fall within the jurisdiction of this committee. However, changes in immigration law can have a significant impact on many areas within this committee’s jurisdiction, so

the purpose of today’s hearing is to examine a number of these

areas and consider the potential consequences, and this testimony

is very important.

Senator Baucus?

OPENING STATEMENT OF HON. MAX BAUCUS,

A U.S. SENATOR FROM MONTANA

Senator BAUCUS. Thank you, Mr. Chairman. I thank you very

much for holding this hearing. It is, I think, vitally important. I

wish that more members of the Senate, this body, and the country

would recognize just how difficult this problem is so we can do

more about it.

Today we examine two causes of delay in receiving Social Security benefits, the first, longstanding, the second, potential. Today

we ask whether Americans are having to wait too long to receive

the Social Security disability benefits.

The first cause of delay results from inadequate funding for Social Security’s administrative expenses. The second delay could result from pending immigration legislation that would place yet

more responsibilities on Social Security.

Some who apply for the Social Security Disability Program under

the disability portion of Supplemental Security Income, have had

to wait 3 to 4 years to get their benefits—not months, years.

One of our witnesses today is Erwin Hathaway. Erv is from

Trego, MT. That is in the far northwestern part of our State. Erv

suffered a severe disabling ankle injury, but Erv had to wait nearly

4

4 years until he finally received his benefits. That is unconscionable.

People with disabilities often cannot work. They have no earnings. Yet, they may have to wait for years to get their benefits.

People with disabilities have it hard enough. They often have to

live with pain, with discomfort. That burden should not be added

to by delays in the delivery of needed benefits.

At her confirmation hearing, Commissioner Barnhart committed

to me that she would study why it takes so long for applicants to

get their benefits, and I might say, those findings were eye-opening.

It took 1,153 days, more than 3 years, for some applicants to get

their benefits, but of that time, only about 7 days were actually

spent by Social Security employees doing the necessary work.

Huge backlogs of cases cause about half of the remaining delays.

Despite the Commissioner’s best efforts, and I commend her for

them, these backlogs have grown. When the Commissioner took office at the end of 2001, a backlog of nearly 400,000 cases was pending before administrative law judges. At the end of this fiscal year,

the backlog is expected to be about 750,000 cases. That is a line

of people, three quarters of a million people long. To get disability

benefits to people who need them more quickly, clearly, we must

reduce those backlogs. That means more efficiency, but it also

means more money to reduce the backlogs.

The Commissioner has done a good job of getting the administration to request appropriations each year that, if enacted, would

have reduced these backlogs. But each year, Congress has cut the

appropriations for the Social Security Administration well below

the President’s request.

By and large, however, the cuts in the requested funds have not

been the fault of the Appropriations Committees. The President’s

overall budget requests have included too few funds for domestic

programs overall. The Appropriations subcommittees, therefore, are

forced to rob Social Security’s account to restore other accounts.

But this year, the situation has deteriorated even further, for

four reasons. First, the total appropriation for Social Security’s administrative costs is about $300 million below the President’s request. I might add, Social Security requested quite a bit more than

that in the first place.

The other three reasons for the deterioration were unanticipated.

First, Social Security had unanticipated expenditures because of

the damage caused by Hurricanes Katrina and Rita. Second, implementation of the Medicare drug benefit has created unanticipated

burdens for Social Security.

The administration has made the drug benefit program more

confusing than it had to be, of that I am sure. Many seniors turned

for help to Social Security, not to the Centers for Medicare and

Medicaid Services.

Third, as a result of the Intelligence Reform and Terrorism Protection Act of 2004, Social Security has unanticipated costs there,

too. Social Security now has to ask for a different method of documentation before giving an individual a Social Security card.

Therefore, a full third of applicants do not have the right docuVerDate 11-MAY-2000 14:56 Mar 13, 2007 Jkt 095484 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 31699.000 SFIN1 PsN: SFIN1
5

ments, so they must make return visits. This adds to Social Security’s work load.

As a result of these three unanticipated problems, backlogs are

getting worse, and with them, delays in benefits for people with

disabilities.

The bottom line is, Social Security needs more money for administrative costs right now. It is not too late to provide Social Security

with the capacity to use $80 million for additional overtime this

year.

These funds could begin to reduce the backlog of cases that results from the three unanticipated causes I just described. Now we

are looking for a way to provide these funds through new legislation.

Now, on top of this, another important administrative challenge

is about to face Social Security: immigration. The Judiciary Committee has been debating legislation to change our Nation’s immigration policies, and the House has already passed immigration

legislation.

Some of these immigration proposals would place additional responsibilities on Social Security. One has to do with Social Security’s role in verifying that a job applicant is eligible to work in this

country.

The current process can involve the use of a Social Security card,

but it is vulnerable to fraud. Counterfeiters can recreate a brandnew card, or a card that mimics someone else’s legitimate card.

One proposal is to mandate that all employers use a system

called Basic Pilot. That provides employers with electronic access

to Social Security’s system. This access can verify that the numbers

on the cards match the names given by the applicants. But this access cannot confirm that the individuals with the cards are who

they say they are.

In theory, Basic Pilot sounds like a good idea. But in practice,

as the GAO and others have indicated, Basic Pilot does not appear

to be ready to be made mandatory for all employers in America.

The system is not reliable. It may have a huge cost to employers.

It may create new incentives for identity theft, it may endanger

personal information, and it may raise civil liberty concerns.

I understand all that. I also understand the need to make sure

that we enforce our immigration laws. That is a difficult balance.

I will be interested to hear from our witnesses how to achieve that

balance.

To avoid adding to backlogs, any new responsibilities placed on

Social Security must be accompanied with resources to accomplish

the task, and the Social Security trust funds must not be compromised.

I look forward to our witnesses, and I again thank the Commissioner, Ms. Barnhart, for all her hard work. She was trying very

hard, under very difficult circumstances, and we very much appreciate her dedication to trying to do the best with what she has.

Our job, Mr. Chairman, frankly, is to not only help her, but to

help all those people who are not getting disability benefits quickly.

That is the real goal of all of this. Thank you.

Senator BUNNING. Mr. Chairman?

The CHAIRMAN. Yes. Go ahead, Senator.

6

Senator BUNNING. I would like to not correct, but just state for

the record, that the Social Security Administration is an independent agency. The law does not even require them to submit

their budget to OMB. We passed that law, Patrick Moynihan and

myself, together. Still, the Social Security Administration submits

their budget to OMB.

Senator BAUCUS. That is right.

Senator BUNNING. Well, they have no requirement to do so. They

can independently put forth their budget, and the Congress can act

one way or the other on it. Until they do that on their own, OMB

is going to continue to do what it does every year by reducing the

Social Security Administration’s budget to perform their duties.

Thank you.

Senator BAUCUS. If I might add, Mr. Chairman, a point of clarification.

The CHAIRMAN. I think he is agreeing with you.

Senator BAUCUS. No, he is not. No, he is not. [Laughter.] As a

point of clarification, I do not think he is.

The CHAIRMAN. Well, I thought he was.

Senator BAUCUS. And that is why I spoke up. No. I think the

process is this, and certainly the Commissioner knows better than

anybody else here. It is true, it is an independent agency. We know

the request that they make. On the other hand, they do submit

their request to OMB.

Senator BUNNING. Not necessary.

Senator BAUCUS. But they do. And it is also true that the

amount is in the President’s budget. That is, the President recommends to the Congress what the appropriation should be for the

Social Security Administration. That is in the President’s budget.

I am just saying that I think the request by the Commissioner was $800 million more than they previously had. The President’s

budget, however, cut that down to a lower amount. Added to that,

Congress then cut that further.

Senator BUNNING. Senator, what I am saying to you is that, in

spite of the fact that they are an independent agency, in spite of

the fact that they do not have to submit their budget to OMB, they

continue to do it and they continue to get their budget cut not only

by the President, but then again by Congress.

Senator BAUCUS. That is my point.

Senator BUNNING. My point is, they should submit the budget directly to Congress. There is no requirement to go through OMB.

That is the law.

The CHAIRMAN. And I think you are saying that if they did

that——

Senator BUNNING. They will do better. They will get more money

if they submit it directly to the people in the Congress of the

United States, and not submit it to OMB.

Senator BAUCUS. That could well be. But I can just see what is

going to happen. I am not defending this process at all. But each

independent agency is going to submit its own independent budget.

I can tell you right now, the President is not going to like that at

all.

Senator BUNNING. Why did we do it as a Congress 10 years ago,

plus?

7

Senator BAUCUS. It is a compromise.

Senator BUNNING. It was not a compromise at the time. It was

a meaningful reform of the Social Security Administration that

Senator Daniel Patrick Moynihan and some people over in the

House got together on and said, this is necessary if we are going

to have a better Social Security system.

Senator BAUCUS. Mr. Chairman, this is all a very interesting discussion, but I think we should get to the issue at hand here and

help people out, help people get their benefits more quickly.

The CHAIRMAN. All right.

Now we have the Commissioner of the Social Security Administration, Jo Anne Barnhart. For you as well as the other four witnesses on the next panel, if all of you had a long statement, the

entire statement will be put in the record without your asking, and

then you can summarize in the time that has been allotted.

Commissioner, go ahead.

STATEMENT OF JO ANNE B. BARNHART, COMMISSIONER,

SOCIAL SECURITY ADMINISTRATION, BALTIMORE, MD

Commissioner BARNHART. Thank you very much, Mr. Chairman.

I do have a longer statement that has been officially submitted that

I am going to summarize, just hit the highlights for you, knowing

the time constraint.

I want to thank you, Mr. Chairman, for inviting me here today

to discuss the administrative challenges that are facing the Social

Security Administration (SSA). Much has changed in the world and

at SSA since my term began more than 4 years ago, but the core

mission of the Agency remains the same: giving the American people the service that they expect and deserve.

Over time, Mr. Chairman, as you and Senator Baucus pointed

out in your opening remarks, Social Security has been tasked with

new and non-traditional workloads through new legislation.

Managing these new workloads, such as the responsibilities

under the Medicare Modernization Act, or prescription drugs, and

the Intelligence Reform and Terrorism Prevention Act (IRTPA), in

a way that does not erode our ability to carry out our core responsibilities, is certainly a challenge, especially in a world of tighter

resource constraints.

Our responsibilities are many, and I believe our mission is critical. In fiscal year 2007, Social Security employees will process over

6.7 million claims for benefits, process almost 245,000 Medicare

Part D low-income subsidy applications, make decisions on over

575,000 hearings, issue 18 million new and replacement Social Security cards, process 265 million earnings items for workers’ earnings records, handle approximately 59 million transactions through

our 800 number, and serve approximately 42 million visitors to our

field offices, and, in addition, will process millions of actions to

keep beneficiaries and recipient records current and accurate.

In addition to those service activities, we will also be performing

1.6 million continuing disability reviews and over 1 million non-disability SSI re-determinations.

As I have often said in these past 4 years, I did not accept this

position to manage the status quo, and nowhere was the need for

change more apparent than in the Disability Program.

8

From the outset, I made improving service to our disability

claimants a priority, especially the successful development and implementation of the Electronic Disability Process, or eDib.

I am proud of the medical information we have captured electronically since we began rolling eDib out in January of 2004. Already, it is the world’s largest repository of electronic medical

records, with over 34 million such records.

The implementation of electronic disability is important, in and

of itself, in terms of moving into the 21st century in the way that

we do business at Social Security, but it is also a vital precursor

to the successful implementation of process changes that I believe

will significantly improve the disability determination process.

In July of 2005, just this past summer, we published an NPRM,

or Notice of Proposed Rulemaking, to improve the disability determination process. The central goal and the over-arching theme and

guiding principle of those regulations is to make the right decision

as early in the process as possible, and we are looking forward to

publication of a final regulation in the very near future.

To that end of making the right decision as early in the process

as possible, the regulations were developed after long and comprehensive outreach efforts to all groups that were involved at

every step or stage of the disability determination process.

Our commitment to quality service extends to all of our programs, and I am sure that you will agree that true public service

also requires sound fiscal stewardship of public resources.

But good stewardship involves more than just money. It also

means making sure that earnings reported, and recorded by employers, are as accurate and precise as possible, and that they are

credited to the correct worker.

I believe that SSA is a good and a worthy investment. Our

achievements over the last year are proof that resources provided

to SSA are used efficiently and effectively to administer America’s

Social Security programs.

In fiscal year 2005, our productivity increased by 2.7 percent over

the previous year. That is part of what I believe is an impressive

cumulative increase of almost 13 percent in productivity since fiscal

year 2001.

But as I noted earlier, and as you and Senator Baucus both mentioned, our workloads have continued to grow over these years

through increased numbers of claims, new responsibilities resulting

from the Medicare Modernization Act, and increased verification

requirements that have been added to the processes for the enumeration and replacement of cards in a post-9/11 environment.

As you all well know, Congress is in the process of considering

changes in immigration policies that could require additional

verification processes or make other changes to the way that we do

business, and we would hope that consideration of those proposals

take into account the time and the resources that Social Security

would need to ensure that workers would not have to wait lengthy

periods after being hired because of delays in the verification process.

Mr. Chairman, I know I do not have to tell this committee, there

are very real consequences when we have reduced resources, and

I would be remiss if I did not thank you and Senator Baucus for

9

your support for the President’s budget request, and if I did not

take this opportunity to publicly thank and acknowledge the hardworking men and women of Social Security, who continue to do

their absolute best for the people of America.

I will be happy to try to answer any questions that you may have

at this time.

[The prepared statement of Commissioner Barnhart appears in

the appendix.]

The CHAIRMAN. I have two questions that are directly related to

some of this additional workload that you have had to undergo recently. Back before you became Commissioner in 1996, Congress

enacted legislation that requires your Agency to conduct a study

and report on different methods of improving the Social Security

card.

One of the options briefly discussed in that report was the ‘‘No

Card’’ option. Under this option, there would be no card. As the report stated, ‘‘Since the key identifier is the number rather than the

card, matching the number to other authentication means could

virtually eliminate counterfeit Social Security card issues.’’

Given the development of various computer systems that allow

employers to verify the name and State number of their employees,

it is now possible to identify someone using a duplicate or phony

Social Security number without the need to physically examine a

card.

I also understand that the SSA issued about 12 million replace- ment cards last year, at a cost of roughly $28. If you exclude the

potential name changes that could be related to marriage or divorce, you are left with about 8 million replacement cards issued

last year, at a total cost of $224 million.

Could you comment on the ‘‘No Card’’ option, specifically with regard to the impact the savings generated from eliminating replacement cards would have on your overall budget.

Commissioner BARNHART. If I could, I would like to make a couple of points, Mr. Chairman. There is no question that there is a

cost associated with providing Social Security cards, with issuing

original and also replacement cards. We estimate the cost of a replacement card is right around $28 a card.

The bulk of that is not the actual card itself. It is actually the

time spent: approximately 31 minutes is how we have timed it out,

doing the interviewing and getting the documentation to make sure

that the evidence that is presented is appropriate.

In terms of the whole issue of the need for a card, I would say

this. We try to encourage people not to carry their Social Security

cards. If you look on our website, the materials that we produce

and send out urge people not to put their Social Security card in

their wallet.

Just last week, I was flying and a young man dropped his wallet

in front of me in the security line at the airport, and his Social Security card fell out. I said, you really should not be carrying that,

you know, because it just landed right there on the floor.

So, it is a very difficult concept to sell to people, because many

people are used to the card, having the card. There are cards for

so many things. But we really would prefer people not carry it because it is really a pathway to identity theft.

10

One of the things that we have done to try to discourage the use

of cards and carrying cards is what we call NUMI-lite, something

we used quite effectively, quite frankly, during the post-Hurricane

Katrina environment.

That is, individuals come in, they request a replacement card or

verification of Social Security number to present to other people,

and we simply issue a letter right there on the spot in the field office, which allows them to take an official document from Social Security, but obviates the need for the card in some circumstances.

I do think one issue that eliminating the cards would pose is

this. Currently, if you have a Social Security card with no legend,

simply your name and your number, that is an indication that you

are authorized to work in this country.

You could have one of two other legends. One could say ‘‘Valid

for Work Only With DHS Authorization,’’ which means that the

person has a temporary work visa from DHS.

The second legend is ‘‘Not Valid for Employment.’’ Those are the

cards that we issue to individuals who need the card, are required

to have it in order to receive Federal or State benefits, but who are

not authorized to work. So, I think if we did not have the card, the

purpose that those legend notations serve for employers and others

would need to be served some other way.

The CHAIRMAN. My second question, and last one. The Intelligence Reform and Terrorism Prevention Act requires your Agency

to establish minimum standards for verification of documents submitted to get a card.

In response to this mandate, employees of your Agency are now

instructed to ‘‘accept all State driver’s license and State identification cards if they meet the visual standards.’’

The ‘‘visual standards’’ are defined as ‘‘an exhibit of documents,’’

in the document verification website. In other words, employees are

not required to contact the State and verify whether or not the license was actually issued. They are merely required to see if the

license looks like the sample on the website.

As we will hear in later testimony today, many applicants for replacement cards are being asked to go back home and return with

additional documents. Of course, this increases your office’s workload and is annoying to applicants.

Given the fact that Social Security employees do not have the

ability to verify documents of U.S. citizens directly with the issuing

agency, with a few limited exceptions, are these procedures justified? There is no criticism of your Agency in my question.

Commissioner BARNHART. I appreciate that, Mr. Chairman. I

think that certainly it is not perfect, but I guess I would say this.

We are faced with the situation of trying not to let the desire for

the perfect be the enemy of what is the best we can do.

In response to the passage of the IRTPA, we issued requirements, increased evidentiary requirements, for individuals applying

for Social Security numbers, and we did it based on the probative

value of the documents that individuals would be asked to present.

I should say, by the way, a birth certificate is required, and we

do verify those for all individuals, even those under age 1. As far

as identity goes, a driver’s license is preferred. If the individual

11

does not have the driver’s license, we will accept the U.S. passport

or U.S. State-issued identity card.

Obviously, it is possible for anyone—unscrupulous people—to

present forged documents, and we do our best to try to discern

those. But it is not a perfect system. As you point out, asking for

a driver’s license, we do not have a guarantee that it was, in fact,

issued by the State of Iowa.

We go on the website, we look to see what the State of Iowa license looks like, and do the best that we can. As I say, it is not

a perfect system, but it is hard to imagine what we could do that

would be better, from our perspective, at Social Security.

The CHAIRMAN. All right. Well, thank you.

Senator Baucus?

Senator BAUCUS. Yes. Thank you, Mr. Chairman.

Just to clarify the record here on what the Agency can or cannot

do, I think Senator Bunning and I really agree on the long-term

goal, that the Social Security Administration needs more money.

But actually, just for the record, so we know what the law is, in

August of 1994, in the conference report accompanying Social Security legislation, basically it says, ‘‘The Commissioner shall prepare

an annual budget for the administration, which shall be submitted

to the President and to the Congress without revision, together

with the President’s annual budget for the administration.’’ So that

is the law.

There is another section here, which I do not have with me,

which makes the same point. But, namely, we do get from OMB

this huge, big book, and it is available to the public, one little paragraph tells us how much SSA is requesting in appropriations.

But the law says that it has to go to the President, and it is in

the President’s budget because it is an executive agency. It is an

independent agency, but the magic words are, it is part of the executive branch. It is a strange situation, but that is what it is. We

can always change the law.

Senator BUNNING. Well, we did change the law, and they

changed it when it went to conference, I will guarantee you that.

Senator BAUCUS. All right. Well, this is the 1994 conference report. I think it is the most recent information.

Madam Commissioner, there are some who might say, observing

this hearing, well, gee, Social Security should just be more efficient.

Can you address that?

Commissioner BARNHART. I would love to, Senator. I think one

of the things I am proudest of is the increased efficiency of the

Agency. It is true, as you pointed out, that our pending disability

hearing cases, for example, have grown.

But in large part, that is because of the increased efficiency of

the State Disability Determination Services (DDS). As the committee knows, it is actually State agencies that are funded by Social Security to make the initial determination for disability.

Our State DDSs are now processing over 450,000 more claims a

year than they were doing in fiscal year 2001. I think that is a phenomenal improvement. The electronic disability system should help

them do even more in the future. In our office of Hearings and Appeals, we are now conducting over 140,000 more hearings than we

were in 2001.

12

Our ALJ production rate has moved from 1.8 cases per day, at

the end of last year, to 2.6 cases a day. Our overall productivity

rate in the Agency, as I pointed out in my opening remarks, has

increased almost 13 percent in 4 years.

So one of the reasons, quite frankly, that I have great confidence,

and I have not been shy about asking for increasing resources for

the Agency, is because I am not simply asking for more money to

keep doing things the same old way.

What I am doing, I believe, is bringing a proven track record of

success at the Agency, first to OMB, then the President, and then

to the Congress, to say, a dollar spent at SSA is a good investment,

we will use it wisely. We are constantly looking at ways to improve

productivity.

Senator BAUCUS. Right. Is there some outside, either audit or examination, that you could point to that helps make your case, so

that when you go to the White House, OMB, or to Congress, that

you could show, hey, we are doing a great job here? There is not

a lot of waste here. In fact, there is more efficiency. I am wondering if there is any outside——

Commissioner BARNHART. Well, the productivity analysis that got

to the almost 13 percent increase in overall productivity was done

by the Office of the Actuary, which, as you know, is an independent

office. So they actually looked at the data from the 4 years to come

up with that percentage.

That was the best I could do, in terms of independence, because

the Actuary’s Office does serve members of Congress and the administration, but does so on a confidential basis and in an independent fashion, and always has.

Senator BAUCUS. Among the various unanticipated consequences

I listed, which is the most burdensome, new additional burden, is

it Part D, the hurricanes? What has it been?

Commissioner BARNHART. I would like to take this opportunity,

if I may, just to commend the employees of Social Security, because

I think our response—their response—after Hurricane Katrina was

really remarkable.

We had 125 of our own employees who lost their homes and

drove to the closest Social Security office to continue working to assist other people. I had the honor of going down right after the

storm, and then just about a month ago, to thank everybody personally.

I want to tell you, when I look at what our employees were facing and what they did in the face of the tragedy, personal tragedies, it was really amazing. We issued 74,000 immediate payments

to people. There were 650,000 affected Social Security beneficiaries.

The cost of doing that, not only in terms of personnel, but the

15 facilities that were damaged, 8 of which sustained major damage, some simply do not exist any more, some we had to just absolutely give up on. I toured some of those myself when I was down

there to make that decision, that we are not going to rebuild.

The cost for all that is around $73 million. We spent $6 million

of it in fiscal year 2005. We have to spend an additional $67 million unanticipated funds in fiscal year 2006. So, that is obviously

very significant for us.

13

Beyond that, as you mentioned, the IRTPA, or Intelligence Reform Act, which required the increased evidentiary requirements,

has had a significant effect. We estimate that about 50 percent of

the increased traffic, at least in the field offices, can be attributed

directly to the increased evidentiary requirements.

As you and the Chairman point out, people had to make return

visits. We are doing our best to publicize what the new requirements are. We have it on the website, we are putting it in our publications. But obviously we do not have money for a big ad campaign.

Senator BAUCUS. I appreciate that. I also very much appreciate

your learning how hard a lot of the Social Security folks really

worked during the hurricanes. I sense that has to be true, and I

am very appreciative of that.

My time has expired. Thank you very much.

The CHAIRMAN. All right. According to our first-come list, Mr.

Thomas, Mr. Bunning, and then I think it is Senator Snowe, then

Senator Lincoln.

Senator Thomas?

Senator THOMAS. Thank you. Thank you for your information.

I guess we are here—and there are a lot of technicalities, lots of

details and so on—to say there is a problem, and what can we do.

I guess that is my question: what should we do differently than we

are doing now?

Commissioner BARNHART. I think that we are doing a lot of good

things now, Senator. I think it is important to remember that. I do

think that in this post-9/11 environment in particular, looking at

the immigration situation, we have implemented a lot of procedures to safeguard the issuance of Social Security numbers, increased identity requirements, and so forth.

The Basic Pilot, which was referred to earlier, provides a system

for employers to verify work authorization through the Department

of Homeland Security and to confirm name, date of birth, and Social Security number through SSA. The Basic Pilot is really, I

think, an effective thing.

One of the options that I understand is being looked at—I think

it was included in the House bill recently passed—is the expansion

of the Basic Pilot; it is now voluntary and people are looking at

making it mandatory.

I would also like to point out that, during my tenure, we created

something called the Social Security Number Verification System

(SSNVS). SSNVS, another one of our catchy acronyms, allows employers all over the country to register, get a PIN and password,

and then to type in the names and Social Security numbers of their

employees and get a real-time, instantaneous match. It will tell

them if the name and Social Security number match.

It is a very easy, inexpensive system to run. We started it as a

pilot over the course of the last 2 years. It is now available to anyone who wants to use it, and I think it is important to promote

that.

Senator THOMAS. I know. But you are doing all those things.

What needs to be changed? Can there be a way to be more efficient? Do you just need more money? I guess you are telling us

what you are doing. Then why are we even having this hearing, if

14

that is all there is to it? Do we need to do anything differently than

we are doing now?

Commissioner BARNHART. Well, for example, should Congress

and the President decide to make the Basic Pilot mandatory as opposed to optional.

Senator THOMAS. That is a question that needs to be decided

here?

Commissioner BARNHART. That is one of the proposals that is

being explored. It would ensure that all employers were verifying

the work status.

Senator THOMAS. So you think that is a good thing to do.

Commissioner BARNHART. I think that it is up to Congress and

the President to make those policy decisions.

Senator THOMAS. Well, of course it is. But you have an opinion,

do you not?

Commissioner BARNHART. I think, from my perspective as Commissioner, as we move down this path of trying to make decisions

about what appropriate additional constraints are necessary, we

need to be cognizant of the balance, the fine line that one walks

in doing that.

That is, there is a certain price you pay, not just in terms of

money, but also in terms of delays in waiting time for people. For

example, one of the ideas that has been put forth is to require

mandatory verification only for new workers or people who change

jobs and also to have an increased tamper-proof card for those individuals.

If we go that route, then those individuals are going to have a

delay in terms of getting employment, because they are going to

have to go through this extra step. I think, as far as what is in the

best public interest, these are the factors that must be weighed in

terms of just making a decision.

Senator THOMAS. Well, I guess the bottom line, apparently—and

I am not an expert in this—is that the basic beginning is simply

records for Social Security. Now, because everyone practically is involved in those, we are beginning to look at them for Homeland Security, we are beginning to look at them for perhaps immigration,

and other kinds of things.

Now, I guess I am saying, is that a good thing to do? Can this

system be utilized for these other purposes efficiently?

Commissioner BARNHART. There is no question that there is a

great deal of information at Social Security. But as was discussed

earlier by some of your colleagues, privacy and confidentiality—I

believe the Chairman spoke to that issue, particularly in his opening remarks—is something we take very seriously at Social Security. Our first regulation deals with privacy and protection of taxpayer information.

We are guided, in terms of the information that we may even release to Homeland Security, by section 6103 of the tax code. That

is really an interpretation and a decision that is left up to the Secretary of Treasury, operating within the confines of the laws passed

by Congress. Our wage data, for example, is considered tax information, and we are not allowed to release it.

Senator THOMAS. Yes. I guess the issue that I think we ought to

break out and talk about a little more directly is whether or not

15

this basic massive database should be used for a number of other

things. If that is the case, then we have to find an efficient way

to do it. But we seem to sort of avoid that really straightforward

issue: is this a good way to do it?

Commissioner BARNHART. If I could elaborate just a little bit,

Senator Thomas.

Senator THOMAS. Yes.

Commissioner BARNHART. One of the other issues, and a point I

think that is underlying what you are saying, is this: the mission

of the Social Security Administration today is to provide service to

the American people.

Senator THOMAS. For what? For Social Security?

Commissioner BARNHART. For determining entitlement to benefits, and making sure those benefits are paid, the right check to the

right people, on time.

Senator THOMAS. All right. I understand that.

Commissioner BARNHART. There is no question that some of the

proposals that are being discussed could potentially cast the Social

Security Administration as an enforcement agency, and that is not

part of our mission today.

Senator THOMAS. I see.

Commissioner BARNHART. I think one of the issues is the release

of the information. The other issue is who uses the information,

whether it is Social Security, which is traditionally a service agency, or Homeland Security or IRS, which are traditional enforcement

agencies.

Senator THOMAS. I think this is a real issue that we need to talk

about. Thank you so much.

The CHAIRMAN. Senator Bunning?

Senator BUNNING. Thank you, Mr. Chairman.

Commissioner Barnhart, you mentioned in your testimony that

Continuing Disability Reviews, or CDRs, ensure that those receiving disability benefits continue to meet SSA’s definition of disabled.

Apparently, for every $1 SSA spends in CDRs, the Social Security Administration sees a savings of $10 in the program benefits.

However, SSA may have to reduce the number of CDRs next year.

I want to know why.

Commissioner BARNHART. The reason, Senator, is that we received $300 million less in our appropriation from the Congress

than was included in the President’s budget. It simply is a matter

of work years.

I was faced this year, as I was last year, with the dilemma of

reduced allocation based on the work years we said we needed and

calculated that we needed to meet other goals, such as the incoming disability claims, meeting the retirement and survivor claims,

and so forth.

My dilemma, my choice last year and again this year, was either

to delay claims-taking on the front end—in other words, making

people who are entitled to benefits wait longer to get those benefits—or to reduce the number of Continuing Disability Reviews and

SSI re-determinations.

It was my decision that reducing CDRs and re-determinations

was more in line with the core mission of the Agency, because makVerDate 11-MAY-2000 14:56 Mar 13, 2007 Jkt 095484 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 31699.000 SFIN1 PsN: SFIN1
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ing sure that people who are entitled to benefits receive those benefits is the original purpose of the Social Security program.

It is not a decision I took lightly, I want to emphasize. While it

saves at least $10, those dollars are program dollars, but we spend

administrative dollars to conduct the reviews.

In other words, we spend 1 administrative dollar to save the $10

in program dollars. To some extent, it is penny wise and pound

foolish not to do, obviously, CDRs and re-determinations. I assume

that is one of the points you are trying to make.

That is one of the reasons that the administration has put forth

various proposals in the past few years, and has one again, which

would provide for sort of an outside-of-the-cap fund to specifically

fund CDRs.

Senator BUNNING. You mentioned in your testimony that SSA

has seen a decrease from the beginning of the year in the number

of calls to the 800 number, and visits to offices about the Medicare

low-income subsidy. Do you feel SSA can handle this current level

of inquiries, and what type of challenges do you face long-term in

processing these applications?

Commissioner BARNHART. Yes, sir. Definitely, the issue that we

were facing, the spike that happened in January has waned significantly. If I might give you an example, in January, our agent-busy

rate was 23.7 percent, average, for the month. In February, the average agent-busy rate was 7.2 percent. So far in March, it is 7.7

percent. So you see a rather dramatic reduction.

Our goal for the year was to be at 10 percent. Right now, we are

at almost 20 percent for the total, almost twice where our——

Senator BUNNING. Average.

Commissioner BARNHART. Average.

Senator BUNNING. In other words, that is double what you normally would have.

Commissioner BARNHART. Correct. And double our goal. Now, it

is important also to acknowledge that, just this past week, we had

days where the busy rate was 1.2 percent, and then other days

where the busy rate was 23 percent. I am speaking averages here.

I do not want people, every time they call, to expect this to be the

result.

But the point is, we do not think there is any way we can get

to the 10 percent, obviously, because we are over a quarter way

through the year and we are already at double that.

Now, we believe that we can stay right around the 10 percent,

and some weeks below it, and continue to ratchet the 20 percent

down, but we will not make the 10 percent busy rate. Obviously,

that has other, what we call ‘‘work affected.’’ It is like fall-out work,

is the term I am looking for.

Senator BUNNING. Are most of those calls from dual eligibles?

Commissioner BARNHART. Dual eligibles. You mean from SSI and

Social Security?

Senator BUNNING. Yes.

Commissioner BARNHART. I could not tell you.

Senator BUNNING. Oh, you could not tell?

Commissioner BARNHART. I could not tell you that. I do not know

that.

17

Senator BUNNING. You would be able to filter that out over a period of time, though.

Commissioner BARNHART. I could see if we could do that kind of

management information. We do not maintain management information on the number of calls SSA receives from individuals who

are dually entitled to Social Security and Supplemental Security

Income payments.

Senator BUNNING. For the simple reason, that is who we seem

to hear the most from in our Congressional and senatorial offices,

that there was a problem on the Medicare prescription drug benefit, particularly with dual eligibles, people who had been getting

their money from Medicaid, then were on Medicare.

Thank you. My time has expired.

The CHAIRMAN. Thank you.

Senator Snowe?

Senator SNOWE. Thank you, Mr. Chairman. Welcome, Ms. Barnhart, to the committee.

With respect to the employment verification problems, and obviously the Office of Inspector General is going to be speaking to that

shortly, what exactly would it require for resources, given the fact

that this continues to be a persistent problem, in terms of erroneous earnings reports and so on, because of unauthorized workers?

Commissioner BARNHART. In terms of making the Basic Pilot

mandatory, Senator?

Senator SNOWE. Yes.

Commissioner BARNHART. The cost for that is actually very low.

It is probably less than 50 cents, almost pennies, frankly, per

transaction. The only additional cost if it were made mandatory

would be dependent on if the Department of Homeland Security decided to send data to us in a different format, or if they were going

to send additional data fields. It would be systems-related costs.

Also, there would be an impact on our help desk for the employers who are using it and who would call us for assistance, and also

our field office employees. These are some of the issues that fall out

as a result of the lack of verification in that process. Last year, we

had about 27,000 such disputed records sent to our field offices for

resolution. So, it would really depend. We could calculate it for you,

but I do not think that we are talking a significant cost.

Senator SNOWE. So could it be done sooner rather than later? I

mean, is this something that could be put in place? Does it require

pending legislation? I know there is pending legislation that would

require——

Commissioner BARNHART. From our perspective, that is certainly

the case. I think the issue is, you would really need to ask Homeland Security about their system readiness and those kinds of

things, since we are an add-on to the DHS systems. Homeland Security is the point of entry for the Basic Pilot. They come to us then

to verify name, Social Security number, and U.S. citizenship.

Senator SNOWE. Do you have any estimate of the value of erroneous wage reporting?

Commissioner BARNHART. In terms of what is in our earnings

suspense file?

Senator SNOWE. Yes.

18

Commissioner BARNHART. Yes, I do. Actually, the total number of wages that have not been posted, since 1937, is $519.6 billion.

It is comprised of 255 million items. But I would like to emphasize,

that is not a static number. Obviously, each year there are additional unmatched wages that go into the Earnings Suspense File.

But at the same time, we run a number of routines and have

many different activities we undertake now to remove items from

the suspense file. It ends up, when all is said and done, after a

year of postings and doing the routines that we do to remove the

ones that we find matches for, we end up with somewhere between

2 to 4 percent of all wages that are reported every year ending up

in the Earnings Suspense File.

But I should point out that, just this past year, we posted some

wage items from the 1940s to workers’ records, meaning we took

these items out of the ESF. So we do not just work on a particular

year. We are constantly unscrambling earnings for people.

Senator SNOWE. Is the problem getting worse, better, or the

same? I mean, is this your most significant challenge?

Commissioner BARNHART. It certainly is a challenge, but actually

it has been roughly the same for quite some time in terms of the

percentage of wages that end up not being a match to the Social

Security numbers. It has been a fairly static program.

But obviously, with $519 billion worth of wages that are

unposted, that means the individuals that earn those wages will

not get credit for them when they retire, unless they are able to

come in and do what we call ‘‘unscramble the earnings,’’ and that

means present proof of employment and wages earned.

Some of those, I want to point out, get fixed fairly readily. They

are due to people who got married and changed their name, or people who got divorced and changed their name, or the transposition

of names, particularly foreign surnames, double names, putting the

last one first, and so forth. The kind of routines we run catch those.

Senator SNOWE. All right.

Thank you, Mr. Chairman. Thank you.

The CHAIRMAN. Senator Lincoln? Go ahead.

Senator LINCOLN. Thank you, Mr. Chairman. We certainly appreciate you bringing us together to discuss a program that has been

such a vital safety net for our Nation’s elderly, the sick, widowed,

and disabled for over 70 years. Our State of Arkansas faces significant challenges, and it really relies heavily on Social Security.

I do want to echo your comments about your Social Security Administration workers. I traveled to the evacuee sites in Arkansas.

We had about 65,000 evacuees from the Gulf region, and I visited

multiple church camp sites, all kinds of places where these evacuees were, and there was not one single site I did not go to that

there was not an unbelievable response from the Social Security

Administration office and workers.

They were working 24/7. They were there handing out checks,

making sure, doing the background work that they needed. It was

phenomenal, and I know you must be proud of them, because I certainly am.

Commissioner BARNHART. Thank you. I have never been prouder

to be Commissioner of Social Security than I was after Hurricane

Katrina.

19

Senator LINCOLN. They were just absolutely incredible. They did

it in a very efficient way. They did it in a very compassionate way,

with a lot of integrity and a great sense of pride. So, I know you

are proud of them, because I certainly was. Those are people we

work with from our office on a day-to-day basis, so it made it a lot

easier for us to be able to find the answers. But, nonetheless, they

did a tremendous, tremendous job.

But our State ranks third in the percentage of our population receiving Social Security. Nearly 50 million Americans receive benefits they have paid into Social Security, and a lot of them really depend on those benefits to meet their everyday expenses.

In Arkansas, that is probably a disproportionate number. So, we

are very, very appreciative of the work you do, and certainly very

concerned in ways that we can be helpful in making sure that the

work that you are doing is coming about in a productive way.

I guess, just two quick questions, if I may. We have discussed

how the implementation of the new Medicare drug benefit has cost

the Social Security Administration hundreds of millions of dollars.

I know that there is an awful lot there.

SSA employees continue to shift responsibilities in carrying out

their workloads. I know, because they get referred there oftentimes. In a lot of ways, I think the Medicare hot-line operators

have been incorrectly referring some of the calls to their SSA.

If you could just briefly touch on how the SSA and CMS are

working cooperatively to address those issues, that would be great.

Then I also would just like to make sure that you address also

some of the short-term fixes that you have implemented. I know

you commented that there were 500,000 more per-year disability

reviews. Is that more than what we have been having, or are those

the specific reviews?

Because I guess my concerns rest with some of the reforms that

you have put into place, where there is cut in Medical Continuing

Disability Reviews of disabled beneficiaries by 50 percent, and reducing the Periodic Continuing Disability Reviews from 1.6 million

to 1.2. Some of these types of efforts may save money in the shortterm, but being penny wise and pound foolish is one thing I get

very concerned about.

I guess one of the specifics there would be the CDRs and the SSI

income re-determinations. They really do save, at least in some reports, $10 for every dollar spent administering them, because they

determine benefits for the beneficiaries who are no longer eligible.

So if you can kind of address some of that for me, that would be

very helpful.

Commissioner BARNHART. Certainly. And again, thank you very

much for your comments about SSA.

Senator LINCOLN. They are a great bunch.

Commissioner BARNHART. They are fabulous.

With regard to our relationship with the Centers for Medicare

and Medicaid Services, we worked very closely with CMS on the

implementation of the new prescription drug legislation. As this

committee knows, our responsibility is fairly limited in that legislation. We basically are charged with determining eligibility for the

low-income subsidy.

Senator LINCOLN. Right.

20

Commissioner BARNHART. Determining the amount of that subsidy. And that was obviously a very large responsibility, because

we had to look at everyone since the summer, moving forward now.

Senator LINCOLN. Well, they wanted us to implement it in 6

weeks, those dual eligibles, when you move over the low income.

Commissioner BARNHART. Yes. And then we will have an ongoing

workload with new retirees who come in every year to do that.

Also, the calculation and deduction of the premium from the checks

for individuals is an ongoing workload. As you know, we deduct

that from the Social Security check.

Senator LINCOLN. Right.

Commissioner BARNHART. Then next year, with the incomerelated Part B premium, we will be handling those deductions as

well.

Senator LINCOLN. I thought you already did that on Part B.

Commissioner BARNHART. We do, but there are additional calculations that will have to be done as a result of the fact that now

it is associated with income, the amount of the premium.

So those are our basic responsibilities. In order to do the lowincome subsidy implementation effectively, we engaged in a massive outreach effort, and we worked closely with CMS in doing

that. We sent letters to 19 million people.

We did 9 million follow-up calls to try to reach everyone who did

not respond, and had a very high success rate in terms of getting

telephone numbers, as you know, when you do matches of names

and telephone numbers.

So then we did 5 million follow-up applications and letters after

we did the 9 million calls to the individuals who said they would

like to have the applications, and so forth. We have been involved

in over 66,000 outreach events, and many of those have been done

in concert with representatives from CMS.

We have worked very, very closely, I want to emphasize, with

them, private charities and social service agencies, State and local,

and they have been absolutely wonderful, too. They have been tremendous partners in this effort of reaching out to the low-income

population.

When individuals started signing up for the plans, actually enrolling in the plans, and some of the difficulties being experienced

were in terms of people being able to get enrolled in the program,

one of the things we did is we worked with CMS to create a process

for people with dire need.

In other words, not surprisingly, people are familiar with Social

Security, they know and trust Social Security, so they call Social

Security or they come to our office.

Senator LINCOLN. Right.

Commissioner BARNHART. When we learned of individuals who,

for example, could not get insulin—they were diabetic—or they

needed heart medication and there were difficulties, we worked out

an arrangement with CMS where we could go directly to a ‘‘Dire

Need Office’’ to take care of those individuals, which I think was

really important, as they worked out some of the initial implementation issues with enrollment.

And we continue to work closely with them by providing information, letting them know how we are doing in terms of enrolling peoVerDate 11-MAY-2000 14:56 Mar 13, 2007 Jkt 095484 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 31699.000 SFIN1 PsN: SFIN1
21

ple in the low-income subsidy, how many we have reached, and so

forth.

The CHAIRMAN. Before I go to the second panel——

Senator LINCOLN. Can she just answer my second question in

writing, perhaps?

The CHAIRMAN. I am sorry. I did not realize she did not.

Senator LINCOLN. That is all right. I am concerned about some

of the reforms.

The CHAIRMAN. She can answer it now.

Senator LINCOLN. All right.

Commissioner BARNHART. All right.

The CHAIRMAN. I did not mean to cut you off. I thought that was

the end.

Senator LINCOLN. No, no. That is all right.

Commissioner BARNHART. As far as the CDRs and re-determinations go, this was an issue that Senator Bunning raised as well. It

clearly is penny wise and pound foolish, my sentiments and

thoughts exactly, when you look at it in terms of a dollar spent in

administration saves $10 in program costs.

However, from my perspective as Commissioner of Social Security, my first responsibility, looking at the core mission of the

Agency, is to make sure people who are entitled to benefits receive

those benefits and get them on a timely basis.

I was faced this year, as I was last year, after receiving a $300

million reduction in the budget request, with having to make a determination about what we could not do.

I could have told everyone, we will try to do everything, and then

done everything badly, quite frankly, Senator Lincoln. I decided a

long time ago when I came into this job that that would not serve

the Agency, the people, or the Congress well to adopt that approach.

So I made the decision, if I have to choose between processing

initial claims for benefits or doing Continuing Disability Reviews

and re-determinations, I will go for the initial claim for benefit

every time, even though I understand that not only is there a fiscal

stewardship component that is important in the CDRs and redeterminations, but it could also be very detrimental to the claimant not to have those done. I am sensitive to that as well; it is not

a choice I make cavalierly.

Senator LINCOLN. Sure.

Commissioner BARNHART. It is something I do take seriously. But

given the possibilities before me, it was the one that I felt was in

the best interests of everyone.

Senator LINCOLN. Thank you.

The CHAIRMAN. Before you go, you did not have any more, did

you?

Senator BUNNING. Go right ahead, since you are the Chairman.

The CHAIRMAN. Did you want a second round, should have been

my question.

Senator BUNNING. I have one question.

The CHAIRMAN. All right.

Either I misunderstood Senator Snowe’s question or you did, the

question on your being able to handle the verification that is being

22

suggested for employers. This is where I am coming from. I think

you said you would be able to handle it.

If these numbers are right, it is my understanding that the current verification system used by the Social Security Administration

has a 10- to 18-percent initial no-match rate.

So if the Social Security Administration had to verify all workers,

that would be 15 to 20 million people seeking Social Security Administration assistance. It just seems like you could not handle

that.

Commissioner BARNHART. Senator, maybe perhaps I did misunderstand. I thought she was speaking about Basic Pilot itself,

the system itself. I was speaking specifically to the operation of the

system, the capability, was the system ready today, the actual mechanical piece of it.

When I explained that we had a fall-out to the field offices of

roughly 27,000 people last year, that represented, I think, almost

3 percent of the verifications that were done, I believe. With respect to the request for information concerning the staff time associated with handling the fall-out work from the Basic Pilot program

to the Social Security Administration’s field offices, we are developing this information and will provide it to the committee. I will

double-check that number, and I would be happy to submit something for the record.

I would be happy to do a calculation for the staff time associated

with dealing with that fall-out work or the field office verification

work that is necessary to respond to you. I was speaking specifically to the system of the Basic Pilot itself.

The CHAIRMAN. All right.

Senator Bunning, then Senator Baucus.

Senator BUNNING. Thank you, Mr. Chairman.

This is a follow-up to others who have questioned you. But I

would like to know, what would be Social Security’s biggest challenge if Congress passed immigration legislation this year requiring employers to verify Social Security numbers? What is the biggest problem for you?

Commissioner BARNHART. Senator, if it is simply to verify Social

Security numbers, that is to say that Jo Anne Barnhart’s Social Security number is XXX, they could do that right now under our Social Security number verification system.

Senator BUNNING. I know. But what is the biggest problem for

you if this becomes part of immigration law?

Commissioner BARNHART. I do think that, I guess to some extent,

it is making clear a greater enforcement—certainly not really enforcement, because we would not be doing any follow-up activity to

it. You are not suggesting we do anything to follow up.

Senator BUNNING. No. I am asking you, what is the toughest

thing that you are going to have to do if we require verification in

an immigration law?

Commissioner BARNHART. Again, it would depend on how it is required. If it is simply to verify—and I am not trying to be difficult,

because there are so many different things being talked about—

that my name and my Social Security match, not that I am who

I say I am, but to go into a system——

23

Senator BUNNING. No. That would be an immigration problem,

not a Social Security problem.

Commissioner BARNHART. Correct. Correct. Then we have the

system in place right now, through the Social Security number

verification system, that can do that. Employers participate on a

voluntary basis.

We probably would have to look at the capacity issues of the system. Because you are going to increase dramatically the number of

employers using the system on a regular basis, then obviously you

have to have system capacity so people are not sitting there for 5

minutes waiting for the information to come back.

We would obviously have to have more people to answer questions for individuals who had difficulty maneuvering the system,

although it is a pretty intuitive system. I have sat and used it myself.

Senator BUNNING. Then my question to you is, what percentage

of people would not be able to be verified?

Commissioner BARNHART. The percentage that could not be

verified?

Senator BUNNING. In other words, if we required it in an immigration bill and required Social Security to furnish that information.

Commissioner BARNHART. There would probably be somewhere

around 10 to 20 percent that could not be verified.

Senator BUNNING. Thank you.

Commissioner BARNHART. And then there would be, as the

Chairman pointed out a minute ago, the fall-out work that goes

into the office when they cannot be verified, for us then to do further checking. So that would be perhaps the greatest thing for us.

I could attempt to quantify that for you, if you are interested, and

provide it for the record as well. With respect to the request for information concerning the fall-out work from the Basic Pilot program to the Social Security Administration’s field offices, we are

developing this information and will provide it to the committee.

The CHAIRMAN. Senator Baucus?

Senator BAUCUS. Thank you, Mr. Chairman. I was just wondering, Mr. Chairman, if you might agree with me or work with

me. They just need some more help, the Social Security Administration. We might find some way we can give them additional resources.

The CHAIRMAN. I think in the past we have made those requests.

We probably have not been as successful as we should, but I think

we have joined together on that in the past. I would join with you

again.

Senator BAUCUS. I appreciate that. I was thinking, maybe not

even a request in that sense, but maybe just an amendment on

some appropriate vehicle somewhere, just to give a little assistance.

The CHAIRMAN. All right.

Senator BAUCUS. That is something we can explore, you and I together.

The CHAIRMAN. Sure.

Senator BAUCUS. But I would just make that observation. I just

think it makes sense, frankly, for us to try to find something.

24

Commissioner BARNHART. If I could just make one additional

comment to Senator Bunning’s question, if I could, please. It is

something that just occurred to me.

Senator BAUCUS. Yes.

Commissioner BARNHART. That is, another issue would be the individuals who should match, but do not match. We would get false

negatives, I guess would be the best way to put it, because somebody enters the name the wrong way or the number gets confused.

So there could be some individuals who are perfectly legitimate

that would have a delay because it would have to go to our field

office. So, that would be more a public perception issue and disadvantageous for some individuals.

Senator BUNNING. Would that be included in the 10 to 20 percent?

Commissioner BARNHART. It would be.

Senator BUNNING. Thank you.

Commissioner BARNHART. It would be part of that.

The CHAIRMAN. Thank you, Senator Baucus

Senator BAUCUS. Yes. Thank you. Thank you, Commissioner.

Maybe Senator Bunning already asked this, but on the Continuing Disability Reviews, is it true, if you are able to have more

resources, that not only the Agency will be more efficient, but it

would also save Uncle Sam a few dollars?

Commissioner BARNHART. Absolutely, we would. It is estimated that we would save $10 in program costs for every $1 that we

spend through administrative costs, and so it is definitely a good

thing.

Senator BAUCUS. I saw a large number. I was surprised how

large it was overall on an annual basis.

Commissioner BARNHART. Yes.

Senator BAUCUS. It was in the low billions, as I recall.

Commissioner BARNHART. Yes. That is correct. Absolutely. Absolutely, Senator. You are absolutely right. It is like $2 billion, I believe, based on what we are not doing this year.

Senator BAUCUS. Yes. Exactly.

Commissioner BARNHART. Yes.

Senator BAUCUS. So we could save $2 billion. Is that right?

Commissioner BARNHART. That is correct.

Senator BAUCUS. If the Continuing Disability Review process

were fully utilized.

Commissioner BARNHART. That is right.

Senator BAUCUS. But you could not fully utilize it because it

meant that you would be robbing efforts in other areas.

Commissioner BARNHART. It means that the waiting time would

be longer on the 800 number, people would, instead of getting appointments within 3 weeks, be getting appointments in 5 weeks.

Senator BAUCUS. So you are scrambling to just rob a little bit

here, pay for a little bit there, and people are getting short-changed

in some areas along the way.

Commissioner BARNHART. We are constantly scrambling. Now,

maybe I do not want to sound that frantic, but——

Senator BAUCUS. That is how it appears to me, anyway.

Commissioner BARNHART. But the characterization is an apt one,

when you look at the fact that, constantly through the year, I am

25

reevaluating, every month, looking at where can I get money from

and shift it around to achieve our goals.

Senator BAUCUS. Right. Right. That is what I mean.

Commissioner BARNHART. So you are absolutely right. That is a

continual activity.

Senator BAUCUS. That is what I meant.

One other question. Maybe this was addressed, and I apologize

if it was. I am just sort of concerned. Whenever I see a Social Security number used so many different places, drivers’ licenses, whenever you apply for a bank account they want your Social Security

number, and all this. It is just used everywhere.

I guess the good side is, that is a common, consistent sort of

benchmark. On the other hand, it is used so many places, in so

many different areas. It is a little worrisome to me as an individual

as to who all has those Social Security numbers and who has access to those Social Security numbers, and how are they used.

A separate question, and maybe it is related, is sort of out of the

box. What is down the road in new technologies to address a different, new sort of identification that Social Security would use, but

others might use too, which is more tamper-proof, less able to be

abused by some nefarious persons?

Commissioner BARNHART. Well, there are a number of things

that have been looked at in terms of tamper-proof cards; some include biometrics.

Senator BAUCUS. Is that promising?

Commissioner BARNHART. Well, obviously, we could do anything.

We could put a photograph on a card. But then you have the issue

of the aging process. People do not go back to renew the Social Security card every 4 years like they do drivers’ licenses.

Senator BAUCUS. You mean, they do not like having an older

photograph on a card? No, I am kidding.

Commissioner BARNHART. So we could do thumbprints. You can

do a number of different things.

The issue there, quite frankly, the primary issue, is cost. We

looked at, based on some of the proposals that have been put forward, what it would cost if we replaced all Social Security cards.

In other words, if we said, for the 300 million cardholders, we

subtract the 60 million under 14 and younger because you assume

they are not working, that leaves you with somewhere around 240

million cards that we would be replacing. The cost of doing a new

card for everyone—and it is not the cost of the card itself——

Senator BAUCUS. It is all behind it. Yes.

Commissioner BARNHART. It is everything behind it. Would be

somewhere around $9 billion and would require 67,000 work years.

Senator BAUCUS. How many work years?

Commissioner BARNHART. Sixty-seven thousand more people

than we currently have employed at the Social Security Administration, because you are talking about——

Senator BAUCUS. That is double.

Commissioner BARNHART. Yes. It is not just a matter of a person

coming in and presenting a card, and SSA issuing a new card. We

would have to go back, just as we do now when a person wants a

replacement card, and see the documentation. We require documentation because, what is to stop anyone from taking a Social SeVerDate 11-MAY-2000 14:56 Mar 13, 2007 Jkt 095484 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 31699.000 SFIN1 PsN: SFIN1
26

curity card, coming in, and representing themselves as the individual?

I think that is a point that you made, Senator Bunning, when

we were talking about whether or not we know the person who presents the card is actually that person with that number. We can

confirm the name and number.

Senator BAUCUS. What should I do with my card if you do not

want me to carry it in my wallet?

Commissioner BARNHART. I would like you to put it in a safe

place, labeled ‘‘Important Papers.’’ [Laughter.]

Senator BAUCUS. All right. I am sorry. I interrupted you.

Commissioner BARNHART. No, no. So, the issue for me, as we

struggle to get the resources that we need to be able to do our current job, our full request this year from the President for Social Security is $9.4 billion, so basically we are talking about essentially

doubling that to be able to do Social Security cards.

Now, obviously they do not all have to be done in a year. We

think it would take at least 2 years. It does not all have to be done

that way. You could phase it in over time. But the basic costs remain the same. You could parcel it out in different ways. Some

suggestions have been, do it only for new workers or people who

change jobs. That is about 34 million a year.

But the way I look at that is, you have that 34 million, 30 million

people changing jobs, plus 4 million new workers. You also have

the 17 million new and replacement cards you issue every year, so

that is 51 million, minimum, you would be doing.

I can assure you that if anyone finds out that there is a new

‘‘better’’ Social Security card, it will have a woodwork effect, and

we will have hundreds, thousands, maybe millions, tens of millions

of people, coming forward and saying, I want the better card.

Senator BAUCUS. Right.

Commissioner BARNHART. If you have a safer card, I want that

one. So would we simply say to those people, we will not give you

one?

Senator BAUCUS. It reminds me of notch babies.

Commissioner BARNHART. Oh, my goodness. [Laughter.]

Senator BAUCUS. Well, thank you very much. My time has expired. I just want to commend you. You obviously are a very good

public servant.

Commissioner BARNHART. Thank you.

Senator BAUCUS. You are trying hard, and you are doing a good

job with what you have. The Chairman, I, and others will try to

work to help you do what you need to do.

The CHAIRMAN. Yes.

Commissioner BARNHART. Thank you. I really appreciate that.

The CHAIRMAN. Yes. I thank you, too. But maybe I would remind

you, because we did not have such a large turn-out at our committee, you may get questions for answers in writing, and we

would appreciate those responses. I would also say that to the second panel now, as I call the second panel.

We thank you, Ms. Barnhart.

Commissioner BARNHART. Absolutely. Thank you very much, Mr.

Chairman. Thank you for your continuing support for Social Security programs and the Agency.

27

The CHAIRMAN. Yes. Thank you.

We will have you speak in this order: Patrick P. O’Carroll, Jr.,

Inspector General, Social Security Administration; Richard E.

Warsinskey, president of the National Council of Social Security

Management Associations, Inc.; Eileen Sweeney, co-chair, Social

Security Task Force, Consortium for Citizens With Disabilities senior fellow, Center on Budget and Policy Priorities here in Washington, DC; and, last, Erwin Hathaway, Social Security disability

insurance beneficiary, Trego, MT.

So we will go just the way you are seated there, starting with

you, Mr. O’Carroll.

STATEMENT OF PATRICK P. O’CARROLL, JR., INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, BALTIMORE, MD

Mr. O’CARROLL. Good morning, Chairman Grassley, Senator

Baucus, Senator Bunning, members of the committee. I am pleased

to be here today to take part in the discussion on Administrative

Challenges Facing the Social Security Administration. Thank you

for inviting me.

While SSA faces challenges in several areas, I would like to focus

today on the Earnings Suspense File, or the ESF, and, in particular, the impact unauthorized workers have on the ESF.

By way of background, SSA receives wage reports, W–2s, from all

employers, and the Agency records these earnings in order to determine eligibility for retirement, survivors, disability, and health insurance benefits, and to calculate the appropriate amount of benefits to be paid to an individual. When the name and SSN on one

of these wage reports cannot be reconciled with SSA’s records, the

item is placed in the ESF.

Since the beginning of the program in 1936, through tax year

2003, the ESF contained about 255 million wage items, representing about $520 billion in wages. We believe the chief cause

of wage items posted in the ESF is unauthorized work by noncitizens.

This is an area in which my office has performed significant

audit and investigation work, because it not only relates to the

proper administration of SSA’s programs but also to the broader

concerns of illegal immigration and homeland security.

Over the years, SSA has developed several tools to assist employers in verifying a worker’s information, to improve accuracy in

wage reporting, and to reduce the size of the ESF. Currently, SSA

offers employers three types of voluntary automated verification:

the Employee Verification System, or EVS, the Social Security

Number Verification System, or SSNVS, and the Basic Pilot.

EVS and SSNVS are the Agency’s two primary verification programs. They are available to employers to ensure that current and

prospective employees’ names and SSNs are valid before the employer submits its wage reports to SSA. Through EVS, requests are

made via paper or magnetic media, while SSNVS is an on-line

service.

While these two programs offer SSN verification, they do not provide work authorization information. The Basic Pilot, on the other

hand, is a joint program between SSA and the Department of

28

Homeland Security that verifies both the employment eligibility of

newly hired employees as well as the SSN information.

In 2003, the program was extended for an additional 5 years and

expanded to all 50 States. The Basic Pilot, however, is available to

employers only to verify information on new hires, not existing employees.

In our audit work, we have recommended that chronic problem

employers be required to participate in an employment verification

program. However, we have not specifically considered the impact

of a mandatory verification program for all employers, as has been

proposed in several versions of immigration reform legislation.

Our work on chronic problem employers leads us to agree with

the GAO that the notion of mandatory verification raises significant concerns, such as: the cost, workload implications, education,

identity fraud, and the production of counterfeit documents.

We agree that such factors should be considered, and we would

advise that even further issues should be weighed, such as: capacity, employer handling, monitoring, feedback, and enforcement.

We are actively reviewing such factors and, in particular, are examining three specific aspects of the verification program: (1) the

accuracy of SSA’s information used to verify an employee’s SSN,

name, date of birth, citizenship status, and, if applicable, the date

of death; (2) employer satisfaction with current verification services

such as SSNVS and the Basic Pilot; and (3) management controls

over SSNVS to ensure that employers are properly using the

verification service.

This review should enable us to provide SSA and Congress with

a more specific initial assessment of the impact and utility of a

mandatory verification program. As always, my office stands ready

to assist you and the SSA by providing accurate and meaningful

audit and investigative work.

Thank you for inviting me here today. I will be happy to answer

any of your questions.

The CHAIRMAN. Thank you very much.

[The prepared statement of Mr. O’Carroll appears in the appendix.]

The CHAIRMAN. Mr. Warsinskey?

STATEMENT OF RICHARD E. WARSINSKEY, PRESIDENT, NATIONAL COUNCIL OF SOCIAL SECURITY MANAGEMENT ASSOCIATIONS, INC., CLEVELAND, OH

Mr. WARSINSKEY. Chairman Grassley, Senator Baucus, and

members of the committee, my name is Richard Warsinskey, and

I represent the National Council of Social Security Management

Associations. On behalf of our membership, I am pleased to have

the opportunity to submit this testimony to the committee.

SSA is facing many challenges this year. Let me give you some

examples. In 1999, SSA had 311,000 hearings pending. There are

now an estimated 750,000 hearings pending, an increase of 140

percent. As a result, the average time to receive a hearing decision

can, in many cases, run more than 2 years.

SSA’s program service centers have seen their pending cases

more than double in the past 2 years, increasing by more than

29

350,000 cases. Waiting times in field offices rose dramatically for

the first 6 weeks of the year.

Walk-in traffic increased by approximately 40 percent. Since

then, traffic has moderated somewhat, but walk-in traffic is currently up an estimated 25 percent.

SSA’s 1–800 number received around 4.5 million more calls for

the first 2 months of this year compared to the first 2 months of

last year. Failure to receive an adequate appropriation for fiscal

year 2006 led SSA to make the decision to cut back on processing

over a quarter of a million Medical Continuing Disability Reviews

this year, and over half a million since fiscal year 2002. It also led

to cutbacks on processing SSI re-determinations of over three-quarters of a million this year.

SSA estimates, for every $1 it spends on an SSA re-determination, it saves $7 in program costs. For every $1 the Agency spends

for a Continuing Disability Review, it saves $10 in program costs.

In August, SSA will send out an estimated 2 million letters for

those qualified for extra help for Part D Medicare to determine

whether the amount of extra help will change.

In late November, SSA will also mail out an estimated 2 million

letters for those potentially affected by the income-related increased Medicare Part B premiums. Many of those affected will

contact SSA field offices with questions and request assistance to

help them determine a correct premium to pay.

The Intelligence Reform and Terrorism Prevention Act of 2004

that went into effect on December 17, 2005, significantly strengthened the rules for issuing new and replacement Social Security

numbers and cards. Immediately after this law went into effect,

SSA field offices throughout the country saw a dramatic increase

in waiting times and number of visitors.

We estimate that nearly one-third of the people currently coming

in to SSA field offices to apply for an original or duplicate Social

Security account number card have to return to the office with additional documentation for that card. We have seen countless numbers of people leaving our offices upset because of the inconvenience.

For example, someone living in Shenandoah, IA would have to

make a 150-mile round trip to their servicing office in Creston, IA.

If you live in Broadus, MT, you would need to make a 337-mile

round trip to the servicing office in Billings, MT.

As these increased demands on SSA facilities throughout the

country have hit the Agency, we are faced with a reduction in staffing of 2,500 from fiscal year 2005 to 2007, even with the President’s proposed budget.

On the horizon is another enormous workload that SSA could receive due to language in the proposed Border Security Act that

could require the Agency to verify an estimated 50 million Social

Security numbers a year.

We understand the current budgetary constraints, but when

making decisions about how limited appropriated funds should be

allocated, keep in mind that SSA has a reputation as an Agency

that gets results, and it has earned that reputation.

30

Mr. Chairman, I thank you for the opportunity to appear before

this committee. I would welcome any questions that you and the

members of the committee may have.

The CHAIRMAN. Thank you.

[The prepared statement of Mr. Warsinskey appears in the appendix.]

The CHAIRMAN. Ms. Sweeney?

STATEMENT OF EILEEN SWEENEY, CO-CHAIR, SOCIAL SECURITY TASK FORCE, CONSORTIUM FOR CITIZENS WITH DISABILITIES SENIOR FELLOW, CENTER ON BUDGET AND POLICY PRIORITIES, WASHINGTON, DC

Ms. SWEENEY. Thank you, Mr. Grassley. My name is Eileen

Sweeney. I am a senior fellow at the Center on Budget and Policy

Priorities. I also am the co-chair of the Social Security Task Force

of the Consortium for Citizens With Disabilities.

CCD is a working coalition of more than 100 national consumer,

advocacy, provider, and professional organizations, working together with, and on behalf of, the 54 million children and adults

with disabilities and their families in the United States.

The CCD Social Security Task Force focuses on disability policy

issues in both Title 2 and SSI, and I am here to testify on their

behalf. There are four key points related to SSA’s administrative

challenges that I would like to raise.

The first is, SSA is doing a good job with limited resources. As

Mr. Hathaway’s testimony reflects, there is much that remains to

be done and some workloads that need more attention, but Commissioner Barnhart has made great strides in improving the Agency’s technological capacity in ways that will help to accomplish its

work.

We are concerned, however, that SSA does not have adequate

funds for the current fiscal year, and will not have sufficient funds

under its proposed budget for 2007.

Of greatest concern, SSA will need to reduce its staff. Even

though SSA is seeking $387 million more than it has received for

this year, this figure will not even cover current staffing. SSA will

lose 2,545 full-time staff positions in 2007, according to the Commissioner’s statements.

In addition, SSA’s progress in reducing delays related to administrative appeals is projected to slow down or worsen in fiscal year

2006. For example, in 2005, the average processing time for hearing decisions at the ALJ stage was 415 days. This is far too long.

Yet, in 2006, SSA expects the average time frame will climb to 467

days, an additional 52 days. SSA expects this to be the average figure in 2007 as well.

Second, we believe that SSA needs increased funding to cover the

level of post-entitlement work that is needed in both Social Security and SSI. By this, I mean the contacts with people after they

become beneficiaries on Social Security or SSI.

One really important example that has come up is, for a long

time, we have had a serious problem with people going back to

work and trying to report to SSA that they were working, and SSA

somehow would get the information and it would disappear and it

would never be put in the person’s record.

31

Then there would be an IRS match done a couple years later, the

person will be found to have a huge amount of earnings, they

would be over-paid. This creates a huge disincentive to work. It is

very frightening to be told, you are going to lose your Social Security, you are going to lose your Medicare.

SSA now has in place a system called e-work for Title 2—they

do not have it for SSI yet, but they are working on that—that will

be able to track this workload and make sure that the workload

gets done and changes are made.

In the context of Mr. Bunning’s question about what kinds of

things do not happen, or what would you need if there is more immigration work, the answer is, these are the things that disappear,

things like this, this progress that has been made on e-work and

trying to eliminate work disincentives.

These things disappear when SSA is pushed, or scrambles, as the

Commissioner said, to try to figure out how to make all the pieces

fit together. It is the things that are not as pressing in the workload that do not get done. So, we are concerned that some of the

progress SSA has been making will not be continued.

Third, we share the concerns about the CDRs. In 1984, Congress

acted to improve the CDR process and basically reversed what was

a terrible situation at that time, of people being arbitrarily terminated from the rolls, even though they continued to be severely disabled. That process that you put in place was the CDR process.

It is absolutely essential that SSA do these CDRs to maintain

the integrity of the process, not just for SSA, not just for the trust

funds, but also for people with disabilities who count on being able

to receive these benefits if their condition has not medically improved.

The comments before about saving $10 for every $1 spent, that

is absolutely important to remember. It is also important to remember that that is just based upon the 4 percent of people who

are cut off. Ninety-six percent of the people who have CDRs are

continued on the rolls and are found eligible. It is just that the program is so big, that that $1 out of $10 really can make a huge difference.

So, getting that extra money for the CDRs really is important,

not just to SSA, not just to the deficit, but also to people with disabilities, to maintain the program.

And then, the last point is my first point, which is, on issues like

immigration, when you talk about a big workload, and I have seen

the CBO estimates that were published last fall that show huge

amounts of work for SSA if some of these verification provisions

are put in place, huge amounts of work, not just in the first 5

years, but in the second 5 years out.

You are talking about SSA not having the ability to do the kinds

of things that people with disabilities and other beneficiaries rely

upon them for if there is not additional funding put in place as

well.

Thank you.

The CHAIRMAN. Yes. Thank you very much.

[The prepared statement of Ms. Sweeney appears in the appendix.]

32

The CHAIRMAN. Mr. Hathaway, I forgot to introduce Mr. Bliven.

Would you speak about him before you give us your statement?

Mr. HATHAWAY. Well, Mr. Bliven was my attorney during this

whole fiasco.

The CHAIRMAN. All right.

Senator BAUCUS. Mr. Chairman, I might just mention to you——

The CHAIRMAN. Please, go ahead.

Senator BAUCUS. Trego is a very special place in Montana where

Erv is from. It is up in the northwestern part of our State. It is,

by Iowa standards, a little remote. It is really a wonderful little

community near the Canadian border.

The CHAIRMAN. I will bet it is beautiful. One time I visited Senator Baucus’ State. My wife always wanted to go to Montana.

Senator BAUCUS. Well, you ought to listen to her.

The CHAIRMAN. I said, why would anybody want to go to Montana? So I went to Montana with my wife, and I know why people

want to go to Montana. It is a beautiful State.

Mr. HATHAWAY. One of my good friends said, before I left home,

do not tell everybody how pretty it is. He said, they will all come.

The CHAIRMAN. All right. Well, I will keep my mouth shut, then.

[Laughter.]

Would you proceed, Mr. Hathaway?

STATEMENT OF ERWIN HATHAWAY, SOCIAL SECURITY DISABILITY BENEFICIARY, TREGO, MT; ACCOMPANIED BY

MICHAEL BLIVEN, ESQ.

Mr. HATHAWAY. Thank you, Chairman Grassley and Mr. Baucus.

I appreciate you bringing me out here. It has been a very interesting, very difficult trip for me and my wife. We got through, but

it has been different. I cannot wait to get back.

So, anyway, you have most of my story in the written testimony.

There are a couple of things I would like to touch on that I have

thought about since then a little bit to make more emphasis on,

just the problems that we went through during this time period.

To start right off, I want to tell you, I may not have come

through this situation without the moral support and physical help

of getting things done that needed to be done without my wife. I

think many spouses in this situation would have just given up and

moved on. But we have a good relationship, and I just want to

thank her.

And Mr. Bliven, too, and his crew. They were really good. They

supported me a lot. They settled me down when I would blow off

the handle. He kept me from doing some things that I probably

should not have done.

I guess one of the big things that happened in this case that I

really did not understand was, on the first application, when I

filled it out, they wanted 10 or 12 names of friends and relatives,

people that did not live with me, whatever, to get an insight to

what I was like in an everyday situation. They wanted doctors’

names and where my films, surgeries, and this and that had all

taken place. I gave them all that information.

They never contacted one. Just, somebody down in the office

down there looked at my application. They never contacted any of

33

my doctors for any further information. They just stamped it ‘‘Rejected’’ and sent it back. That took about 4 months.

Then I appealed that. Within 2 weeks after I sent that appeal

in, I got it stamped ‘‘Rejected’’ again. That is when I contacted Mr.

Bliven, and this whole court thing started, and all that. They did

not seem like they wanted to listen to me, or the doctors, or my

friends.

They just never wanted to talk to them. I asked continually to

be sent to a doctor of their choosing to be examined. That did not

happen either. I just feel there are some things that could be put

in the system that would help people.

All right. Send me to a doctor. Do not just have somebody look

at a piece of paper and say ‘‘he is not disabled.’’ You cannot see

that. You have to look at the medical information. I guess that is

my biggest complaint about the whole thing.

And the doctors. The doctors all supported me. I had several doctors. I was up to seven, eight, nine of my own, psychiatrist, orthopedics, GPs, pain medicine doctors. I mean, it was just an ongoing

list. They all said that I was unable to work.

The judge kept saying, yes, you are. Even the medical expert and

vocational expert at the hearings said I was unable to work. The

judge said, yes, you are. There is a problem there. He should be

looking at the evidence presented to him, taking that evidence, and

making a decision, not his own personal opinions.

Just a little bit on the financial side. It was getting pretty tight.

We sold a lot of stuff. We sold all our stocks and depleted our savings. I took an early retirement from where I had worked.

I got discounted on that actually at the time, but we had to get

medical coverage, because we had none. That was part of my retirement program. So, that is why I got the bullet on early retirement. I had to take an early withdrawal from my 401(k). I just got

hurt there.

I had to take a small mortgage out on the house and had to do

some fast talking, because I had no proof of income. There again,

the State of Montana, they will listen to you and they understand.

I do not know if it would have worked somewhere else, but I do

not think so.

The CHAIRMAN. You go ahead.

Senator BAUCUS. Your time may be technically up. But why do

you not go ahead?

The CHAIRMAN. Yes. Please.

Senator BAUCUS. Tell us what you want to tell us.

The CHAIRMAN. Yes. Yes.

Mr. HATHAWAY. There is not much left here. The last 12 to 18

months, we were paying our bills, buying our groceries, gas, and

that kind of stuff. But we were using credit cards. Financially, we

were done. We were just about an inch away from going under.

Most people, they do not have the assets we had to do that.

Six months ago, my wife’s car broke down. We parked it in the

garage. I could not afford to fix it. Living up where we lived, you

should have two vehicles up there, because if one goes down, you

are dead in the water. It is just an overall burden.

I guess that is about it. I do not know what else I could add, but

I will answer any questions, and thank you for bringing us.

34

[The prepared statement of Mr. Hathaway appears in the appendix.]

The CHAIRMAN. Yes.

Senator BAUCUS. Thank you, sir.

The CHAIRMAN. What we are going to do is, I had several questions I was going to ask, and Senator Baucus does. But we both

have to go at noon. So I am going to ask a couple of questions, Senator Baucus is going to ask a couple of questions, and then the last

of the questions we will submit for answer in writing, please.

Mr. O’Carroll, section 6103 of the Internal Revenue Code prohibits the disclosure of taxpayer return information, with some exceptions. Unauthorized disclosures then are subject to a penalty of

up to $5,000, or even 5 years in jail.

Now, the Immigration Reform Act of 1996 requires the Commissioner of Social Security to notify the Attorney General whenever

there is a report of earnings by an alien who was assigned a nonwork Social Security number.

This notification would include the name and Social Security derived from the taxpayer’s return information. While these reports

have been issued every year, they have never been used for workplace enforcement activities.

Now, I understand that there has been some recent discussions

between Social Security and the IRS that suggests this notification

provision may be in conflict with section 6103. Would you elaborate

on those discussions for me?

Mr. O’CARROLL. Yes, Mr. Chairman. The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 mandated SSA to

provide non-work alien information to the Attorney General, notwithstanding any other statutes or laws. SSA has been complying

with that law.

But recently, two things have happened. One, INS moved from

under the Attorney General and the Justice Department to the Department of Homeland Security. Therefore, it is unclear with whom

SSA is authorized to share that information.

Two, IRS and the Department of the Treasury believe that the

Internal Revenue Code, section 6103, prohibits the disclosure of

that information despite the ‘‘notwithstanding’’ clause in the Act.

Thus, IRS, Treasury, and Social Security are now in negotiations

discussing the disclosure issue. To be truthful, I think it is probably something that is going to require legislation to clarify.

The CHAIRMAN. Senator Baucus? I am going to say goodbye, and

he will adjourn the hearing. I have another question for Mr.

O’Carroll, one for Mr. Warsinskey, one for Ms. Sweeney that I

would like to have answered in writing, and also one for Mr.

Hathaway.

Thank you very much.

Senator BAUCUS. Thank you, Mr. Chairman.

Erv, could you just tell us a little more your reactions and what

ideas you might have to deal with the situation where the doctors

all agree that you are disabled, but at the first level, you are summarily denied without seeing anybody personally.

Mr. HATHAWAY. Exactly.

Senator BAUCUS. And then I guess at the hearing level, when it

is appealed—maybe Mr. Bliven can answer the question too and

35

help out a little bit—at least the Hearing Officer hears from the

doctors, I guess. I guess that is how it works. But the Hearing Officer, on appeal, does not really examine you.

What I am trying to get at, is your frustration with being summarily denied, even though, clearly, you are disabled. You are denied by people that do not see you personally or examine you.

Mr. HATHAWAY. Exactly.

Senator BAUCUS. And how we get at that a little bit better. Any

thoughts you might have, or even Mr. Bliven might have on how

we get at that?

Mr. HATHAWAY. My thought is, if you send in three or four reports from the doctors that say this man cannot work, or this lady

cannot work, and you fill out the application, if they have a question, send you to a doctor of their choosing, like I requested, and

at least give you the opportunity to be seen by somebody alive instead of somebody just reading some paper and saying, you are out

of here. That is totally wrong, as far as I am concerned. There is

no one-on-one contact with anybody.

Senator BAUCUS. As far as you are concerned, that is, based on

information you have, how do they make that determination? What

do they look at? What information, what documents? What do they

have?

Mr. HATHAWAY. You fill out all these forms with all this information of doctors you have seen and everything, and submit any additional letters or anything you may have, and then you sign it. Then

they have people down there. Michael probably knows better exactly what goes on down there.

Senator BAUCUS. Do you want to add anything, Mr. Bliven?

Mr. BLIVEN. I would, Senator. I want to thank you for inviting

my client and myself here to address the committee.

In Mr. Hathaway’s case, what happened was not uncommon.

Even though his treating doctors stated that he was disabled and

that he met a disability listing and had a number of limitations,

that was essentially discounted or ignored by the reviewing officials

at the Agency.

No consulting examination was scheduled by either his doctor, or

any other doctor. I share your commendation for the Commissioner

in her efforts to speed up the process, and the committee’s efforts

so the Agency has appropriate funding.

Despite the Commissioner’s proposed regulations, which hopefully will help, we do have our concerns—that is, the Consortium,

I am sure, and those of us who represent claimants. The claimant

really needs to be able to submit evidence throughout the process,

have their doctors be heard, and our concern remains that the

Commissioner not make any changes that would undermine the

weight that should be given treating physicians. These decisions

are made in a State office.

Now they may be made in a Federal office hundreds of miles

away, and not necessarily give weight to what the claimant is saying, or their doctors, but rather some reviewing doctor who has not

met the claimant or examined him.

We believe that if the Agency continues with its regulations that

say that the treating physician should be given the greatest weight,

and controlling weight in most circumstances, hopefully these deciVerDate 11-MAY-2000 14:56 Mar 13, 2007 Jkt 095484 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 31699.000 SFIN1 PsN: SFIN1
36

sions will be made quickly and appropriately. We ask that the committee, and yourself, please continue to have oversight over that,

because we do have concerns about some of the proposed regulations.

Senator BAUCUS. And your major concern would be what?

Mr. BLIVEN. Well, quite frankly, and I thank you for asking, our

concern is that elimination of the Appeals Council would flood the

Federal courts with appeals.

It is important that the Federal judge, as in Mr. Hathaway’s

case, review the file and that the claimant have full access to the

Federal court if necessary, and that they get a full and fair hearing

with the administrative law judge and be able to submit reports

from their treating physician and updated medical evidence up

through the hearing rather than the record being closed in advance

of the hearing and having the hearing officer or the Agency have

the ability to ignore that evidence or not allow the claimant to submit evidence. The claimant should be allowed to submit evidence

from their doctors throughout the process.

Senator BAUCUS. Might I ask you, Mr. Hathaway, from your perspective, what is the cause of all these delays, too? Why does it

take so long?

Mr. HATHAWAY. I have no idea.

Senator BAUCUS. Well, your gut guess, if you can just put your

finger on it. What does it seem like it is?

Mr. HATHAWAY. Well, you send it in and you wait for the mail

to come back, and it never comes, and it never comes. And that is

one of the things I was talking about with my frustrations. I would

call up Mike’s office and I am just mad as an old wet hen, and I

do not know what is going on; you guys are not doing your job.

Well, I finally understood that it was just the process it had to

go through. It took forever to get an answer back on anything, with

the exception of that second rejection on the original application.

Senator BAUCUS. Right.

Mr. HATHAWAY. That was just almost like, it came across somebody’s desk and it was back in the mail the next day. I mean, it

was about 2 weeks, 21⁄2 weeks, something like that.

Senator BAUCUS. Yes, you had mentioned that. Yes.

Mr. HATHAWAY. Yes.

Senator BAUCUS. Your thoughts, Mr. Bliven, why, from your perspective, it just takes so long.

Mr. BLIVEN. Well, again, I believe the committee is appropriately

focusing its energy on providing the Commissioner with the funding that she needs to implement the programs. The eDib is helpful.

Her redesign hopefully will help.

But frankly, as you noted earlier in this hearing, there are only

about 7 days where someone is actually working on the file while

it moves through the system. That is a serious problem. The backlogs are a serious problem as well.

Senator BAUCUS. Yes. I should know the answer to this question,

but what is happening in those non-seven days?

Mr. BLIVEN. Well, in my experience, and I do represent a lot of

claimants, and have for over 10 years, files get lost. I cannot answer exactly what goes on at the local Disability Determination

37

Service Office. I have dealt with them not just in Montana, but in

other States as well. That is always a good question.

I do believe the Commissioner is doing everything she can to

help that process, but sometimes we really wonder, and we wonder

what is going on, even at the Office of Hearings and Appeals,

frankly.

Senator BAUCUS. So a lot of it is just backlog. There are so many

people, so few resources.

Mr. BLIVEN. The backlog and the lack of resources is a very serious problem, and I appreciate the committee taking a look at that

and seeking the funding for it, because that is critical.

In fact, in Mr. Hathaway’s case, one thing I wanted to add was,

his case is not outside of the bell curve. It is fairly in the middle.

He only had to wait a year from the time he requested a hearing.

Delays throughout the system are longer than that.

His Appeals Council process did not take as long as it does for,

actually, many people. Mr. Hathaway, unlike many of my clients,

did not end up homeless and did not pass away while his claim was

pending. It could have been a lot worse for him.

Senator BAUCUS. That is what I was next going to ask. You mentioned, Mr. Hathaway, that although your resources were practically depleted, still you had some resources.

Mr. HATHAWAY. Some. Yes.

Senator BAUCUS. Some. Whereas, some people do not have anything.

Mr. HATHAWAY. That is why I say, we were luckier than others

in that aspect, that we had something to fall onto.

Senator BAUCUS. Right.

Mr. HATHAWAY. But it is not the way you had things before.

Senator BAUCUS. So what happens to those people?

Mr. HATHAWAY. I do not know. That is a problem for these people. That is why it should not take this long.

Senator BAUCUS. It is an outrage, it really is.

Mr. HATHAWAY. Yes. If we would not have had some of the assets

that we had, we would have been out on the streets somewhere.

Senator BAUCUS. Mr. Bliven, you have some experience with

some other clients who have fewer resources. What happens? Do

other people pick up and help them out?

Mr. BLIVEN. Yes. I have clients living in homeless shelters, clients living, in Montana winters, in a camper on somebody else’s

property. I have had clients pass away waiting for their hearing.

It is pretty stark stuff. I refer clients all the time to the Salvation

Army, or whatever local resources we have. I, myself, have gone to

Costco and bought my clients paper towels and dog food, or whatever I can ethically do to help them. It is tough.

Senator BAUCUS. Right. Yes, I can tell.

Well, thank you, Mr. Hathaway. I, regrettably, have to conclude

this hearing now. But I just thank all of you, all five of you, for

coming. Thank you for coming this great distance, Erv, and sharing

your experiences. I know it has had a real effect on me, and it does,

I know, on the Chairman of the committee and others who are

here. Thank you very much.

38

Let us just hope, now we can find some solutions here and get

additional resources and help people in the chain who need some

help, and even down the road who are not yet in the system, but

who will be. Thank you very much. The hearing is adjourned.

[Whereupon, at 12:05 p.m., the hearing was concluded.]

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