U.S. GOVERNMENT PRINTING OFFICE

55–046 CC WASHINGTON : 1999

BARRIERS PREVENTING SOCIAL SECURITY DISABILITY RECIPIENTS FROM RETURNING TO

WORK

HEARINGS

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

JULY 23 AND 24, 1997

Serial 105–61

Printed for the use of the Committee on Ways and Means

(
ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

JIM BUNNING, Kentucky

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

JOHN ENSIGN, Nevada

JON CHRISTENSEN, Nebraska

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

BARBARA B. KENNELLY, Connecticut

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

JON CHRISTENSEN, Nebraska

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

BARBARA B. KENNELLY, Connecticut

RICHARD E. NEAL, Massachusetts

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.
iii

C O N T E N T S

Page

Advisories announcing the hearings ...................................................................... 2

WITNESSES

Social Security Administration, Hon. John J. Callahan, Acting Commissioner;

Accompanied by Susan Daniels, Associate Commissioner, Office of Disability .......................................................................................................................... 8

U.S. Department of Education, Judith E. Heumann, Assistant Secretary,

Office of Special Education and Rehabilitative Services; Accompanied by

Mark Shoob, Deputy Assistant Secretary .......................................................... 13

U.S. General Accounting Office, Jane L. Ross, Director, Income Security

Issues, Health, Education, and Human Services Division; Accompanied by

Cynthia Bascetta, Assistant Director ................................................................. 33

Abilitech, Suzanne Erb ............................................................................................ 106

American Rehabilitation Association, Mary Gennaro .......................................... 153

Arc of the United States, Lorraine Sheehan ......................................................... 98

Arizona Bridge to Independent Living, Susan Webb ............................................ 80

Arthritis Foundation, Brenda Crabbs .................................................................... 102

Baron, Richard C., Matrix Research Institute, and International Association

of Psychosocial Rehabilitation Services .............................................................. 54

Berkowitz, Monroe, Rutgers University ................................................................ 44

Christman, Rick, Metro Industries, and Kentucky Association of Community

Employment Services; as presented by Mary Gennaro, American Rehabilitation Association .................................................................................................... 153

Connecticut Bureau of Rehabilitation Services, John Halliday ........................... 124

Consortium for Citizens with Disabilities Vocational Working Group, Tony

Young .................................................................................................................... 88

Council of State Administrators of Vocational Rehabilitation, John Halliday ... 124

Crabbs, Brenda, Arthritis Foundation ................................................................... 102

Erb, Suzanne, Abilitech ........................................................................................... 106

Gennaro, Mary, American Rehabilitation Association; presenting statement

of Rick Christman, Metro Industries, and Kentucky Association of Community Employment Services ................................................................................... 153

Growick, Bruce, Ohio State University .................................................................. 41

Halliday, John, Connecticut Bureau of Rehabilitation Services; and Council

of State Administrators of Vocational Rehabilitation ....................................... 124

Hessellund, Thorv A., National Association of Rehabilitation Professionals

in the Private Sector ............................................................................................ 157

International Association of Psychosocial Rehabilitation Services, Richard C.

Baron ..................................................................................................................... 54

Kentucky Association of Community Employment Services, Rick Christman ... 153

Kregel, John, Virginia Commonwealth University ............................................... 51

Matheson, Leonard N., Washington University School of Medicine ................... 57

Matrix Research Institute, Richard C. Baron ....................................................... 54

Metro Industries, Rick Christman ......................................................................... 153

National Academy of Social Insurance, Virginia P. Reno .................................... 44

National Association of Rehabilitation Professionals in the Private Sector,

Thorv A. Hessellund ............................................................................................ 157

National Council on Disability, Bonnie O’Day ...................................................... 86

National Council on Independent Living, Susan Webb ........................................ 80

O’Day, Bonnie, National Council on Disability ..................................................... 86

Ramstad, Hon. Jim, a Representative in Congress from the State of Minnesota .................................................................................................................... 5

Reno, Virginia P., National Academy of Social Insurance ................................... 44

Return-to-Work Group, Stephen L. Start .............................................................. 164
Page

iv

Sheehan, Lorraine, Arc of the United States ........................................................ 98

S.L. Start & Associates, Inc., Stephen L. Start ..................................................... 164

Southwest Business Industry and Rehabilitation Association, Fred E. Tenney 161

Start, Stephen L., S.L. Start & Associates, Inc., and Return-to-Work Group .... 164

Tenney, Fred E., Southwest Business Industry and Rehabilitation Association ........................................................................................................................ 161

United Cerebral Palsy Associations, Inc., Tony Young ........................................ 88

Webb, Susan, Arizona Bridge to Independent Living; and National Council

on Independent Living ......................................................................................... 80

Young, Tony, United Cerebral Palsy Associations, Inc.; and Consortium for

Citizens with Disabilities Vocational Working Group ...................................... 88

SUBMISSIONS FOR THE RECORD

American Occupational Therapy Association, Inc., Bethesda, MD, statement

and attachments ................................................................................................... 205

Association for Persons in Supported Employment, Richmond, VA, Celane

M. McWhorter, letter ........................................................................................... 215

Becklund Home Health Care, Inc., Golden Valley, MN, T. Jeff Bangsberg,

and Courage Center, Golden Valley, MN, Anita Boucher, joint letter and

attachments .......................................................................................................... 220

Center for Career Evaluations, Inc., Oakland, CA, Thomas P. Yankowski,

statement .............................................................................................................. 224

Corp, Elizabeth A., Metropolitan Life Insurance Co., Met DisAbility Division,

statement .............................................................................................................. 242

Courage Center, Golden Valley, MN, Anita Boucher, and Becklund Home

Health Care, Inc., Golden Valley, MN, T. Jeff Bangsberg, joint letter and

attachments .......................................................................................................... 220

EXCEL! Networking Group, Inc., Merrifield, VA, Robert Rudney, statement ... 228

Hurt, Jerald L., NovaCare, Inc., King of Prussia, PA, statement ....................... 255

Isernhagen and Associates, Duluth, MN, Susan J. Isernhagen, statement

and attachments ................................................................................................... 230

Kalix Group, L.L.C., Pasadena, CA, Robert L. Sniderman, statement ............... 240

McWhorter, Celane M., Association for Persons in Supported Employment,

Richmond, VA, letter ........................................................................................... 215

Metropolitan Life Insurance Co., Met DisAbility Division, Elizabeth A. Corp,

statement .............................................................................................................. 242

National Alliance for the Mentally Ill, Arlington, VA, Annie V. Saylor, statement ...................................................................................................................... 249

NovaCare, Inc., King of Prussia, PA, Jerald L. Hurt, statement ........................ 255

Rudney, Robert, EXCEL! Networking Group, Inc., Merrifield, VA, statement .. 228

Saylor, Annie V., National Alliance for the Mentally Ill, Arlington, VA, statement ...................................................................................................................... 249

Sniderman, Robert L., Kalix Group, L.L.C., Pasadena, CA, statement .............. 240

Yankowski, Thomas P., Center for Career Evaluations, Inc., Oakland, CA,

statement .............................................................................................................. 224
(1)

BARRIERS PREVENTING SOCIAL SECURITY

DISABILITY RECIPIENTS FROM RETURNING

TO WORK

WEDNESDAY, JULY 23, 1997

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON SOCIAL SECURITY, Washington, DC.

The Subcommittee met, pursuant to notice, at 10:16 a.m., in

room 1100, Longworth House Office Building, Hon. Jim Bunning

(Chairman of the Subcommittee) presiding.

[The advisories announcing the hearings follow:]
2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225–9263

July 15, 1997

No. SS–8

Bunning Announces Hearing on

Barriers Preventing Social Security Disability

Recipients From Returning to Work

Congressman Jim Bunning (R–KY), Chairman, Subcommittee on Social Security

of the Committee on Ways and Means, today announced that the Subcommittee will

hold a hearing on barriers preventing Social Security disability recipients from returning to work. The hearing will take place on Wednesday, July 23, 1997, in the

main Committee hearing room, 1100 Longworth House Office Building, beginning

at 10:00 a.m.

In view of the limited time available to hear witnesses, oral testimony at this

hearing will be from invited witnesses only. However, any individual or organization

not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

Between 1985 and 1994, the number of working-age recipients on the Social Security and Supplemental Security Income disability rolls increased 59 percent. In addition, disabled recipients are staying on the rolls longer than in the past because of

increased life expectancy, a lower average age of disability recipients due to the

baby boom cohort, and an increase of awardees with disabling mental impairments

who tend to be younger and physically healthier.

In 1996, fewer than 6 percent of new disability recipients were referred to State

vocational rehabilitation agencies for services, and historically, less than of 1 percent of disabled recipients leave the rolls because of successful rehabilitation. These

facts underscore the need for initiatives designed to encourage disabled recipients

to receive rehabilitation services and to enter the workforce.

To help Social Security and Supplemental Security Income disability recipients

who want to return to a life of financial independence and self sufficiency, Chairman

Bunning introduced H.R. 4230, the Rehabilitation and Return to Work Opportunity

Act of 1996, last Congress. Since then, similar legislation (H.R. 534, Transition to

Work Act of 1997) has been introduced by ranking member Rep. Barbara Kennelly

(D–CT), and the Administration has included a related proposal in the President’s

fiscal year 1998 budget.

In announcing the hearing, Chairman Bunning stated: ‘‘Social Security disability

recipients are not getting the rehabilitation services they deserve. It isn’t fair for

anyone to face a life of dependency and denied opportunities unnecessarily. It’s time

to remove the barriers and provide real rehabilitation assistance for those who want

to return to work.’’
3

FOCUS OF THE HEARING:

During the hearing, the Subcommittee will receive the views of various agencies,

experts, consumers, and providers regarding the barriers which prevent Social Security disability recipients from returning to work, and will hear recommendations on

what changes in the law are needed to remove those barriers.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed

record of the hearing should submit at least six (6) single-space legal-size copies of

their statement, along with an IBM compatible 3.5-inch diskette in ASCII DOS Text

format only, with their name, address, and hearing date noted on a label, by the

close of business, Wednesday, August 6, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House

Office Building, Washington, D.C. 20515. If those filing written statements wish to

have their statements distributed to the press and interested public at the hearing,

they may deliver 200 additional copies for this purpose to the Subcommittee on Social Security office, room B–316 Rayburn House Office Building, at least one hour

before the hearing begins.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement

or exhibit submitted for the printed record or any written comments in response to a request

for written comments must conform to the guidelines listed below. Any statement or exhibit not

in compliance with these guidelines will not be printed, but will be maintained in the Committee

files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be typed in single space

on legal-size paper and may not exceed a total of 10 pages including attachments. At the same

time written statements are submitted to the Committee, witnesses are now requested to submit

their statements on an IBM compatible 3.5-inch diskette in ASCII DOS Text format.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing.

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material

not meeting these specifications will be maintained in the Committee files for review and use

by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, full address, a

telephone number where the witness or the designated representative may be reached and a

topical outline or summary of the comments and recommendations in the full statement. This

supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press and the public during the course of a public hearing may be submitted in

other forms.

Note: All Committee advisories and news releases are available on the World

Wide Web at ‘HTTP://WWW.HOUSE.GOV/WAYSlMEANS/’.

The Committee seeks to make its facilities accessible to persons with disabilities.

If you are in need of special accommodations, please call 202/225–1721 or 202/226–

3411 TTD/TTY in advance of the event (four business days notice is requested).

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

f
4

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225–9263

July 16, 1997

No. SS–9

Bunning Announces Continuation of Hearing on

Barriers Preventing Social Security Disability

Recipients From Returning to Work

Congressman Jim Bunning (R–KY), Chairman, Subcommittee on Social Security

of the Committee on Ways and Means, today announced that the Subcommittee’s

hearing on barriers preventing Social Security disability recipients from returning

to work will be continued on Thursday, July 24, 1997. The second day of the hearing

will begin at 1:00 p.m. in room B–318 Rayburn House Office Building.

On July 23, the Subcommittee will receive testimony from various agencies and

rehabilitation experts, and on July 24, will receive the views of consumers and providers regarding the barriers which prevent Social Security disability recipients

from returning to work, and will hear recommendations on what changes in the law

are needed to remove those barriers.

(For further details see Subcommittee press release No. SS–8, dated July 15,

1997.)

thank the Members for being here.

Chairman BUNNING. The Subcommittee will come to order. I

f

This morning we begin the first day of a 2-day hearing about the

barriers preventing disabled Social Security recipients from returning to work. We will also hear recommendations on what changes

in the law are needed to remove those barriers.

We are all too familiar with the huge increases in the Social Security disability and the Supplemental Security Income disability

rolls. There seems to be no end in sight to this alarming trend. In

fact, new disability awardees are, on average, coming on the rolls

at a younger age and staying on the rolls longer than in the past.

This means recipients will spend more of their lives dependent on

Social Security or SSI benefits.

In 1996, fewer than 6 percent of new disability recipients were

even referred to State vocational rehabilitation agencies for service.

And historically, fewer than one-half of 1 percent of disabled recipients leave the rolls because of successful rehabilitation. Social Security and disability recipients are just not getting rehabilitative

services they need. This isn’t right, and it certainly isn’t fair.

Congress must give recipients with disabilities the opportunity to

obtain the tools and training they need to return to productive and
5

self-sufficient lives. That is why in the last Congress I introduced

H.R. 4230, the Rehabilitation and Return to Work Opportunity Act

of 1996. I am happy to say that since then, Ranking Member Kennelly has introduced similar legislation, and the administration has

included a related proposal in the President’s 1998 budget.

Today we will hear the views of one of our own colleagues, Jim

Ramstad, from Minnesota, followed by the Social Security Administration, and the Department of Education, and then we will hear

from GAO and experts in the field of rehabilitation.

I am very pleased that tomorrow we will hear from consumers,

those individuals who are closest to the issues surrounding return

to work. I believe that they will give us valuable insight into what

is working, what isn’t working, and offer suggestions for improvement.

Finally, we will hear the views of those who work day to day providing rehabilitation services. As we will hear over the next 2 days,

these issues are complex, and finding real answers will not be easy.

Still, I remain optimistic that Mrs. Kennelly and I, along with the

Subcommittee Members and the administration, can work together

to craft legislation that provides real opportunities to people with

disabilities.

In the interest of time, it is our practice to dispense with opening

statements, except for the Ranking Democratic Member, and we

will allow her to put her statement in the record when she arrives.

I would like to begin with our testimony today from our Ways

and Means colleague Congressman Jim Ramstad from Minnesota.

STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MINNESOTA

Mr. RAMSTAD. Thank you, Mr. Chairman and colleagues. I am

here today to thank you and the Subcommittee for your important

efforts on return to work issues for people with disabilities. I applaud you for calling this hearing to discuss those barriers which

deter eager, hardworking, productive people with disabilities from

working.

When I first came to Congress in 1991, Mr. Chairman, I was

very surprised to learn that among the multitude of caucuses and

task forces in Congress, there was no group specifically focused on

issues affecting people with disabilities. That is why I started our

Conference Task Force on Disabilities.

Under the purview of the task force, I held a field hearing in

Minnesota on the work disincentives in those Federal programs,

particularly SSI and SSDI, to which the Chairman alluded, which

are supposed to assist people with disabilities. I continue to work

in Minnesota with my own Disabilities Advisory Committee on

these and many other issues affecting people with disabilities. Virtually every member of that task force, were they here today,

would cite the work disincentive issue as a top priority.

I have witnessed firsthand countless stories of frustrated individuals who desperately want to work and contribute to society, but

are literally prohibited from doing so because of confusing Federal

programs and rules which make working too difficult or expensive.

Of course, we must take steps to prevent abuses in the system, but

in doing so, we must make sure our efforts do not prohibit Ameri-
6

cans with disabilities from living up to their full potential. We

should not have a system of laws that provide a built-in disincentive to people from working.

Mr. Chairman, preventing people from working runs counter to

the American spirit, a spirit that thrives on individual achievements and societal contributions. In addition, discouraging people

with disabilities from working, earning a regular paycheck, paying

taxes and moving off public assistance of course results in reduced

Federal revenues.

Creating incentives for people with disabilities is not just humane public policy, it is sound fiscal policy. Eliminating the current

barriers to work that so many people face is not just a smart thing

to do, Mr. Chairman, it is the right thing to do.

Let me give you one example. A good friend, since 1981, his

name is Tom Haben. I met him when he was president that year

of the Metropolitan Handicapped Coalition in the Twin Cities of

Minnesota. Tom happens to be a person with quadriplegia; very

bright, hard working, productive, just a great guy, and as I said,

one of my best personal friends.

Tom went to work, in fact, went to work for me, but it became

counterproductive for him to work. We couldn’t pay him what he

was worth. He couldn’t take that because he would start losing his

benefits. Therein lies the problem. He had a disincentive to work.

Ultimately, he left the office and has not been employed in the

marketplace since because he can’t afford to lose those benefits at

the pay level he was being paid.

As you know, Mr. Chairman, in 1993, I worked with our colleague, Representative Stark, on legislation to address the disincentives people with disabilities face in Federal programs. We

weren’t successful in the 103d Congress to pass the legislation to

help get people back to work, but I appreciate so much your commitment and other Members of the Subcommittee, and I am confident that we can untangle this complicated web and get something done soon.

Your leadership, Mr. Chairman, in this area deserves high

praise. I followed with great interest the hearings the Subcommittee held last session on these issues and appreciate your efforts to

deal with this in a comprehensive way very much.

I see that my time has elapsed, and I don’t want to violate anyone’s time. I know we have many other people here to testify today,

but I ask unanimous consent that the rest of my testimony be entered into the record.

Again, I want to thank you and the Subcommittee staff. You

have been very helpful and very sensitive to the needs of people

with disabilities. Working together, I am absolutely confident that

we can untangle this web, this maze of Federal laws that provide

a built-in disincentive to people with disabilities from working. We

can change the system so the people can be gainfully employed and

truly enjoy the dignity of independent living which they so deserve.

Thank you, Mr. Chairman.

Chairman BUNNING. We will allow your complete statement to be

put into the record.

[The prepared statement follows:]
7

Statement of Hon. Jim Ramstad, a Representative in Congress from the

State of Minnesota

Mr. Chairman, I am here today to thank you and the Subcommittee for your important efforts on ‘‘return to work’’ issues for people with disabilities. I applaud you

for calling this hearing to discuss those barriers which prevent eager, hard-working

intelligent people with disabilities from working.

When I came to Congress in 1991, I was surprised to find that among all the caucuses and task forces on the Hill, there was no group specifically focused on issues

affecting people with disabilities. That’s why I started the Republican Task Force

on Disabilities.

Under the purview of the task force, I held a field hearing in Minnesota on the

work disincentives in those federal programs—particularly SSI and SSDI—which

are supposed to assist people with disabilities. I continue to work with my own Disabilities Advisory Committee back in Minnesota on these and many other issues facing people with disabilities.

I have heard countless stories of frustrated individuals who desperately want to

work and contribute to society but are literally prohibited from doing so because

confusing federal programs and rules make working too difficult or expensive. Of

course, we must take steps to prevent abuse of the system, but in doing so, we must

make sure that our efforts do not prohibit Americans with disabilities from living

up to their full potential.

Mr. Chairman, preventing people from working runs counter to the American

spirit—a spirit that thrives on individual achievements and societal contributions.

In addition, discouraging people with disabilities from working, earning a regular

paycheck, paying taxes and moving off public assistance results in reduced federal

revenues.

Creating work incentives for people with disabilities is not just humane public

policy, it is sound fiscal policy. Eliminating the current barriers to work that so

many individuals face is not just the smart thing to do, it is the right thing to do.

As you know, in 1993 I worked with our esteemed colleague on the Ways and

Means Committee, Representative Stark, on legislation to address the disincentives

people with disabilities face in federal programs. While we were not successful in

the 103rd Congress to pass legislation to help people get back to work, I remain

hopeful that we will get something done soon.

Your leadership in this area deserves high praise. I followed with great interest

the hearings this Subcommittee held last session on these issues and was very interested in the legislation you introduced last year. I realize that some of the elements of comprehensive reform in these areas fall outside the jurisdiction of this

Subcommittee, but I want to publicly and personally thank you for looking at those

issues within your jurisdiction.

Specifically, when I hear that in 1996, fewer than 6% of new disability recipients

were referred to state vocational rehabilitation agencies for services and less than

1⁄2 of 1% of disabled recipients leave the rolls because of successful rehabilitation,

I know something must be done to open up the vocational rehabilitation process.

In my home state of Minnesota, the State Vocational Rehabilitation Program administrators do a good job in meeting the needs of many Minnesotans, but I am also

aware of experienced, successful private groups in Minnesota that can also provide

these services. Many private rehabilitation groups in Minnesota have been involved

in SSA demonstration programs and can greatly contribute to the efforts of the state

VR and help even more people get back to work. In addition, people with disabilities

should have the ability to seek rehabilitation and choose the provider they feel will

best help them achieve their goal of employment.

Like everyone else, people with disabilities have to make decisions based on financial reality. Should they consider returning to work or even make it through vocational rehabilitation, the risk of losing vital federal health benefits often becomes

too threatening to future financial stability. As a result, they are compelled not to

work. Given the sorry state of present law, that’s generally a reasonable and rational calculated decision.

I appreciate the attention in your legislation to Medicare coverage for those who

work. It is my sincere hope that the Commerce Committee will also consider proposals to allow individuals with disabilities who return to work access to Medicaid.

I am currently seeking Medicaid proposals from my state Department of Human

Resources and others that will hopefully compliment any legislation you introduce

this year so we can comprehensively knock down all the barriers preventing people

from working.

Mr. Chairman, thanks again for your leadership on these important issues and

for letting me come before the Committee today. Your Subcommittee staff has been
8

very gracious in allowing me and my staff to work with you on these important

issues and I look forward to continuing to work with you on our shared goal of helping people with disabilities return to work.

tions?

Chairman BUNNING. And Mr. Collins, do you have any quesf

Mr. COLLINS. I have no questions.

Chairman BUNNING. We thank you, Jim, for your interest, and

your determination to do something about this, and we appreciate

your testimony.

Mr. RAMSTAD. Thank you, Mr. Chairman.

Chairman BUNNING. If the next panel will come forward. Acting

Commissioner of Social Security, Hon. John Callahan, accompanied

by Susan Daniels, Associate Commissioner at the SSA Office of

Disability. Testifying on behalf of the U.S. Department of Education is Judith Heumann, Assistant Secretary for Special Education and Rehabilitative Services.

Dr. Callahan, if you would begin, we would appreciate it.

STATEMENT OF HON. JOHN J. CALLAHAN, ACTING COMMISSIONER, SOCIAL SECURITY ADMINISTRATION; ACCOMPANIED BY SUSAN DANIELS, ASSOCIATE COMMISSIONER,

OFFICE OF DISABILITY

Mr. CALLAHAN. Thank you very much, Mr. Chairman, for inviting us here today. We would like to commend you and Congresswoman Kennelly and other Members of the Subcommittee for holding these hearings. They are very, very important hearings, and I

think we are all starting down this road of dismantling barriers for

return to work. So my commendation to you and the Ranking

Member.

Today, too few of our approximately 8 million Social Security and

Supplemental Security Income recipients leave the disability rolls

each year to work. Many more of our customers with disabilities

tell us they want to work, and they will do so, if the incentives are

right and the services they need are available. We look forward to

working with this Subcommittee to turn their dreams of economic

independence into a reality.

I am enthusiastic about the possibilities for the future, particularly the President’s Ticket to Independence Proposal, which we

have sent forward to the Congress. The Ticket to Independence is

a good public-private partnership. The partnership would give people receiving disability payments what they want and what they

need: The control and flexibility to secure services tailored to their

individual requirements, from their choice of providers. The Ticket

Program is also, I would add, fiscally responsible, since providers

would only be paid for results, that is, placing individuals in a job

and eliminating Federal cash assistance.

The Ticket to Independence is grounded on four principles. The

first is customer choice. SSA’s customers desire and need maximum

flexibility and choice in pursuing services that will help them become gainfully employed. Beneficiaries with disabilities will receive

this Ticket to Independence to use with a participating public or

private employment or rehabilitation provider of their choice.
9

The second principle is innovation. The employment strategy in

our proposed legislation encourages widespread innovations in the

public and private sectors by providing opportunities for State

agencies, local nonprofit and for-profit providers and employers to

work with willing beneficiaries.

Third, paying for results. This is very important. The focus on

outcomes, we believe, is best achieved by linking it to financial rewards. The provider will be paid only when the beneficiary’s earnings from work result in benefit savings.

And finally, health care incentives. We all know that one of the

key barriers to returning to work is fear of losing health care. Opportunities to obtain employment should be as health-care-neutral

as possible.

The Senate reconciliation bill does contain a proposal similar to

that proposed by the President that would allow workers with disabilities to buy into Medicaid. We urge the conferees to adopt the

President’s proposal in that regard. The President’s proposal for a

4-year demonstration to extend premium-free part A Medicare benefits beyond the current period of Medicare eligibility is not included in reconciliation. We believe that is still important and

would want to pursue that demonstration authority in the future.

Very quickly, this is how the ticket will work. After SSA determines that individuals are eligible for benefits, it will issue them

tickets. A beneficiary may give the ticket to his or her provider of

choice in exchange for rehabilitation and employment services. We

expect to select between 5 and 10 States to begin our pilot. Tickets

will be issued and providers will be solicited for participation. State

vocational rehabilitation agencies and alternate participants will

also have an option to participate in either the Ticket Program or

the current program.

Providers must satisfy certain criteria to be enrolled and be eligible to receive payments from SSA: They must be able to conduct

business in the State where they enroll by whatever criteria are

used in that State.

Very quickly, I see the light is running here, the beneficiary may

have a ticket for up to 2 years. They may be able to renew it for

another 2 years. Payments will be made to providers once these individuals terminate their cash benefits and become permanently

employed.

We feel as a starting payment point that we will be prepared to

pay 50 percent of the cash benefit, up to 5 years of gainful employment. We will select a contract administrator to administer this

program, and we will report back to Congress on the 3d, 5th, 7th

and 10th year of the pilot.

In conclusion, the Ticket to Independence is a very frugally designed, results-oriented innovation that can, first of all, create a

public-private partnership between us and public and private providers, obtain significant savings to the SSA Trust Funds, give

beneficiaries what they want, which is a choice to find a willing

provider and minimize bureaucracy in the administration of this

program.

We believe these hearings are a starting point on a long road to

fashioning constructive legislation, and we are committed to work-
10

ing with the Subcommittee and the administration to get legislation that will remove the disincentives to go back to work.

[The prepared statement follows:]

Statement of Hon. John J. Callahan, Acting Commissioner, Social Security

Administration

Mr. Chairman and Members of the Subcommittee:

A large and growing number of people with disabilities can work, and want to

work. With the Americans With Disabilities Act, changes in societal attitudes, and

advances in technology, it is clearer than ever that being disabled does not mean

that you can’t contribute to our nation’s economy. However, people with disabilities

face a variety of complex barriers to work. Now is the right time to launch new initiatives to help break these barriers.

Today, too few of our approximately 8 million Social Security and Supplemental

Security Income (SSI) disability recipients leave the disability rolls each year because of work. In fiscal year 1996, SSA paid State vocational rehabilitation (VR)

agencies about $65.5 million for their services provided to approximately 6,000 beneficiaries with disabilities who worked at least 9 months earning more than $500 per

month. However, many State VR agencies have waiting lists for services, and many

more of our customers with disabilities tell us they want to work and will do so if

the incentives are right and the services they need are available. We look forward

to working with Congress, the Rehabilitation Services Administration, and other

Federal agencies to turn our customers’ dreams of economic independence into reality. I am enthusiastic about the possibilities for the future, particularly the President’s ‘‘Ticket to Independence’’ proposal.

This plan creates new ways to help people find work and achieve their goals. The

Administration looks forward to working with the Hill to enact these proposals.

Since there are members of Congress from both sides of the aisle who are also working to solve this problem, we are looking forward to a constructive dialogue with

you on this issue that will lead to the enactment of legislation, and we believe that

our proposal merits your support.

The ‘‘Ticket to Independence’’ is a public-private partnership designed to expand

opportunities for individuals with disabilities, including individuals who are blind.

This partnership would give people receiving disability payments what they want

and need—the control and flexibility to secure services tailored to their individual

requirements from their choice of providers. The Ticket is fiscally responsible, since

providers would be paid only for results, i.e., placing individuals in jobs and eliminating Federal cash assistance.

Some have been critical of the current system for not improving the work capacity

of our beneficiaries. We know that many highly skilled, outcome-focused agencies

and professionals could be successful in assisting our diverse beneficiaries to return

to work and that individualized planning and support is essential to successful work

re-entry. The President’s proposal builds on this knowledge.

We believe that the ‘‘Ticket to Independence’’ proposal will result in more opportunities for our beneficiaries to receive the services they need in order to work. We

must keep in mind, however, that many of our beneficiaries have disabilities so severe and permanent that they will be unable to work even with the best VR services.

THE ‘‘TICKET TO INDEPENDENCE’’ PROPOSAL

Included in the President’s fiscal year 1998 budget is a historic proposal to help

more beneficiaries achieve their goals of obtaining a job and leaving the benefit

rolls. This is the first time that a President has submitted a proposal to significantly

expand return to work efforts. The ‘‘Ticket to Independence’’ is grounded in a four

part vision.

• Customer Choice: SSA’s customers desire and need maximum flexibility and

choice in pursuing services which will help them to become gainfully employed.

Beneficiaries with disabilities will receive a ‘‘Ticket to Independence’’ to use with a

participating public or private employment or rehabilitation provider of their choice.

Our experience indicates that customer choice is a key element in their decision to

seek services.

• Encouraging Innovation: The Administration’s proposal seeks to encourage

widespread innovations in the private and public sectors by creating opportunities

for Federal and State agencies, local non-profit and for-profit providers, employers,

and beneficiaries to work together.
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• Paying for Results: Beneficiaries and providers alike should focus on the goal

of stable employment. The provider will be paid only when the beneficiary’s earnings from work result in benefit savings. The ‘‘Ticket to Independence’’ rewards success and frugally uses public funds in an accountable and targeted way. And, since

stable employment is the only goal that reaps a financial return, fewer resources

are needed to monitor methods, expenditures, case files, etc. • Health Care Incentives: Health care security is viewed by beneficiaries as an

essential factor in deciding whether or not to try to work. Opportunities to obtain

employment should be as health-care neutral as possible for individuals with disabilities. As you know, the President’s Budget proposal included two new approaches to removing disincentives to returning to work.

We are pleased that the Senate Reconciliation bill includes a proposal similar to

that proposed by the President that would permit states to allow workers with disabilities to buy into Medicaid. The Administration has urged the Conferees to adopt

the President’s version which would not limit eligibility for this program to people

whose earnings are below 250 percent of poverty.

Unfortunately, the Administration’s proposal for a 4-year demonstration to extend

premium-free Part A Medicare eligibility for beneficiaries who leave the cash benefit

rolls and continue working beyond the current period of Medicare eligibility (39

months) was not included in Reconciliation. The Administration continues to believe—that such a demonstration, coupled with the ‘‘Ticket to Independence,’’ is good

policy and continues to support changes in Medicare to reduce disincentives to return to work.

HOW THE TICKET WILL WORK

After SSA determines that individuals are eligible for benefits, we will issue them

tickets. The beneficiary may still apply to the State VR agency for services regardless of whether it is participating in this program, or give the ticket to another participating provider of his/her choice in exchange for rehabilitation and employment

services. If the beneficiary returns to work and benefits cease due to earnings, the

provider holding the ticket will receive a portion of the savings for a fixed period

of time.

PHASED ROLL-OUT

SSA will select 5–10 States to begin. Tickets will be issued and providers will be

solicited for participation. State VR agencies will have the option to participate in

either the ‘‘Ticket to Independence’’ or the current SSA VR Reimbursement Program.

For State VR agencies or alternate providers which choose to participate in the

pilot, claims filed under the current program prior to the start of the pilot will continue to be processed under that program. Also, the State VR agencies in pilot

States will not have first priority access to referrals of beneficiaries who have tickets.

ELIGIBILITY

All disability beneficiaries in roll-out States, except those whose medical conditions are expected to improve, will be eligible to receive a ticket. Beneficiaries who

are expected to improve will be eligible for a ticket if their benefits are continued

as a result of a continuing disability review.

PROVIDERS

Providers must satisfy certain criteria to be enrolled and eligible to receive payments from SSA. Providers must be eligible to conduct business in the State where

they enroll by whatever criteria are used in that State. SSA will not certify, license

or regulate organizations or businesses.

USING THE TICKET

A beneficiary may activate a ticket at any time by giving it to an enrolled provider, who then registers it for 1 or 2 years, at the beneficiary’s discretion. The ticket can be transferred to another provider only if the original ticket holder agrees

(except in situations where disputes between a beneficiary and a provider are resolved by withdrawing the ticket). The terms of transfer of the ticket from one approved provider to another, with the beneficiary’s consent, are entirely up to the respective parties. Providers receiving tickets from other providers must notify SSA

of the change to be eligible for payment. At the end of the period of registration,
12

if no provider is being paid under the expired ticket, the beneficiary may request

a renewed ticket and that ticket may be registered for 1 or 2 years with the same

or a different provider. Only one ticket will be issued to a beneficiary at a time and

only one provider may hold a beneficiary’s ticket at a time.

PAYING THE PROVIDER

When SSDI benefits or an SSI beneficiary’s federally administered benefits stop

due to earnings, the provider is paid a portion of each monthly benefit not paid to

the beneficiary during a specified continuous period.

The provider payments begin with the first month that Social Security disability

insurance benefits or Federally administered SSI payments are reduced to zero, due

to earnings, after the ticket is registered.

ADMINISTERING THE TICKET

SSA will award a contract to an administrator to manage the enrollment of providers, the system of referrals, ticket registration, and to assist in paying providers.

The administrator will also develop a data collection system incorporating information required for management reports, a beneficiary tracking system, and the evaluation of the impact of the ‘‘Ticket to Independence.’’

EVALUATION AND EXPANSION

The Commissioner of Social Security will report to the Congress on the operations

of the ‘‘Ticket to Independence’’ Program. At the end of the 3rd, 5th, 7th, and 10th

year of the pilot, the Commissioner will evaluate and report on the impact of the

program and work activity of beneficiaries with disabilities. Based on the results of

the evaluation, the Commissioner will determine whether to continue and expand

to other States (if the ticket system has been sufficiently successful), to modify aspects of the models to gain better results (such as the payment formula or the

length of the payment period), or to discontinue the project.

PROTECTION AND ADVOCACY

SSA will supplement the funding of the existing State Protection and Advocacy

(P&A) system with funds specifically designated for assisting SSA beneficiaries

when disputes with providers occur. The State P&A System is a long established

federally mandated system operating in each State and territory that investigates,

negotiates and mediates solutions to problems that certain persons with disabilities

cannot resolve on their own.

CONCLUSION

The ‘‘Ticket to Independence’’ is a cost effective, results oriented innovation that

can:

• Create a public-private partnership between Social Security and public and private providers with the goal of supporting beneficiaries who want to work.

• Offer potentially significant savings to the SSA trust funds by helping persons

with disabilities to work.

• Give beneficiaries the control and flexibility they need in securing services they

want.

• Minimize bureaucratic involvement.

Mr. Chairman, let me reiterate. We want to work with you to design new programs that can result in jobs for persons with disabilities who would otherwise remain dependent upon disability benefits. We believe the President’s ‘‘Ticket to Independence’’ begins a deliberate process to roll out a federal initiative to achieve that

end. I thank you for your attention and would be happy to answer any questions.

Chairman B

Testifying on behalf of the U.S. Department of Education is JuUNNING. Thank you, Dr. Callahan.

f

dith Heumann. If you will begin, please.
13

STATEMENT OF JUDITH E. HEUMANN, ASSISTANT SECRETARY,

OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE

SERVICES, U.S. DEPARTMENT OF EDUCATION; ACCOMPANIED BY MARK SHOOB, DEPUTY ASSISTANT SECRETARY

Ms. HEUMANN. Thank you, Mr. Chairman, Mrs. Kennelly and

other Members of the Subcommittee. Thank you very much for inviting us to speak with you on the issue of barriers that prevent

disabled Social Security, disabled insurance and Supplemental Security Income beneficiaries from engaging in or returning to work.

As the Department of Education’s Assistant Secretary for the Office of Special Education and Rehabilitative Services, I am responsible for providing leadership to the Rehabilitation Services Administration, the Federal agency that provides support to State vocational rehabilitation agencies and other service providers to assist

individuals with disabilities to achieve employment and to live

independently. Since my childhood, we as a country have made significant strides in improving educational and employment opportunities for individuals with disabilities. The Congress’ recent bipartisan reauthorization, strengthening the Individuals with Disabilities

Education Act, and the coming reauthorization of the Rehabilitation Act, will lead to significant progress in furthering opportunities for education, employment, and independent living.

It is estimated that approximately 800,000 individuals with disabilities are now working because of the antidiscrimination protections provided by the 1990 Americans with Disabilities Act. But

significant barriers remain to achieving the goals of independence,

inclusion and empowerment for all individuals with disabilities.

Federal policy aimed at assisting individuals with disabilities has

created disincentives for many with disabilities.

For example, the potential loss of health care coverage represents

a significant barrier to employment for SSDI and SSI recipients. In

order to address this disincentive, the President’s budget proposes

to help people with disabilities work without losing their health

care coverage.

Federal income policy regarding disability payments may also

create disincentives through employment. Our data suggests many

beneficiaries are well aware of the substantial gainful activity

threshold and earnings limits and, as they approach them, tend to

limit their hours of work or earnings so as to remain eligible. Ultimately these barriers must be addressed if we were to achieve successful employment outcomes for many more individuals with significant disabilities.

The programs I administer at the Department of Education have

played a significant role in our overall efforts to help individuals

to be prepared for and engage in gainful employment and must

continue to be part of a comprehensive strategy. The Vocational Rehabilitation State Grants Program provides $2.2 billion in formula

grant assistance to 82 State-operated VR service programs. These

programs provide consumers with choices among a wide range of

specialized services that include, but are not limited to, job development, job training and placement, counseling and guidance, assisted technology, personal assistance services, physical and mental

restoration services, reader services, interpreter services, supported

employment services and school-to-work transition services.
14

The essence of the VR Program is to provide services that meet

the aspirations, needs, abilities and priorities of each individual,

consistent with the individual’s informed choice. A VR counselor

works as a partner with a person with disability to design a rehabilitation program that matches the individual’s strengths and interests to a vocational outcome, and they jointly develop an employment plan. In fiscal year 1996, 213,500 individuals who exited the

VR system after receiving services achieved an employment outcome and showed notable gains in their economic status.

The State VR agencies and the Social Security Administration

have a long history dating back to 1954 of working together to assist SSDI and SSI beneficiaries to return to work. In order to examine the success of the VR Program in assisting individuals with

disabilities to achieve sustainable improvement in employment,

earnings and independence, the Department is currently conducting a major longitudinal study. The study which is being conducted

by Research Triangle Institute follows approximately 8,000 current

and former VR consumers over a 3-year period and examines services and post-VR earnings, employment and community integration

of VR consumers. Information obtained from this study will enable

the Department to conduct specific analysis relative to SSDI and

SSI beneficiaries receiving VR services.

Some of the preliminary data regarding the rehabilitation of SSI

and SSDI beneficiaries may be of interest to you. This data shows

28 percent of all active VR clients are, in fact, SSDI and SSI beneficiaries who have been receiving benefits for an average of 55

months. SSI/DI beneficiaries referred to the VR Program directly

by SSA or SSA’s Disability Determination Service represent only

3.6 percent of all beneficiaries who, in fact, are applying for services. Beneficiaries enter the VR system far more often through selfreferral, community health and rehabilitation programs and

schools, after a period of receiving SSA benefits.

SSA beneficiaries tend to have higher percentages of some significant disabilities. These include higher percentages of visual disabilities, significant mental disabilities, mental retardation and

prelingual deafness.

Chairman BUNNING. Are you close to being finished?

Ms. HEUMANN. Yes.

The Department is committed to closely monitoring program outcomes, improving performance and developing evaluation standards

and performance indicators for the VR Program in order to improve

program performance. We recognize that Education’s Vocational

Rehabilitation Programs are only part of the solution to the unemployment of individuals with disabilities, and we support other options to maximizing return to work opportunities, including the Social Security’s Ticket to Independence. We must continue to explore

ways to address the broad range of factors contributing to the high

unemployment of individuals, and we are committed to working

with you on this process. Thank you.

[The prepared statement follows:]
15

Statement of Judith E. Heumann, Assistant Secretary, Office of Special

Education and Rehabilitative Services, U.S. Department of Education

Chairman Bunning and members of the Subcommittee, thank you very much for

inviting me to speak with you on the issue of barriers that prevent disabled Social

Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries from engaging in or returning to work.

As the Department of Education’s Assistant Secretary for the Office of Special

Education and Rehabilitative Services (OSERS), I am responsible for providing leadership to the Rehabilitation Services Administration (RSA), the Federal agency that

provides support to State vocational rehabilitation (VR) agencies and other service

providers to assist individuals with disabilities to achieve employment and to live

independently. My leadership also extends to the National Institute on Disability

and Rehabilitation Research which—through research, demonstration, and dissemination and utilization programs—identifies those best practices in technology, rehabilitation, and independent living that result in greater independence and productivity of individuals with disabilities.

My appointment as Assistant Secretary and my ability to live independently

would not have been possible without the broad array of rehabilitation and independent living services from which I have benefited along with my personal determination and family’s support.

When I was one and a half years old, I developed polio. When I was five, the public school officials would not allow me to enroll. They told my mother that because

of my wheelchair, I was a fire hazard. Instead, the school system sent a tutor to

my house. When I was nine, I finally got to go to school, but I was placed with other

disabled kids in a room hidden in the school basement.

I was the first student in my class to go on to high school—but not until my mom

and dad fought for this right.

After graduating from high school, I went to college. I wanted to become a teacher, but the agency financing my education believed that people who use wheelchairs

could not teach, so they refused to let me major in education. But I did manage to

minor in it.

When I graduated, I applied for a teaching license in the New York City school

system. I passed the written test and the spoken test. But I failed the medical test

because I used a wheelchair. The school officials would not give me a license to

teach. But I knew I could be a good teacher. With the support of my parents, I challenged the school system, obtained my license, and finally got a job teaching.

During this time, I became aware that other disabled people from all over the nation—in fact, from around the world—were also advocating for equal rights. These

people, and many other disabled people and their families, became part of the growing movement for the rights of the disabled.

This broader movement enabled me to go on to graduate school, and to be a leader

in the then new independent living movement. I helped found the first Center for

Independent Living in Berkeley, California.

Since my childhood, we, as a country, have made significant strides in improving

educational opportunities for individuals with disabilities, particularly with the enactment of the Individuals with Disabilities Education Act (IDEA) in 1975. In addition to Congress’ recent bipartisan reauthorization that further strengthened IDEA,

we have also made significant progress in furthering opportunities for employment

and independent living for individuals with disabilities through a broad range of

programs that support both rehabilitation and independent living services and research and demonstrations and programs that protect the rights of individuals of

disabilities from discrimination in employment, housing, and transportation. It is estimated that approximately 800,000 individuals with disabilities are now working

because of the anti-discrimination protections provided by the Americans with Disabilities Act. But significant barriers remain to achieving the goals of independence,

inclusion, and empowerment for all individuals with disabilities. Despite the opportunities afforded by the Individuals with Disabilities Education Act, the Rehabilitation Act, and the Americans with Disabilities Act, nearly half of working-age persons with disabilities are unemployed.

These barriers include environmental barriers such as the lack of transportation

and lack of affordable and accessible housing. Individuals like myself need access

to personal assistance services in order to work. Many individuals need accommodations on the job such as assistive technology to perform effectively in the workplace.

Despite the promise of the ADA, negative employer and individual attitudes regarding the employability of individuals with disabilities persist.

Notably, federal policy aimed at assisting individuals with disabilities is also creating disincentives to work for many individuals with disabilities. For example, the
16

potential loss of health care coverage represents a significant barrier to employment

for SSDI and SSI recipients. Medicare for disabled SSDI beneficiaries and Medicaid

for SSI recipients provide the majority of health care coverage for these groups.

While there are provisions that extend these benefits once an individual returns to

work, Medicare coverage is time limited and SSI recipients who go to work lose

Medicaid if their earnings exceed caps that vary by State. As a result, it’s possible

that people who are eligible for SSI ‘‘mangage’’ their income to ensure that they

keep Medicaid—by stopping work when they hit the caps, or even turning down promotions. In addition to primary health care services, the Medicaid program also offers a variety of optional services essential to the needs of severely disabled individuals that are both costly and difficult to obtain even if traditional employer-based

health care coverage can be secured.

In order to address this disincentive, the President’s budget proposes to help people with disabilities work without losing their health care coverage. The President’s

proposal would create a new State option that would allow SSI beneficiaries with

disabilities who earn more than those State caps to keep Medicaid by contributing

to the cost of their coverage as their income rises. The President’s budget also includes a proposal for a 4 year demonstration project to extend Medicare coverage

for SSDI recipient who return to work.

Federal income policy regarding disability payments may also create disincentives

to employment. SSDI benefits can continue for up to nine months after an individual attempts to return to work. At that point, SSA must determine if the SSDI beneficiary has achieved substantial gainful activity (SGA), which is a trigger for termination of cash benefits. SSI recipients can continue to receive their SSI checks while

they work. As long as they remain disabled, they will continue to receive their SSI

check until they reach a certain level of earnings. Our data suggest that many beneficiaries are well aware of the SGA threshold and earnings, and, as they approach

them, tend to limit their hours of work or earnings.

Ultimately, these barriers must be addressed if we are to achieve successful employment outcomes for many more individuals with disabilities.

The programs I administer at the Department of Education have played a significant role in our overall efforts to help individuals to be prepared for and engage in

gainful employment and must continue to be part of a comprehensive strategy. One

of the biggest programs is the Vocational Rehabilitation State Grants programs,

which provides $2.2 billion in formula grant assistance to 82 State-operated VR

service programs. These programs provide consumers with a wide range of specialized services that include, but are not limited to, job development, job training and

placement, counseling and guidance, assistive technology, personal assistance services, physical and mental restoration services, reader services, interpreter services,

supported employment services, and school-to-work transition services. The essence

of the VR program is to provide services that meet the aspirations, needs, abilities

and priorities of each individual, consistent with the individual’s informed choice.

A VR counselor works as a partner with an individual with a disability to design

a rehabilitation program that matches the individual’s strengths and interests to a

vocational outcome, and they jointly develop an employment plan.

Since its creation seventy-seven years ago by the Smith-Fess Act, the VR State

Grants program has assisted some nine million individuals with disabilities to

achieve gainful employment. Presently, there are over 1.25 million eligible individuals receiving VR services, 77.5 percent of whom have significant disabilities. In FY

1996, 213,500 individuals who exited the VR system after receiving services

achieved an employment outcome and showed notable gains in their economic status.

The State VR agencies and the Social Security Administration have a long history, dating back to 1954, of working together to assist SSDI and SSI beneficiaries

to return to work. The Social Security Amendments of 1965 authorized the use of

Social Security trust funds to pay for VR services for beneficiaries. The goal of the

Beneficiary Rehabilitation Program is to return the maximum number of disabled

beneficiaries to work so that savings in reduced benefit payments and the Social Security contributions of the rehabilitated beneficiaries would equal or exceed the

amount paid for rehabilitation services.

Since 1983, VR agencies have been reimbursed by SSA only for beneficiaries who

are terminated from benefits following a determination that the beneficiary has

achieved substantial gainful activity. Payment is made to the VR agency only when

savings to the trust fund are anticipated.

In order to examine the success of the VR program in assisting individuals with

disabilities to achieve sustainable improvement in employment, earnings, and independence, the Department is currently conducting a major longitudinal study. The

study, which is being conducted by Research Triangle Institute, includes a sample
17

of approximately 8,000 current and former VR consumers at 37 VR offices over a

three-year period. The time frame permits tracking of services and post-VR earnings, employment, and community integration of VR consumers.

Specifically, the study investigates:

• short and long-term outcomes achieved by VR consumers; • characteristics of consumers that affect access and receipt of services and outcomes; • how receipt of specific services contributes to successful outcomes; • how local environmental factors influence services and outcomes; • what about the VR agency influences services and outcomes; and • the extent of return on the VR program’s investment.

Information obtained from this study will also enable the Department to conduct

specific analysis relative to SSDI and SSI beneficiaries. Some of the preliminary

data regarding the rehabilitation of SSI and SSDI beneficiaries may be of interest

to you. These data show that 28 percent of all active VR clients are SSDI and SSI

beneficiaries who have been receiving benefits for an average of 55 months and include recipients who have initiated contact with the VR program or who have selfreferred. SSI/DI beneficiaries referred to the VR program directly by SSA or SSA’s

Disability Determination Service represent only 3.6 percent of all beneficiaries who

apply for services because these referrals are made much earlier in the process, e.g.,

when they first start to receive benefits and are not yet ready to return to work.

Beneficiaries entered the VR system far more often through self-referral, community

health and rehabilitation programs, and schools. One implication of these data is

that a majority of beneficiaries who elect to enter the vocational rehabilitation system do so after a period of receiving SSA benefits, rather than concurrent with the

initiation of the receipt of benefits.

The data also show some significant differences between the SSA beneficiary population and the general population served by the VR program. Beneficiaries tend

to have higher percentages of some severe disabilities. These include higher percentages of visual disabilities, severe mental illness, mental retardation, and prelingual

deafness. One result of the more severe disability mix is higher cost of services. For

example, in 1995, the average cost of purchased services for beneficiaries was 49

percent higher than for non-beneficiaries ($4,724 compared to $3,168).

The Department is committed to closely monitoring program outcomes to improve

performance and is also in the process of developing evaluation standards and performance indicators for the VR program in order to improve program performance.

The 1992 amendments to the Rehabilitation Act made a number of important

changes to the VR State Grants program that will enhance employment opportunities for individuals with disabilities. For example, the amendments modified the criteria for determining eligibility for services to streamline the process and set forth

the policy that individuals with disabilities are to be active participants in their own

rehabilitation programs.

In preparing for the pending reauthorization of the Rehabilitation Act, we have

invited input from a broad range of groups and individuals to get their ideas for

further improving the Act, and we are prepared to make a number of specific recommendations for changes that are aimed at improving results for individuals with

disabilities in the areas of employment and independent living. These include further streamlining the eligibility determination process to establish presumptive eligibility for VR services for recipients of disability benefits under Titles II and XVI

of the Social Security Act, and streamlining the Individualized Written Rehabilitation Plan (renamed the Individualized Employment Plan) to eliminate unnecessary

process requirements and give consumers who want to take responsibility for developing their plan the option of doing so. We also support an amendment that clarifies

that consumers have the right to choice in regard to the selection of their employment goal, the services needed to reach their goal, the providers of such services,

and the methods to be used to procure the services.

At the same time, we recognize that vocational rehabilitation is only part of the

solution to the unemployment of individuals with disabilities, and we support other

options to maximize return-to-work opportunities. For example, the Social Security

Administration has recently transmitted its Ticket to Independence proposal, which

would authorize a new public-private partnership to assist individuals who receive

SSDI or SSI benefits on the basis of disability to return to work. We look forward

to working with the Social Security Administration on this effort.

We must continue to explore ways to address the broad range of factors contributing to the high unemployment of individuals with disabilities. I am convinced that

by working together, the Administration, Congress, individuals with disabilities and

their advocates, service providers, and employers can turn the wasted talents of disabled people into an important resource for securing our nation’s future.
18

I want to assure the Subcommittee of my sincere desire to work with you and our

partners at SSA to achieve our common goal of assisting individuals with disabilities to achieve gainful employment and to become contributing members of our society.

Chairman B

Let me start the questioning with Dr. Callahan. The legislative

UNNING. Thank you.

f

language for the Ticket to Independence Proposal is somewhat

vague regarding payment to providers. Please describe your proposal payment system.

Mr. CALLAHAN. The proposal payment system—I would like to

answer this question, and Associate Commissioner Daniels may

want to amplify—we would first of all seek to pick 5 to 10 States

to pilot this program.

Chairman BUNNING. Five pilot States.

Mr. CALLAHAN. Five to ten pilot States. We would make sure the

States were a diverse group of States throughout the country,

large, small, with various characteristics. Right now, we have 65

alternate providers nationwide that would be ready to serve current beneficiaries. We expect more providers to come online. The

disabled individuals in those States would be given tickets, and

they would be able to take those tickets to any provider that was

willing to provide Ticket to Independence services. They would register with those providers for up to 1 or 2 years, which could be

renewable for an additional 1 or 2 years. We expect during that

process that the provider would help them obtain stable employment. Once they go into stable employment and their cash assistance ends, the provider of those services would receive up to 50

percent of the estimated cash benefit, possibly up to 5 years.

Chairman BUNNING. In their report of March 1997, GAO suggests that SSA compare the results of the proposed results-based

payment system with those of alternate systems. Does SSA intend

to pilot more than one payment system? If not, why not; if so,

would you please describe it?

Mr. CALLAHAN. Let me ask Associate Commissioner Daniels to

comment on that, if I may.

Ms. DANIELS. Our original plan is to start with one payment system, as Mr. Callahan has described. Fifty percent of the benefit for

every month the individual is not in cash status for 5 years. However, the language is flexible enough to allow us to determine if

that needs to be adjusted in any way, and we will be collecting

data to see if any particular group of beneficiaries are not being

served and take a look at maybe changing or modifying that formula.

Chairman BUNNING. Would SSA administer payments to providers directly or use a contractor?

Mr. CALLAHAN. We would use a contractor, sir.

Chairman BUNNING. I understand SSA’s proposal only pays providers when the recipient comes off of the rolls; is that correct?

Mr. CALLAHAN. Yes, that is correct.

Chairman BUNNING. How would smaller providers, who may

have limited capital, be able to participate in the program then?
19

Mr. CALLAHAN. Let me say, our assessment is that the alternate

providers, which have come to us to seek to provide vocational rehabilitation services, range from large to small enterprises. We

think there are a lot of innovative small enterprises that would be

willing to participate in this program.

One of the things I think you allude to is the issue of paying for

milestones. One of the things we have to be——

Chairman BUNNING. I am alluding to the fact that a small provider couldn’t carry this program very long.

Mr. CALLAHAN. The providers will assess their own internal capacities, and they will look at the various beneficiaries that are out

there, and——

Chairman BUNNING. What I am alluding to is the fact that some

of the younger, smaller and best providers may have the best ideas

on how to do it, and we may miss those ideas if we are only contracting with larger providers.

Mr. CALLAHAN. Well, you are presuming when we put the ticket

stick out that no smaller providers will come forward.

Chairman BUNNING. No, I am worried about their financial ability to carry it.

Mr. CALLAHAN. Well, I think it is like everything else, Mr. Chairman. Individuals and enterprises with good ideas and good innovation oftentimes can get capital from a variety of sources. So we believe that they would be able to do that and that the better ones

would enter into the process.

Chairman BUNNING. My time has expired, and I want to question

the next witness, but I will yield to Mrs. Kennelly.

Mrs. KENNELLY. I thank the panel for being with us this morning.

I have introduced legislation on the issue we are talking about

this morning, and I have to say to you there was a certain amount

of skepticism when I was putting my legislation together that, in

fact, it would increase the number of people taken off the disability

rolls. So what I would ask you, Dr. Callahan, considering only 1

percent or less are leaving the rolls, is there anything we can do

to increase that number? Have you got numbers you can give us

on how this proposal would increase the numbers going off disability?

Mr. CALLAHAN. Obviously we would shoot for at least initially a

30-percent increase of people going off the rolls in the pilot States.

One of the things we are encouraged about is that by paying providers for results, we will increase the capacity of public and private providers to provide the appropriate services. So we would

hope to increase it at least initially by 30 percent.

Mrs. KENNELLY. That would be wonderful, and I think it is going

to take a great deal of work.

Mr. CALLAHAN. That is right.

Mrs. KENNELLY. We are talking about people who get off disability and enter into a situation where they have a provider. How

does that save the trust fund money if we are only talking about

those who are already off, and we know so few go off? When you

put forth your proposals, what are the savings?

Mr. CALLAHAN. Well, as you probably know, there are at least

three cost estimates of this proposal. SSA’s actuaries have costed
20

it out, OMB has costed it out, and CBO has costed it out. All three

components indicate a fair amount of cost neutrality in the first

stages; that is, savings. We indicate that we will have savings over

the full 10 years of the pilot, the OMB indicates less savings in the

last 5 years, and CBO has a different alternative.

I think one thing to be aware of is that some people say we will

just be paying for people who are going back to work anyway. I

think that is something that has to be looked at and studied, but

the key thing here is to increase the capacity of the overall system

to provide these services, bring more providers online, and provide

the best incentive we know, which is paying for results.

Mrs. KENNELLY. Well, that is something that both the Chairman

and I are concerned about.

Mr. CALLAHAN. Let me add one point, if I may. I understand the

desire for cost savings for the trust funds, but we also are looking

at a goal of putting disabled individuals back to work. I mean, we

shouldn’t forget that goal. That is a very important goal.

This Subcommittee has a difficult task. You have to look at all

the issues that affect disabled workers. It is not just Social Security, it is Medicare, Medicaid, sometimes assisted housing, transportation services, and so forth, and I think this will be a benefit

to us as you look to that as well.

Mrs. KENNELLY. But, Doctor, with less than 1 percent going back

to work, we are all going in the same direction on that, we have

to increase that number, and to take that one step further, Ms.

Heumann, everything I read tells me early intervention is the key.

What does this proposal do to get the intervention earlier than it

is now?

Mr. CALLAHAN. That is already on a separate track. You passed

legislation here, I believe it is H.R. 1048. It is pending in the Senate. We would support getting that enacted into law as soon as possible, rather than tying that back to this particular proposal. So in

one sense, you are already ahead of the game on early intervention

with your other legislation.

Mrs. KENNELLY. A proposal this size, we have to all be on the

same track.

Ms. Heumann.

Ms. HEUMANN. I was just going to say, some of the State rehabilitation agencies have already been working in a proactive way

with employers, so as individuals are becoming injured on the job,

they can come in and try to maintain people on the work force,

which we believe is critically important.

In addition to that, as I was discussing in my presentation, the

study being done by Research Triangle is, in fact, showing that one

of the difficulties is that individuals are being given determinations

of disability and at the same time are being told about their ability

to go get jobs. The data are showing people enter into the system

as much as 40 to 55 months after they have been on benefits, so

it does seem to say a number of things. For some individuals, capturing them early, if their disability is not necessarily significant

enough, may be able to keep them in the work force. Changing employers’ attitudes so employers welcome workers and to keep them

in the work force is something we also know is positive.
21

But I think what everyone has been saying this morning is people have more significant disabilities. There is a time period for

some in which they are going to have to adjust to their disabilities,

as well as the other issues we laid out around health care benefits,

which is a very big issue. Congressman Ramstad raised that issue

earlier with his former employee who was a quadriplegic who

couldn’t maintain employment. I assume because he was at risk of

not only losing his Medicaid, but in the State of Minnesota, they

have good programs for personal assistance services.

This is a complex issue. We agree with you that early interventions are critically important for some, and then a collaborative approach of services that come from Social Security, rehabilitation

agencies and many other programs can also potentially help move

people back into work; plus the removal of the disincentives, which

we all believe is one of the biggest problems of getting people back

into the work force.

Mrs. KENNELLY. Thank you for that excellent answer.

Chairman BUNNING. Thank you.

Mr. Collins will inquire.

Mr. COLLINS. Thank you, Mr. Chairman.

Mr. Callahan, I want to kind of clear up this 30 percent. You say

you are hoping to increase by 30 percent the number who leave the

rolls of disabled back into the workplace.

Mr. CALLAHAN. Over the current baseline, yes, sir.

Mr. COLLINS. Not 30 percent of a half percent, then, that Mrs.

Kennelly spoke of, is now currently leaving the rolls, because that

wouldn’t be much of an increase, would it? That would get us up

to about two-thirds of 1 percent.

Mr. CALLAHAN. State vocational rehabilitation agencies are our

primary provider of services right now. We referred last year

60,000 individuals to State vocational rehabilitation agencies for

services.

Mr. COLLINS. According to our numbers, that was about 6 percent.

Mr. CALLAHAN. Right. But let me, if I could, just pursue this for

1 minute. Of the 60,000 we referred, we reimbursed the States for

their services to 6,000 disability beneficiaries; that is, those who

were substantially gainfully employed for 9 months or more.

Now obviously, we would like to increase the number. First of all,

we would like to get more of those 60,000 beneficiaries we referred

for services back to work. Additionally, we would like to get more

beneficiaries referred for services. The Ticket to Independence, at

the very least, will enable us to list more individuals on the electronic billboard, that is, advise all the providers participating in

the Ticket Program that these individuals have tickets, and to

marry the individuals with a provider of services, whether that be

a State VR agency if they choose to participate in the Ticket Program, or some other public or private service provider. So it is in

essence trying to achieve a market solution, if you will; that is,

marry the individuals with the service providers and get them back

into the work force.

Mr. COLLINS. Well, good. You know, I think the best place for rehabilitation is the workplace, and you suggested that, hopefully,

you think there are people in the private enterprise, small business
22

area that would be willing to take this task on and hire people with

disabilities, and I agree with that. I think they will, too. But you

say you think they are. Have you actually inquired with small business people, entrepreneurs, employers as to where the stumbling

blocks are in hiring people with a disability, because there are

some there. I am a small business person, and I know where they

are, and I know where the disincentives are because of a longrange liability that that employer is going to pick up. Have you

been to the workplace and talked to people about it?

Mr. CALLAHAN. If I may, Congressman, let me defer to Associate

Commissioner Daniels, who has dealt with that in more detail than

I have.

Ms. DANIELS. As we were developing the proposal, we had an opportunity to talk with employers, some of them large, some of them

small. One of the things they indicated to us is they are in the

business of their business, and that when it comes to hiring people

with disabilities, they are generally willing to hire people who can

help them do their business. They need help sometimes in figuring

how to make the best accommodations or how to provide the best

workplace, but they don’t want, themselves, to become experts in

that. We believe that the providers who take our tickets will be

willing to work with employers to make those kinds of transitions

happen for our beneficiaries, without asking the employer to become an expert in rehabilitation or workplace accommodations.

Mr. COLLINS. Well, the incentive to me to hire anyone is productivity, and the disability should not be a question as to whether

they are productive or not, unless it is a job where they just actually physically can’t handle it.

But there are some problems in the area of insurance, problems

in the area of workers’ compensation, and problems in the area of

entrance to the facility, and all of these things are regulated very

heavily by the Federal Government that puts the roadblock up that

I don’t want to deal with. But I would deal with them if I were not

afraid of the punishment that I might receive of attempting to try

to deal with it. I think you need to go to the marketplace and talk

to people and talk to them in a real sense, not a bureaucratic

sense.

Thank you, and thank you, Mr. Chairman.

Ms. HEUMANN. Mr. Collins, could I just say one thing?

Mr. BUNNING. Mr. Christensen.

Mr. CHRISTENSEN. Thank you, Mr. Chairman.

Since I was a junior in high school, Dr. Callahan, you have been

testing a pilot program and going through a demonstration project.

I believe it has been about 17 years. From that pilot program, since

I was a junior in high school, what have you learned that you incorporated into the Ticket to Independence Program?

Mr. CALLAHAN. Well, I will defer to Associate Commissioner Daniels on this because she has worked on it for the past several years,

but I will say we also have a study, called Project Network, for

which we expect an evaluation report by the end of this year. We

are going to fully report to the Subcommittee, which will shed light

on this. But, I think what we have learned is that a disabled individual wants to go back to work. I think the testimony from all the

panelists today suggests there are a lot of disabled people who
23

want to go back to work, but are concerned about disincentives,

and finding a willing provider of services that tailors the program

with the disabled individual, and provides the various things that

are helpful to that individual in order to return to work.

I mean, my colleague here, says we have had 800,000 people go

back into the workplace since the ADA was passed. We find that

our customers tell us they want to go back to work. We are seeking

here, as a result of that, to put providers together with the disabled

individuals and try to get them back to work. It is a very complex

and a time-consuming process.

Mr. CHRISTENSEN. I guess what I question is the fact that after 17 years of a pilot program, roughly $30 million in taxpayers’

money, the Ticket to Independence Program that you are rolling

out is still yet another pilot program; that after 17 years of studies

and pilot programs and demonstration projects, you don’t have

enough confidence in the program to roll it out as a permanent program rather than another pilot program which will last, I think,

10 years.

Ms. DANIELS. Let me say that many of the previous demonstrations have given us a lot of useful information. They were not wasted. One of the most important things——

Mr. CHRISTENSEN. I have never heard of a government program

that wasted money.

Ms. DANIELS. One of the most important things we learned, and

you probably will learn from some of our colleagues on the other

panel, is we found that there is a broad network of very able, highly skilled, results-oriented professionals out there who are willing

to work with our beneficiaries. We structured the Ticket to Independence, as you see, to start slowly, 5 to 10 States, but it gives

us the flexibility, if the program is successful, to continue to roll

it out even faster, to encompass as many States as possible as our

capacity increases to manage the program and as it remains successful.

So I would think this is not as limiting a rollout pilot as you

might be thinking. It starts small, but it can grow rapidly if it is

successful.

Mr. CALLAHAN. If it works, we are probably going to come back

and ask for permanent legislation. If it doesn’t, we will come back

and tell you why it didn’t work.

Mr. CHRISTENSEN. When do you think it will come back?

Mr. CALLAHAN. The legislation provides that I am supposed to

report back to the Congress within 3, 5, 7 and 10 years—I am sure

I will be reporting back before then—so we will be reporting back

as quickly as we can on this, but we don’t want to start a permanent program that doesn’t have a chance of success.

Mr. CHRISTENSEN. Thank you, Mr. Chairman.

Mr. HULSHOF. Mr. Christensen, I can’t wait to see the headline

back in your hometown paper that you have never heard of a government program that wasted money.

Ms. Heumann, I wanted to give you the opportunity to respond

to Mr. Collins’ question, but I think you did want to share with us

some opinions.

Ms. HEUMANN. I just would like to put a face on the people we

are talking about, and I think the issue Mr. Collins raised is very
24

important, the need for agency—Social Security and rehabilitation

agencies and others to be working face to face with employers to

understand those programs. I think really the reforms that have

been going on in programs around the United States in the last 8

to 10 years have definitely been linking rehabilitation agencies

with employers to understand their real needs.

I also think we can’t avoid the discussion which deals with the

disincentives, because just improving employers’ opportunities to

bring disabled people in will not address the issues of individuals

who have significant disabilities. I mean, people like myself, that

are right now spending $3,500 a month for rent and attendant

services; the person that Congressman Ramstad spoke about earlier, who I am sure has a comparable level of expense. So we have

to, as we all work forward with the mutual goal of getting disabled

people to work, which is what we want to do, we have to realize

that we have to make some of these systemic changes if we are

going to allow people opportunities.

The approach Social Security is taking is one more approach to

assist disabled people to moving into the work force, but if we don’t

seriously address these other issues, we are not going to be able

to move the number of people who could move into the work force

into the work force.

Mr. HULSHOF. Let me ask you about the SSA Ticket Proposal.

Specifically, Ms. Heumann, let me ask you to comment on right of

first refusal, because as I understand, the Ticket Proposal allows

the State VR agencies to opt into the Ticket Program in the States

participating in the pilot, but then the State VR agencies in the

States would then no longer enjoy the right of first refusal as currently provided for in current law. Would you expect States to opt

into this program? And what is the Department of Education’s view

about losing right of first refusal?

Ms. HEUMANN. We anticipate some States would participate in

the program. What our hope is, and we have obviously been working very closely with Social Security, is as the program moves forward, individuals with disabilities are given significant information

so they understand what the ticket is going to mean. They have a

better understanding of the various providers that are going to be

there, the kinds of services that rehabilitation is legally required

to offer people versus the services that agencies that make—become ticketholders are not obligated to provide people, and that individuals also are aware of what protections they have, if there are

differences in the beliefs of the purchaser, as the disabled individual, and the provider.

I think those are criteria we think are critically important as the

program moves forward.

Mr. HULSHOF. You mentioned information about the new pilot

program, and, Dr. Callahan, as you know, we have split this hearing up into two sessions. Tomorrow we are going to hear from

many in the disabled community; also some from the consumer

panel tomorrow. And maybe it is unfair of me to ask you to comment, but, for instance, I think Mr. Halliday is testifying tomorrow

on behalf of the Council of the VR—State VR Administrators. He

talks about the lack of understandable information on what would

happen to cash benefits and medical coverage when a person at-
25

tempts to work, and he calls it; the Twilight Zone, I think, in his

testimony.

In addition to the pilot program, what is SSA doing to educate

those presently trying to move into the work force?

Mr. CALLAHAN. We have a number of initiatives underway that

Dr. Daniels has spearheaded, and I think she would like to comment.

Ms. DANIELS. We realize the work incentives are very complex

and, in fact, we have become students of some colleagues from the

Virginia Commonwealth University who have created a computer

program to show us and others what happens to income and net

income when individuals work, and how it affects their benefits. I

think you may have a chance to hear from those individuals. We

have invested heavily in that program, and we think it holds promise of being available to our beneficiaries to help them and their

providers figure out the real impact of the work incentives.

Additionally, we developed a package for young people called,

‘‘Graduating to Independence,’’ that focuses on families and young

people. Counselors teach them about work incentives and teach

them how to prepare for a transition to work. We have publications

that we deliver, and we have a continuing and ongoing dialog with

our customers about what makes sense and how we can best administer the work incentives. All of the things are leading us in a

good direction, we hope.

Chairman BUNNING. The gentleman’s time has expired.

Mr. Johnson.

Mr. JOHNSON. Thank you, Kenny. Thank you, Mr. Chairman.

Dr. Callahan, the National Council on Disability appointed by

the President has some recommendations in it to improve the Social Security’s ability to return disabled to work, and some of our

witnesses will be reviewing those details, but one of the recommendations is to reduce the monthly SSDI benefits $1 for every

$2 of earnings over $500 a month, similar to the SSI Program.

What are your views on that, and isn’t that a possibility, and why

aren’t those two programs the same anyway?

Mr. CALLAHAN. I haven’t seen that proposal in all its detail. We

would obviously have to understand the cost ramifications of it.

Clearly, we would like to see some comparability among all our

programs, but, Mr. Johnson, what I would like to do is provide our

answer for you on that one for the record because I would like to

take the time to study the National Council on Disability’s recommendations.

[The following was subsequently received:]
26

ommendations then?

Mr. JOHNSON. You haven’t looked at the President’s recf

Mr. CALLAHAN. I don’t have that right in front of me, sir, no, I

don’t.

Mr. JOHNSON. One other question. When people get out of disability, they lose Medicare; is that true?

Mr. CALLAHAN. I am sorry?

Mr. JOHNSON. They lose Medicare—or Medicaid, maybe.

Mr. CALLAHAN. It depends. They can lose it to some degree or another. Let me ask Ms. Daniels.

Ms. DANIELS. The Social Security Disability Insurance Program

allows beneficiaries to keep their Medicare part A premium free for

their trial work period, which is 9 months, and then to continue to

keep that premium free for the extended period of eligibility, which

is another approximate 3 years, and at the end of that period the

beneficiary may purchase part A, with a premium. It is a little over

$300 a month.
27

So there are transitions currently in the Disability Insurance

Program that allow the beneficiary to keep the Medicare that they

have while they are beginning to work and get stabilized, and, at

the end of that, to purchase it.

Mr. JOHNSON. So that is not an obstacle to them getting work

then, is it?

Ms. DANIELS. Some of our beneficiaries say that the premium itself, at a little over $300 a month, is a substantial premium,

given their ability to earn after they have become disabled.

Mr. JOHNSON. But you said they get it for 9 months, in the interim, free.

Ms. DANIELS. That is right, part A.

Mr. JOHNSON. I understand.

Well, is it working or not?

Ms. DANIELS. Certainly for people on their trial work periods or

in their extended period of eligibility, it is a fabulous coverage for

them to have and something for them to depend upon. Whether or

not they can afford to keep it after they finish that period is really

uncertain. We have only had approximately 600 people since this

provision was put in law to ever use it; in other words, purchase

their Medicare part A.

Mr. JOHNSON. Six hundred out of how many?

Ms. DANIELS. Out of several thousand. I would have to look at

my book here, but several thousands of people have left the rolls

over the years, and very, very few people have ever bought Medicare.

Mr. JOHNSON. Thank you very much.

Thank you, Mr. Chairman. I yield back to you.

Chairman BUNNING. I would like to ask Ms. Heumann your comments on the Council, National Council on Disability, employment

recommendations, if you know about them.

Ms. HEUMANN. I am sorry, I haven’t seen them in detail either.

Chairman BUNNING. You don’t have any idea whether you agree

or disagree with the recommendations?

Ms. HEUMANN. I think the thrust of the Council’s recommendations we support because it is the same thrust we are all discussing. What they have been doing is convening meetings around the

country and bringing together disabled experts who are both

knowledgeable about disability from a personal perspective and

knowledgeable about the laws.

Chairman BUNNING. I want to assure all of the witnesses that

I am going to submit questions in writing to you for answers for

the record.

Mr. CALLAHAN. Yes, sir.

Chairman BUNNING. Ms. Heumann, in your testimony you state

the Department of Education supports consumers’ choice in the selection of their employment goals. Would you like to expand on that

for me?

Ms. HEUMANN. Well, we believe it is important for anyone in this

country to be able to have the opportunity to talk about what their

work objectives are, not for someone to say that this is the job you

should do. Historically, and if I could just talk personally, when I

was in high school, what my disabled friends told me in high school

was when you went to rehabilitation many years ago, you could
28

only tell them you wanted to do a job where you could demonstrate

that another disabled person had a job like that. So when I was

interested in becoming a teacher, I knew not to tell anybody I

wanted to be a teacher because they would not help me go to school

to become a teacher. So I said instead I wanted to be a speech pathologist, which I never really wanted to be.

Today, because of many of the pieces of legislation that are out

there, disabled individuals have options like other people, but we

need to make sure that no one is saying to any disabled person,

you should do x job when, in fact, they want to do y job. So choice

means that we have to be able to sit down with the disabled individual and allow the person to say what they are interested in,

what kind of adaptations they need for the job, types of technology

they may need, where they may have to live in order to get to and

from the job, to look at other disability-related issues as they make

their determinations.

Chairman BUNNING. I don’t want to interrupt you. Mr. Collins

brought up some of the barriers that exist for industry and small

businesses when trying to hire people with disabilities. Disincentives include health care and liability insurance and more. So is

that in an educational process being brought up to those that are

seeking to hire the disabled?

Ms. HEUMANN. Well, what we would be talking to a disabled person about is if they are interested in certain types of jobs where

there are risks in the jobs, what kind of accommodations could be

provided for the individual to remedy the risk issue.

Chairman BUNNING. Well, that is very important, obviously, for

the disabled person to be able to choose any job they want. The reality is that there are barriers that prevent employment. We are

seeking to get a handle on the big picture. We can’t write a bill to

handle SSDI and SSI without the complete picture on subsidized

housing, on all the other things that go with it.

Ms. HEUMANN. Mr. Chairman, I think it is important to give that

information to disabled individuals, but I also think we need to do

a continued job at working with employers, because there are still

employers—and I am not talking about Mr. Collins—who are unaware of what disabled people can do. And so I think we need to

have a partnership with the provider, with the disabled individual

and with the potential employer to be able to look at what they

perceive as barriers to see if, in fact, the barriers can be removed.

We don’t want to limit disabled individuals’ options in the world of

work based on their disability.

Chairman BUNNING. We want to make sure they have an opportunity to do a better job at rehabilitating more than 1 percent of

those on SSDI. That is our job and what we are trying to accomplish in any kind of legislation we would propose.

Ken, do you have any other questions?

Mr. HULSHOF. No.

Chairman BUNNING. I would like to thank the panel for their testimony, and we will be submitting questions to you. Thank you.

[The following was subsequently received:]
29

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Hon. John J. Callahan, Acting Commissioner of Social Security

1. You indicated that, under the Administration’s Ticket to Independence proposal,

providers are not paid for services until the recipient no longer receives benefits.

What about an individual who is only able to work part-time? Is there nothing that

can be done, in your view, to reward this progress?

First, we would like to emphasize that the Ticket to Independence Program (TIP)

is intended to be a voluntary addition to all the VR programs currently available

to SSA’s beneficiaries. As such, a beneficiary can get services from the State VR

agencies in their respective States. Second, the essence of the TIP is that savings

to the SSDI Trust Fund or the general revenues is a prerequisite for payment to

a provider. One could make milestone payments, but that would not be consistent

with the approach we have proposed. The TIP (and any savings-based payment system) is designed to encourage aggressive pursuit of employment outcomes for as

many beneficiaries as can be efficiently returned to work. Other beneficiaries, who

need more extensive services in order to return to work full time, will be served by

existing systems such as the State VR agencies.

2. In your testimony, you mention the Administration’s proposal for a four-year demonstration to extend premium-free Medicare health insurance for recipients who leave

the cash benefit rolls because of work. You also state that the Administration believes

such a demonstration, along with the ‘‘Ticket to Independence,’’ is good policy and

constitutes an incentive to return to work. Why, then, did the Administration not include this proposal in its 1998 budget?

The President’s 1998 budget did include a proposal for a demonstration which

would have permitted certain title II disability beneficiaries to have their Medicare

coverage continued, premium-free, for an extra 4 years after their Medicare coverage would have terminated under present law. While the President’s proposal

was, unfortunately, not included in the Balanced Budget Act of 1997, the Administration plans to continue to pursue such demonstration authority.

3. All disability recipients, except those whose medical conditions are expected to improve, will be eligible to receive a ticket. Recipients who are expected to improve will

be eligible for a ticket after their benefits are continued as a result of a CDR. Since

an extensive CDR backlog still exists, why not issue a ticket to those whose medical

conditions are likely to improve, as it seems that those recipients would benefit from

rehabilitation services early in the process?

We intend to issue tickets at the time of award to new beneficiaries who are not

considered ‘‘high profile’’ in SSA’s CDR profile system. Those considered high profile

would be eligible for a ticket after a CDR results in a finding that their disability

condition has not improved. All beneficiaries currently on the rolls who are not classified as ‘‘high profile’’ cases will also be eligible to receive tickets. Initially, it may

be necessary to phase in the profile system, if it appears that too many beneficiaries

would be excluded from receiving a ticket or phase in the beneficiaries on the rolls,

if the workload appears too large in the first year. In addition, we will evaluate the

CDR backlogs at the time legislation is enacted and reassess our position, if necessary, at that time.

4. Basically, under your proposal most new recipients and individuals who are continued benefits after a CDR are issued a ticket. Is their use of a ticket mandatory?

The Social Security Administration has a duty, obligation, and responsibility to

protect the Social Security trust funds and the general funds of the treasury from

being used to pay benefits to individuals who are not entitled to them. Therefore,

the ‘‘Ticket to Independence’’ proposal provides that the benefits of beneficiaries who

(1) either do not cooperate in a rehabilitation program designed by the provider to

which they assigned their ticket, to get them off the disability rolls, or (2) refuse

to assign their ticket to a provider which has developed a rehabilitation program

which is likely to get them off the disability rolls, may be withheld or terminated.

These sanctions are consistent with long-standing Social Security policy.

5. Social Security law requires suspension of benefits for those SSDI and SSI recipients who refuse to accept vocational rehabilitation services. How many SSDI and SSI

recipients have had their benefits suspended because they refused to accept services?

Benefit suspension can occur when an individual, without good cause, refuses to

continue to accept VR services or fails to cooperate in such a manner as to preclude

their successful rehabilitation. Before a suspension occurs, SSA and the State VR

agency make every possible effort to encourage the individual to participate in their
30

program of VR services. Additionally, SSA independently evaluates if good cause exists in those cases where nonparticipation is reported. During the last three years,

SSA has reimbursed a State VR agency in fewer than 10 cases where benefit suspension was linked to a refusal situation.

6. State VR agencies are reimbursed by SSA for services when SSA recipients engage

in substantial gainful employment for nine months. In 1996, SSA reimbursed State

VR agencies for about 6,000 recipients. How many recipients actually left SSA disability rolls because of VR services?

To assess the effectiveness of successful State rehabilitations, SSA periodically

evaluates the number of months successfully rehabilitated individuals stay off the

disability rolls. Although we do not presently have longitudinal data on 1996 successful rehabilitations, prior analyses indicate that over a 5 year (60 month) period,

successfully rehabilitated SSDI beneficiaries will be out of benefit status for an average of 46 months (i.e., collect checks in only 14 months in 5 years following successful rehabilitation).

The months an individual is in benefit status include all 60 months for the few

individuals who never leave the rolls, any new reentitlements based on new applications within the following 5 year period, and any months during the extended period

of eligibility an individual received benefits because their earnings fell below the

substantial gainful activity level. This information confirms that, on average, SSA

is getting a good payoff from successful rehabilitations. As it is not currently available, we will provide the number requested under separate cover.

7. Most of the return-to-work proposals focus on the back end of the disability program, in other words, once individuals are allowed benefits. However, many people

think the front end of the disability program needs to be brought up to date. Do you

believe that the current law definition of disability is still appropriate for the program? Should it be changed?

Many people, both in government and the private sector have mixed opinions

about this issue. It is true that the current implementation of the definition of disability, which is defined in broad terms in the Social Security Act, was written into

regulation and established in State agencies across the country nearly 40 years ago.

Much has changed since then. However, fundamental changes to that process would

have far-reaching consequences for current beneficiaries and individuals who are insured for disability, for disability advocates, for the larger disability and health insurance systems in America, and for the federal government. We are willing to work

with the Congress to identify changes that all agree would be desirable and to test

those changes, to the extent possible, in controlled field experiments before attempting to implement a different definition nationwide.

As you know, we have a review of the entire disability decision process on-going

under the Disability Process Redesign Project. Part of that redesign effort includes

research into alternate ways to implement the functional evaluation of the severity

and consequences of physical or mental impairments. We plan to field-test any feasible alternate processes which are identified by the research. Any of these alternate

processes would have to be proven to be cost-effective in terms of decision accuracy

and administrative efficiency. It is not clear that the current system would turn out

to be less effective than any proposed alternative.

8. Why are so few disabled recipients (6%) referred to State VR agencies for services?

We too are concerned that relatively few beneficiaries are referred for VR services.

While the national rate of referral is below 10 percent, the rate does show a wide

variance from State-to-State. Some factors influencing this variance are the individual States’ use of local criteria for selecting referrals and the fact that some beneficiaries are already VR clients (due to a referral from another source) before the

SSA medical determination is completed.

To help address the overall rate of referrals and wide State-to-State variance, we

are working with both the Council of State Administrators of Vocational Rehabilitation and the Rehabilitation Services Administration. Through this joint effort, we

are seeking ways to implement a more uniform and broader selection of quality referrals.

9. In March 1994, SSA issued regulations allowing public and private providers to

provide services to SSA’s disabled recipients who are not served by the State VR

agencies. Currently, how many recipients are actually receiving services from alternate providers? Why has it taken so long to get this program up and running?

Developing a process within SSA for working with alternate providers of VR services has never before been done. The process required considerable original and
31

imaginative work to establish. Over 4,000 separate public and private VR providers

expressed an interest in the new process and received the agency’s solicitation for

a proposal. Over 500 actually submitted proposals to become alternate participants.

The first contract was awarded in the Spring of 1997. Since then, nearly 100 additional contracts have been negotiated and awarded. More are expected from those

for whom additional information has been requested.

Several of those awarded contracts are already accessing our listings of available

beneficiaries. The contractors are free to choose which beneficiaries are contacted

and to independently negotiate a plan of services with a beneficiary. We are very

early in the period where alternate participants have begun outreaching to available

beneficiaries. Therefore, the results are limited. We do know, however, that some

services are being provided and at least one individual has begun workibg.

10. One of the SSI program’s work incentive is the PASS program. We are hearing

from many consumers, including panelists who testified in Day 2 of this hearing, regarding their concerns over SSA’s administration of the PASS program. Since many

SSI recipients also receive SSDI benefits, please explain what SSA is doing to ensure

that the PASS program is being effectively administered.

PASS allows the Social Security Administration, in determining eligibility and

payment amount for SSI, to exclude income and resources an individual sets aside

in order to pursue an occupational goal. The purpose of this provision is to help disabled and blind individuals who want to work obtain items or education that will

help them to work. For example, funds set aside under a PASS can be used for tuition, training, transportation, supplies, and computers.

We feel strongly that PASS is an important work incentive for highly motivated

disabled SSI recipients. However, recent evaluations of the provision by us and by

the General Accounting Office (GAO) revealed that there are some aspects of the

PASS that are vulnerable to misuse. We want to make sure that PASS continues

to be available for moving individuals from dependency to independence. Our goal

in recent months has been to improve management of the provision while reducing

opportunities for misuse.

To improve adjudication accuracy, and to achieve consistency in decisionmaking,

we recently centralized the processing of all PASS applications. We are currently

evaluating options for achieving further improvements in the adjudication of this

sensitive and important workload.

SSA instituted a comprehensive review of policies for the PASS provision. Our review began this past spring in keeping with commitments we had made to study

the first year impact of changes in the way PASS requests are processed.

We cannot at this point specify the precise nature of any future proposals for

PASS changes resulting from our review.

Question received from Hon. Jim Bunning, and Subsequent Response from

f

Judith Heumann

Question: State VR agencies are reimbursed for services when an SSA recipient engages in substantial gainful activity for nine consecutive months. State VR agencies

were reimbursed for only about 6,000 SSA beneficiaries last year. Why are so few

SSA recipients served by State VR agencies?

Answer: In FY 1995, SSA reimbursed State vocational rehabilitation (VR) agencies a total of $65,480,627.30 for the rehabilitation of 6,026 SSDI and SSI beneficiaries. While this figure represents only a small percentage of individuals on the

disability rolls, it also reflects only a small number of beneficiaries who requested,

and were provided, VR services from the State VR program.

In FY 1995, 607,195 individuals requested services from State VR agencies. Of

these, 143,298, or about 28%, were SSDI or SSI beneficiaries. 130,343 were accepted

for VR services, 97,363 received services under an Individualized Written Rehabilitation Program (IWRP), and 53,877 exited the VR system, having met the programs

criteria for an employment outcome.

It is important to point out that the criteria under which SSA reimburses VR

agencies for their services differs considerably from the standards by which the VR

program determines a successful employment outcome. In order for VR agencies to

be reimbursed by SSA, it must be established that a beneficiary has engaged in substantial gainful activity (SGA) for nine months. The SGA earnings level is set at

$500 per month for disabled non-blind beneficiaries, and $1,000 per month for blind

beneficiaries.
32

Criteria established by the Rehabilitation Act of 1973, as amended, require that

in order for a State VR agency to claim an employment outcome, it must be determined that: VR services have contributed to the employment outcome; the employment outcome is consistent with the individual’s strengths, resources, priorities, concerns, abilities, capabilities, interests, and informed choice; the employment be in

the most integrated setting possible; the employment must have been at least 90

days in duration; and, the individual and VR counselor agree that the employment

is satisfactory and progressing well. While VR agencies strive to assist individuals

in obtaining the best paying jobs possible, as long as these criteria are met, it is

acceptable, and appropriate, for the individual to be ‘‘rehabilitated’’ in employment

that may be part-time employment, supported employment, or employment at earnings less then SGA. In FY 1995, 38,629, or 71.1% of all SSA beneficiaries closed

after achieving an employment outcome, were working in the competitive labor market. Preliminary data suggest that this percentage increased to about 84% in FY

1996.

Data, obtained from the Rehabilitation Services Administration’s (RSA) Case

Service Report System (RSA–911), indicate that when SSA beneficiaries choose to

apply for VR services, they are more likely than non-beneficiaries to be accepted by

the program. In FY 1995, 90.1% of beneficiaries who applied for VR were accepted,

compared with 76% of non-beneficiaries. Preliminary FY 1996 data are similar, but

with decreases in the percentage of non-beneficiary acceptances (90.4% of beneficiaries compared to 72% of non-beneficiaries).

SSA beneficiaries have ample opportunity to access the VR system. Current law

requires, that upon initial adjudication for benefits, they be referred to the VR program. There are strong indications that this may not be the most appropriate time

for such a referral, as most beneficiaries who participate in VR services have been

on the benefit rolls for several years (40–55 months). Further, the 1995 data show

that a large percentage, over 24%, have accessed VR through self-referral. Currently, SSA, OSERS(through RSA), and State VR agencies are working cooperatively to improve the referral system.

It is clear from the information presented above that SSA beneficiaries represent

a significant percentage of the VR caseload. Further, many beneficiaries do enter

employment in the competitive labor market. However, what is also clear is that

many beneficiaries who attempt work do not earn enough to be terminated from

benefits. Disincentives inherent in the present benefit structure, have been cited as

reasons why more beneficiaries do not attempt work. These include: loss of essential

medical coverage, fear that earnings alone will not be sufficient for self-support, and

difficulties associated with re-entry into the benefit system.

Finally, it appears that in FY 1996, State VR agencies will be reimbursed over

$90 million for their services to SSA beneficiaries. As of July 31, 1997, SSA reported

that over 6,700 cases have been processed for reimbursement. State VR agencies

consider these reimbursements to be a valuable source of program income and are

working cooperatively with SSA and RSA to improve the reimbursement system.

The vocational rehabilitation of individuals with significant disabilities is a priority of the Rehabilitation Act. SSA beneficiaries, almost without exception, are included in this group, and VR agencies are committed to working with them towards

achievement of meaningful employment outcomes.

ward, we will hear from Jane Ross, Director, accompanied by CynChairman BUNNING. Panel number two, if they will come forf

thia Bascetta, Assistant Director of Income Security Issues at the

Health, Education, and Human Services Division of the U.S. General Accounting Service; Dr. Bruce Growick, professor of rehabilitation services at Ohio State University; Dr. Monroe Berkowitz, professor of economics at Rutgers University, accompanied by Virginia

Reno, director of research at the National Academy of Social Insurance; John Kregel, research director at the Rehabilitation Research

Training Center at Virginia Commonwealth University; Richard

Baron, director of the Matrix Research Institute in Philadelphia;

and Dr. Leonard Matheson, director of the Work Performance Laboratory and section chief of the Occupational Competence and
33

Ergonomics Section at the Washington University School of Medicine Program in Occupational Therapy in St. Louis, Missouri.

Chairman BUNNING. Ms. Ross, when you are ready, you can

begin with your testimony

STATEMENT OF JANE L. ROSS, DIRECTOR, INCOME SECURITY

ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES

DIVISION, U.S. GENERAL ACCOUNTING OFFICE;

ACCOMPANIED BY CYNTHIA BASCETTA, ASSISTANT

DIRECTOR

Ms. ROSS. Mr. Chairman, thank you for inviting me to testify on

issues facing Social Security as it tries to increase the work effort

of disabled people.

As you know, we have recommended that SSA place much greater priority on improving its return to work efforts. With cash payments now exceeding $1 billion a week, SSA has a powerful incentive to take such actions as the ones they have just described.

Experts have told us that effective strategies to encourage disabled people to work must include three types of initiatives. Thus,

we believe that SSA should develop a strategy that includes intervening earlier in a person’s disability experience, providing vocational rehabilitation services to help applicants and beneficiaries

become ready for employment, and encouraging work by guaranteeing medical coverage or assuring increased income as a result of

working.

Today I would like to emphasize two points. First, although preparing people for work is important, beneficiaries are likely to return to work only if they perceive they will be better off financially.

Second, although no one knows which strategies might yield the

best results, the high opportunity costs of both inaction and choosing options that may not work well strongly indicate that testing

more than one approach is appropriate.

On the first point, while the administration has proposed the

Ticket to Independence Program, they haven’t yet made a proposal

to ensure people will be better off financially if they return to work.

SSA should test work incentive reforms that address the risks that

beneficiaries face when they give up benefits and medical coverage

for the uncertainties of employment.

The two charts that I have with me today over here show the financial risks that face DI beneficiaries when they work. The white

bars on each chart show how the current law works. You can see

that the individual’s net income is at $1,000 when he or she has

about $500 of earnings. Well, when the benefits are terminated, he

or she doesn’t get back to the same net income level until earnings

are almost $1,800. So when a beneficiary considers his options

about returning to work, he has to assess how long it is going to

take to get back to the same income position as when he was receiving benefits.

These two charts also show how a tax credit and a gradual benefit reduction proposal could cushion the drop in an individual’s income when benefits stop. The tax credit would provide additional

income through a refundable income tax credit and would be linked

to the amount a person earned. The gradual benefit reduction could

cut benefits by, say, 50 cents for every dollar of earnings.
34

While the choices that an individual faces are illustrated in

charts like this and could be individualized for any particular person, the total costs of proposals like these are uncertain, because

we don’t have sufficient information on how individuals will change

their work effort in response to program changes; For people that

are already on the program, will they respond to the earnings benefit decision by increasing their earnings or not? Also, allowing people to keep more of their earnings may cause people who are currently not on the program to apply for benefits.

We believe that SSA should test and evaluate at least a few work

incentive options. Also, while we agree in principle for paying for

vocational rehabilitation based on outcomes, as SSA has proposed,

we believe SSA should test and evaluate other reimbursement

mechanisms for vocational rehabilitation, such as a milestonebased reimbursement system.

Before I summarize, I want to point out that most of the proposals under discussion would affect beneficiaries who are already on

the rolls. But, we have also urged SSA to work with other agencies

on strategies to intervene before people with disabilities even apply

for benefits. By not offering vocational rehabilitation earlier, we

could be missing a chance to help people stay off the DI rolls. With

about 2 million people applying for benefits each year, this fundamental redirection could be even more fruitful than trying to

help beneficiaries reduce their reliance on benefits once it has

begun.

Just to summarize, we know that intervening earlier, vocational

rehabilitation, and cash and medical work incentives are all important parts of a strategy to ease the transition back to work. However, it is not clear how to package all these components so they

work in concert, and make work more financially attractive without

increasing caseloads or program costs. We have a lot to learn about

the work responses of people with disabilities to changes in the

programs. We owe it to the beneficiaries and taxpayers alike to

move forward expeditiously and judiciously in reforming the programs.

Thank you, Mr. Chairman.

[The prepared statement follows:]

Statement of Jane L. Ross, Director, Income Security Issues, Health,

Education, and Human Services Division, U.S. General Accounting Office

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me to testify on return-to-work issues facing the Disability

Insurance (DI) and Supplemental Security Income (SSI) programs and to discuss

various alternatives the Social Security Administration (SSA) could use in developing strategies to help more people with disabilities to work. Each week, SSA pays

over $1 billion in cash payments to DI and SSI beneficiaries. While providing a

measure of income security, these payments, for the most part, do little to enhance

work capacities and promote beneficiaries’ economic independence. Yet, as embodied

in the Americans With Disabilities Act (ADA), societal attitudes have shifted toward

goals of economic self-sufficiency and the right of people with disabilities to full participation in society. Moreover, medical advances and new technologies now provide

more opportunities than ever before for people with disabilities to work.

The DI and SSI programs, however, have not kept pace with the trend toward

returning people with disabilities to the work place: Fewer than 1 percent of DI

beneficiaries, and few SSI beneficiaries, leave the rolls to return to work each year.

Yet, even relatively small improvements in return-to-work outcomes offer the potential for significant savings in program outlays. For example, if an additional 1 percent of the 6.6 million working-age SSI and DI beneficiaries were to leave SSA’s dis-
35

1The estimated reductions are based on fiscal year 1995 data provided by SSA’s actuarial staff

and represent the discounted present value of the cash benefits that would have been paid over

a lifetime if the individual had not left the disability rolls by returning to work. These reductions, however, would be offset, at least in part, by rehabilitation and other costs that might

be necessary to return to a person with disabilities. 2 Included among the 4.2 million DI beneficiaries are about 694,000 beneficiaries who were

dually eligible for SSI disability benefits because of the low level of their income and resources. 3 References to the SSI program throughout the remainder of this testimony address blind or

disabled, not aged, recipients. 4States can opt to use the financial standards and definitions for disability they had in effect

in Jauary 1972 to determine Medicaid eligibility for their aged, blind, and disabled residents,

rather than making all SSI recipients automatically eligible for Medicaid. Often, the Medicaid

financial standards used by states are more restrictive than SSI’s.

ability rolls by returning to work, lifetime cash benefits would be reduced by an estimated $3 billion.1

Because the current structure of DI and SSI does not encourage return to work,

many proposals are being discussed to address this problem. Over the past few

years, we have issued a series of reports that have recommended that SSA place

much greater priority on helping DI and SSI beneficiaries maximize their work potential—whether part- or full-time—and we continue to urge SSA to act expeditiously in developing an integrated and comprehensive strategy to do so. Our work

has demonstrated that SSA’s success in redesigning the disability programs is likely

to require a multifaceted approach, including earlier intervention, providing returnto-work supports and assistance, and structuring benefits to encourage work.

At the same time, we recognize the dearth of empirical analysis with which to

predict outcomes of possible interventions. In particular, because measures of work

responses to changes in work incentives and other return-to-work measures are unknown, any estimates of the net effect on caseloads and taxpayer costs are likely

to involve a high degree of uncertainty. Moreover, our analysis of some of the proposed changes to the work incentives illustrates the difficult trade-offs that will be

involved in any attempt to change the work incentives. With this in mind, today,

I would like to discuss the challenges and trade-offs faced in redesigning the disability programs. We strongly encourage testing and evaluating alternatives to determine what strategies can best tap the work potential of beneficiaries without jeopardizing the availability of benefits for those who cannot work. My testimony is

based on our published reports and prior testimonies and our recent analysis of

work incentives conducted for Representative Kennelly. (A list of related GAO products appears at the end of this statement.)

BACKGROUND

DI and SSI—the two largest federal programs providing cash and medical assistance to people with disabilities—have grown rapidly between 1985 and 1995, with

the size of the working-age beneficiary population increasing from 4.0 to 6.6 million.

Administered by SSA and state disability determination service (DDS) offices, DI

and SSI paid cash benefits approaching $60 billion in 1995. To be considered disabled by either program, an adult must be unable to engage in any substantial gainful activity because of any medically determinable physical or mental impairment

that can be expected to result in death or that has lasted or can be expected to last

at least 1 year. Moreover, the impairment must be of such severity that a person

not only is unable to do his or her previous work but, considering his or her age,

education, and work experience, is unable to do any other kind of substantial work

that exists in the national economy.

Established in 1956, DI is an insurance program funded by Social Security payroll

taxes. The program is for workers who, having worked long enough and recently

enough to become insured under DI, have lost their ability to work—and, hence,

their income—because of disability. Medicare coverage is provided to DI beneficiaries after they have received cash benefits for 24 months. About 4.2 million

working-age people (aged 18 to 64) received about $36.6 billion in DI cash benefits

in 1995.2

In contrast, SSI is a means-tested income assistance program for disabled, blind,

or aged individuals regardless of their prior participation in the labor force.3 Established in 1972 for individuals with low income and limited resources, SSI is financed

from general revenues. In most states, SSI entitlement ensures an individual’s eligibility for Medicaid benefits.4 In 1995, about 2.4 million working-age people with dis-
36

5The 2.4 million SSI beneficiaries do not include individuals who were dually eligible for SSI

and DI benefits. The $20.6 billion represents payments to all SSI blind and disabled beneficiaries regardless of age. 6State VR agencies also provide rehabilitation services to people not involved with the DI and

SSI programs. 7SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/HEHS–96–

62, Apr. 25, 1996); SSA Disablity: Return-to-Work Strategies From Other Systems May Improve

Federal Programs (GAO/HEHS–96–133, July 11, 1996); and Social Security: Disability Programs

Lag in Promoting Return to Work (GAO/HEHS–97–46, Mar. 17, 1997).

abilities received SSI benefits; federal SSI cash benefits paid to these and other

beneficiaries amounted to $20.6 billion.5

The Social Security Act states that people applying for disability benefits should

be promptly referred to state vocational rehabilitation (VR) agencies for services in

order to maximize the number of such individuals who can return to productive activity.6 Furthermore, to reduce the risk a beneficiary faces in trading guaranteed

monthly income and subsidized health coverage for the uncertainties of employment,

the Congress has established various work incentives intended to safeguard cash

and health benefits while a beneficiary tries to return to work.

CURRENT PROGRAM STRUCTURE DOES NOT ENCOURAGE WORK

In a series of reports, we have discussed how the DI and SSI programs’ design

and operational weaknesses do not encourage beneficiaries to maximize their work

potential.7 The lengthy disability determination process, which presumes that certain medical impairments preclude employment, requires applicants to emphasize

their work incapacities. To address the erosion in motivation to work that could result from applying for benefits, we have recommended that SSA develop strategies

to intervene earlier in the application process. For example, before awarding benefits, SSA could help applicants assess their work capacity and, in turn, their ability

to maintain economic independence or delay their application for benefits. This

would likely involve SSA’s collaboration with other federal agencies, such as the Departments of Labor and Education. Significant savings could be achieved by reducing the need for people with disabilities to rely on DI and SSI. Although full-time

work may not be achievable, even part-time work could reduce their reliance on benefits.

Regarding those people currently on the rolls, we have also reported that SSA has

done little to promote return-to-work measures, such as VR and economic incentives

to work. VR services include, for example, guidance, counseling, and job training

and placement. VR can help beneficiaries return to work by improving their skills

and making them more marketable and competitive. A beneficiary who engages in

work encounters additional challenges, however. By returning to work, a beneficiary

trades guaranteed monthly income and premium-free medical coverage for the uncertainties of employment. Work incentives, such as access to medical coverage or

retention of a portion of their cash benefits while working, are intended to encourage beneficiaries to return to work—and, possibly, leave the rolls—by making work

more financially attractive.

In the last couple of years, numerous changes to the work incentives and to the

delivery of and payment for VR services have been proposed in legislation and by

various interest groups. Most recently, SSA has proposed a VR system emphasizing

provider choice. Beneficiaries would get a voucher, usually referred to as a ‘‘ticket,’’

which they could use to obtain services from public or private VR providers and

which would be reimbursed on the basis of outcomes. In our March 1997 report, we

advocated the critical importance of testing and evaluating new measures to return

beneficiaries to work. We also cautioned against focusing on one option to the exclusion of alternative measures. We noted, for example, that if SSA tests only one type

of VR service delivery system, the agency will forgo the opportunity to compare the

results of the proposed outcome-based payment system with those of alternative

plans, such as combining outcome-based payments with reimbursements to providers on the basis of milestones reached before the beneficiary leaves the rolls.

In addition, others have proposed changes to financial incentives, including making DI similar to SSI by reducing benefits $1 for every $2 in earnings and revising

the deduction of impairment-related expenses. New tax incentives have also been

proposed, including tax credits to individuals—making work more financially attractive—and tax credits to employers—encouraging them to hire people with disabilities. Proposed changes to medical benefits include extending premium-free Medicare coverage, scaling Medicare buy-in premiums to earnings, expanding Medicare

and Medicaid eligibility, and creating a Medicaid buy-in.
37

8The Employment Support Institute at Virginia Commonwealth University developed

WorkWORLD software, which allows one to compare what happens to an individual’s net income (defined as an individual’s gross income plus noncash subsidies minus taxes and medical

and work expenses) as earnings levels change under current law and when work incentives are

changed.

Our work has called for SSA to develop a comprehensive, integrated return-towork strategy that includes (1) intervening earlier, (2) providing return-to-work supports and assistance, and (3) structuring benefits to encourage work. SSA has

agreed that compelling reasons exist to try new return-to-work approaches and, as

mentioned, has proposed the creation of a VR ticket to expand beneficiaries’ access

to VR providers. We believe a successful strategy would incorporate all three components, working in concert, and that beneficiaries are likely to return to work only

if it is financially advantageous for them to do so. The remainder of this testimony

focuses on the work incentives, the proposed changes to them, and the difficulties

and trade-offs involved in their reform.

DI AND SSI WORK INCENTIVES PROVIDE DIFFERENT BENEFIT PROTECTIONS

The work incentive provisions of the two programs differ significantly, providing

very different levels of benefit protection for DI and SSI beneficiaries. One significant difference is that a DI beneficiary’s cash benefit stops completely after a period

of time, if earnings exceed a specified level, while an SSI recipient’s cash benefit

is gradually reduced to ease the transition back to work. The gradual reduction in

SSI cash benefits yields savings to the government, even if recipients work part

time. In contrast, DI beneficiaries who work yield no program savings unless they

leave the rolls, because their benefits are not offset. Another difference is that a DI

beneficiary can purchase Medicare coverage after premium-free coverage ends (although lower-wage earners may find it too expensive to do so), but an SSI recipient

loses Medicaid and is unable to purchase further coverage once he or she exceeds

a certain income level. Table 1 highlights each program’s work incentive provisions.

WORK INCENTIVES ARE INSUFFICIENT AND DIFFICULT TO UNDERSTAND

Despite providing some financial protection for those who want to work, the DI

work incentives do not appear to be sufficient to overcome the prospect of a drop

in income for those facing low-wage work. Moreover, the work incentives do not

allay DI or SSI beneficiaries’ fear of losing medical or other benefits, which could

accompany return to work. In addition, the current package of work incentive provisions is complex and difficult to understand, which further discourages work effort.

This difficulty in understanding the work incentives is heightened for the 694,000

beneficiaries (11 percent of the beneficiary population) who are dually eligible for

DI and SSI. For these concurrent beneficiaries, SSI work incentive provisions apply

to the SSI portion of their cash benefit and DI provisions apply to the DI portion

of their cash benefit. This adds administrative complexities to the system because

earnings must be reported to both programs, each of which has its own reporting

requirements and processes. Because SSA does not promote the work incentives extensively, few beneficiaries are even aware that these provisions exist.

WORK INCENTIVES ILLUSTRATE DIFFICULT TRADE-OFFS IN DISABILITY REFORM

Some work incentive changes may help some beneficiaries, or some groups of

beneficiaries, more than others. Data from Virginia Commonwealth University’s

Employment Support Institute illustrate this point.8 For example, figure 1 shows

that under current law, a DI beneficiary’s net income may drop at two points, even

as gross earnings increase. The first ‘‘income cliff’’ occurs when a person loses all

of his or her cash benefits because countable earnings are above $500 a month and

the trial work and grace periods have ended. A second income cliff may occur if

Medicare is purchased when premium-free Medicare benefits are exhausted. Figure

1 also illustrates what happens to net income when a tax credit is combined with

a Medicare buy-in that scales premiums to earnings. In this particular example, although the tax credit may cushion the impact of the drop in net income caused by

loss of benefits, it does not eliminate the entire drop. However, as figure 2 shows,

this income cliff is eliminated when benefits are reduced $1 for every $2 of earnings

above SGA.
38

Table 1: Highlights of DI and SSI Work Incentive Provisions

Program Provision

Income safeguards

DI ........................... Trial work period: Allows beneficiaries to work for 9 months (not necessarily consecutively) within a 60-month rolling period during

which they may earn any amount without affecting benefits. After

the trial work period, cash benefits continue for 3 months and then

stop if countable earnings are greater than $500 a month.

Extended period of eligibility: Allows for a consecutive 36-month period after the trial work period in which cash benefits are reinstated

for any month countable earnings are $500 or less. This period begins the month following the end of the trial work period.

SSI ......................... Earned income exclusion: Allows recipients to exclude more than half

of earned income when determining the SSI payment amount.

Section 1619 (a): Allows recipients to continue to receive SSI cash

payments even when earnings exceed $500 a month. However, as

earnings increase the payment decreases.

Plan for Achieving Self-Support (PASS): Allows recipients to exclude

from their SSI eligibility and benefit calculation any income or resources used to achieve a work goal.

DI and SSI ............ Impairment-related work expenses: Allows the costs of certain impairment-related items and services needed to work to be deducted from

gross earnings in figuring substantial gainful activity (SGA) and the

cash payment amount. For example, attendant care services received in the work setting are deductible, while nonwork-related attendant care services performed at home are not.

Subsidies: Allows the value of the support a person receives on the job

to be deducted from earnings to determine SGA.

Medical coverage

safeguards

DI ........................... Continued Medicare coverage: Allows for continued Medicare coverage

for at least 39 months following a trial work period as long as medical disability continues.

Medicare buy-in: Allows beneficiaries to purchase Medicare coverage

after the 39-month premium-free coverage ends. Beneficiaries pay

the same monthly cost as uninsured retired beneficiaries pay.

SSI ......................... Section 1619 (b): Allows recipients to continue receiving Medicaid coverage when earnings become too high to allow a cash benefit. Coverage continues until earnings reach a threshold amount, which

varies in every state.

Eligibility safeguards

DI ........................... Reentitlement to cash benefits and Medicare: After a period of disability ends, allows beneficiaries who become disabled again within 5

years (7 years for widow(ers) and disabled adult children) to be reentitled to cash and medical benefits without another 5-month waiting period.

SSI ......................... Property essential to self-support: Allows recipients to exclude from

consideration in determining SSI eligibility the value of property

that is used in a trade or business or for work. Examples include

the value of tools or equipment.

DI and SSI ............ Continued benefit while in an approved VR program: Allows a person

actively participating in a VR program to remain eligible for cash

and medical benefits even if he or she medically improves and is no

longer considered disabled by SSA.
39
40

9See Hillary Williamson Hoynes and Robert Moffitt, ‘‘The Effectiveness of Financial Work Incentives in Social Security Disability Insurance and Supplemental Security Income: Lessons

from Other Transfer Programs,’’ in Disability, Work, and Cash Benefits, edited by Jerry L.

Mashaw, Virginia Reno, Richard V. Burkhauser, and Monroe Berkowitz (Kalamazoo, Michigan:

W.E. Upjohn Institute for Employment Research, 1996) and Hillary Williamson Hoynes and

Robert Moffitt, ‘‘Tax Rates and Work Incentives in the Social Security Disability Insurance Program: Current Law and Alternative Reforms,’’ May 1997, unpublished.

NET EFFECT OF PROPOSALS ON WORK EFFORT AND PROGRAM COSTS IS UNKNOWN

Because there are complex interactions between earnings and benefits, changing

the work incentives may or may not increase the work effort of current beneficiaries,

depending on their behavior in response to the type of change and their capacity

for work and earnings. But, even if the changes in the work incentives increase the

work effort of the current beneficiaries, a net increase in work effort may not be

achieved. This point is emphasized by economists who have noted that improving

the work incentives may make the program attractive to those not currently in it.9

Allowing people to keep more of their earnings would make the program more generous and could cause people who are currently not in the program to enter it. Such

an entry effect could reduce overall work effort because those individuals not in the

program could reduce their work effort in order to become eligible for benefits.

Moreover, improving the work incentives could also keep some in the program who

might otherwise have left. Allowing people to keep more of their earnings would also

mean that they would not leave the program, as they once did, for a given level of

earnings. Such a decrease in this exit rate could reduce overall work effort because

people on the disability rolls tend to work less than people off the rolls. The extent

to which increased entry occurs and decreased exit occurs will affect how expensive

these changes could be in terms of program costs.

However, determining the effectiveness of any of these proposed policies in increasing work effort and reducing caseloads requires that major gaps in research

be filled. The economists considered entry and exit effects in their analysis by using

economic theory and numerical simulations of how net income (earnings plus benefits plus earnings subsidies) is affected when individuals work for different numbers

of hours at different wage rates. But the economists were not able to simulate

changes in work effort in response to program changes because that would require

information that is not currently available from the literature. Such information

would measure how beneficiaries’ work efforts change in response to changes in income, including the value of noncash benefits, resulting from program changes.

The costs of the proposed reforms are difficult to estimate with certainty because

of the lack of information on entry and exit effects. SSA has tried to account for

potential entry and exit effects when estimating the cost of various proposed reforms. But the agency has noted that such estimates are subject to significant uncertainty because of the lack of information on changes in work effort.

Mr. Chairman, this concludes my prepared statement. At this time, I will be

happy to answer any questions you or the other Subcommittee Members may have.

RELATED GAO PRODUCTS

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/HEHS–97–46,

Mar. 17, 1997).

People With Disabilities: Federal Programs Could Work Together More Efficiently to Promote

Employment (GAO/HEHS–96–126, Sept. 3, 1996).

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

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/T–HEHS–96–

147, June 5, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/HEHS–96–

62, Apr. 24, 1996).

PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly Managed (GAO/HEHS–

96–51, Feb. 28, 1996).

Social Security Disability: Management Action and Program Redesign Needed to Address

Long-Standing Problems (GAO/T–HEHS–95–233, Aug. 3, 1995).

Supplemental Security Income: Growth and Changes in Recipient Population Call for Reexamining Program (GAO/HEHS–95–137, July 7, 1995).

Disability Insurance: Broader Management Focus Needed to Better Control Caseload (GAO/T–

HEHS–95–164, May 23, 1995).

Social Security: Federal Disability Programs Face Major Issues (GAO/T–HEHS–95–97, Mar.

2, 1995).

Social Security: Disability Rolls Keep Growing, While Explanations Remain Elusive (GAO/

HEHS–94–34, Feb. 8, 1994).

Vocational Rehabilitation: Evidence for Federal Program’s Effectiveness Is Mixed (GAO/

PEMD–93–19, Aug. 27, 1993).
f

41

Chairman BUNNING. Thank you very much.

Dr. Growick.

STATEMENT OF BRUCE GROWICK, PH.D., ASSOCIATE PROFESSOR, REHABILITATION SERVICES PROGRAM, COLLEGE OF

EDUCATION, OHIO STATE UNIVERSITY

Mr. GROWICK. Thank you. It is a pleasure to be here to present

before your Subcommittee.

My name is Bruce Growick, associate professor in the College of

Education at Ohio State University, where I teach classes, conduct

research and advise students in the discipline of rehabilitation

counseling. I am also a past president and an active member of the

National Association of Rehabilitation Professionals in the Private

Sector. On a part-time basis, I am also a vocational expert for the

Social Security Administration, and I partake in a daily decisionmaking process of deciding who is disabled and who is not.

Chairman BUNNING. Are you a Buckeye fan though?

Mr. GROWICK. Of course. Ranked number 2 last year, of course.

The training program at Ohio State has graduated over 120 students at both the doctoral and master’s level since I have been

there, and Ohio State is only 1 of 70 to 80 rehabilitation training

programs nationally. An interesting trend has emerged over the

last few years. More and more of our graduates are obtaining employment in the private sector of rehabilitation, rather than the

public sector, rather than the State and Federal rehabilitation system. Many graduates are employed by private, nonprofit and forprofit agencies and companies, helping individuals with disabilities

either enter or return to employment. Most of these entities in the

private sector counsel individuals who are covered by personal injury, workers’ compensation or Social Security insurance.

In the area of private sector rehabilitation, counselors who can

help people obtain work are valuable because they remove an outstanding portion of liabilities that are covered by the insurance policy. The insurance industry has discovered it is cheaper and better

to help beneficiaries return to work than it is to pay off a claim.

This is especially true in workers’ compensation where employers

are clearly liable for wages lost by individuals who are injured on

the job.

Many of our graduates prefer this kind of work in the private

sector because they are unencumbered by unnecessary paperwork.

They often feel they can help people quicker and more easily, and

their beginning salary is higher.

In contrast to the public sector of rehabilitation, the world of private sector rehabilitation is relatively new, but has been growing

rapidly over the last several years. As with most services starting

in the public sector, like health care and education, rehabilitation

has seen a transformation from the monopolistic domination of the

public sector to the healthy addition of the private sector and competition. Nothing improves on the delivery of a service or development of a product like competition, and the United States is a com-
42

petitive society, and policies that spur competition are clearly

healthy and good.

During a 2-year leave of absence from Ohio State, I also had the

opportunity and honor of being director of the rehabilitation division of the Bureau of Workers’ Compensation. That bureau is quite

similar to the State/Federal rehabilitation system.

Ohio, under Governor Voinovich, has undergone a transformation

over the last couple years in moving rehabilitation services from

the public sector to the private sector, and an analogy may be appropriate here that the State/Federal system of rehabilitation services might be more efficient and effective if it were not the sole provider of rehabilitation services to the beneficiaries of Social Security.

A critical component of any new legislation should be provisions

for informed choice throughout the rehabilitation process. In addition to consumers having the right to select an employment goal

and their choice and services; they should no longer be limited to

just a State/Federal rehabilitation system. Individual choice, by

competition, simply increases involvement in the quality of services

provided. The Social Security Subcommittee should codify the need

for and value of allowing private sector rehabilitation professionals

to compete in the area of rehabilitating Americans with disabilities,

based on cost, quality, and outcome.

There have been many successful cooperative partnerships between State governments, Federal Governments and the private

sector in the areas of welfare, workers’ compensation and unemployment. The role of government should be to assist and encourage persons with disabilities toward employment, but by the same

token, the system should include the private sector as an expanded

and successfully proven option. A good mechanism for referral of

Social Security beneficiaries to the private sector needs to be developed as soon as possible.

In conclusion, I would like to say more and more of my students

have been taking advantages of the benefits of employment and

private sector rehabilitation. Now it is time to give Social Security

beneficiaries the same choice. The private sector has a proven history of providing cost-effective and successful return to work outcomes for the insurance industry, and Social Security should be the

same. In fact, return on investment in private sector rehabilitation

is so good that our industry continues to grow, and in private sector rehabilitation, we like to say we operate under earned dollars

rather than appropriated dollars. If we are to reduce the disability

rolls, we must provide true consumers with their choice, and that

choice needs to include private sector rehabilitation.

Thank you, your Honor.

[The prepared statement follows:]

Statement of Bruce Growick, Ph.D., Associate Professor, Rehabilitation

Services Program, College of Education, Ohio State University

Chairman Bunning and members of the Subcommittee, thank you very much for

this opportunity to share with you both my professional experiences in the field of

vocational rehabilitation, and my personal suggestions and recommendations for improving on the delivery of rehabilitation services in America.

My name is Bruce Growick, and I am an Associate Professor in the College of

Education at The Ohio State University (OSU) where I teach classes, conduct research, and advise students in the Rehabilitation Services program. I am also a
43

past-president and active member of the National Association of Rehabilitation Professionals in the Private Sector (NARPPS). However, I am here today in my capacity

as an Associate Professor of rehabilitation.

The training program at OSU has graduated over 120 students at both the master’s and doctoral level over the last fifteen years. Many, if not most, of these graduates have obtained employment in our field, and are contributing to the rehabilitation of individuals with disabilities. In addition, we at OSU have also conducted

federally-funded research on different aspects of the rehabilitation system including

predictors of rehabilitation success, counselor satisfaction and performance, and the

Americans with Disabilities Act.

An interesting trend has emerged over the last few years. More and more of our

graduates are obtaining employment in the private-sector of rehabilitation rather

than the public-sector. Many of our graduates are now employed by private, nonprofit and for-profit, agencies and companies helping individuals with disabilities either enter or return to employment. Most of these entities in the private-sector

counsel individuals who are covered by personal injury, workers’ compensation, and/

or Social Security insurance. In the area of private-sector rehabilitation, counselors

who can help individuals obtain work are valuable because they remove an outstanding portion of the liability that is covered by the insurance policy. The insurance industry has discovered that it is cheaper and better to help their beneficiaries

return to work than it is to pay off a claim. This is especially true in workers’ compensation cases where employers are clearly liable for wages lost by individuals who

are injured on the job.

Many of our graduates prefer this kind of work because, unlike the public state/

federal rehabilitation system, they are unencumbered by unnecessary paperwork,

they often feel they can help people quicker and more easily, and their salary is

higher. In contrast to the public-sector, the world of private-sector rehabilitation is

relatively new, but has been growing tremendously over the last ten years. As with

most services which start in the public-sector like health care and education, the

field of rehabilitation has seen a transformation from the monopolistic domination

of the public-sector to the healthy addition of the private-sector and competition.

Nothing improves on the delivery of a service or the development of a product like

competition. The United States is a competitive society and policies that spur competition are healthy and good.

During a two-year leave of absence from The Ohio State University (1989–1990),

I also had the honor of being the Director of Rehabilitation for the Ohio Bureau of

Workers’ Compensation. As Director, I had responsibility for twelve field offices located throughout the State of Ohio, two rehabilitation Centers (Columbus and

Cleveland), and over 400 employees with an annual budget of $48 million dollars.

During 1990, the Rehabilitation Division of the Ohio Bureau of Workers’ Compensation returned to work over two thousand injured workers. Ohio is somewhat unique

in that it offers industrial rehabilitation services directly to injured workers by a

separate state agency. As you can see, this agency is quite similar to the public rehabilitation system.

Over the last five years in Ohio, more and more of the delivery of industrial rehabilitation services have been provided by the private-sector. Our state agency is no

longer both the regulator and the sole provider of rehabilitation services. An analogy

may be appropriate here that the state/federal system of rehabilitation services

might be more efficient and effective if it were not the sole provider of services to

beneficiaries of Social Security. A critical component of any new legislation should

be provisions for informed choice throughout the rehabilitation process. In addition

to consumers having the right to select an employment goal, and a choice in services

needed to reach their goal, consumers should be able to choose from whom they

would like to receive services, no longer being limited to just state Vocational Rehabilitation agencies. Individual choice simply increases involvement and the quality

of services provided. The Social Security Subcommittee should codify the need for

and value of allowing the private-sector to compete in the area of rehabilitating

Americans with disabilities based on cost, quality, and outcome.

Changes are necessary in the way in which beneficiaries of Social Security can

receive rehabilitation services and return to work. The current climate represents

a historic opportunity to instill needed change into a system that has, to date, been

inefficient and insufficient in its provision of vocational rehabilitation to persons

with disabilities. A recent GAO study documented the unacceptable return to work

rate of the state/federal system. In contrast, the private-sector has a proven history

of providing cost-effective and successful return to work outcomes within the insurance industry. In fact, the private sector continues to exist and prosper specifically

because of its ability to return individuals with disabling conditions to gainful employment for a sustained period of time and resolve outstanding liabilities.
44

There have also been many successful cooperative partnerships between state governments and the private sector in the areas of welfare, workers’ compensation, unemployment, etc. The role of government should be to assist and encourage persons

with disabilities towards employment, but by the same token, the system should include the private sector as an expanded and successfully proven option. A good

mechanism for the referral of SSA beneficiaries to the private sector needs to be developed as soon as possible.

In conclusion, more of my students have been taking advantage of the benefits

of the private-sector. Now it is time to give SSA beneficiaries that same choice. The

private sector has a long and proven history of providing cost effective and successful return-to-work outcomes within the insurance industry. In fact, return on investment in private-sector rehabilitation is so good that our industry continues to grow.

In the private-sector, rehabilitation providers operate under earned dollars, not appropriated dollars. If we are to reduce the disability rolls than we must provide true

consumer choice for SSA beneficiaries, and that choice needs to include privatesector rehabilitation services.

I respectfully offer the following five recommendations as you consider new legislation in this area:

• Reduce the disincentives for return-to-work for SSA beneficiaries by providing

a means to continue medical coverage upon return to work.

• Include choice of the private-sector for return-to-work services with a payment

model for providers that is viable and realistic.

• Avoid increasing the work load of SSA; this new return-to-work system should

be as streamlined and efficient as possible.

• Develop an incentive for employers to hire SSA beneficiaries, such as a FICA

Tax Credit.

• And that you and your staff feel free to call on me as a valuable tool in your

efforts to improve the state/federal vocational rehabilitation system.

Again, Mr. Chairman, thank you for the opportunity to present today before the

Subcommittee, and I am happy to answer any questions that the Subcommittee

might have.

Chairman B

Dr. Berkowitz.

UNNING. Thank you very much.

f

STATEMENT OF MONROE BERKOWITZ, PROFESSOR OF

ECONOMICS EMERITUS, RUTGERS UNIVERSITY, NEW

BRUNSWICK, NEW JERSEY; ACCOMPANIED BY VIRGINIA P.

RENO, DIRECTOR OF RESEARCH, NATIONAL ACADEMY OF

SOCIAL INSURANCE

Mr. BERKOWITZ. With your permission, may I ask for Ms. Reno

from the National Academy of Social Insurance to say a word of introduction?

Chairman BUNNING. Without objection. Go right ahead, Ms.

Reno.

Ms. RENO. Thank you, Mr. Chairman. We commend you and

Mrs. Kennelly on the leadership you have given in this very important area of return to work and barriers to work. Our academy

completed a study recently that we began over 3 years ago to look

at the Social Security Program and barriers to work. Our expert

panel came out with both findings and recommendations. Professor

Berkowitz was a member of the panel, and he will speak about our

most innovative recommendation.

In brief, when the panel looked at the Social Security Program

in comparison with private disability insurance and with foreign

disability programs, it had several findings. First, the test of disability in these programs is among the strictest found anywhere.

Second, by these comparisons, the benefits are modest. The benefits
45

1The Disability Policy Panel’s work was funded from private sources—The Pew Charitable

Trusts, the Robert Wood Foundation, and by corporate members of the Health Insurance Association of America that offer long term disability insurance. It also received an in-kind contribution from the Social Security Administration in the loan of an employee under an Intergovernmental Personnel Act (IPA) assignment.

alone are not a strong deterrent to work, in the panel’s view, but

lack of health care coverage can be.

The panel had five recommendations: First, a better Medicare

buy-in for those who return to work, and similar provisions in Medicaid; second, a tax credit to make work pay; third, better implementation of existing work incentives to get the best we can out

of current law; fourth, a personal assistance tax credit for people

with extraordinary work expenses; and finally, a return to work

ticket.

Professor Berkowitz designed the Ticket Proposal, and he is an

expert on the thinking behind it. It rests on a few very simple ideas

of consumer choice, innovation through voluntary market-based arrangements, and, finally, paying for the result you want, which, out

of Social Security funds, means the person back at work and off the

Social Security rolls.

[The prepared statement follows:]

Statement of Virginia P. Reno, Director of Research, National Academy of

Social Insurance

Mr. Chairman, we commend you and Representative Kennelly for your leadership

on the important issue of Social Security and return to work. We appreciate the opportunity to report to you on key findings and recommendations of the Academy’s

Disability Policy Panel. With me today is Monroe Berkowitz, Professor of Economics,

Emeritus of Rutgers University who served on the Panel.

I will briefly summarize the Panel’s findings and recommendations. Professor

Berkowitz will spend most of our time discussing the return-to-work ticket proposal.

Summaries of the Panel’s report, Balancing Security and Opportunity: The Challenge of Disability Income Policy, are available here today.

The Academy is a nonprofit, nonpartisan organization made up of many of the

Nation’s leading scholars on social insurance. Its purpose is to promote research and

to be a forum for exchange of new ideas in social insurance.

The Academy convened a panel of 18 of the Nation’s leading experts on varied

aspects of disability policy to conduct its analysis. The list of panel members is on

page 2.

The findings and recommendations we are presenting are those of the Panel. They

do not represent an official position of the National Academy of Social Insurance,

which does not take positions on legislation.1
46

2 In reading this conclusion,t he Panel recognized that any income support can, to some degree, be viewed as a work disincentive. This is because the purpose of income support is to

provideincome to substitute for earnings when that is warranted.

THE DISABILITY POLICY PANEL, NATIONAL ACADEMY OF SOCIAL INSURANCE

Jerry L. Mashaw, Chair,

Sterling Professor of

Law, Institute of Social

and Policy Studies, Yale

University Law School,

New Haven, CT

Monroe Berkowitz,

Professor of Economics,

Emeritus, Rutgers

University, New

Brunswick, NJ

Richard V. Burkhauser,

Director, Center for

Policy Research,

Maxwell School,

Syracuse University,

Syracuse, NY

Gerben DeJong, Director,

National Rehabilitation

Hospital-Research

Center, Washington,

D.C.

James N. Ellenberger,

Assistant Director,

Department of

Occupational Safety and

Health, AFL–CIO,

Washington, D.C.

Lex Frieden, Senior Vice

President, The Institute

for Rehabilitation and

Research, Houston, TX

Howard H. Goldman,

M.D., Professor of

Psychiatry, University

of Maryland School of

Medicine, Baltimore,

MD

Arthur E. Hess,

Consultant, Former

Deputy Commissioner of

Social Security,

Charlottesville, VA

Thomas C. Joe, Director,

Center for the Study of

Social Policy,

Washington, D.C.

Mitchell P. LaPlante,

Associate Adjunct

Professor, Institute for

Health and Aging,

University of California,

San Francisco

Douglas A. Martin,

Special Assistant to the

Chancellor, University

of California, Los

Angeles

David Mechanic, Director,

Institute for Health,

Health Care Policy and

Aging Research, Rutgers

University, New

Brunswick, NJ

Patricia M. Owens,

President, Integrated

Disability Management

UNUM America,

Brooklyn, NY

James M. Perrin, M.D.,

Associate Professor of

Pediatrics, Harvard

Medical School,

Massachusetts General

Hospital, Boston, MA

Donald L. Shumway, Codirector, RWJ Project on

Developmental

Disabilities, Institute on

Disabilities, University

of New Hampshire,

Concord, NH

Susan S. Suter, President,

World Institute on

Disability, Oakland, CA

Eileen P. Sweeney,

Director of Government

Affairs, Children’s

Defense Fund,

Washington, D.C.

Jerry Thomas, President,

National Council of

Disability

Determination

Directors, Decatur, GA

The Panel was asked to answer to three basic questions.

(1) Do disability cash benefits provide a strong deterrent to work?

(2) Can an emphasis on rehabilitation be built into the Social Security disability

insurance (DI) program without greatly expanding costs or weakening the right to

benefits?

(3) Are there ways to restructure disability income policy to better promote work?

The short answers are no, yes, and yes. The reasons for these answers and the

Panel’s recommendations follow.

BENEFITS AND WORK

First, the Panel concluded that current benefits are not a strong deterrent to

work.2 That conclusion is based on the Panel’s review of the strict and frugal design

of the DI and Supplemental Security Income (SSI) programs, the attributes of beneficiaries, and a comparison of U.S. disability spending with that in other Western

countries.

The strict and frugal design of DI and SSI is evident in three ways: First, the

test of disability is among the strictest used in any disability program in the United

States, public or private. And it is stricter than in most European countries.

Second, there is a 5-month waiting period after the onset of disability before DI

benefits are paid and another 24-month waiting period before Medicare coverage begins. Virtually all private systems, and most foreign systems, assure short-term benefits before long-term benefits are paid. And virtually all are accompanied by secure

health care coverage before and after disability.

Third, the benefits are modest. Replacement rates in DI are lower than those provided by U.S. private disability insurance or in the public systems in other countries. Those systems typically pay between 50 and 70 percent replacement rates. DI

in contrast, pays replacement rates ranging from 43 percent for a person earning
47

3 Replacement rates can be up to 50 percent higher for the 1 in 5 beneficiaries who receive

an allowance for dependents. 4Tabulations of the March 1994 Current Population Survey provided by the Employee Benefit

Research Institute, Washington, D.C.

$25,000 to about 26 percent for one earning $60,000.3 At lower earnings levels, say $15,000, benefits replace half the worker’s prior earnings, but are nonetheless below

the poverty threshold.

The modest replacement rates from Social Security reflect an expectation that

benefits will be supplemented by pensions or savings. When compared with retirees,

disabled workers had lower incomes and less often had pensions, insurance or savings to supplement their Social Security. Their vastly smaller asset holdings is particularly striking. Their modest savings no doubt reflect the fact that disability occurs unexpectedly, before they have completed saving for retirement; and the unexpected costs of disability eroded their savings.

SSI benefits are more modest. They are paid subject to the same strict test of dis- ability and a strict test of means. In 1997, the maximum federal SSI benefit is $484

a month. While some states supplement the federal benefits, the federal guarantee,

alone, amounts to about 70 percent of the poverty threshold. These benefits, too, are

an unappealing alternative to work for those who can earn a living wage.

Foreign Comparisons.

When the Panel compared U.S. disability spending with that in other countries,

it found that U.S. spending is relatively low. U.S. spending for DI and SSI combined

amounted to 0.7 percent of our gross domestic product (GDP) in 1991, less than half

the share spent in the United Kingdom (1.9 percent) and less than a fourth of the

spending in Sweden (3.3 percent of GDP).

Even Germany spends far more than the United States on long-term disability

benefits (2.0 percent). This is despite the Germans’ emphasis on ‘‘rehabilitation before pensions’’ and provisions for quotas, tax penalties and subsidies for job accommodations to encourage private employers to hire disabled workers.

Our conclusion, therefore, is that U.S. cash benefits programs for disabled workers are strictly and frugally designed and do not provide a strong deterrent to work.

HEALTH CARE COVERAGE AND WORK

While neither DI nor SSI, in and of themselves, pose strong incentives to claim

benefits in lieu of working, the Panel concluded that constraints on access to health

care can be a significant barrier to employment.

Persons with chronic health conditions, are at risk of very high health care costs.

They often cannot gain coverage in the private insurance market, and even when

they do have private coverage, it often does not cover the range of services and longterm supports they may need in order to live independently. Medicare or Medicaid,

therefore, are crucial supports.

Furthermore, health care coverage has declined in recent years and the number

of uninsured has grown among the entire working-aged population and among those

with disabilities. Between 1988 and 1993, the number of persons with work disabilities who lacked health coverage from either private insurance or public programs

grew from 2.3 million to 2.9 million.4

The Panel recommended a way to make Medicare coverage more affordable and

secure for DI beneficiaries who leave the rolls because of work. It also urged States

to adopt similar arrangements in their Medicaid programs.

RETURN TO WORK TICKETS

On the question of linking beneficiaries with rehabilitation services, the Panel recommended a radical new approach. Beneficiaries would receive a return to work

(RTW) ticket, that they could use to shop among providers of rehabilitation or RTW

services in either the public or private sector. Once a beneficiary deposited the ticket

with a service provider, the Social Security Administration would have an obligation

to pay the provider, but only after the beneficiary returned to work and left the benefit rolls. A provider whose client successfully returned to work would, each year,

receive in payment a fraction of the benefit savings that accrue to the Social Security trust funds because their customer—the former beneficiary—is at work and not

receiving benefits.

This market approach rests on a few basic principles:

• Beneficiary choice. For the market approach to work, the beneficiary’s choice to

use the ticket has to be voluntary. And the provider’s choice to accept the ticket has

to be voluntary.
48

• Innovation. Beneficiaries and providers would decide on a case-by-case basis,

the approach that will work to get the desired result.

• Paying for the result you want—beneficiaries in long-term jobs and off the benefit rolls.

The Panel concluded that each of these principles is essential to the overall effectiveness of the proposal. And, with these features, it can be effectively administered

by the Social Security Administration. To deviate from these basic principles—

choice, innovation and paying for results—means a much greater role of government

in decisions that the Panel believes are most effectively made directly between customers and providers. If choices are not made voluntarily, the government inevitably must be involved in deciding who is obligated to do what for whom; who has

‘‘good cause’’ for not doing what the other party wants; and so forth. Professor

Berkowitz will elaborate on the Return-to-Work ticket developed by the Panel.

OTHER POLICIES TO PROMOTE WORK

In response to the question about changes in cash benefit policies that would promote work the Panel recommended a wage subsidy, a tax credit for personal assistance services, and improvements in the implementation of existing work incentives.

Wage Subsidy for Low-Income Workers with Disabilities.

The disabled worker tax credit (DWTC) the Panel recommended would be separate from the Social Security system. It would be paid to low-income persons, not

because they are unable to work, but because they work despite their impairments.

Patterned after the earned income tax credit, it would reward work for low earners

with disabilities without increasing reliance on disability benefit programs that are

designed primarily for persons who are unable to work. It is designed for three

groups in particular.

• Older workers who experience a decline in hours of work or wage rates due to

progressive impairments.

• Young people with developmental disabilities who are entering the work force

for the first time.

• People who leave the DI or SSI rolls because they return to work. The wage

subsidy would ease the income ‘‘cliff’’ that DI beneficiaries now face.

Personal Assistance Tax Credit.

The Panel recommended a personal assistance tax credit to compensate working

people for part of the cost of personal assistance services they need in order to work.

Some people who require personal assistance services are able to work in the competitive labor market. But they face a dilemma. If they work successfully, their income may disqualify them from receiving publicly-financed services, yet they do not

earn enough to pay for the services on their own. The Panel recommended a tax

credit to compensate working people for part of the cost of personal assistance services people need and pay for in order to work.

Administering DI and SSI Work Incentives.

The Panel believes that the most important enhancement needed in existing work

incentives in DI and SSI is to improve the way in which they are implemented.

Such improvements would involve both service providers who assist beneficiaries

and the Social Security Administration. After in-depth analysis and extensive field

research, the Panel concluded that:

• Work incentive provisions are inherently complex. Efforts to simplify them by

redesigning them are not particularly promising. Therefore, beneficiaries need help

to understand the rules and comply with them when they work.

• Some kinds of help could be offered by service providers who assist beneficiaries

in returning to work—such as those who accept the RTW tickets the Panel recommends. They would need to understand the rules and consider it part of their

job to assist their clients in complying with them.

• Some tasks can only be performed by the Social Security Administration or an

entity it employs. These include prompt processing of earnings reports so that benefits are adjusted promptly as beneficiaries’ circumstances change. If return to work

is a priority, personnel and systems support for these functions are essential.

CONCLUSIONS

In closing, I want to the emphasize two themes of the Panel’s report. First, many

of the barriers to employment for persons with disabilities lie outside cash benefit

programs. Consequently, many of the promising interventions also lie outside of
49

cash these programs—in health care, the structure of jobs, education and training.

The Panel focused its recommendations only on federal benefit and tax policy.

Finally, as indicated in the title of their report, Balancing Security and Opportunity, the Panel concluded that disability income policy must strive for balance—

between providing secure and dignified income benefits to benefits to those who are

unable to work, on the one hand, while providing realistic opportunities and supports for those who have the capacity to work, on the other. In the final analysis,

our nation’s disability policies will be judged by how well they achieve this balance.

Ms. R

Mr. B

ENO

ERKOWITZ

. Professor Berkowitz.

. Let me just say that the views I express here

f

are mine and not necessarily endorsed by the panel, and certainly

not by the Social Security Administration.

I would heartily endorse a simple return to work program for

persons on Social Security rolls for the following reasons: First, the

system is broke, and if it is broke, it needs fixing. Once on the rolls,

people leave only as they die or they transfer to the old-age system,

and we have already had testimony about the number, the pitifully

small number of people that go to work.

Second, persons on the roll are a diverse lot. Some are mature

persons with work experience who can no longer carry on. Others

have never worked and are now preparing themselves for a life of

benefits. This heterogeneous population needs a variety of services,

and it clearly is not a case of one size fits all.

Third, how we can get more people back to work. This is the narrow issue with which we are concerned. I don’t want to reform the

system, I don’t want to make things better for everyone. I want to

find a way to get people off disability rolls and back at good competitive jobs. The Social Security Administration can’t do the job.

We made that decision way back in 1956. We decided that the SSA

ought not get into the rehabilitation business. The joint Federal/

State Vocational Rehabilitation Program is doing a fine job addressing the priorities Congress assigned to them. They may have

a role to play here; they may not. They ought to be given a chance.

Fourth, we are fortunate, as Dr. Growick just said, in having in

this country a thriving private sector rehabilitation industry. It is

flexible and adaptive. I don’t think we have gone far enough in involving the private sector providers.

How can we bring the energies of those people into this business?

To go down the road of having the Social Security Administration

negotiate fee schedules, utilization protocols and other rules would

provide jobs for the Federal bureaucracy, but very few for persons

on the disability rolls.

The conviction that there has to be a better way led to this ticket

plan. Here is simplicity itself. Here is a plan that gives disabled

persons a choice. People entering the rolls are issued a ticket. They

need not do anything with the ticket. The system has to be voluntary. That is the essence of the plan. However, if they choose to

deposit the ticket with a provider—and visualize, if you will, a

whole wide variety of providers to match the variety of problems,

then the ticket allows the provider to begin services.

We don’t know that there is any one way to take people off the

rolls and to rehabilitate them. We don’t know that there is one way
50

to motivate people. Let 1,000 flowers bloom here, and allow a variety of providers to get into this act.

Once deposited with a provider, the ticket becomes a contract

with the Social Security Administration to pay the provider a percentage of the benefits that would have been paid once the person

goes back to work and off the rolls. Nothing gets paid until the beneficiary is back at work, and then only after savings are realized.

We debated this proposal for many, many sessions, and all kinds

of issues arise. I do not have the time to get into them. But let me

conclude by noting that although there are many details, the essence of the plan is contained in two essential principles. The plan

must be voluntary. Years of experience in workers’ compensation in

this and other countries in the world convinces me a compulsory

plan will not work.

Second, all risks must be borne by the provider. If we pay for

milestones, we will get milestones. We will get what we pay for.

Milestones are not what we want. We want return to work, and

that is what we ought to pay for.

Pick up any newspaper and look at the ads for lawyers who want

to get people on the rolls. They receive no interim payments, they

do not get paid for milestones. They are on a contingency-fee basis.

It is the one part of Social Security that works, unfortunate though

that may be. Let’s use the same idea and the same creativity and

move people into the world of work. Thank you.

[The prepared statement follows:]

Statement of Monroe Berkowitz, Professor of Economics Emeritus, Rutgers

University, New Brunswick, New Jersey

My name is Monroe Berkowitz. I am professor of economics emeritus at Rutgers

University. For over four decades, I have been concerned with research in the area

of economics of disability with emphasis on return to work. I am a member of the

National Academy of Social Insurance and served on its Disability Panel. The views

I express are my own and not necessarily endorsed by the Panel. I am most grateful

for the opportunity to appear before the committee.

I heartily endorse a simple return to work program for persons on the Social Security Disability benefit rolls for the following reasons:

• The system is broke and needs fixing. Once on the rolls, persons leave only as

they die or become old enough to switch to old-age benefits. Less than one half of

one percent of the persons on the rolls return to work. We should be able to improve

that record.

• Persons on the rolls are a diverse lot. Some are mature persons with work experience who can no longer carry on. Others are persons who have never worked and

who are consigned to a life of benefits. This heterogeneous population needs a variety of services. Clearly this is not a case of one size fits all.

• How can we get more people back to work? Social Security cannot do the job.

We made the decision back in 1956, that Social Security should not get into the rehabilitation business. The joint federal-state vocational rehabilitation programs are

doing a fine job addressing the priorities Congress has assigned to them. They may

have a role to play in returning beneficiaries to work, but it is increasingly evident

that they cannot do the job alone.

• We are fortunate in having in this country a thriving industry of private sector

rehabilitation providers. These are imaginative hard working people who have years

of experience in helping injured workers return to the job. They can provide the

flexible, adaptive type of services that can return SSA beneficiaries to work.

• How can we bring the energies and creativity of the private sector to bear on

this problem? It is my judgment that Social Security cannot do a very good job of

negotiating with private providers. To go down the road of negotiating fee schedules

and utilization protocols is to end up providing jobs for the federal bureaucracy but

not for persons on the disability rolls.
51

• The conviction that there has to be a better way led to the development of the

ticket plan. Here is simplicity itself that takes into account the heterogeneity of persons on the rolls and that enlists the creativity and energies of providers.

—Persons entering the rolls are issued a ticket. They need not do anything with

the ticket. The essence of the plan is that it is voluntary in all of its aspects.

—They may choose to deposit the ticket with a provider. Visualize a wide variety

of providers. The variety of problems should be matched with a variety of providers

offering a medley of approaches and services.

—Once deposited with the provider, the ticket becomes a contract between the

provider and the Social Security Administration to pay the provider a percentage

of the benefits that would have been paid once the person goes back to work and

is off the rolls. Nothing gets paid until the beneficiary is back at work, and then

only after the savings are actually realized.

• The Panel debated the ticket proposal for many sessions. I have had the advantage of discussing it before many groups of persons working for the government, persons drawn from the disability community and private and public sector providers.

In the course of these discussion, I believe we have touched on each of the issues

and the possible problem areas and I would be happy to discuss these if there are

any questions.

Let me conclude by noting that details can differ, but the essence of the plan is

contained in these essential principles.

—The plan must be voluntary. Years of experience in workers’ compensation in

this and other countries in the world convinces me that a compulsory plan will not

work.

—All risks must be borne by the providers. If we pay for milestones, we will get

milestones. That is not what we want. We want return to work and that is what

we should pay for.

Pick up any newspaper and note the ads for lawyers who are soliciting clients to

get them on the disability rolls. These lawyers are working on a contingency fee

basis and no one is offering them interim payments. They get paid once the person

is on the disability rolls. Why cannot we enlist that same entrepreneurial energy

to get people off the rolls and back to work?

Thank you Mr. Chairman. I appreciate the opportunity to present my views on

this important subject and will be happy to answer any questions.

Chairman B

Mr. Kregel.

UNNING. Thank you for your testimony.

f

STATEMENT OF JOHN KREGEL, ED.D., RESEARCH DIRECTOR,

REHABILITATION RESEARCH AND TRAINING CENTER ON

SUPPORTED EMPLOYMENT, VIRGINIA COMMONWEALTH

UNIVERSITY

Mr. KREGEL. It is an honor for me to be with you this morning.

The suggestions and recommendations I will share over the next

few minutes are the results of research activities completed by the

Rehabilitation Research and Training Center at Virginia Commonwealth University in 1995 and 1996, through the joint funding provided by NIDRR and the Social Security Administration.

As a part of this research effort, we conducted focus groups comprised of representatives of local provider agencies and completed

over 300 structured telephone interviews with directors of local

agencies in 40 different States. Questions focused on the agencies’

perceptions of potential effectiveness of various provider incentive

proposals.

I would like to briefly share with you recommendations in three

areas: First, the perceived need for milestone payments; second,

strategies to enhance the ability of smaller agencies to participate

in the program; and third, the need for strong programmatic management structures, external to SSA.
52

First the need for milestone payments. While the notion of paying providers for results is logically and physically sound, in practice this approach will greatly reduce the number of agencies that

will participate in the program and limit the overall size of the return to work initiative. Participation will likely be limited to large,

highly capitalized agencies which receive sizable amounts of support from charitable organizations, or which are able to generate

revenue through various enterprises.

Lack of milestone payments limit the participation of various categories of provider agencies, including smaller agencies, which

don’t have the fiscal resources to provide resources for long periods

of time without some reimbursements for incurred cost, and programs in rural communities which are generally small and face additional costs associated with providing employment services in

rural areas.

In addition, it should be anticipated that individuals who are either viewed as too challenging, that is, costly, to serve, or too poor

a risk for meeting success criteria for the program, such as individuals with persistent mental illness or brain injuries, will have extreme difficulties locating providers willing to assist them.

Second, strategies for promoting participation of smaller agencies. Return to work programs should be designed so that payments to providers are viewed as a premium resulting from savings

to the trust fund or general fund, rather than as a cost reimbursement mechanism. Provider incentive proposals should carefully

consider dual funding arrangements as a mechanism for encouraging the participation of small- and medium-sized agencies.

For example, agencies should be allowed to serve as both the employer and the provider agencies for individuals who select them

for service provision. This will allow agencies providing employment opportunities through JWOD or other similar programs to

focus their efforts on serving individuals participating in the return

to work program.

In addition, local employment agencies should be allowed to seek

reimbursement from other funding agencies for services provided to

individuals participating in the return to work program. For example, agencies should be able to receive funding from a local mental

health or mental retardation authority, State rehabilitation agency

or other funding entity which would partially or fully reimburse

agencies for the cost of providing services. Payments provided to

the agencies through the return to work program would be a premium over and above those received from other funding agencies.

Third, the need for a strong external management structure. A

strong management structure, external to SSA, is required to resolve the numerous issues that will inevitably arise in the implementation of the return to work program. The programs being considered will dramatically change the relationship between consumers and employment service agencies. While this change is highly

desirable, it cannot be assumed that numerous implementation

issues will be quickly or automatically resolved.

Consider, for example, the following scenarios. An individual attempts to resign from an unsatisfactory employment situation 7

months after initially entering the job. The provider agency, having

already expended extensive resources, places undue pressure on
53

the individual to remain in an unsatisfactory employment setting

rather than jeopardize the agency’s potential reimbursement. Or an

individual who has been working for 5 months becomes dissatisfied

with the services delivered by the provider agency. The individual

changes to a different provider agency and remains in employment

until ultimately leaving the disability rolls. To what extent does

the first provider agency have a legitimate claim to subsequent

payments from SSA?

These are but two of a myriad of implementation issues which

will eventually arise as the return to work program evolves. Many

of the issues have only been marginally recognized in the development of the proposed plans. Management structures, external to

SSA, are needed that would coordinate implementation policies and

guidelines across the country, while allowing flexibility to address

regional and local needs.

Thank you very much.

[The prepared statement follows:]

Statement of John Kregel, Ed.D., Research Director, Rehabilitation

Research and Training Center on Supported Employment, Virginia

Commonwealth University

It is an honor for me to be with you this morning. The suggestions and recommendations I will share in the next few minutes are the result of research activities completed by the Rehabilitation Research and Training Center at Virginia Commonwealth University in 1995–96 through joint funding provided by NIDRR and the

Social Security Administration.

As a part of this research effort, we conducted focus groups comprised of representatives of local provider agencies and completed over 300 structured telephone

interviews with directors of local agencies from 40 different states. Questions focused on the agencies’ perceptions of the potential effectiveness of various provider

incentive proposals.

I would like to briefly share with you recommendations three areas: (1) the perceived need for milestone payments; (2) strategies that will enhance the ability of

smaller agencies to participate in the program; and (3) the need for strong program

management structures external to SSA.

NEED FOR MILESTONE PAYMENTS

While the notion of paying providers only for results is logically and fiscally

sound, in practice this approach will greatly reduce the number of agencies that will

participate in the program and limit the overall size of the return to work initiative.

Participation will likely be limited to large, highly capitalized agencies which receive

sizable amounts of support from charitable organizations, or which are able to generate revenue through various enterprises. Lack of milestone payments will limit

the participation of various categories of provider agencies, including:

• smaller agencies which simply don’t have the fiscal resources to provide services

for prolonged periods of time without some reimbursement for incurred costs; and

• programs in rural communities, which are generally small and face additional

costs associated with providing employment services in rural areas.

In addition, it should be anticipated that individuals who are either viewed as too

challenging (i.e. costly) to serve or too poor a risk for meeting the success criterion

of the program, such as individuals with persistent mental illness or brain injuries,

will have extreme difficulties locating providers willing to assist them.

STRATEGIES FOR PROMOTING THE PARTICIPATION OF SMALLER AGENCIES

Return to work programs should be designed so that payments to providers are

viewed as a premium resulting from savings to the Trust Fund or General Fund,

rather than as a cost reimbursement mechanism. Provider incentive proposals

should carefully consider ‘‘dual funding’’ arrangements as a mechanism for encouraging the participation of small and medium-sized agencies.

For example, agencies should be allowed to serve as both the employer and the

provider agency for individuals who select them for service provision. This will allow

agencies providing employment opportunities through JWOD or other programs to
54

focus their efforts on serving individuals participating in the return to work program.

In addition, local employment agencies should be allowed to seek reimbursement

from other funding agencies for services provided to individuals participating in the

return to work program. For example, agencies should be able to receive funding

from a local mental health/mental retardation authority, state rehabilitation agency,

or other funding entity which would partially or fully reimburse agencies for the

costs of providing services. Payments that are provided to the agency through the

return to work program would then be a premium over and above those received

from other funding agencies.

NEED FOR A STRONG EXTERNAL MANAGEMENT STRUCTURE

A strong management structure, external to SSA, is required to resolve the numerous issues that will inevitably arise during the implementation of the return to

work program. The programs being considered will dramatically change the relationship between consumers and employment service agencies. While this change is

highly desirable, it cannot be assumed that numerous implementation issues will

be quickly or automatically resolved. Consider the following scenarios.

• An individual attempts to resign from an unsatisfactory employment situation

seven months after initially entering the job. The provider agency, having already

expended extensive resources, places undue pressure on the individual to remain in

an unsatisfactory employment setting rather than jeopardize the agency’s potential

reimbursement.

• An individual who has been working for five months becomes dissatisfied with

the services delivered by the provider agency. The individual changes to a different

provider agency and remains in employment until ultimately leaving the disability

rolls. To what extent does the first provider agency have a legitimate claim to subsequent payments from SSA?

These are but two of a myriad of implementation issues which will eventually

arise as the return to work program evolves. Many of these issues have only marginally been recognized in the development of the proposed plans. Management

structures external to SSA are needed that will coordinate implementation policies

and guidelines across the country while simultaneously allowing flexibility to address regional and local needs.

Chairman B

Mr. Baron.

UNNING. Thank you very much.

f

STATEMENT OF RICHARD C. BARON, DIRECTOR, MATRIX

RESEARCH INSTITUTE, PHILADELPHIA, PENNSYLVANIA, ON

BEHALF OF INTERNATIONAL ASSOCIATION OF PSYCHOSOCIAL REHABILITATION SERVICES, COLUMBIA, MARYLAND

Mr. BARON. Thank you. Good morning. I want to thank the Subcommittee for the opportunity to testify today. I am director of Matrix Research Institute and its Research and Training Center on

Vocational Rehabilitation Services for Persons with Mental Illness.

I will be speaking today also as a representative of the International Association of Psychosocial Rehabilitation Services.

A staggering 90 percent of Americans who struggle with a serious mental illness are unemployed, the vast majority of whom rely

on SSA or SSDI for cash assistance and medical coverage. The

largest group of SSA recipients are those with mental illness, and

they are the group currently most likely to remain on the rolls for

their entire adult life. Although the symptoms of serious mental illness are considerable barriers to job performance, a wide array of

transitional and supportive rehabilitation programs have been

proven to be dramatically effective in helping people to work, but

such programs remain in short supply.
55

More importantly, the barriers to employment, implicit in our

public policies, dissuade many people who should be working to opt

instead for dependency, and both the President and the Congress

are to be congratulated for the recent initiatives to reshape the

Nations’s approach; however, I want to note a few of the most critical barriers that new public policy will need to address.

First, the longstanding public policy preoccupation with getting

people off the SSA rolls is, in my opinion, an inappropriate goal

and its own barrier. What we need instead is legislation that encourages more people to work at their individual capacity as frequently and as often as they can, even if that employment is less

than full time, or is only intermittent. The vast majority of people

with serious mental illness can build substantial careers if we encourage both part-time and full-time options, and we believe financial savings from such policies, because of the widespread and sustained reductions in cash assistance that will follow, will be dramatic and far more effective than concentrating our rehabilitation

efforts on the relatively limited number of people who can afford

to escape the SSA rolls because they have the capacity to return

to full-time jobs in white collar professions. Both groups of people

deserve the attention of this Subcommittee.

Second, any new system must address the barrier represented by

the potential loss of medical insurance for those who work, limiting

access to the very supports that make work possible in the first

place. Although I know Medicaid and Medicare provisions are beyond the purview of this Subcommittee, because people with serious mental illness use SSI and/or SSDI eligibility as the portal to

medical support, any program that seeks to offer new incentives for

employment must find a way to ensure enrollees’ access to Medicaid and Medicare if they need it.

A third barrier has been a presumption that mental health professionals or SSA personnel can accurately assess rehabilitation potential. Any system that attempts to determine at the outset which

clients do and do not have the capacity for employment is wrongheaded. There is no evidence that we have the tools to make accurate prognostications of this sort, and forcing rehabilitation professionals to pretend to do so will only result in eliminating from potential employment all but a few higher functioning clients. New

approaches must encourage each client to reach his or her vocational potential.

A fourth barrier has been a tendency to assume that rehabilitation is a straight-line process. Many people will need to be assured

they can try once, fail, and then try again, and yet again. Many

of us would hate to see a ticket or voucher program that provided

only a one-point-in-time opportunity for people to enter the working

world, or one that placed arbitrary time limits on needed support.

Fifth, delaying payment to vocational rehabilitation agencies

until the end of the process, when the client has achieved prescribed goals—such as leaving the SSA rolls or remaining employed

consistently for 12 months—only creates new barriers. The agencies will want to serve only those clients who will appear, often erroneously, to be good bets. The new system will need to offer payments at various milestones in each client’s progress, and then pro-
56

vide for the ongoing occasional assistance some will need to build

lifetime careers.

Sixth, the complexities of the current work incentive provisions

are considerable barriers as well. Although not perfect, the current

work incentives are quite positive, yet they are largely unknown or

unutilized by most consumers, and are largely ignored or misunderstood by mental health, vocational rehabilitation and Social

Security staff. Any future changes to incentives must be accompanied by a financial commitment to provide expertise at the local

level that consumers need to manage these complicated systems.

Finally, let me say a word about the consequences of continuing

to ignore the vocational potential of persons with serious mental illness, people who should be working because it is in their own best

interest, people who could be working because rehabilitation programs do make it possible, and people who would be working because work, in fact, endures as a primary goal for the majority of

those now completely dependent on SSA. To fail to offer new opportunities and new incentives is to risk the loss of yet another generation of disabled people who are prepared to face the challenges

of work, a loss neither they nor the Nation can afford.

Thank you.

[The prepared statement follows:]

Statement of Richard C. Baron, Director, Matrix Research Institute,

Philadelphia, Pennsylvania, on Behalf of International Association of

Psychosocial Rehabilitation Services, Columbia, Maryland

Good morning. My name is Richard Baron, and I want to thank the Subcommittee

for the opportunity to testify today. I am the Director of Matrix Research Institute

and it’s Research and Training Center on Vocational Rehabilitation Services for Persons with Mental Illness. I’ll be speaking today also as a representative of the International Association of Psychosocial Rehabilitation Services.

A staggering 90% of Americans who struggle with a serious mental illness are unemployed, the vast majority of whom rely on SSI and SSDI both for cash assistance

and medical coverage. The largest group of SSA recipients are those with mental

illness, and they are the group currently most likely to remain on the rolls for their

entire adult lives. Although the symptoms of serious mental illness are considerable

barriers to effective job performance, a wide array of transitional and supported rehabilitation programs have been proven to be dramatically effective in helping people to work, but such programs remain in short supply.

More importantly, the barriers to employment implicit in our public policies dissuade many people who should be working to opt instead for dependency, and both

the President and the Congress are to be congratulated for their recent initiatives

to reshape the nation’s approach; however, I want to note a few of the most critical

barriers that new public policies will need to address.

First, the long-standing public policy pre-occupation with ‘‘getting people off the

SSA rolls’’ is its own barrier. What we need instead is legislation that encourages

more people to work at their individual capacity as frequently and as often as they

can, even if that employment is less than full-time or is only intermittent. The vast

majority of people with serious mental illness can build substantial careers if we

encourage both part-time and full-time options, and we believe that financial savings from such policies—because of widespread and sustained reductions in cash assistance—will be dramatic, and far more effective than concentrating our rehabilitation efforts on the relatively limited number of people who can afford to escape the

SSA rolls because they have the capacity to return to full-time jobs in white collar

professions. Both groups of people deserve the attention of this Subcommittee.

Second, any new system must address the barrier represented by the potential

loss of medical insurance for those who work, limiting access to the very supports

that make work possible in the first place. Although I know that Medicaid and

Medicare provisions are beyond the purview of this Committee, because people with

serious mental illness use SSI and/or SSDI eligibility as the portal to medical support, any program that seeks to offer new incentives for employment must find a
57

way—as in a national health care program or the states’ 1115 waiver programs—

to insure enrollees’ continued access to Medicaid and Medicare.

A third barrier to employment has been a presumption that mental health or vocational rehabilitation professionals—or SSA personnel—can accurately assess ‘rehabilitation potential:’ any system that attempts to determine at the outset which

clients do and do not have a capacity for employment is wrong-headed: there is no

evidence that we have the tools to make accurate prognostications of this sort, and

forcing rehabilitation professionals to pretend to do so will only result in eliminating

from potential employment all but a few higher functioning clients. New approaches

must encourage each client to reach for his or her vocational potential.

A fourth barrier has been our tendency to assume that rehabilitation is a straightline process; many people will need to be assured that they can try once, fail, and

then try again, and yet again. Many of us would hate to see a ‘ticket’ or ‘voucher’

program put in place a system that only offered one-point-in-time opportunity for

people to enter the working world, or one that placed arbitrary time limits on needed support.

Fifth, delaying payment to vocational rehabilitation agencies until the ‘end’ of the

process—when the client has achieved a prescribed goal such as leaving the SSA

rolls or remaining employed consistently for 12 months—only creates new barriers:

the agencies will want to serve only those clients who will appear—often erroneously to be ‘good bets’. The emerging system, to encourage agency engagement,

will need to offer payments at various milestones in each client’s progress toward

employment, and then provide for the ongoing occasional assistance some will need

to build lifetime careers.

Sixth, the complexities of the current work incentive provisions are considerable

barriers as well. Although not perfect, the current work incentives are quite positive, yet they are largely unknown or unutilized by most consumers, and are largely

ignored or misunderstood by mental health, vocational rehabilitation, and Social Security staff. Any future changes to incentives must be accompanied by a financial

commitment to provide expertise, at the local level, that consumers need to manage

these complicated systems.

Finally, let me say just a word about the consequences of continuing to ignore the

vocational potential of persons with serious mental illness, people who should be

working because it is in their own best interest, who could be working because rehabilitation programs make it possible, and who would be working because work endures as a primary goal for the majority of those people now completely dependent

on SSA. To fail to offer new opportunities and new incentives is to risk the loss of

yet another generation of disabled people who are prepared to face the challenges

of work, a loss neither they nor their nation can afford.

Chairman B

Mr. Matheson.

UNNING. Thank you very much.

f

STATEMENT OF LEONARD N. MATHESON, PH.D., CVE,

DIRECTOR, WORK PERFORMANCE LABORATORY; AND SECTION CHIEF, OCCUPATIONAL HEALTH AND ERGONOMICS,

PROGRAM IN OCCUPATIONAL THERAPY, WASHINGTON

UNIVERSITY SCHOOL OF MEDICINE, ST. LOUIS, MISSOURI

Mr. MATHESON. Thank you, Mr. Chairman.

In 1970, I began to work with a young man named Paul who was

a teenager at Rancho Los Amigos Hospital; he was a client of mine.

He had a serious head injury, resulting in hemiplegia and very bad

paralysis on one side of his body. Eventually I helped him get a job

as a spray painter at a furniture plant. Twenty years later he is

still a spray painter, he is married for the second time, he has

three kids and a wife living in a mortgaged home in southern California. He has claimed his occupational birthright as an American,

despite the fact that he easily qualifies for SSDI benefits.

I have worked with several thousand people with disabilities, approximately half of whom have been able to get back to work. For
58

all of them, functional capacity evaluation, which we call FCE,

guided rehabilitation and was a key to their success. FCE is a systematic process of measuring and developing an individual’s ability

to perform meaningful tasks on a safe and dependable basis. It addresses functional limitations, which is a bridge between medical

impairment and ability to work. This addresses the most important

defect in the design of SSDI, the attempt to predict disability from

impairment. In order to manage the issues that limit the potential

to work, it is necessary to move beyond impairment to address

functional limitation to address performance on job tasks.

It was proposed in your Rehabilitation and Return to Work Opportunity Act of 1996 that the assessment of capability for vocational adjustment be undertaken on a broad basis. This was wellintended but would have resulted in a wasteful application of resources. It would be much better to evaluate the occupational potential of a person with a disability on a progressively constricting

basis. This would allow the process to be halted before it consumes

too many resources. FCE can provide objective information necessary to achieve effective gatekeeping to screen out those who are

not likely to benefit while boosting the opportunities for those who

can benefit based on adherence to three indicators of success, the

first being the ability to maintain focus on meaningful work goals;

second being the ability to maintain focus on function rather than

impairment; and third, the willingness to stick with it. This is the

single most important multiplier of ability.

Rehabilitation requires 110-percent effort. In order to take advantage of FCE strengths and not waste resources, the process

must be undertaken in steps. At each step, recipients who do not

meet criteria for success must be excused from the program in an

ever-constricting funnel that preserves resources so that meaningful rewards in terms of rehabilitation benefits are provided to those

that persevere.

In step one, we must identify causes. In step two, we must minimize disablement. In step three, we must identify the person’s ability factors. In step four, get into vocational exploration to help the

person identify goals, interests and possible vocational targets. We

wind up at step five with a rehabilitation plan that has prepared

the person to be an excellent candidate for a return to work program.

The hallmarks of this process is that it is driven by demonstrated recipient effort and guided by objective information about

work performance.

I have three policy recommendations, the first having to do with

standardization, and I ask SSA pay only for FCE services which

are provided by programs that are accredited by an independent

agency.

The second has to do with science and technology, and I would

recommend SSA only pay for services which adhere to standards

for technology development, which can be developed by a national

interdisciplinary committee of experts.

The third has to do with cost efficiency. I have cost estimates in

a supplemental report I provided this morning, predicated on a policy in which the SSA pay only for FCE services which address
59

questions pertinent to that step in the process at which the client

is found.

To conclude, the successful return to work of SSDI recipients

benefits all Americans. The GAO has estimated if only 73,000 of

the 6.6 million Americans of working age who received SSDI and

SSI benefits were to return to work, $3 billion could be saved. It

seems to me this is aiming far too low, given the need and potential we find in these people.

My supplemental report looks at lifetime cost savings. I see FCE

as a gatekeeper, something that could be used as a supplement to

the Bunning bill, and would be a transition to work program tickets, which will make it more likely that small providers will take

on these clients.

Thank you for your time.

[The prepared statement and attachment follow:]

Statement of Leonard N. Matheson, Ph.D., CVE, Director, Work Performance Laboratory; and Section Chief, Occupational Health and

Ergonomics, Program in Occupational Therapy, Washington University

School of Medicine, St. Louis, Missouri

In 1970, I began to work with a teenager named Paul who came to me as a client

with a severe head injury at Rancho Los Amigos Hospital in Downey, California

where I worked as a pre-vocational counselor in the pediatrics unit. I helped Paul

get a job as a spray painter in a furnitue plant. I still hear from Paul occasionally

during the Holiday season. Paul is a grandfather, married for the second time, has

three children who live with him and his wife in a mortgaged home, and is still employed as a spray painter. He has claimed his occupational birthright as an American, in spite of the fact that he easily qualifies for SSDI based on the severity of

his impairments, including a seizure disorder, complete hemiplegia which stops him

from using his left hand and causes difficulties with standing and walking, swallowing, speech, memory, and reading.

More than 6.6 million Americans of working age are SSDI and SSI recipients who

have impairments that limit their potential for competitive employment. Some have

functional limitations that make work impractical while others are limited by disabilities that can be overcome with proper identification and management. Since I

had the opportunity to work with Paul, I have assisted more than 7,000 persons

with severe disabilities to attempt to enter the work force. Approximately 50% of

these people have been successful. The patterns of success are apparent, and stem

both from characteristics of the person served and characteristics of the services

each received.

I am here today to discuss the importance of functional capacity evaluation (FCE)

as a key service that can help the Pauls and Paulas of this country retrieve what

I believe is every American’s birthright, the opportunity to work and demonstrate

occupational competence. I will present FCE as a process of measurement and development which can be used to improve the Social Security Administration’s disability determination process as well as to increase the likelihood that occupationally disabled SSDI beneficiaries will return to work. In my testimony, I will be describing a vision of FCE that can be used as a model of service to improve the

health and function of our citizens so that they can return to work, resume fullfledged participation in the economy, restore dignity to themselves and to their families, and improve the overall financial and emotional health of the nation.

FUNCTIONAL CAPACITY EVALUATION

We should begin with a definition. Functional capacity evaluation (FCE) is a systematic process of measuring and developing an individual’s ability to perform

meaningful tasks on a safe and dependable basis (1).

Brief History

The scientific underpinnings of FCE stem in large part from the research efforts

of industrial and human factors psychologists in World War II and thereafter, supported by federal defense funding. The idea of matching the person to the task was

extended from this work to the Rehabilitation community in the 1950’s with early

centers of excellence at the University of Wisconsin, the University of Arizona and
60

1The word ‘‘disabilities’’ is plural because most people who are chronically disabled have more

than one cause of disablement.

at rehabilitation centers such as Rancho Los Amigos. In those days, we assumed

that persons with severe disabilities who wanted to work probably could be assisted

to work and we developed procedures to achieve such goals. From the first, we recognized that the evaluation of work capacity was a key to success for people like

Paul. This early experience evolved into formal procedures for evaluating functional

capacity as a subset of work capacity and marrying that to work-oriented treatment

programs (2, 3), which will be described later. The use of FCE in Rehabilitation has

continued to develop over the intervening years. At its present level, FCE is able

to offer assistance to American society to match a wide variety of persons with

chronic disabilities 1 to a wide variety of meaningful jobs. How it can accomplish this

requires that we consider FCE in more detail.

Functional

The term ‘‘functional’’ is intended to connote performance of a purposeful, meaningful, or useful task that has a beginning and an end with a result which can be

measured. Several authors (4–7) have described current models of disablement (8–

10) and the rehabilitation process (11). My testimony today references a model of

rehabilitation depicted in Figure One (below), the Stage Model of Occupational Rehabilitation, in which functional limitations hold a translational role between the individual’s impairment and his or her occupational disability. This key segment of

the process of the occupational rehabilitation process is the focus of FCE (12, 13).

It is important to focus on functional limitations because they bridge between impairment which is assessed by medical means and disability which is assessed my

non-medical means (14). More to the point, occupational disability predicts employability better than does impairment (15–17), as Paul’s case and hundreds of others

in my direct experience indicate. This may be the single most important defect in

the design of SSDI; the attempt to predict disability from impairment. In order to

manage the issues that limit potential to work, it is necessary to move beyond impairment and functional limitation to address performance on job tasks. The

impairment-centered model must not continue to be used for this purpose.

Figure One. Stage Model of Occupational Rehabilitation.

Stage Issue Addressed Measured by or in terms of ... Measurement Professionals

One ............ Pathology .......................... Cells, tissue and bone ..... All appropriate medical

diagnosticians.

Two ........... Medical Impairment ........ Anatomic, physiologic,

psychologic system

health.

All appropriate health

care providers.

Three ......... Functional Limitation ..... Task performance ............ FCE-trained MDs, OTs,

PTs, PhDs.

Four .......... Occupational Disability ... Role consequences of

functional limitations.

Occupational Therapists,

Vocational Evaluators.

Five ........... Vocational Feasibility ...... Acceptability of the

evaluee as an employee.

Vocational Evaluators,

Occupational Therapists.

Six ............. Employability ................... Ability to become employed.Vocational Evaluators,

Rehabilitation Counselors.

Seven ........ Vocational Handicap ....... Ability to perform a particular job.Occupational Therapists,

Ergonomists.

Eight ......... Earning Capacity ............. Earned income over expected worklife.Economists.

This model describes pathology and impairment as factors that, taken within the

context of the individual’s environmental and personal resources (12–18), are the

precursors of functional limitation. If the impairment is sufficiently severe, functional limitations can result. If the functional limitations are sufficiently severe and

are pertinent to role tasks, occupational disability will be the result. Occupational

disability can be thought of as the summation of the role consequences of functional

limitations (6, 7) and recently has been the focus of governmental attention (19). Another useful definition of occupational disability is that it is the individual’s uncom-
61

pensated shortfalls in responding to role demands (13). Figure Two represents this

definition in graphic terms.

Evaluation of disability is based on the measurement of the functional consequences of impairment in tasks that are pertinent to the particular role under

consideration (6, 9). Individuals assume several roles in society, such as spouse, parent, neighbor, worker, team mate or customer. If the functional consequences are

significant and occur in tasks which are critical to the performance of the job, the

evaluee can be described as having a compensible occupational disability (COD).

When the emphasis is on determining the presence or degree of occupational disability, the focus must be on tasks in the worker role and work environment (20). The

extent and type of the COD is dependent on the evaluee’s ability to perform these

work-relevant tasks.

Capacity

The term ‘‘capacity’’ connotes the immediate potential of the evaluee, what the

person can possibly do at that point in time. The use of the term capacity is somewhat misleading because it rarely is measured directly unless the evaluee is highly

trained and motivated, such as when an experienced athlete competes. Work capacity is less than ‘‘work tolerance’’ and can be inferred somewhat from evaluation of

an individual’s response to exhaustive demands. However, exhaustive demands are

inappropriate when the focus of the evaluation is on a worker (impaired or healthy).

In this circumstance, the evaluation may be concerned with the individual’s ‘‘maximum dependable ability,’’ what he or she can do on a regular basis in hallmark

tasks such as lifting and carrying. This information allows us to identify occupations

in which there are jobs the person may be able to perform, based on the assumption

that the demands of these jobs are less than the evaluee’s maximum dependable

ability. If we can, in turn, evaluate a person for a particular job, we can focus on

ability to handle that job’s task demands. Knowing the SSDI recipient’s maximum

dependable ability places us in the ballpark; assignment to a particular position on

the team depends on the recipient’s ability to handle the tasks that are found in

that position. A typical relationship among these variables is described in Figure

Three.
62

Evaluation Compared with Assessment

Functional capacity evaluation should be distinguished from functional assessment (21). Although the terms sometimes are used interchangeably and some functional assessment instruments are used in FCE, they describe different processes.

Generally, FCE is based on performance measurement while functional assessment

is based on expert ratings from observation or on the evaluee’s self-report (22–25).

FCE employs structured performance protocols using test equipment or simulated

activities to measure functional performance while functional assessment employs

structured behavior rating scales to rate observations of the evaluee made by

trained observers or self-perceptions made by the evaluee. Thus, FCE is much more

likely to identify work tasks that can be performed by SSDI recipients. Additionally,

FCE is much more likely to identify problems with motivation or less than full effort

performance because it actively engages the evaluee in challenging tasks and

records the evaluee’s behavioral response.

Because functional capacity evaluation involves measurement of the evaluee’s

ability to perform work, it involves the interface between both the person and the

job. At this interface are tasks that have complex physiological, psychological, musculoskeletal and environmental bases. To evaluate the individual without impairment and achieve a safe and dependable match to job demands is difficult; to do

so with a person who has an impairment is more difficult; to do so with many people

who have a wide variety of impairments is daunting. For SSDI recipients, there is

often not a job to return to or a job available to allow a focus on certain job demand

factors, further broadening the scope of FCE.

NUMEROUS FCE PROVIDERS

Many professional disciplines provide FCE services. In fact, all of the major disciplines involved in FCE today have legitimate claims in that each has been interested to greater or lesser degrees in matching the person to the task. FCE is taught

in many colleges and universities and postgraduate seminars and is provided by a

wide range of professionals:

Occupation Estimated U.S.

Providers

Occupational Therapists ....................................................................................... 10,000

Physical Therapists .............................................................................................. 10,000

Physicians .............................................................................................................. 5,000

Psychologists ......................................................................................................... 5,000

Vocational Evaluators .......................................................................................... 5,000

Each discipline has developed its own approach to FCE, dependent on factors

which differentiate one discipline from the other. In recent years, professionals from

the fields of exercise physiology, kinesiology, nursing, chiropractic medicine, and

speech pathology have developed additional approaches to FCE. Most SSDI recipi-
63

ents will require the services of more than one discipline, both during the FCE and

once the rehabilitation plan begins in order to maximize their potential for gainful

work.

SPECIFIC PURPOSES OF FCE

Beyond the general purpose of measuring an individual’s ability to perform meaningful tasks on a safe and dependable basis, functional capacity evaluation as practiced in the United States has three specific purposes:

Disability Determination

Determines the presence (and, if present, the level) of occupational disability so

that the evaluee’s case can be bureaucratically or juridically concluded (1, 26). In

practice, disability determination is the most simple of the three, because it is only

necessary to identify one factor (or a small group of factors) to confirm that a person

is disabled and to measure the extent of disability with various rating schemes,

while many factors must be evaluated to determine whether a person is able to fulfill an occup ational role. The efficiency that can be obtained when a circumscribed

question is posed for FCE to answer is realized in this type of evaluation, which

may be demonstrated in the future as the SSA Disability Determination reengineering process continues to unfold. HR 4230, introduced in the last Congressional session, recognized that something more was possible and held the promise

of much greater fiscal and human savings.

Rehabilitation Planning

Assists a medically impaired person to improve role performance through identification of occupationally-relevant functional limitations so that these decrements

may be resolved or managed (2, 13, 27). Health care professionals use this information for many purposes, including the triage of patients into proper treatment programs, to provide the basis for remediation, and to measure treatment progress.

Many times, recipients have disabilities which can be eliminated through aggressive

rehabilitation or the use of technological assists.

Job Matching

Measures the individual’s ability compared to task demands to determine whether

he or she will be competent in a job (10, 21). Routinely, the comparison of an individual’s capacity to a job’s demands is made to diminish the risk of re-injury that

is associated with a mis-match as well as to improve the individual’s productivity.

Numerous researchers (28–33) point to the importance of properly matching the

worker’s capacity to the job’s demands. Shortfalls in the relationship between the

individual’s resources and the environment’s demands will result in decreased performance (34) and increased risk for injury (35, 36).

LEGISLATIVE INITIATIVES

It was proposed in the ‘‘Rehabilitation and Return to Work Opportunity Act of

1996’’ (HR 4230), that the assessment of capability for vocational adjustment be undertaken on a broad basis, with mandated assessment of work and educational history, abilities and limitations, and interests and aptitudes. This was well-intended

but would have resulted in wasteful application of resources. It would be much better to evaluate the occupational potential of a person with a disability on a progressively constricting basis. This would allow the process to be halted before it consumes too many resources so that the downstream benefits can be made sufficiently

supportive that success will be a likely consequence of full-effort participation. This

can be accomplished and will result in much greater efficiency and success. FCE can

provide the information necessary to achieve effective ‘‘gatekeeping’’ to screen out

those who are not likely to benefit while boosting the opportunities provided to those

who can truly benefit.

Context of Practice

The FCE process should have a strong therapeutic orientation and should always

have a focus on achieving productivity that enlists the individual’s goals, motivation

and attitudes toward success. This context of practice has been described as ‘‘work

hardening,’’ a treatment program which was developed at Rancho Los Amigos Hospital in the 1970’s (2, 3) and has been shown to be effective in many settings

throughout the United States. Each step of the FCE process should be presented

within such a context. Key indicators of success in this process include: • The ability to maintain a focus on meaningful work goals. Goals such as improvement in fitness, decrease or control of pain, alleviation of depression, improved
64

2 Based on factor analysis research of the abilities requirements of numerous jobs, Fleishman

and Reilly describe 52 different abilities that are pertinent to job tasks. Nine of these abilities

involve strength, while an additional ten are psychomotor abilities which involve response speed

and precision, and other factors involve verbal skills, reasoning, and social skills.

sleep, and many others which will be identified in these types of cases must always

be considered secondary to return to meaningful work as the primary goal. • The ability to focus on function rather than impairment. The medical impairment aspects of the case should be handled in a way that facilitates maintaining

a focus on the development of the recipient’s work behaviors. Many of these people

have not benefited from medical care; some of them can be vocational successes in

spite of their medical circumstances. This will be most difficult and important with

regard to pain control. For the person who is disabled by pain, this approach may

greatly increase discomfort on a temporary basis. If this temporary increase is not

able to be tolerated without strong medication, it is unlikely that the person will

be able to work in a competitive market place. However, appropriate medical support to manage benign disabling pain can be accomplished and should be provided. • The willingness to stick with it. At each step of the evaluation process, the recipient must be expected to ‘‘pay the price of admission’’ to the next step by demonstrating a strong willingness to participate, in spite of his or her circumstances.

Less than full effort participation should be cause for suspension or cessation of the

return to work program. Conversely, full effort participation which demonstrates a

high level of motivation must be reinforced tangibly and recognized as the single

most important multiplier of ability.

Step-Wise Service Delivery

FCE is a developmental process (13) in which the experiences of the recipient lead

to improvement in performance through learning, adaptation, and changes in the

supporting environment. It also can have immediate therapeutic effect (37, 38)

based on development of self-efficacy as a consequence of feedback concerning functional abilities which are uncovered or affirmed (39). Finally, it can greatly improve

the likelihood that an SSDI recipient will benefit sufficiently from rehabilitation to

achieve a return to work. In order to take advantage of these benefits and to maintain the highest level of cost efficiency and not waste resources, the FCE process

for SSDI and SSI recipients must be undertaken in steps. At each step, recipients

who do not meet criteria for success must be excused from the program in an everconstricting funnel that preserves resources so that meaningful rewards in terms of

rehabilitation benefits are provided to those who persevere.

Step One.—The evaluation must identify the causes of disablement, through the

active involvement of the recipient in a simulated work environment, including the

implementation of normal work hours, work rules and procedures. The questions to

be addressed at this step center around, ‘‘What are the functionally limiting factors

which have created this occupational disability?’’ Issues which identify good candidates for return to work include the degree to which the individual demonstrates

a strong work ethic, is safe in the work place, and is able to get along with fellow

workers and supervisors. Recipients will be excused for problems with safety and

interpersonal behavior. Recipients with problems with productivity will be retained

and move to Step Two.

Step Two.—The evaluation must begin to minimize disablement by answering the

question: ‘‘For the functionally limiting factors, are there rehabilitation services

which will be likely to improve ability to work?’’ This is best addressed within a simulated work environment to provide an appropriate context of treatment. This is the

step at which work hardening and work conditioning occur (2, 3, 40–42). Issues

which identify good candidates for return to work include full-effort performance,

the demonstrated ability of the individual to negotiate with disabling factors such

as pain and fatigue, and his or her effective use of work aids, modifications and productivity enhancement strategies. Recipients will be excused for inability to push

through pain to improve function, maintain a conditioning regimen, or participate

daily. As recipients plateau, they will move to Step Three.

Step Three.—If the recipient is to enter the work force, we must identify his or

her person-centered ability factors. This process should be structured by a work demands taxonomy 2 such as that developed by Fleishman and his colleagues (44)

which can be matched to an occupational database in Step Four. This is a broadbased approach to evaluation which will be necessary if the full spectrum of occupationally disabling functional limitations is to be addressed. Using a variety of standardized procedures, the recipient’s aptitudes, abilities, and transferable skills are

identified and measured. Issues which identify good candidates for return to work

include the identification of resources which can be developed to a level that will
65

3The American Psychological Association, American Physical Therapy Association, American

Occupational Therapy Association, American College of Physical Medicine and Rehabilitation,

and most of the other professional associations in Rehabilitation underwrite CARF and have

representation on its Board of Trustees and nominate members of its specially-convened national standards committees.

be valued by employers, coupled with a positive response to the identification of

these resources (45). Recipients will be excused for levels of aptitudes or abilities

which are below a threshold for competitive employment at a level of remuneration

that is likely to make the available benefits package unattractive. As a feasible occupational profile is developed, recipients will move to Step Four.

Step Four.—The collection of work relevant ability information will provide the

recipient with information which will be used in vocational exploration to identify

goals, interests, and possible vocational targets if a rehabilitation program were to

be undertaken. Issues which identify good candidates for return to work include the

identification of occupations which use selected personal resources which can be developed into salable skills, the key to sustainable employment (46) over the next 20

years. Recipients who are unable to identify occupations which have jobs in their

geographic area which will provide adequate remuneration will be excused. After an

acceptable occupational target is identified, recipients will move to Step Five.

Step Five.—Finally, the evaluation will conclude with rehabilitation plan development. If the recipient has progressed successfully through each of the earlier steps,

he or she will be an excellent candidate for a return to work rehabilitation program

focused on a particular vocational target, the likely outcome of which will be sustainable employment.

The hallmarks of the FCE process described above are that it is driven by continuing demonstration of the recipient’s effort and is guided by objective information

about his or her work performance. These are the keys to return to work for a person with a chronic disability. The consequence of this process should be a recipient

who is ready to begin a focused rehabilitation program that often will involve services such as occupational therapy, rehabilitation counseling, and both formal education and on the job vocational training. These are services that should only be undertaken if objective data have been used to develop information about the person

with disabilities that makes it likely that he or she will benefit and the outcome

will be sustainable employment.

POLICY RECOMMENDATIONS

Standardization

FCE is practiced by professionals from many different disciplines, none of which

can lay sole claim. As a consequence, FCE is not formally governed and lacks consistency, resulting in less efficient use of resources and less than optimal outcome

for service recipients. The field needs cross-disciplinary standards of practice. Programs in which FCE is often found have accreditation available through the Commission on Accreditation of Rehabilitation Facilities (CARF),3 although accreditation

is voluntary and often is not pursued because of expense, inconvenience, and marginal applicability.

Policy recommendation: Pay only for FCE services which are provided by programs accredited by an independent agency, using new FCE standards for service

delivery which are developed by a national interdisciplinary committee of experts.

Science and Technology

In the past 20 years, FCE technology has outstripped its scientific underpinnings,

resulting in problems with the utility of many of the FCE applications that are in

use today (47).

Policy recommendation: Require adherence to standards for technology development, including both test protocols and equipment, which are developed by a national interdisciplinary committee of experts, such as those first published by the

EEOC in 1978 (48) which guide employee selection procedures, the American Physical Therapy Association guidelines, and those published by the American Psychological Association (49–51) which currently are under revision.

Cost Efficiency

This is the most subtly difficult problem. FCE easily can be too expensive for the

utility which is derived. An FCE only has utility to the degree it assists in the resolution of a problem and adheres to the ‘‘evaluation factors hierarchy’’ (47). To maximize cost effect, data which relate to the likelihood of return to work should be collected using procedures which maintain a reasonable balance among safety, reliabil-
66

ity, validity and practicality after developing a sharp focus on the question, ‘‘To

what purpose will the information be put?’’

Policy recommendation: Pay only for FCE services which address questions which

are pertinent to that step in the evaluation process at which the client is found,

based on a classification of types of services which normally are appropriate. Such

a classification scheme can be developed by a national interdisciplinary committee

of experts.

The successful return to work of SSDI recipients is a cause for celebration because

it benefits all Americans in both tangible and spiritual ways. These people have the

need and many have been found to be amenable to rehabilitation. The General Accounting Office has estimated that if only 73,000 of the 6.6 million Americans who

receive SSDI and SSI benefits were to return to work, $3 billion could be saved in

subsequent years. It seems to me that this is aiming far too low, given the need

and potential that we find in these people. I have presented an approach which will

be much more effective.

We are on the verge of a great opportunity that needs only to be captured and

managed with resolve. FCE is an important component of an effective return to

work strategy which can be implemented on a national basis. The costs of not making the attempt have become unbearable. Responsible and innovative leadership is

required.

Thank you.

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48. EEOC. Equal Employment Opportunity Commission uniform guidelines on employee selection procedures (1978). Federal Register. Washington, DC: United States Congress, 1990:216–

243. vol 1).

49. AERA, APA, NCME. Standards for educational and psychological testing. Washington,

DC: American Psychological Association, Inc, 1986.

50. APA, AERA, NCME. Standards for educational and psychological tests and manuals.

Washington, DC: American Psychological Association, 1966.

51. APA, AERA, NCME. Standards for educational and psychological tests and manuals.

Washington, DC: American Psychological Association, 1974.
68

you to know we will submit questions for the record in writing to

Chairman BUNNING. Thank you all for your testimony. I want

f

you, but we want to do some individual questioning.

Ms. Ross, in your testimony, you advocate the importance of testing and evaluating new measures to return beneficiaries to work

and caution against focusing on one option to the exclusion of alternative measures. Do you think that return to work legislation

should authorize the testing of various alternatives, rather than a

full implementation of one measure?

Ms. BASCETTA. Yes, Mr. Chairman, we do prefer testing various

alternatives. Because our analysis shows——

Chairman BUNNING. Would you please bring the mike closer so

everyone can hear you.

Ms. BASCETTA. We do prefer testing more than one alternative,

and the reason is that our analysis has shown there are many

interrelated problems. So we think we could obtain richer information about what might work best if we test at least a few ideas in

a couple of areas. For instance, we would want to know before full

implementation how different changes in work incentives might affect caseload growth and work effort, and we would also like to

know how many VR providers might participate and who they

might serve under different reimbursement mechanisms.
69

Chairman BUNNING. Do you have any recommendations who

should monitor return to work alternatives, given SSA’s record on

managing demonstration projects?

Ms. BASCETTA. We don’t have a specific recommendation about

who might monitor, but we would anticipate that SSA’s Office of

Research, Evaluation, and Statistics would hire specialized expertise, you know, a nationally known researcher, or a firm with a

track record in conducting social experiments. And, we would also

strongly advocate peer review, outside peer reviewers, particularly

during the design of the study, and also at important points during

the analysis of the data.

Chairman BUNNING. I think Mr. Christensen mentioned the fact

that there have been pilot programs in existence for over the last

17 years, and we are having the administration recommend another pilot program.

Let me ask all of the participants on this panel, if the fear of losing a medical card or medical insurance is one of the principal barriers to returning to work for people with disabilities? In other

words, if we could provide in a piece of legislation the fact that

they are going to be covered by Medicaid or Medicare, and have it

reasonably priced—by that I don’t mean the current $300 plus

after 9 months—would that address the main barrier right now

from returning people from the SSDI and SSI rolls to the work

force?

Mr. MATHESON. It is an important barrier. I think the main barrier is motivation on the clients’ parts. The most important——

Chairman BUNNING. Please repeat that. I didn’t understand.

Mr. MATHESON. I think the absence of a medical care card would

be a very important barrier. It is with my clients. I think the most

important barrier has to do with a person’s motivation.

Chairman BUNNING. Anyone else care to respond.

Mr. KREGEL. I would like to comment on that. There are provider

agencies, both public and private, in operation this morning, in

which people are meeting with the consumers with disabilities, who

are coming with them, expressing an interest to return to work.

What these professionals are doing in collaboration with the consumer is not figuring out how they can get off the SSDI rolls, but

rather how to maximize their earnings while retaining their SSDI

eligibility, so that they can maintain their eligibility for Medicare

services.

Chairman BUNNING. What if we took that factor out though?

Mr. KREGEL. Then the issue becomes whether the individual is

financially better off as a result of returning to work, and by maintaining Medicare eligibility you eliminate a major, major factor of

that cost equation for the individual, because of the special types

of expenses that they are going to have related to their medical expenses.

Chairman BUNNING. Also, in regard to the employment in the

private sector, there is the barrier that the liability assumed by the

employer is so high.

Is there someone else?

Mr. Baron.

Mr. BARON. In that regard, a number of States have begun to experiment through the 1115 waiver program with various kinds of
70

sliding scale programs, as well as wraparound coverage, and either

of those, in addition to full continued coverage through Medicaid

and Medicare, are possibilities that need to be considered. I don’t

think we have much evidence yet of which of those is going to be

most effective, but it is a major barrier in terms of the culture of

unemployment and the lack of motivation that exists in the community of people I am most familiar with.

Chairman BUNNING. I think there could be a sliding scale built

in according to the amount of earnings as to how much you might

be offered in medical coverage.

Would anyone else like to comment?

Ms. RENO. If I may, Mr. Chairman, that was the thinking behind

the panel’s recommendation for an affordable and understandable

Medicare buy-in. There are two problems with the Medicare buyin. First, it is very, very difficult to explain to a beneficiary what

the price of it is, so the price needs to be both affordable and understandable. Scaling it to their earnings is an idea that our panel

thought would work. That is understandable.

The second point the panel recognized is that for many people on

the disability rolls, prescription medications are needed in order for

them to function. They need it while they are disabled and not

working, they need it while they are working, and that is not covered by Medicare, which is why Medicaid often is very important.

Chairman BUNNING. Anyone else?

Ken, go ahead.

Mr. HULSHOF. Thanks.

Ms. Ross, this first one is for you. Dr. Growick, maybe you can

also comment on this particular question, but, Ms. Ross, you mentioned that you recommended to SSA they should develop strategies to help intervene earlier in the application process, maybe

even prior to awarding benefits, to help applicants assess work capacities. Would SSA have to actually advance screen for those who

would somehow presume to be disabled, and are there some problems along with that?

Ms. ROSS. Well, you are certainly right in pointing out that it is

not easy to figure out how you would have a whole set of applicants

move into the vocational rehabilitation world. There are some possibilities for something that a lot of beneficiaries say they really

would like, such as one-stop shopping. This could happen in some

SSA offices, where you could have vocational rehabilitation people

and other kinds of employment and training facilities there. Without its being at all involved with SSA, you could make some of

these referrals before people began applying for benefits. Maybe

there is a possibility for limited screening, that is another way to

look at it.

The major point is that we know what we have now is too late

for many people; that by the time you have had an award, it could

be at least 1 year, and sometimes many years, after you have started to experience this physical or mental impairment. So while the

precise solution isn’t obvious, it seems like an area where we ought

to grapple some more.

Mr. HULSHOF. Doctor, you mentioned the insurance industry has

discovered it is cheaper and better to help beneficiaries return to

work than it is to pay off a claim. Are there any lessons we can
71

learn in terms of early intervention from the insurance industry

that might be included in some sort of reform proposal?

Mr. GROWICK. Yes, sir. Obviously earlier rehabilitation is better

rehabilitation. The sooner you can get to an individual before they

are disenfranchised from the workplace, the better off and research

has shown that, some of my own research in terms of prediction

of outcome. Within the workers’ compensation arena, it is even

paramount that that happens. The reason is that claimants are receiving TT, temporary total disability payments, so the clock is

ticking. Rehabilitation professionals, graduates of my training program, will go into the private sector, work with workers’ compensation claimants, know that time is their enemy, so they have to

enter the process as soon as possible.

There is another fiat they use in that whole process in workers’

compensation rehabilitation, and that is something we call a hierarchy of return to work, and it is codified in some workers’ compensation systems nationally, hierarchy, return to work, meaning

when you work with somebody with a disability, especially if it is

work-related, you go back to the same employer and try to get the

person back to work in the same job with the same employer. For

some reason, they don’t have the functional capabilities to do their

previous work, you then move down the hierarchy to a different

job, same employer, see what else can be done at the worksite with

modifications, what other essential functions the person can perform for that employer. Then you could go to a different employer,

same job, down this hierarchy.

Early rehabilitation is crucial. That is part of the problem with

bureaucracy that is government run. You have to employ the freeenterprise system, have private providers out there who are going

to respond quickly and fast, and also know how to talk to employers and get the job opportunities that are necessary.

Chairman BUNNING. Doctor Berkowitz, you want to comment,

and let me even ask you as sort of an introductory question because my time is limited, do you believe personally that SSA

should manage a return to work program, Dr. Berkowitz?

Mr. BERKOWITZ. Do I believe they should manage a return? No,

no, I don’t. I recognize that the GAO recommends we ought to intervene early. Do we really want the Social Security Administration to pay trust fund money to persons not on benefits? Do we

want to turn SSA into a rehabilitation agency? We are lucky SSA

can pay checks on time. The Social Security Administration is not

set up to accomplish these functions.

The essence of the ticket plan is that SSA is relieved of these

functions and responsibilities.

I don’t know whether any particular rehabilitation scheme will

work. The advantage of having a variety of private providers is

that each can do their own thing. Best of all there are no risks. We

pay them only if the beneficiary goes back to work.

Why am I so against milestones? It is not that I wouldn’t love

to reward providers. It is because I have no confidence in the ability of SSA to negotiate fee schedules. The minute you begin to pay

for milestones, you are creating a new bureaucracy, and I don’t

think that is necessary. I want to pay people only for what we

want. We want people back at work, in good productive jobs. I don’t
72

think anybody around this table knows of any one way to do that.

There are just a variety of ways to do it and the Ticket Proposal

allows all of them an opportunity to demonstrate their utility.

Chairman BUNNING. The gentleman’s time has expired.

Let me ask Dr. Growick, you recommended an incentive for employees who hire SSA recipients, such as a FICA tax credit. What

data is there to support that kind of tax credit, and is it really

needed?

Mr. GROWICK. The data is mostly personal experience.

Chairman BUNNING. No studies, just your own experience and

your own students’ experiences?

Mr. GROWICK. Correct. In terms of working with employers, our

experience is that you need some sort of leverage when you go to

an employer to try to get them to accept individuals with limitations because of some of the potential liabilities down the road.

Anything we can do to help the rehabilitation industry work with

employers, you know, helps the entire process, and there is some,

you know, tax credits with the general rehabilitation field that

have been tried over the years that have been successful in terms

of opening doors to employers that otherwise might not be so receptive.

Chairman BUNNING. Dr. Berkowitz, unfortunately, or fortunately, the SSA is in the SSDI business right now. What makes

you think that the ticket model that we are talking about will

work?

Mr. BERKOWITZ. They are in the DI business; they pay benefits.

Chairman BUNNING. That is correct, they are in the business—

there is a law on the books right now, right now, that requires a

review of everyone on SSDI over a 3-year period. Obviously they

are not complying with the law. That is the law. So let’s move on

from there, and I want to know your opinion on why you think

your Ticket Program will work.

Mr. BERKOWITZ. I don’t know whether it will work or not. All I

am saying is it is a risk-free method of trying it. Now, you seem

to be concerned, or someone on the panel seems to be concerned,

about the fact that this is going to disenfranchise certain providers

out there.

Chairman BUNNING. I am not concerned about any of that. I am

concerned about getting answers.

Mr. BERKOWITZ. I think this is a good way to try. Let’s unleash

all of the creativity that Bruce has talked about in regard to the

Workers’ Compensation Program. We know a lot of exciting things

are happening in the private sector. Now insurance carriers are

continually hiring people to aid people to get back to work. They

have no prescribed protocol. They do it in 100 different ways. And

I say here is a marvelous opportunity to try at no cost to the U.S.

Government.

Chairman BUNNING. Well, you also really emphasize the fact it

has to be voluntary.

Mr. BERKOWITZ. I am sorry?

Chairman BUNNING. That it has to be voluntary.

Mr. BERKOWITZ. Yes.

Chairman BUNNING. That you can’t mandate it. Tell me the reason that it has to be voluntary. Why is that so important?
73

Mr. BERKOWITZ. I have looked at these programs in this country

and abroad in many different countries, and I have never seen

compulsory provisions work. We are confronted with the atomic

bomb dilemma. If the only penalty is cutting people off the rolls,

administrators are hesitant to use it. The essence of this plan is

to get the disabled person together with a provider so that they can

work together to get the person back to work. The whole idea of

compelling people, or penalizing them, is contrary to the whole

spirit and philosophy of this plan.

Chairman BUNNING. Mr. Kregel, let me ask you one question.

You mentioned in your statement that a strong management structure, external of SSA, is needed to effectively implement the return

to work program, much like Dr. Berkowitz. Can you elaborate on

why a return to work program should be administered outside of

SSA, other than the bureaucratic maze that we have?

Mr. KREGEL. There are functions that are required, such as expertise in the design and management and evaluation of employment programs and return to work programs; and there is also a

function relating to consumer advocacy, consumer assessment, and

building consumer protections into the delivery of services. Both of

those are unique areas of expertise, and it seems to me that those

types of functions should be identified outside the Social Security

Administration.

Specifically, there are some issues—that were alluded to in an

earlier panel—about information that would be provided to individuals who need to make a decision; first, should I participate in the

Ticket Program, and then second, what agency should I select to

deposit my ticket with? Now, who should provide that information?

Should it be that the provider agencies themselves recruit and

market their services to individuals? Is that exclusively SSA’s responsibility because of what we know about prior efforts in terms

of promoting work incentives and other factors; or is there a need

for a management structure that can give information to people in

the best way that will work in their particular locale?

Mr. HULSHOF. Mr. Chairman, I would be extremely remiss if I

didn’t lob at least one softball to a fellow Missourian.

So, Dr. Matheson, you make some very strong points in support

of the functional capacity evaluation, and I appreciate the supplemental, because rather than bog down with some of the costs of it,

is a functional capacity evaluation needed in every case; and if not,

in what types of circumstances would it be most useful?

Mr. MATHESON. I think it is going to be something that could be

mandated as a screening process for the subsequent voluntary participation and the ticket. I think it is going to bring about such

great savings, identifying those people who are good candidates,

that it ought to be used widely.

Mr. HULSHOF. Are there certain industries that have utilized a

similar type of evaluation that we can look to to say that this is

a good model for us to follow?

Mr. MATHESON. This model began at Rancho Los Amigos Hospital, and if you look at the large rehabilitation centers that have

the full range of capabilities, from physicians, PTs and OTs down

to rehabilitation counselors, you find this is a stepwise model that

is interdisciplinary. I think its application on a wide basis is new
74

and in some ways revolutionary, but the model itself is one that

is grounded in quite a bit of experience.

Mr. HULSHOF. Last question. Since I haven’t had a chance to digest some of the numbers, is there an average cost of a functional

capacity evaluation?

Mr. MATHESON. The process we have projected is $5,500 before

we get to something that we would say is a ticketed sort of benefit,

of vocational preparation, and that $5,500, it would only be a $500

cost if the person only makes it through step one. It would be an

aggregate of $4,000 if the person makes it through step three and

so forth.

Mr. HULSHOF. Thank you, sir.

Mr. MATHESON. You’re welcome.

Chairman BUNNING. Ms. Reno, you mentioned one of the panel’s

conclusions was that current benefits are not a strong deterrent to

work. Are current benefits, in your view, a strong deterrent to people coming on the rolls?

Ms. RENO. The panel’s conclusion was that for people who had

a choice to work or to turn to benefits, the benefits themselves are

a very poor second choice to having and remaining in a job.

Chairman BUNNING. I apologize, I have to go to the floor, and if

my colleague has no further questions, we will submit to you in

writing those questions that we have failed to ask you today in person. Thank you for your cooperation.

[The following was subsequently received:]

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Dr. Bruce Growick

1. In your testimony, you said that a critical component of any new legislation should

be provisions for informed choice throughout the rehabilitation process with a payment system that is viable and realistic. What are the key components, in your view,

of a viable and realistic payment model for providers?

The development of a payment system should focus on providing the consumer

with choice. That means developing a system that will enable and encourage all

qualified providers, both large and small, to participate in the program. In order for

this to occur, a payment model must contain milestone payments so that small providers can remain financially viable during the long process of consumer job placement and retention. Also, a larger reimbursement target must be established to encourage providers to have a vested interest in long-term job retention by the consumer. The most viable reimbursement option appears to be a percentage of the savings realized to the Social Security fund from having the individual being self sufficient and off the roles.

2. You recommend that a new return-to-work system be as streamlined and efficient

as possible and avoid increasing SSA’s workload. Do you have any specific recommendations for designing such a system?

The Social Security Administration (SSA) is a government agency that was established to provide retirees, the disabled and the poor with financial aid. The SSA is

not in the business of rehabilitating its recipients with disabilities. Therefore, a system should be developed that allows SSA to retain oversight over payments but establishes a governing body that will regulate the delivery of services by taking into

account the needs of consumers and the qualifications of providers.

f
75

Questions received from Hon. Jim Bunning, and Subsequent Responses

from John Kregel

[At the time of printing, no responses had been received from Mr. Kregel.]

You mention that individuals viewed as too challenging to serve, or too poor a risk

for meeting the success criteria of the program (such as individuals with persistent

mental illness or brain injury), will have extreme difficulties locating providers willing to serve them. Can you envision any type of incentive or special provision which

might be included in legislation to help ensure these individuals do receive services?

SSA’s proposal contains a provision for protection and advocacy funding designed to

assist SSA recipients with any disputes with providers that may occur. What are

your views regarding a protection and advocacy system? Do providers need a system

to address disputes that they may encounter?

I understand that you are a vendor of supported employment services for persons

with severe disabilities. Could you describe the services that you provide and the

process for placing individuals with severe disabilities into the workplace?

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Richard Baron

f

Chairman Bunning’s Question #1: Your testimony focused on the unique challenges

faced by individuals with mental impairments. If a ticket-type approach isn’t the best

option for these individuals, what other options do you envision working?

Response. While the ‘ticket approach’—which emphasizes empowering consumers

to choose their providers and rewarding those providers on the basis of specific outcomes—is a reasonable way in which to structure Social Security’s response to meeting the needs of persons with serious mental illness, the development of a ticket approach must avoid a number of operational problems that, unless addressed, will

limit the rehabilitation opportunities available to people who are often quite eager

to enter the competitive labor market. To avoid some of the problems that can be

anticipated, we would suggest building into the ‘ticket approach’ a number of key

operational principles. Along these lines, the ‘ticket approach’ to insure that the

tickets are:

Accessible. Because we believe that there are no effective means to accurately predict which SSA recipients or beneficiaries are most likely to succeed at working in

the competitive labor market, access to the ticket should be universal, and not involve testing and screening out possible candidates for rehabilitation and employment programming.

Renewable. Persons with serious mental illness will often need to be engaged in

the process of rehabilitation several times in their lives in order to establish a longterm relationship with the labor market: for this reason, the ‘ticket’ system cannot

be a ‘one-time-only’ offer on the part of the Social Security Administration.

Divisible. Rehabilitation providers will need to be reimbursed at various milestones—on the basis of specific achievements at points along the client’s progress

toward economic independence—if the ticket approach is to avoid encouraging agencies to work only with those most readily employed and avoid those clients who will

take longer or may choose to drop out mid-process.

Transferable. To maximize client choice, the ticket must be transferable, at the

client’s request, from provider to provider: some clients may be dissatisfied with the

services they receive; others may choose to leave an area or a state to make a new

life for themselves elsewhere, and others may believe better employment prospects

will be in other settings.

A ticket approach that embodies these principles is far more likely to be able to

meet the needs of persons with serious mental illness, maximizing both their choice

of providers and their choice of the type, pace, and outcomes of the rehabilitation

program they may find most helpful, at the various points in their lives. It must

be emphasized that persons with mental illness often have a long-term disability,

and this will require a long-term commitment to provide rehabilitation services if

the nation is going to encourage them toward long-term careers. A ticket approach

can and should respond to these unique needs.
76

Chairman Bunning’s Question #2. Various proposals create a system under which an

SSA recipient would be given a ticket which they could use to obtain vocational rehabilitation and employment services from a public or private provider. In your view,

will the majority of SSA recipients be able to make informed decisions on how best

to assign their ticket? How can consumers best make informed choices regarding provider services?

Response. There is no question but that people with serious mental illness and

others with serious disabilities will be able to make informed decisions on how best

to assign their ticket if they are provided with the kind of information on which informed decisions are made. To insure that such information is available to consumers, Social Security will need to insure that:

—information about the operations and outcomes of provider agencies will be accessible. SSA will need to support the collection of both outcome data and consumer

assessments of the various provider agencies they may want to use. Much of this

information can be gathered by consumer organizations themselves.

—‘vocational case management’ resources will be accessible to help clients make

choices. In addition to providing the information, consumers will need access to

guidance—from either professional or consumer organization—to help them determine goals, assess the offerings from various providers, and make choices on an ongoing basis throughout the rehabilitation process.

Finally, many consumers are likely to face very few choices in their communities:

in many parts of the country—in both urban and rural communities—there may

only be a single provider of work oriented rehabilitation services, in which case

‘choosing’ between depositing their ticket with their local Office of Vocational Rehabilitation (which will contract with the provider for service delivery anyway) or contracting directly with the same provider agency is really no choice at all. Social Security—to make their reliance on ‘client choice’ more real—will need to explore varied means for promoting the development of a far richer array of rehabilitation program.

Chairman Bunning’s Question #3. You mentioned in your testimony that SSA’s current work incentives are largely unknown. Do you have recommendations on ensuring

that SSA recipients are informed and knowledgeable on current or future work incentives?

Response. The Social Security Administration will indeed need to make a substantial commitment to ensure that information about the work incentives are available.

Two major activities need to be undertaken. First, a much greater effort must go

toward informing the Social Security Administration’s own field staff about the usefulness and details of existing and emerging work incentives: it is now commonplace

to hear complaints from vocational rehabilitation counselors, consumers of disability

services who are back at work, and employers that local Claims Representatives are

either unaware of or misinformed about the work incentives within their own systems.

Second, there will need to be a comparable effort to provide local provider agencies with similar information, so that persons with disabilities are informed—as

early as possible and with absolute accuracy—about the impact of work (and the

work incentives) on their financial lives. The Matrix Research Institute/University

of Pennsylvania Research and Training Center on Vocational Rehabilitation Services for Persons with Mental Illness, supported under a grant from the National Institute on Disability and Rehabilitation Research, is currently exploring two different modalities in providing such information to consumers:

—internal advocacy involves the development of ‘in-house’ expertise, in which

each provider agency is funded to support a half-time or full-time position to provide

vocational rehabilitation clients with information about work incentives. Those who

fill such positions will need both initial training and ongoing support.

—external advocacy involves the establishment of a regional center (on a statewide or citywide basis) to be used by both rehabilitation staff and clients, where

their questions about the work incentives can be answered authoritatively—by telephone and fax and E-mail, or in training programs and in-person presentations—

by trained full-time staff.

Again, many of these advocacy programs can be staffed and run by consumer organizations themselves: here at MRI we have successfully operated a Work Incentives Advocacy (WIA) program that has been entirely consumer staffed, which has

allowed the WIA advocates both to speak with great authority and to gain the trust

of their audience...

Again, let me thank you for your interest in our views. We would be delighted

to have the opportunity to answer any further questions on these critically impor-
77

tant matters as the Subcommittee on Social Security moves forward. The Subcommittee’s efforts are especially encouraging to those of us in the field: there is

a growing conviction that people with all kinds of serious disabilities have enormous

but largely unrealized vocational potential, and that the current economic climate

offers an unparalleled chance to seek to define a new role for people with disabilities

in the competitive labor market.

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Leonard Matheson

f

[At the time of printing, no responses had been received from Mr. Matheson.]

What is the difference between a functional assessment and a functional capacity

evaluation? How does a functional capacity assessment measure motivation or less

than full effort performance?

You recommend evaluating the occupational potential of a person with a disability

on a ‘‘progressively restrictive basis.’’ What exactly does this mean and how would

such an evaluation serve as a gatekeeper to the process?

Chairman B

[Whereupon, at 12:09 p.m., the hearing was adjourned.]

UNNING. The Subcommittee stands adjourned.

f

(79)

BARRIERS PREVENTING SOCIAL SECURITY

DISABILITY RECIPIENTS FROM RETURNING

TO WORK

THURSDAY, JULY 24, 1997

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON SOCIAL SECURITY,

Washington, DC.

The Subcommittee met, pursuant to notice, at 1 p.m., in room B–

318, Rayburn House Office Building, Hon. Jim Bunning (Chairman

of the Subcommittee) presiding.

Chairman BUNNING. The Subcommittee will come to order.

Today we will continue with part II of our hearing on barriers preventing Social Security disability recipients from returning to work.

My formal statement was made yesterday, so my remarks this

afternoon will be very short.

During part I of the hearing we heard from the Social Security

Administration, the Department of Education, the General Accounting Office, and experts in the field of rehabilitation.

Today I look forward to hearing from consumers, those individuals who are closest to the issues surrounding return to work, and

from those who work day to day providing rehabilitation services.

I am confident that each of you will provide important insight for

the Subcommittee to carefully consider. In addition, I want to

thank each of you for your tireless advocacy and commitment.

Many of you have provided your counsel to both my staff and

Mrs. Kennelly’s staff, and I want you to know how much we appreciate your help.

In the interest of time, it is our practice to dispense with opening

statements, except from the Ranking Democratic Member. All

Members are welcome to submit statements for the record. I yield

to Mrs. Kennelly for any statement she would like to make.

Mrs. KENNELLY. Thank you, Mr. Chairman. Mr. Chairman, the

testimony we received yesterday was useful in setting out some of

the work disincentives which the disabled face in attempting to return to work. I am sure we will find today’s testimony equally as

helpful.

I am pleased the administration has now submitted to us a plan

for returning more beneficiaries to the workplace. I hope that you

and I, Mr. Chairman, together with the administration can work

on a bipartisan solution to this problem, and I look forward to today’s hearings.

Thank you.
80

Chairman BUNNING. Thank you, Barbara.

Testifying on the first panel today are Susan Webb, executive director of the Arizona Bridge to Independent Living in Phoenix, and

board member of the National Council on Independent Living;

Bonnie O’Day with the National Council on Disability; Tony Young,

cochair of the Consortium for Citizens with Disabilities Vocational

Working Group; Lorraine Sheehan, chairperson of the Governmental Affairs Committee of The Arc of the United States, accompanied by Marty Ford, assistant director of the Governmental Affairs Office; Brenda Crabbs, a current SSDI beneficiary testifying

on behalf of the National Arthritis Foundation; and Suzanne Erb,

a former SSDI beneficiary from Philadelphia, Pennsylvania.

Ms. Webb, if you would start the testimony please.

STATEMENT OF SUSAN WEBB, EXECUTIVE DIRECTOR,

ARIZONA BRIDGE TO INDEPENDENT LIVING; AND BOARD

MEMBER, NATIONAL COUNCIL ON INDEPENDENT LIVING

Ms. WEBB. Thank you, Mr. Chairman. Members of the Subcommittee, thank you very much for the opportunity to be here

with you today.

My name is Susan Webb. I am executive director of the Arizona

Bridge to Independent Living, and I am also a board member of the

National Council on Independent Living, or NCIL, and I chair

NCIL’s Subcommittee on Social Security issues.

Representative Bunning, on the last day of the 104th Congress,

you presented a statement before the House floor that gave a very

deplorable statistic: That 1 in 1,000 people who ever get onto SSDI

voluntarily leave those rolls.

And I guess my purpose here today is I am the 1 in 1,000 who

made it.

Chairman BUNNING. Congratulations.

Ms. WEBB. Thank you. Twenty-three years ago I fell off a motorcycle at a company picnic. It happens. And I woke up 2 days later,

having permanently and irreversibly lost the use of 60 percent of

my body.

For the next 3 years I took advantage of the SSDI Program, and

it was my safety net that enabled me to live independently in the

community while I rehabilitated both physically, medically and vocationally.

Now, at the end of that time, I used the trial work period to return to work. I have been gainfully employed full time without

interruption for the past 20 years.

Now, as near as I can figure, the American taxpayer spent about

$29,000 on SSDI benefits to me and vocational rehabilitation services. I am very proud to tell you today that in 1 of those 20 years

that I have been employed, I paid back every penny of that $29,000

in taxes. Admittedly, it was a good year.

The other 19 years I did not make quite that much, but I figure

that still as an employed person I was making a personal investment in the greatest country in the world.

Now, you might assume that if I can do it, why are not all the

other millions of people that are receiving SSDI doing the same

thing. Well, the fact is that I was very, very lucky.
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Everything fell into place for me. My medical care issue was not

a problem, because I was insured by two different private health

care coverers at the same time.

A key issue was that the Social Security Administration did not

hassle me. I went through the 5-month waiting period. I got into

the system. I did not have lengthy appeals. I did not have to get

an attorney. While I was on the system, they did not hassle me.

They did not overpay me.

And so when it was time to go back to work it was not a fear

for me. I did not fear going back to work, that the SSA was going

to come and beat up on me over it. So it seemed the logical thing

to do to try work, because I felt that if it did not work out for whatever reason, I would still be able to use the SSA as my safety net.

I had a car that was paid for. Transportation was not an issue.

My family was supportive. My uncle built a ramp and put in grab

bars so I did not have to go into expensive—well, I do not know

what the euphemism is, but we call them nursing homes where I

live. I was able to stay and rehabilitate in the community.

And the fact was that my disability was not that severe. Quite

frankly, I do not need help with toileting, dressing, bathing, meal

preparation. I do not need help on the job in terms of personal assistance services, sign language interpreters or job coaches. People

who need those kinds of things need extra support, and those

things are not available to you today to any appreciable extent if

you do in fact work.

The other factor was that jobs were available, just like today. We

are in a really good economy. This is the best time right now for

people, in a post-ADA era, in a strong economy to return to work.

We are there now to where I think we can do some of the things

that I availed myself of back in the seventies.

Today my colleagues and I come to you with a proposal. This proposal was developed in Houston, Texas, this year where 40 consumers from around this Nation who had lived it—had been there—

who had been on the system, got together in a room, and answered

one fundamental question: What is it going to take for people with

disabilities on SSI and SSDI to return to work?

We believe, Mr. Chairman, and Members of the Subcommittee,

we have answered that question. We believe that it is a reasonable

and it is a cost-effective proposal. But I am here to tell you I am

not an economist. I do not have a Ph.D. in anything.

All I know is that I lived with this, and I got off the system because the system was there for me when I needed it in a rational

way. Today it is not for most beneficiaries.

Our proposal fixes that, because it is finally the consumer voice

from people who really know what needs to be done.

I caution you that we cannot take a piecemeal approach. This

has got to be comprehensive, and I applaud your leadership and I

look forward to your leadership in taking it beyond the jurisdiction

of this Subcommittee, and taking it to a massive, comprehensive

solution.

No more studies. No more demonstration projects. No more

Band-Aids. No more delays. Millions of people are counting on you

to be an integral part of Workforce 2000.
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That completes my comments, Mr. Chairman. I welcome any

questions.

[The prepared statement follows:]

Statement of Susan Webb, Executive Director, Arizona Bridge to Independent Living; and Board Member, National Council on Independent Living

Mr. Chairman, members of the subcommittee, thank you for your interest in

disability-related issues. Thank you for inviting me to be with you today. My name

is Susan Webb, and I am the Executive Director of the Arizona Bridge to Independent Living (ABIL), Board Member of the National Council on Independent Living

(NCIL), and chair of NCIL’s Social Security subcommittee.

Representative Bunning, on the last day of the 104th Congress you delivered a

statement from the House floor that included a deplorable statistic: 1 in 1,000 SSDI

beneficiaries voluntarily leave the rolls to return to work. I am here today is as a

representative of that statistic. I am the 1 in 1,000 who did so. Twenty three years

ago I fell off a motorcycle while attending a company picnic. I woke up two days

later with 60% of my body permanently and irreversibly paralyzed. After three

years of physical and vocational rehabilitation I used the SSDI Trial Work Period

to return to work. I have worked full-time without interruption for the last 20 years.

As near as I can estimate, the American people provided me with approximately $29,000 in SSDI and Vocational Rehabilitation Services (allowing 20% for administrative overhead). I am proud to say that in one year during the last twenty (admittedly a good year!) I paid back every cent of that $29,000 in taxes. As for the taxes

I paid during the other 19 years, well, I figure that’s an investment in the greatest

country in the world. Clearly, my returning to work was far more cost-effective for

our Nation than if I had not returned to work. And, of course, my lifestyle is far

closer to the American Dream as a result.

Now, you might be inclined to assume that if I did it, so can the millions of other

SSDI recipients. Unfortunately, I am the exception rather than the rule because I

was very, very lucky. Many components involved in my achieving this goal happened to fall perfectly into place for me. It obviously does not happen that way for

the vast majority of SSDI beneficiaries. For example:

1. My medical expenses were completely covered as I was dually insured by an

employer-provided healthcare policy and as a dependent on my husband’s policy. Although they did not cover all the cost of assistive technology (formerly called durable medical equipment), my employer had purchased short-term disability insurance

which provided me with $100 per week for 26 weeks. I used this income to purchase

the additional equipment I needed to achieve independence.

2. The Social Security Administration didn’t hassle me about eligibility for benefits. After the five-month waiting period I began receiving cash benefits without

lengthy appeals. I received accurate information on options available to me including the Work Incentives. I received no threats or letters of ‘‘overpayments.’’ In short,

I was not afraid to leave the rolls as I had not had a threatening experience with

the SSA to begin with. It never occurred to me to worry about what would happen

if for some reason I found I did not have the endurance to work successfully. I assumed the safety net of the SSA would be there for me if I needed it.

3. I owned an automobile that was fully paid for. Having transportation that enabled me to come and go whenever and wherever I needed allowed much greater

opportunity to continue with outpatient therapy, attend college and ultimately return to work.

4. State Vocational Rehabilitation was relatively new as the Rehabilitation Act of

1973 had just been adopted. My VR counselor was focused on counseling rather

than the professionalized, process-oriented, bureaucratic system we have today. She

was actually helpful in advice and guidance while I made my own decisions about

the direction of my life.

5. My family was supportive. I went to live with an aunt and uncle for six months.

My uncle built a ramp and installed grab bars. They had two children living at

home with disabilities. They knew I needed time to practice independent living

skills to become completely independent and avoid institutionalization in expensive

nursing homes. I have never been institutionalized due to the support available to

me that enabled me to adjust while living and functioning in the community.

6. My disability is not as severe as that of many others. I was young, healthy and

strong when my accident occurred. I do not need personal assistance for bathing,

dressing, toileting, meal preparation or housekeeping. I do not need personal assistance on the job such as job coaches, sign language interpreters, readers, etc. For

those who need these services, working is only possible when such services are

available, preferably on a co-pay or tax credit basis.
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1 According to a General Accounting Office report submitted to the Ways and Means Subcommittee on Social Security Disability in 1996. Representative Bunning’s statement from the

House floor used a 1 in 1,000 statistic.

7. When I started back to work, the economy was good, jobs were available. My

employer, Michigan Bell, had just been selected by the President’s Committee on

Employment of the Handicapped (now the President’s Committee of Employment of

People with Disabilities) as ‘‘Handicapped Employer of the Year.’’ I had marketable

skills and training. I worked for the Bell System/AT&T for 12 years in two states.

Accommodations, when I needed them, were made willingly. I was part of the team

and considered a valuable employee.

My colleagues and I come to you today with a proposal developed by those of us

who have ‘‘been there.’’ On January 31 and February 1 of this year, 40 consumers

with disabilities, most of whom have been on SSI or SSDI, assembled in Houston,

Texas to answer one fundamental question: What will it take so that SSI/SSDI

beneficiaries can reduce our dependency on these systems by starting or returning

to work? We believe that finally a comprehensive proposal from those of us whose

very lives depend on this system have come forward with a document demonstrating

a cost-effective, reasonable answer to that question.

As NCIL’s representative at the Houston conference, I was one of the five steering

committee members facilitating the position development. NCIL’s Board of Directors

formally adopted the position at our Board meeting in March, 1997. It is important

to note, however, that this position is representative of people across the Nation representing a cross-disability, cross-country, multi-cultural perspective. It stands on

its own merit as a comprehensive document that should be used as a jumping-on

point to other stakeholders as partners in a cohesive, bipartisan movement toward

successful (re)entering the workforce for millions of Americans with disabilities.

The National Council on Disability plans to issue a report to you within a week

that details all of the provisions of the position. For the sake of brevity, however,

I offer you the following summary of our position:

THE PROBLEM:

• Only 1 in 500 1 DI beneficiaries voluntarily leave the rolls.

• Few beneficiaries know of or use the current work incentives.

• Linkage between benefits perpetuates ‘‘all-or-nothing’’ focus (e.g. beneficiaries

lose healthcare coverage if they leave the rolls)

• State VR system is the only option for SSA referrals for return-to-work services.

VR serves only a small percentage of these referrals.

• SGA earnings cliff discourages work.

• Lengthy eligibility determination, lack of consistent information by SSA, and

lack of confidence in SSA disincents work attempts.

GUIDING PRINCIPLES FOR PROPOSED SOLUTION:

• System change must include incentives for all stakeholders: beneficiaries, employers, insurers, public and private vocational providers, taxpayers, SSA.

• SSI and DI programs need to be simplified/consolidated.

• Changes must be comprehensive. Piecemeal solutions have never worked.

• Focus must be on reduction of dependency on the system rather than whether

an individual fully leaves the rolls.

• Proposed solutions must be revenue neutral or demonstrate savings to the trust

fund and/or general fund.

• Systems must focus on the relationship between beneficiaries and employers.

SSA should not be gatekeeper or be in the business of vocational services. Beneficiaries must control and be primarily responsible for the own return-to-work plan.

HIGHLIGHTS OF POSITION:

Increase Choice in Employment Services and Providers:

• Consumers/beneficiaries take responsibility for choosing among providers of return-to-work employment services, both public and private.

• Providers of employment services are reimbursed upon attainment of milestone

outcomes, e.g., after completing training, after job placement, after a period of time

on the job.
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Streamline SSI/SSDI Work Incentives:

• SSI and SSDI benefits should be reduced $1 for every $2 earned above $500

in earned income. Reductions should be made in $50 and $100 increments. This

would allow low wage earners or those only able to work part time to work as much

or as little as their disability allows but would still reduce dependency on the system. The incremental offsets would reduce the accounting burden and the historical

inaccuracy of determining benefit reductions monthly.

• Eliminate existing complexities: e.g., Trial Work Period and Extended Period of

Eligibility. The offsets described above would achieve the safety net needed to encourage return-to-work attempts but would do so in a manner more consistent with

transitioning rather than reaching an ‘‘earnings cliff’’ associated with the existing

TWP and EPE.

• Eliminate Substantial Gainful Activity (SGA) except as it relates to initial SSDI

eligibility. We understand that an earnings benchmark is needed to identify when

an individual is considered ‘‘employed’’ by the very nature of SSDI being an income

replacement program when loss due to disability occurs. However, beyond initial eligibility, it serves as an earnings cliff and bears no relevance on ability or inability

to work, especially if the 2:1 offset proposed above is adopted.

• Retain the Plan to Achieve Self-Support (PASS) Program and apply it to SSI

and SSDI beneficiaries. The PASS Program has been criticized recently for being

underutilized, poorly managed by the SSA and used by beneficiaries with little successful outcome. We believe the PASS program represents a viable means for beneficiaries to ease back into the workforce by setting aside earned income for preemployment expenses, such as specialized transportation, job coaching, sign language interpreters, personal assistance services, assistive technology and specialized

transportation. We believe that the lack of usage and questionable success of the

PASS Program is directly related to the fact that other barriers described in this

proposal have not been addressed simultaneously. We believe the PASS Program

would be immensely successful if implemented as part of a comprehensive public

policy around (re)entering the workforce.

• Improve SSA accountability by establishing an independent, federally-funded

oversight body that includes all stakeholders (51% consumers) who approve employment-related regulations and monitor their implementation. As evidenced in recent

history by such progressive endeavors as the Americans with Disabilities Act, public

policy should be shaped by the Americans whose lives are affected. Personal accountability and responsibility can only be achieved when those expected to be accountable and responsible have the major voice in the programs imposing the expectation. A consumer-controlled oversight entity will achieve this goal.

Remove Financial Disincentives to Work:

• Establish an Impairment Related Work Expense Tax Credit for SSI/SSDI beneficiaries who work to cover 75% of the cost of impairment related expenses up to

a maximum of $15,000 per year. Phase out at an income level of $50,000 and end

at $75,000. Individuals with the most severe disabilities (e.g. needing attendant

services, sign language interpreters, job coaches) are the most difficult to employ because these expenses are rarely considered a ‘‘reasonable’’ accommodation for an employer to provide. Further, expenses for assistive devices such as motorized wheelchairs, lift-equipped vans, prosthetic limbs, etc. that make some individuals more

employable are expensive and often not considered ‘‘medically necessary’’ such that

health insurance would pay for these items. A tax credit would offset these expenses

only when the individual is employed, thereby providing an incentive to actually go

to work. Tax credits also apply only to actual disability-related expenses rather than

‘‘one-size fits all’’ cash benefits that offer no incentive to work.

• Current IRWE tax deductions should be extended to include expenses related

to preparation for and traveling to and from work. The need for in-home personal

assistance services and specialized transportation are a major barrier to employment. Tax deductions for these expenses would help offset these costs.

Enhance Employer Incentives:

• Implement a FICA exemption (50% first year, 75% second year and 100% third

year). This incentive would be attractive to small and medium sized businesses

whose fear of hiring persons with disabilities might be willing to give it a try in

order to reap the FICA savings. The proposal assumes that after the third year, the

employee will have become an indispensable part of the team.

• Implement a tax credit for true expenses such as increased workers’ compensation costs, healthcare insurance, worksite modifications, sign language interpreters,

print materials in alternative formats, on-the-job personal assistance, job coaches,
85

etc. Although numerous studies conducted over the years by corporations such as

McDonald’s and Dupont demonstrate that the cost of accommodations is minimal,

many employers still fear that one-in-a-million case where the costs are extraordinary. This provision is to allay that fear but still provide a safety net for the rare

circumstance where an employer is extraordinarily burdened.

• Establish an insurance fund that would cover employers’ extraordinary expenses. Premiums could be taken as a tax credit. This would be an added benefit

to allay employer fears.

Extend Medical Services:

• Establish a Medicaid buy-in to allow consumers to buy Medicaid on a sliding

scale according to adjusted gross income after deductions for Impairment Related

Work Expenses.

• Establish a Medicare buy-in after current coverage ends. Premium should be

10% of adjusted gross income in excess of $15,000. Current Medicare premiums are

typically considered too expensive by most beneficiaries, especially those unable to

work full time.

• Encourage states to provide personal assistance services to workers with disabilities on a co-pay or premium basis similar to the Medicare buy-in.

• Include a wrap-around provision in Medicare and Medicaid to fill gaps in

employer-provided health insurance.

• Encourage states to provide equal access to psychiatric services including copays.

We realize that at first blush these recommendations might lead you to ask:

‘‘After all these benefits, what would be leftover from earnings to add to the tax

base? Isn’t this a little excessive? How will this possibly save the trust fund and/

or general fund?’’ We are in the process of developing a means to cost-out this proposal. However, it is important to recognize these proposal provisions in the context

of a large consumer base. No one consumer or employer would use all of them. The

proposal is designed to offer the widest latitude to pick and choose those provisions

that will incent a particular individual or employer. Our goal was to develop a proposal that would include all the flexibility needed to anticipate the characteristics

of a broad base of consumers and employers. For example, the 2:1 offset would be

attractive to a consumer who is only able to work part time or sporadically. For a

consumer who begins work at a high wage, he/she will not be eligible for the offset.

For those consumers whose accommodation needs are minimal, the employer would

absorb the cost as a reasonable accommodation and, therefore, the consumer would

not claim a tax credit.

By having the courage to make the massive changes envisioned here people with

disabilities will gain a significant foothold on realizing the full promise of the Americans with Disabilities Act of 1990 by finally achieving equality with our nondisabled peers in achieving full economic independence and inclusion in the mainstream of American life. Not only will we the people with disabilities benefit but

so, too, will those who provide employment services to us, those who employ us,

those who insure us, and most importantly, the taxpayers who unwillingly financially support us.

We recognize this is a massive undertaking. We applaud this committee’s leadership in bringing this issue to the forefront. We ask for your continued leadership

in shaping an effort that will go beyond the jurisdiction of this committee to encompass both sides of the aisle and both houses of Congress. Anything less than a complete solution will only be a Band-Aid that WILL NOT WORK. If, however, we wage

a massive systems change, millions of Americans with disabilities, hopelessly living

in poverty today, will be successful, contributing members of Workforce 2000.

Chairman B

Ms. O’Day.

UNNING. Thank you very much for your statement.

f
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STATEMENT OF BONNIE O’DAY, MEMBER, NATIONAL COUNCIL

ON DISABILITY

Ms. O’DAY. Good afternoon, Mr. Chairman and Members of the

Subcommittee. My name is Bonnie O’Day, and I am a member of

the National Council on Disability. I was listed as chair in your

program. I am not chair. I am chairperson of a Subcommittee that

deals with Social Security return to work issues.

The National Council on Disability is a 15-member body appointed by President Clinton and confirmed by the Senate to advise

Congress and the President on disability issues. We are an independent Federal agency that offers such advice and counsel.

And today we are here to reflect the thousands of voices of individuals with disabilities throughout this country who want to work.

These individuals are anxious to reap the gains of the Americans

with Disabilities Act passed by Congress in 1990, and also to increase the tax base by paying taxes because they have returned to

work.

However, we have found that individuals with disabilities face

tremendous financial barriers if they want to achieve this goal.

We are here today as the culmination of an intensive effort to reflect the voices and gain the input of individuals with disabilities.

This input started when we convened a summit last year of over

400 people which culminated in a report entitled ‘‘Achieving Independence.’’

The employment recommendations from that report were the

basis of the meeting that the National Council pulled together in

Houston that Ms. Webb alluded to. These individuals were people

who had been on SSI and SSDI but had made themselves experts

in the system, and they assisted the Council by coming up with a

list of proposals which you will hear about in just a moment.

We took those proposals out to the community to obtain some

grassroots support and input. We are subsequently going to revise

our original recommendations and would like to submit a final report for the record as soon as it is completed—probably sometime

in August.

The primary finding from the hearings is that for many participants it does not pay to go to work. The barriers that individuals

face are extremely complex, and a holistic, non-Band-Aid approach

solution will be needed to assist individuals in overcoming those

barriers.

There are many of those barriers for which this Subcommittee

does not have jurisdiction. However, we are asking you, Mr. Chairman, and Members of your Subcommittee, to provide leadership

among your colleagues in the House on addressing such issues.

As you said yesterday, health care is probably the number one

barrier for individuals with disabilities who wish to return to work.

The administration and Members of Congress are working to try to

address this issue during the budget reconciliation discussions and

we would ask for your support in this endeavor.

Additionally, we ask your support in providing tax incentives for

employers, so that individuals with disabilities will not face discriminatory barriers and other barriers as they return to work.

But I would like to spend most of my time today talking about

work incentives that are within the jurisdiction of your Subcommit-
87

tee that you can help us address. First of all, with regard to the

SSDI system, when an individual goes to work, once they earn

$500, they face what we call an income-earnings cliff.

They lose their entire benefit package as soon as they make that first $500. According to an individual from Minnesota named Maynard Bostrom, you either stay under $500, or you earn enough

money to make it worthwhile. According to statistics out of Virginia

Commonwealth University that’s about $24,000. Additionally, we believe that the $500 income exclusion needs to

be indexed to inflation, and that individuals should be able to keep

$50 of benefits for every $100 earned, to provide a ramp, rather

than a cliff off the system.

We believe that eliminating this work incentive will drastically

improve the number of individuals with disabilities who can return

to work. If 5 percent of individuals return to work, this will make

this a cost neutral proposal.

Additionally I would like to spend just a moment addressing the

Ticket Proposal submitted by the administration. We do support

the Ticket Proposal, but believe that individual milestones should

be considered during the payment mechanism.

We also believe that an independent evaluation needs to be funded by a certain percentage of the Social Security Trust Fund that

allows organizations to be able to evaluate the programs and obtain

consumer input on the programs and their services.

Chairman Bunning, thank you very much for allowing us to testify today. We look forward very much to submitting our final report for the record. Thank you.

[The prepared statement follows:]

Statement of Bonnie O’Day, Member, National Council on Disability

Thank you Mr. Chairman and distinguished Members of the Subcommittee, for

this opportunity to testify on barriers preventing Social Security disability recipients

from returning to work. I am Bonnie O’Day, a member of the National Council on

Disability (NCD), a fifteen-member Council appointed by the President and confirmed by the U.S. Senate to advise Congress and the President on matters affecting

people with disabilities. As an independent federal agency, our purpose here today

is to reflect the voices of hundreds of consumers around the country who wish to

work. They want to fully reap the gains made during the last several years resulting

from the Americans with Disabilities Act by contributing their talents to the economy and paying taxes, but they face tremendous financial barriers to realizing this

goal.

NCD’s Action Proposals are the culmination of an intensive campaign to hear

from beneficiaries, advocates and grassroots leaders. We began in 1996 with a summit of approximately 300 people with disabilities, which generated Achieving Independence, a policy roadmap for the 21st Century. The employment recommendations

from this report served as the springboard for a 21⁄2 day working conference of 40

consumer/advocates, most of whom had direct experience with SSI DI, and all of

whom are very knowledgeable about disability employment issues. The group generated a series of proposals for overcoming those barriers. NCD subsequently took

those proposals to the community through a nationwide series of 13 public hearings,

and received oral and written testimony from people with disabilities, their advocates and service providers.

The primary finding of the hearings is that, for many people, it doesn’t pay to

work. The barriers to work are extremely complex, and a holistic, system-wide approach is needed to eradicate these barriers. While we realize that many of our proposed solutions lie outside the jurisdiction of this committee, we request that you

play a leadership role in assuring that health care coverage, SSI work incentives,

tax credits for personal disability-related expenses, and employer tax credits, are addressed by your colleagues. Those recommendations, along with those within your

purview, are detailed in a soon to be released report which the Council would like
88

to submit for the record. Today, I will address those recommendations within the

purview of this Subcommittee.

SSDI WORK INCENTIVES:

Existing SSDI work incentives themselves are a major employment barrier, especially for part-time workers who can’t earn enough to make up for loss of their entire benefit package. People with disabilities who earn $500 per month face a sudden loss of benefits: a cliff. According to Maynard Bostrom from Minnesota, ‘‘Now,

you either stay under $500 or get a position that pays high enough to make it work

it,’’ over $24,000 per year, according to the Employment Support Institute at Virginia Commonwealth University. NCD recommends that the current level of Substantial Gainful Activity (SGA) be indexed to inflation, and that SSDI cash benefits

be reduced $50 for every $100 of earnings above the SGA level to provide a ‘‘ramp’’

rather than the current ‘‘cliff’’ off the benefit rolls. Individuals eligible for the $1,000

Blind SGA amount could choose either to remain under current rules or switch to

the $500 SGA and $50/$100 reduction. This recommendation would eliminate the

need for the nine month Trial Work Period, which is confusing to beneficiaries, complex to administer, and generally results in SSDI overpayments. Preliminary estimates show that a mere five percent of DI beneficiaries must return to work, earning more than $500 per month, for this proposal to be cost neutral.

We further recommend that Congress ensure continued eligibility for both SSI

and DI as long as the individual remains disabled. Beneficiaries would receive cash

benefits only when their income was low enough to qualify. This would allow people

whose disabilities permit only intermittent employment, such as people with MS or

psychiatric disabilities, to work to their capacity, without the need to reapply for

benefits during periods of symptom exacerbation. The process of Continuing Disability Review (CDR) should be based upon SSA’s established schedule, rather than precipitated by the individual’s attempts to work.

CHOICE IN REHABILITATION PROVIDERS

A substantial portion of SSDI beneficiaries could work if they had informed

choices and access to training programs, employment counseling, adaptive equipment and transportation, or resources needed to start their own businesses. We support the ‘‘Ticket to Independence’’ proposal, but suggest that providers be reimbursed based upon milestones, e.g., after a consumer has completed training, after

job placement, and after a period of employment.

To ensure success of the ticket proposal, Congress should designate a certain percentage of the Trust Fund for a competitive grant program for information dissemination about return-to-work options and incentives. Independent evaluations of rehabilitation providers should be funded, to give potential workers consumer-based

information to aid in their decision making. The funding should also provide for advocates to assist in resolving disputes between consumers and providers.

Congressman Bunning, thank you for the leadership that you and your colleagues

on the Subcommittee on Social Security have shown in helping people with disabilities return to work. Your leadership on this issue will allow thousands of citizens

with disabilities to become taxpayers, and realize the ADA’s promise of independence and full productivity. We look forward to submitting our Barriers to Work: Action Proposals for the 105th Congress report into the record.

Chairman B

Mr. Young, if you would be so kind as to testify.

UNNING. Thank you, Ms. O’Day.

f

STATEMENT OF TONY YOUNG, PUBLIC POLICY ASSOCIATE,

UNITED CEREBRAL PALSY ASSOCIATIONS, INC.; AND

COCHAIR, CONSORTIUM FOR CITIZENS WITH DISABILITIES

VOCATIONAL WORKING GROUP

Mr. YOUNG. I am Tony Young, public policy associate with the

United Cerebral Palsy Associations, and a former SSDI beneficiary.

Today I speak on behalf of the Consortium for Citizens with Disabilities Vocational Working Group.
89

Recent reports cite five interdependent barriers to work for SSDI

beneficiaries and SSI recipients. CCD recommends solutions that

extend health benefits for working beneficiaries, streamlines work

incentives, makes work pay, enhances consumer choice of providers, and researches ways to increase work opportunities.

As you have heard, the all or nothing design of the SSDI Program prevents most beneficiaries from working. Unlike the SSI

Program, where recipients who work lose $1 in cash assistance for

every $2 earned, DI beneficiaries lose all cash assistance after $500

per month.

This working beneficiary falls off a net income cliff when earning

only $6,000 a year, and does not recover the same net income until

earnings reach $24,000 annually. An SSI recipient’s net pay increases until they hit their income cliff as they reach their State

Medicaid threshold and attempt to purchase medical coverage.

Ironically, most beneficiaries who attempt to work find it so costly that they cannot afford to continue. They feel they are financially and medically supported for remaining on benefits, yet financially and medically penalized for working.

If a work incentive similar to the SSI Program was instituted for

SSDI, including a buy-in to medical coverage, beneficiaries would

work to the maximum extent possible. This would mean savings to

the trust fund as they began to forgo all or some of their cash assistance.

We know this solution has been determined by CBO to have high

costs. We respectfully yet strongly disagree with the assumptions

underlying these results. CCD urges the Subcommittee to work

with us to develop state-of-the-art computer models for anticipating

work efforts and the resulting benefit savings.

Consumers must be able to choose from among all public and private providers of employment services, paid using an outcomebased milestone payment system. Limiting choice to vocational rehabilitation agencies will quickly overwhelm a system that is already struggling to serve only some of the individuals with disabilities who request their assistance.

In addition, the range of SSDI and SSI beneficiaries in the system now demands that we focus the full capacity of the Nation’s

employment and training resources on assisting them to work.

Implementing choice is a critical component. CCD recommends a

commission with equal representation from consumers, providers

and employers be appointed to assist SSA in this effort. It should

research, model, test and recommend the structure of the program

to SSA and the Congress by a date certain.

Work in the information age recognizes that technology can enhance the abilities of all workers. A work disability exists when a

person with an impairment does not have all the supports needed

to work. Medical rehabilitation, assistive technology, and employment training when combined with work incentives that accommodate lifelong physical or mental disabilities can open many employment opportunities to beneficiaries.

Some of these solutions lie beyond this Subcommittee’s jurisdiction. We discussed them because a comprehensive solution is required that engages each of the stakeholder groups on this issue—
90

consumers, providers, employers, policymakers, and taxpayers—in

reducing cash assistance for beneficiaries through work.

We seek opportunity, employment and freedom, rather than dependence. Sometimes we will attain self-sufficiency and require

only opportunity and accommodations from society. Many times we

will earn most of our support, but will need help to ease the extraordinary expense of working with disabilities.

More than occasionally, even our maximum work effort will require some ongoing cash assistance, and inkind support from society. In all instances, we are highly motivated to be working members of society, contributing what we can, and taking only that

which we need to survive and prosper.

In all instances, the opportunity exists to reduce the dependence

of beneficiaries on cash assistance, and to minimize public expenditure on inkind support.

Thank you for your attention. I will be happy to answer any

questions you might have.

[The prepared statement follows:]

Statement of Tony Young, Public Policy Associate, United Cerebral Palsy

Associations, Inc.; and Cochair, Consortium for Citizens with Disabilities

Vocational Working Group

These Signatory Organizations Support This Statement in Principle

Alliance for Rehabilitation Counseling

(NRCA/ARCA)

American Network of Community

Options and Resources

American Rehabilitation Association

American Association on Mental

Retardation

Bazelon Center for Mental Health Law

Goodwill Industries International

International Association of PsychoSocial Rehabilitation Services

Inter-National Association of Business,

Industry, and Labor

National Association of Developmental

Disabilities Councils

National Association of Protection and

Advocacy Systems

Paralyzed Veterans of America

The Arc of the United States

United Cerebral Palsy Associations, Inc.

Thank you, Mr. Chairman and distinguished Members of the Subcommittee, for

this opportunity to testify on Barriers Preventing Social Security Disability Recipients From Returning to Work. I am Tony Young, a Public Policy Associate with the

United Cerebral Palsy Associations, Inc., and a former SSDI beneficiary. Today I appear before you representing the Consortium for Citizens with Disabilities Vocational Working Group. Reflecting the complex interrelations between Social Security

and employment, the Vocational Working Group consists of expert members from

the CCD Task Force on Social Security and the CCD Task Force on Employment

and Training. CCD is a coalition of almost 100 national disability organizations

working together to advocate for national public policy that ensures the self-determination, independence, empowerment, integration and inclusion of children and

adults with disabilities into all aspects of society. The CCD Social Security Task

Force monitors federal policy that impacts upon SSDI beneficiaries and SSI recipients. The Employment and Training Task Force monitors federal policy that effect

employment of people with disabilities.

Recent reports from sources as varied as the General Accounting Office (GAO),

the National Academy of Social Insurance (NASI), the National Council on Disability (NCD), the Consortium for Citizens with Disabilities (CCD), the Employment

Support Institute at the Virginia Commonwealth University (ESI) and the Return

To Work Group (RTW) all demonstrate that there are five principal barriers to the

employment of individuals with significant disabilities who are SSDI beneficiaries

and SSI recipients (SSDI/SSI beneficiaries).

The barriers are:

1. The loss of health benefits; 2. The complexities of current work incentives; 3.

Financial penalties of working; 4. Lack of choice in employment services and providers; and, 5. Inadequate work opportunities.

The solutions are:
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1. Extend Health Benefits; 2. Streamline Work Incentives; 3. Make Work Pay; 4.

Enhance Consumer Choice of Services and Providers; and, 5. Help Employers to

Employ Individuals with Significant Disabilities.

It is generally agreed that all of these barriers must be solved in order to empower individuals with significant disabilities to go to work. We recognize that some

of these solutions lie beyond the jurisdiction of the Subcommittee on Social Security,

and even beyond that of the Committee on Ways and Means. Nonetheless, while we

will focus our testimony on issues under the Subcommittees’ jurisdiction, we chose

to discuss the full range of these solutions with this Subcommittee for three important reasons:

1. All of these barriers must be resolved in order to empower individuals with significant disabilities to go to work. The major studies of the disincentives to work

done by the General Accounting Office, the National Academy of Social Insurance,

and the Employment Support Institute all agree that to truly solve this problem,

a comprehensive solution is required.

2. It is important to note that these solutions address issues faced by not only

people with disabilities. There are five stakeholder groups with a direct interest in

this issue: individuals with disabilities; providers of employment services; employers; policymaker, especially the US Congress, and, taxpayers. Each of these stakeholders holds a portion of the answer to the puzzle of employment for SSDI/SSI

beneficiaries. Without the willing participation of each stakeholder to implement the

solutions, there is no hope of achieving the desired outcome of reducing cash assistance payments for SSDI/SSI beneficiaries through work.

3. The Subcommittee, especially through its Chairman and Ranking Member, has

demonstrated leadership and strong interest in crafting solutions to barriers to employment for SSDI/SSI beneficiaries. We strongly encourage the Subcommittee to

carry on in its leadership role on this issue in the areas under its jurisdiction, and

continue to work in a bipartisan, cooperative mode with other Committees and Subcommittees, and the Administration, as appropriate, to enact a comprehensive solution to these barriers. Our goal is to work with the Subcommittee on Social Security,

along with other partners, to create an effective system that both supports employment for those who can work and early retirement for those who, due to the severity

of their disabilities, cannot work.

SCOPE OF THE BARRIERS

The solutions outlined above reflect the desire of many individuals with significant disabilities to change the way SSDI responds to the needs of persons with work

disabilities. In the beginning SSDI was designed as an early retirement program to

provide income support for injured or ill workers who could no longer perform Substantial Gainful Activity in a post World War II Industrial economy. In the four decades that have elapsed since the inception of SSDI, the economy has changed substantially, perceptions of individuals with significant disabilities have changed substantially, and even the nature of work has changed substantially. SSDI has only

experienced technical modifications that have left it struggling to cope with a new

generation of workers with disabilities trying to obtain employment in a booming

Information Economy.

In essence, individuals with significant disabilities want to benefit from taxpayer

dollars spent on assisting our efforts to seek opportunity, employment, productivity,

and freedom rather than for dependence on cash assistance. We want to work to

the maximum of our physical and mental capacities, fully understanding that even

if we do so, some of us will not earn enough income to be economically self sufficient, and some of us who are terminally ill or similarly substantially impaired will

be unable to work at all. Nevertheless, we want to engage in work the most essential of all societal activities to the greatest extent possible.

In some instances we will attain economic self sufficiency and require only opportunity and accommodations from society. In other instances we will be capable of

earning a substantial portion of our support but will require ongoing in-kind support

(e.g., primarily health care, personal assistance, and housing subsidies) from society

to help with the extraordinary expense of living and working with disabilities. In

some instances, even our maximum work effort will still require both some cash assistance and in-kind support from society. In all instances, we want to be active

members of society, contributing what we can and taking only that which we need

to survive and prosper. In all of these instances, the real opportunity exists to reduce the dependence of SSDI/SSI beneficiaries on cash assistance and to minimize

direct public expenditures on in-kind support.

However, the current all-or-nothing design of the SSDI program prevents most

beneficiaries from attempting to go to work. Unlike the SSI program, where recipi-
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ents who attempt work lose only $1 in cash assistance for every $2 in earned income

and can continue receiving Medicaid acute medical care, personal assistance, and

prescription medication coverage (up to State limits), SSDI beneficiaries lose all

cash assistance after earnings reach $500 per month (assuming in this example that

the Trial Work Period has expired). Further exasperating the situation, SSDI beneficiaries receive free Medicare (which, because it does not cover personal assistance

and prescription medications is a lesser benefit than Medicaid) for only 36 months.

After then, they pay the full Part A premium, currently $330 monthly, to continue

coverage.

The result is that the vast majority of DI beneficiaries find that working to their

maximum capacity under the current SSDI work incentives rules is so costly that

they financially cannot afford to work. They feel that they are financially and medically rewarded for remaining on benefits and punished for attempting work.

An analysis of these ‘‘work incentives’’ by the Employment Support Institute is

enlightening. They have designed a software program that can demonstrate the impact on the net income of an individual receiving SSDI, SSI, or both when they attempt to work. Under current rules, an SSDI beneficiary receiving the average

amount ($704 per month DI check in 1997) who attempts work falls off a net ‘‘income cliff’’ after earning $600 per month ($7,200 per year) and does not recover the

same net income level until earnings reach $2,000 per month ($24,000 annually).

An SSI recipient in a similar circumstance can continue earning more income and

take home more net pay after passing $600 per month because of the Sec. 1619 two

for one offset of cash assistance they have available to them. SSI recipients do not

experience the ‘‘income cliff’’ until they reach their State Medicaid threshold and attempt to purchase medical coverage.

These are only two examples of the unfortunate situations (visit the ESI Web

page at http://www.vcu.edu/busweb/esi to review other scenarios, all of which are

significant barriers to employment for SSDI/SSI beneficiaries) that are an unintended result of Federal and State social policies that were developed without a coordinated purpose. The result is a conflicting maze of work incentives that all too

often rewards SSDI/SSI beneficiaries who try to work with the receipt of an over

payment letter from SSA rather than income security. No wonder less than one-half

of 1% of SSDI beneficiaries leave the rolls to work.

If a work incentive similar to the SSI Sec. 1619 program were instituted for SSDI

beneficiaries, and combined with extended health coverage, tax incentives, and

choice in providers, DI beneficiaries could work to the maximum extent that their

disabilities and other personal circumstances allowed. This would result in savings

to the SSDI Trust Fund as beneficiaries entered the workforce and began to forego

all or some of their DI cash assistance. These cash savings would grow over time

as SSDI beneficiaries gained skills and confidence. The following section discusses

a comprehensive package of changes required to implement these solutions.

BARRIERS AND SOLUTIONS

Barrier 1: Health Benefits. Access to private health insurance is increasingly cited

as the key obstacle to employment, particularly in light of the increase in part-time

work, which rarely brings access to health insurance. With underwriting practices

and limits on benefits acting as critical disincentives, many people with disabilities

must seek Social Security benefits in order to gain access to public health insurance.

Solution 1: Extend Health Benefits. An individual who is an allowed SSDI/Medicare or SSI/Medicaid beneficiary who returns to work, should remain in a continuing disability status unless medical recovery is determined. Health coverage should

be maintained for SSDI/SSI beneficiaries going to work in three ways: 1) Continue

Medicare free until $15,000 of earned income, then with a buy-in at 10% of earned

income capped at the full Part A Medicare premium amount; 2) Establish a Medicare-only buy-in similar to number one above for individuals with disabilities who

would be DI eligible except for earning above SGA, capped at the full Part A Medicare premium amount; and, 3) Create an optional state Medicaid buy-in for working

SSDI/SSI beneficiaries.

Barrier 2: Complexity of Work Incentives. The SSDI and SSI programs both have

work incentives that are designed to assist beneficiaries and recipients to leave the

rolls by going to work. These work incentives have the potential to be effective but

they complex and incomplete and therefore are underutilized. In addition, they are

not coordinated for people who receive both SSDI and SSI. Despite intense efforts

by SSA and advocacy groups to publicize and educate SSDI/SSI beneficiaries about

these benefits, they are used by only a small fraction of those eligible. They also

are very expensive to administer and too often result in benefit overpayments that

must be returned by the payees.
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Solution 2: Streamline Work Incentives. The ‘‘work incentives’’ in current law

must be renamed and simplified so that SSDI/SSI beneficiaries can understand and

utilize them, and so there is a decrease in the expense of their administration. The

goal should be to modify them into easily understood and usable work facilitators

that encourage the transition from sole reliance on public benefits to economic security primarily through employment.

Barrier 3: Financial Penalties. Enabling individuals who have been unable to afford to enter or re-enter the workforce due to the economic disincentives inherent

in the current system requires the redesign of the program. This should be done in

a way that facilitates former SSDI/SSI beneficiaries to earn an income that enables

them to survive. The current SSDI structure punishes rather than rewards people

with disabilities who attempt to leave entitlement programs to work. The SSDI system eliminates eligibility for both cash assistance and in-kind support (e.g., health

care) before the individual can earn a living wage. Whie the SSI program has Sec.

1619, SSDI has no similar work incentives. This sudden loss of support is known

as the ‘‘income cliff’’ and represents a significant disincentive to work.

Solution 3: Make Work Pay. A combination of declining cash assistance similar

to the SSI Sec. 1619 program, disability expense related tax credits, and tax deductions will enable individuals with significant disabilities to work. We also recommend a change in the asset limitations for SSI recipients who work to facilitate

savings and investment. This recognizes that some individuals with the most significant disabilities will need ongoing support due to their limited earning capacities.

Declining cash assistance. An allowed SSDI/Medicare beneficiary who goes to work should have their DI cash assistance reduced by $50 for every $100 earned

beginning at $500 of monthly earned income. The $50/$100 sliding scale offset

would replace Substantial Gainful Activity (SGA) measures only for allowed SSDI

beneficiaries who attempt to work. SGA, defined as earnings from wages or salaries

that equal or surpass $500 monthly (for non blind disabled beneficiaries) would remain a principal criteria for establishing a work disability at initial eligibility.

CCD recognizes that this provision has been analyzed by CBO and determined to

have high costs. We respectfully disagree with the assumptions underlying these results. We urge the Congress to work with CCD and the Employment Support Institute at VCU in developing state-of-the-art computer models for anticipating work efforts. The financial barriers to work for SSDI/SSI beneficiaries are real. As a nation

we must afford these individuals every opportunity to work; we certainly cannot afford to trap them in a lifetime of poverty on government cash assistance payments.

Disability Expense Tax Credits. The vast majority of working Americans have

their wages supported by tax breaks, either through personal exemption; standard

or itemized deductions; or tax credits. Individuals with disabilities should be rewarded for working through the alleviation of their extraordinary expenses of living

and working with a disability. A tax credit of one-half of all disability related expenses, including personal assistance services, of up to $15,000, should be provided

for SSDI/SSI beneficiaries who are working. Costs for disability related work expenses beyond those applied to the Disability Expense Tax Credit should be deductible as Impairment Related Work Expenses.

Personal assistance is defined as one or more persons or devices assisting a person with a disability with tasks which that individual would typically do if they did

not have a disability. This includes assistance with dressing, bathing, getting in and

out of bed or one’s wheelchair, toileting (including bowel, bladder and catheter assistance), eating (including feeding), cooking, cleaning house, and on-the-job support.

It also includes assistive technology devices and services, assistance with cognitive

tasks like handling money and planning one’s day, and fostering communication access through interpreting and reading services.

Impairment Related Work Expense Tax Deductions. A modification of the existing

Impairment Related Work Expense tax deduction available to workers who itemize

deductions on their tax returns would enhance long term employment for individuals with significant disabilities. This modification would allow former SSDI/SSI

beneficiaries to deduct costs of disability related work expenses beyond those covered by the proposed disability expense tax credit.

Facilitate Savings and Investment. SSDI/SSI beneficiaries who work should have

their unrestricted asset limitation raised to $5,000 (indexed to inflation). ‘‘Super

IRA’s,’’ ‘‘qualified plans’’ and medical savings accounts should be exempted from this

resource limitation. These plans allow savings for education, medical emergencies

or retirement.

Barrier 4: Consumer Choice of Services and Providers. People with disabilities

who are SSDI beneficiaries or SSI recipients have no choice in the providers of their

services. Consumers are assigned to a service provider, which by law must be a

state vocational rehabilitation agency, usually by type of disability rather than type
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of services required. Consumers who determine that they are not receiving appropriate or high quality services generally have no recourse other than to purchase

services themselves from private vendors. Given the cost of private services and the

state of most consumer’s finances, this is an option very few can afford.

Solution 4: Enhance Consumer Choice of Services and Providers. Active participation in the rehabilitation process is a proven method for increasing the chances of

a successful outcome. Enabling consumers to choose their services and providers

gives the individual a feeling of ownership in the process. This choice of services

and providers treats the beneficiary as an adult, capable of making significant life

choices, thereby enhancing the individuals self-esteem and confidence. Choice eliminates the conflicting signals currently sent by the referral system, which tells beneficiaries they are capable enough to work, but they are not capable to select by

themselves where to go for employment and related vocational services. Choice is

also important for those individuals with cognitive impairments who may need assistance in exercising choice.

Consumers must be able to choose from among the many thousands of public and

private rehabilitation, employment service, and related providers in the nation. Limiting the choice of SSDI/SSI beneficiaries who want to work to only the network of

State Vocational Rehabilitation Agencies (SVRA’s) will quickly overwhelm a system

that is already struggling to serve some of the individuals with disabilities who request their assistance to prepare for and enter the work force. In addition, the sheer

magnitude of SSDI/SSI beneficiaries who may want to access services to prepare for

and go to work demands that we focus the full capacity of the nation’s employment

and training resources on assisting them to work.

Consumer choice will only work if there are a wide range of high quality, effective

public and private providers available. This means that an infrastructure that enables providers to contact, recruit, serve, and to receive timely payment for having

served consumers must be designed from the ground up to be effective in this outcome-based system.

Since 1981, Congress has required the only authorized provider of employment

services to SSDI/SSI beneficiaries SVRA’s to share the risk of assisting them to

work by reimbursing relevant service costs only after the attainment of a measurable outcome: returning to work at or above the SGA level. This strategy has reduced expenditures from the SSDI Trust Fund without significantly reducing the

numbers of those who reach SGA. It is time to modernize this risk based payment

system so that all public and private employment service providers have an incentive to assist SSDI/SSI beneficiaries to work.

The updated payment system should encourage work by all SSDI/SSI beneficiaries, regardless of their ultimate work capacity. Instead of rewarding providers

only for removing people from the rolls, it should reward providers for assisting people to minimize their dependancy on cash assistance programs. Paying providers a

portion of the savings realized by the Federal Government will enable many more

people to work to their full capacity and result in greater savings than only paying

for those attaining SGA.

Payment should be made through a milestone approach. Providers should receive

partial payments at three points: When a consumer and provider agree on an employment plan; 60 days after the consumer begins employment; and when the consumer completes 9 months of employment. Subsequently, providers should receive

quarterly payments equal to a portion of the savings the Government realizes due

to the reduction of the cash assistance paid to the consumer for five years. Milestone

amounts should be limited so that no more than one-third of the total payment

made to providers are received before the consumer achieves the third milestone.

Designing and implementing this program will be a significant challenge to SSA.

CCD recommends that a Commission with equal representation from consumers

and their self-selected representatives, providers, and employers be appointed and

charged with responsibility to assist SSA in this endeavor. The Commission should

have broad authority to research, model, test, and recommend the final structure

of the program to SSA and the Congress by a date certain. It is imperative that

the missteps that occurred during implementation of the Alternate Participant program be avoided.

In any system involving negotiations between parties there will be disagreements.

Therefore, funding for advocacy services specifically designated to assist SSA’s beneficiaries to resolve disputes with providers should be made available. It should protect their legal and human rights, and assist and advocate for such individuals in

their relationship with public and private providers through alternative dispute resolution means as necessary.

Finally, the management of the new program should be contracted to a private

sector firm on a competitive bid similar to the arrangement in the current Alternate
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Participant program. This will minimize the administrative burden of the program

on SSA.

Barrier 5: Inadequate Work Opportunities. Individuals with significant disabilities

face competition from many directions in their efforts to work. Individuals who are

leaving welfare, those who are graduating from schools and colleges, and those who

are dislocated due to corporate down-sizing and economic restructuring all are competing for a limited pool of jobs.

Solution 5: Help Employers to Employ Individuals with Significant Disabilities.

The Committee should study the impact of an expansion of the Work Opportunity

Tax Credit to employers for hiring and retaining former SSDI/SSI beneficiaries. It

should also study other ADA and disability related employment incentives already

available to employers.

WORK IN THE INFORMATION AGE

The new definitions generally accepted for work in the Information Age recognize

that the creative application of technology can enhance the inherent skills, abilities,

and talents of all workers. A work disability now exists as a point in time when

an individual acquires a physical or mental incapacity and can no longer perform

SGA, rather than a lifelong incapacity to do any work. However, only the application of new techniques in medical rehabilitation, assistive technology, and employment training, when combined with the employment supports that we discussed

today which accommodate the lifelong physical or mental disability, can open this

unprecedented array of employment opportunities to individuals with significant

disabilities.

Most of us languish behind a wall of barriers made up of all the best intentions

of the policy makers who have gone before us. Only those most fortunate among us

have been able to use our unique personal circumstances to go to work. My rehabilitation and work experience is an example of this serendipity.

I became a C–4 quadriplegic in 1970 as a result of a body surfing accident. I was

18 years old, and just graduated from high school. My work skills and experience

included mowing lawns, raking leaves, washing cars and dishes, and three summers

as a life guard, swimming instructor and swim team coach. These jobs are not exactly what you need to prepare for working in an economy of high skill, high wage

jobs, especially with a disability as severe as mine. After medical rehabilitation, I

was evaluated by the Virginia Department of Rehabilitative Services in 1971, determined to have no work potential, and sent home to live with my parents.

In 1975, I was again connected with the Virginia Department of Rehabilitative

Services and evaluated for work potential. In the few years between 1971 and 1975,

the expectations of the potential of severely disabled persons changed substantially,

mainly due to the emergence of the Independent Living Movement. I was determined to have work potential under these new expectations. I wanted to earn a college degree, and agreed to a program of study to become a computer programmer.

After one year of study, during which I demonstrated a complete and utter lack of

talent or aptitude for programming computers, I realized that I could be successful

not by accomplishing tasks directly, but by managing human and other resources

to accomplish tasks, so I changed my major to Business Administration and completed my degree program.

I initially went to work at the US Department of Agriculture as a Budget Analyst

under a Schedule A appointment which paid a salary but did not provide health coverage. The only reasons why I was able to accept this opening was the fact that I

was covered under my Mother’s employer sponsored health insurance, and that as

a GS–7, I was, at that time, able to pay for some of my personal assistance services.

Without a personal assistant to help me shower, get dressed, and prepare for work,

I would have been unable to even consider working. I relied on family and friends

for the balance of my needs, such as grocery shopping, doing laundry and house

keeping, taking medications, going to the doctor, and other routine activities of life.

My next job was as the Executive Director of a Center for Independent Living.

As the boss, I could decide who to cover under our health plan and chose to cover

my entire staff as a group. Mixing employees with and without disabilities under

a small group plan was difficult even 15 years ago, but that coverage and my ability

to pay for more of my personal assistance expenses made it possible for me to continue to work.

A few years later I experienced some significant health problems that forced me

to retire from the active workforce for a time and left me with a secondary disability

and a propensity for decubitus ulcers (pressure sores or bed sores). When I recovered, I worked part-time as a consultant in public policy for persons with disabilities. I worked part-time because I could no longer sit in my wheelchair for the full
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amount of time required for a full time job due to the decubitus ulcer problem. I

worked as much as I could, relying once again on my Mother’s family health coverage, along with Medicare, SSDI, and volunteer personal assistance. I was reviewed by a Continuing Disability Review once during this period and determined

not to be performing SGA. This was a difficult and extremely trying time for me

and my family.

In 1990, technology, workplace theory and civil rights for individuals with disabilities began to catch up with my disability. The introduction of the personal computer and telecommuting, along with the passage of the Americans with Disabilities

Act, enabled me to accept a full-time position with the American Rehabilitation Association at an excellent salary and with health and retirement benefits. The stateof-the-art working environment at American Rehab, including job-related personal

assistance at work, flexible working schedule, telecommuting, and accessible personal computers, enabled me to significantly advance my career. The knowledge and

experience I obtained there led me directly to the position I currently hold at UCPA.

I have been able to build some personal financial stability. This ‘‘personal safety

net,’’ as I call it, consists of personal savings, retirement savings, and an investment

plan for building my personal wealth. This means that I have the personal resources

to weather a financial setback without needing to immediately return to public support, and to look forward to retirement without the prospect of relying solely on Social Security retirement checks. Federal policy should encourage everyone to build

this type of ‘‘personal safety net’’ as soon as possible. We recommend a change in

the asset limitations for SSI recipients who work to facilitate savings and investment.

None of this would have been possible without a series of fortunate circumstances.

My Mother was working, and I was covered under family health insurance that allowed me to ignore the number one barrier to work: fear of losing health coverage.

I lived in my parents’ home (after accessibility adaptations) rent free, which allowed

me to afford to pay for the extraordinary expenses of living and working with a disability, thus avoiding barriers two and three: the complex work incentives and the

earnings cliff. I was not able to choose my rehabilitation provider, which meant that

I had to wait until the changing attitudes of the work capacity of individuals with

significant disabilities permeated my sole mandated service provider before I could

receive services; I might have been working years earlier had I been able to choose

other provider options. Finally, my first employer had an internal incentive to hire

me: as a Schedule A appointment, I did not count against the Branch’s FTE limit,

thus boosting the productivity of the unit substantially.

It is not in the best interests of society, either from a fiscal standpoint or from

a humanistic view, to force SSDI/SSI beneficiaries to rely on luck as a means to opportunity, employment, productivity, and freedom. It is certainly not in the best interests of SSDI/SSI beneficiaries, as analysis clearly shows. These barriers that

were inadvertently built into the system must be removed; the physical, mental, and

financial health of SSDI/SSI beneficiaries depends upon the timely enactment and

full implementation of effective, comprehensive solutions. The financial health of the

nation demands the full participation of all of its citizens to the maximum extent

of their capabilities. The Congress has an historic opportunity to use the full range

of tools at its disposal to meet the converging needs of SSDI/SSI beneficiaries, providers of rehabilitation services, employers, and taxpayers. We are ready, willing,

and able to assist the 105th Congress to achieve this important goal.
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your testimony. As you see I have some big shoes to fill. The ChairMr. HAYWORTH [presiding]. Mr. Young, thank you very much for

f

man’s been called away to speak on the floor, and so I am pleased

to be sitting here with my dear friend from Connecticut and hearing all of your testimony.

Let’s move along now. Lorraine Sheehan, chairperson of the governmental affairs committee of The Arc of the United States, accompanied by Marty Ford, assistant director of governmental affairs.

Ms. Sheehan.
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STATEMENT OF LORRAINE SHEEHAN, CHAIRPERSON,

GOVERNMENTAL AFFAIRS COMMITTEE, ARC OF THE

UNITED STATES; ACCOMPANIED BY MARTY FORD, ASSISTANT DIRECTOR, GOVERNMENTAL AFFAIRS OFFICE, ARC OF

THE UNITED STATES

Ms. SHEEHAN. Mr. Acting Chairman, and Members of the Subcommittee, thank you for the opportunity to testify. We appreciate

the leadership of Chairman Bunning and Representative Kennelly

in taking a serious and long overdue look at the work incentive and

barrier issues in the Social Security Disability Program.

I want to focus on issues and problems facing people with mental

retardation. I am testifying as chairperson of the governmental affairs committee of The Arc of the United States, and also as the

mother of my son, John.

John is 31 years old, has mental retardation. He works in

groundskeeping, in a Maryland State park during the summer, and

has been receiving SSI benefits since 1984. During the school year,

he works for the Marriott Corp. in the cafeteria at St. John’s College in Annapolis.

His work is known as supported employment because he has a

job coach to assist him with job-related issues. I also want you to

know that he is well-known in his neighborhood and he is good

looking.

Many people with mental retardation receive title II Social Security benefits as adult dependents of their parents who have retired,

become disabled or died. In addition, a growing number receive

SSDI benefits as a result of their own work history and disability.

People with mental retardation have a lifelong disability. Although most can work, those who are severely disabled enough to

qualify for SSDI or SSI benefits are likely to need lifelong support

of some sort, even if they are working.

Success for many people with mental retardation must be measured in decreasing dependence, increasing productivity and community participation. It should not be measured solely in terms of

elimination of benefits. The fact that many people continue to use

section 1619 of the SSI Program without moving off should not be

viewed as a failure.

In my son’s situation, the SSI exclusion for impairment-related

work expense makes work pay. Transportation to and from work

absorbs half his earnings. The IRWE helps cover those expenses

before SSI benefits are reduced on the basis of earnings.

Due to the nature of the disability and the nature of job opportunities traditionally open to people with mental retardation, many

will start as low-wage workers and will remain at lower levels of

income most of their lives, often in jobs which do not provide health

or other benefits. Many will be the last hired, the lowest paid, and

the first to be fired in any restructuring or downsizing.

While my son has been working at St. John’s College for 4 years,

previous to that he had a series of four or five jobs that lasted between 1 and 5 months. Even with the additional support of a job

coach it was, and can be, very hard to find jobs which are an appropriate match for the individual with mental retardation and the

employer.
99

Sometimes fitting in with untrained or uninterested managers

and coworkers can be an insurmountable hurdle. In spite of that

fact, my son clearly wants to work, as others do like him. And in

spite of the Americans with Disabilities Act, and the Rehabilitation

Act it can be very difficult to find jobs which provide the right

match for people with significant cognitive limitation.

It is even more difficult to find those jobs which provide longterm stability and support needed by an individual with significant

impairment over a lifetime. John’s two jobs are considered part

time, and do not provide health or retirement benefits.

The cash cliff of title II and the cost of continuing Medicare are

very real barriers to work. In the SSI Program, sections 1619 (a)

and (b) allow for gradual decline in cash benefits and continuing

Medicaid coverage if the person needs continuing Medicaid in order

to work.

The Social Security Disability Program does not have similar

work incentives.

In addition, there are very significant complications for people

who move from SSI 1619 to the title II disability programs, and for

those who receive benefits from both title II and SSI. Typically,

when a child reaches 18, the family will sign them up for SSI, and

then the parent retires or becomes disabled, and then the individual becomes eligible for SSDI.

But the major change comes when we die, when parents die. Believe me when I say this, our greatest fear as parents of children

and adults with mental retardation, is what is going to happen to

our kids when we die. It is a thought constantly on our minds.

And in today’s world, with the title II benefits, my son could actually lose the stability of a job, as well as wondering who is going

to care for him, and all of the rest.

For my son and others like him, loss of meaningful work also

means loss of part of your identity, as for many of the rest of us.

The Arc would like to work with the Subcommittee on all of

these incentive issues. Our goal is to really make it work. And I

hope that you will be sensitive to the different needs of different

people with different strengths and limitations, and we look forward to working with you.

Thank you.

[The prepared statement follows:]

Statement of Lorraine Sheehan, Chairperson, Governmental Affairs

Committee, Arc of the United States

Thank you, Mr. Chairman and Members of the Subcommittee, for this opportunity

to testify on the barriers to employment for Social Security disability beneficiaries.

The Arc of the United States has joined in the statement of the Consortium for Citizens with Disabilities. We appreciate the leadership of Chairman Bunning and Representative Kennelly in taking a serious and long overdue look at the work incentive

and barrier issues in the Social Security disability programs. I will use this opportunity to highlight and discuss in further detail the issues and problems facing people with mental retardation.

I am testifying in my capacity as Chairperson of the Governmental Affairs Committee of The Arc of the United States and also as mother of my son John. John

is 31 years old, has mental retardation, works in groundskeeping at Sandy Point

State Park during the summer, and has been receiving SSI benefits since 1984. During the school year, he works for the Marriott cafeteria at St. John’s College in Annapolis. His work is known as supported employment because he has a job coach

to assist with transitional and other job-related issues.
100

TITLE II AND PEOPLE WITH MENTAL RETARDATION

Before I make certain basic points about the experience of people with mental retardation in the Title II program, let me explain why Title II is important to people

with mental retardation. Many people with mental retardation receive ‘‘Title II’’ Social Security benefits as adult dependents of their parents who have retired, become

disabled, or died. To qualify in this way for benefits based upon a parent’s work history, the adult ‘‘child’’ must have been disabled during childhood. This group of eligible adults disabled during childhood are often referred to as ‘‘DACs’’ (disabled adult

child).

In addition, a growing number of people with mental retardation receive Title II

disability insurance benefits as a result of their own work history (quarters of coverage) and disability.

Since the eligibility criteria and work incentive provisions of the disability insurance program are applied to all of these categories of adults, the term SSDI (Social

Security Disability Insurance) is often used in references to encompass all of the

Title II disability programs (even though it is technically incorrect for encompassing

all). It is important that improvements in any of the work incentives be applied to

all people who receive Title II benefits on the basis of disability, not just those who

are technically in the SSDI program.

THE LESSONS OF SECTION 1619 AND TITLE II WORK INCENTIVES

I would now like to highlight a number of key issues regarding work incentives

for people with mental retardation, based on the experiences of people with mental

retardation as reported to us over the years by themselves, their parents, and service providers. • People with mental retardation have a life-long disability. Although most can

work, those who are severely disabled enough to qualify for SSDI or SSI benefits

are likely to need life-long support of some sort even if they are working. That need

for support will vary with the individual, depending on circumstances including age,

health, skill development, and family and community support, to name a few. • Success for many people with mental retardation must be measured in decreasing dependence (financial or otherwise) and increasing productivity and community

participation; success should not be measured solely in terms of elimination of benefits. The fact that many people continue to use Section 1619 of the SSI program

without ‘‘moving off’’ should not be viewed as failure. For the people with mental

retardation involved, they have increased their own financial stability while reducing the amount of cash benefits paid out of the general treasury. • In my son’s situation, the SSI exclusions for impairment related work expenses

make work pay. Transportation to and from work absorbs half of his earnings; the

IRWE helps cover those expenses before SSI benefits are reduced on the basis of

earnings. • Due to the nature of the disability and to the nature of job opportunities traditionally open to people with mental retardation, many will start as low-wage workers and will remain at lower levels of income most of their lives, often in jobs which

do not provide health or other benefits. Many will be the last hired, lowest paid,

and the first to be fired in any restructuring or downsizing. While my son has been

working at St. John’s College for 4 years, previous to that he had a series of 4 to

5 jobs which lasted from 1 to 5 months. Even with the additional support of the

job coach, it was and can be very hard to find jobs which are an appropriate match

for the individual with mental retardation and the employer. Sometimes, fitting in

with untrained or uninterested managers or co-workers can be an insurmountable

hurdle. In spite of the fact that my son clearly wants to work, as do others like him,

and in spite of the Americans with Disabilities Act and the Rehabilitation Act, it

can be difficult to find jobs which provide the right match for people with significant

cognitive limitations. It is even more difficult to find those jobs which provide the

long term stability and support needed by an individual with significant impairment

over a lifetime. John’s summer job does not provide health or retirement benefits;

his school-year job is also considered part-time and does not cover benefits. • Therefore, the ‘‘cash cliff’’ in Title II (the loss of all cash benefits after reaching

the substantial gainful activity (SGA) level of earnings for the 9 months of the trial

work period (TWP)) and the cost of continuing Medicare are very real barriers to

work. In the SSI program, Sections 1619(a) and (b) allow for a gradual decline in

cash benefits as earned income increases beyond the SGA level and for continued

Medicaid coverage, even beyond the cash break-even point, for as long as the person

needs continued Medicaid in order to continue working. The Social Security disability program does not have similar work incentives. There, people lose all cash after

9 months of trial work and Medicare is very expensive for lower income earners
101

when the extended period of eligibility (EPE) is exhausted. It is important to note

that, when the Section 1619 program was made permanent in 1986, the TWP and

EPE were eliminated in SSI; with the gradual cash offset and the availability of

continued Medicaid, TWP and EPE were no longer necessary. • In addition, there are very significant complications for people who move from

SSI Section 1619 work incentives to the Title II disability programs and for those

who receive benefits from both Title II and SSI. • We strongly believe that a parallel program to Section 1619 should be established in Title II, including elimination of the confusing TWP and EPE. • In our experience, there is a very typical scenario for people with mental retardation and their attempts to work despite severe, life-long disability. Of course,

there are innumerable variations, but the basic scenario is repeated over and over

again across the country in family after family.

—First, the young person, often upon becoming 18 years old, becomes eligible for

SSI based on disability and low income and resources. The individual is able to increase income to the best of his/her ability using the Section 1619 program. This

is where my son fits into the scenario.

—Then the individual’s parent retires or becomes disabled. The individual becomes eligible to receive a benefit of 50 percent of the parent’s benefit. This will

happen to my son John soon. As you know, an SSI beneficiary must apply for and

accept all other sources of income or benefits he/she is entitled to, because of the

nature of the SSI program as supplemental income.

—As a result of this increase in unearned income, the individual may lose SSI

completely OR may receive both SSI and SSDI simultaneously. It is at this step that

it becomes clear that the work incentives in SSI and SSDI are not at all coordinated.

—The next major change comes when the parent dies. As parents, our greatest

fear is not for our own futures, but for the future of our sons and daughters, particularly when they have significant limitations in their ability to anticipate and care

for their own needs. At this point, the individual becomes eligible for a Title II benefit equal to 75 percent of what the parent’s benefit was. Once again, the individual

may lose SSI altogether and move completely into Title II, OR may continue to receive SSI and SSDI simultaneously.

—Throughout all of this, the individual has not changed at all. There may have

been no change in job status, no change in job or income, no promotion. Yet, the

person, through no action of his/her own, may become ineligible for basic safety net

support and is forced to choose between that critical support or work which cannot

meet his/her needs.

—The loss of SSI benefits and the loss of those work incentives which make it

possible to improve financial stability, therefore, may also mean the loss of work

and the loss of an important factor in quality of life. The individual with a significant impairment and the need for some level of life-long support simply cannot afford to work at this point unless potential income is high enough to skip over the

cliffs and canyons created by the loss of the Title II cash benefit and medical coverage. For the individual whose income is likely to start and remain low, including

most people with mental retardation, the loss of work is likely.

—For my son and others like him, loss of meaningful work also means loss of part

of your identity. As for many of us, your work is who you are.

• The movement between programs requires other trade-offs also. In SSI, the Sec.

1619 work incentives encourage work. However, a person cannot save meaningfully

for the future because of the limits on resources. While in SSDI, the work incentives

do not encourage work, so a person cannot earn. However, there are no restrictions

on savings for the future. Both programs require that the individual give up one

or the other of these essential components for future financial security, if not total

financial independence. Families helping a person with significant cognitive impairment, like mental retardation, must be concerned for the future and the long-term.

• In designing a series of changes for Title II and/or SSI, remember that, for people with mental retardation, work is often for the first time and may require different approaches than for people who are ‘‘returning’’ to work.

• Finally, I would like to make a comment on SGA. The substantial gainful activity level needs an increase and should be indexed for inflation. Rep. Phil English

has introduced a bill which is long overdue. We urge the Committee to address it

as part of its work incentive improvement efforts. However, caution will be necessary to ensure that it works in the overall context of work incentives addressed

here this week.

The Arc would like to work with the Committee on all of these work incentive

issues. Our goal is to make work incentives really work, to make them sensitive to

the different needs of people with different strengths and limitations, and to have
102

them incorporate the need to potentially support some people over a lifetime. We

timony. Now we will hear from Brenda Crabbs, a current SSDI

look forward to working with you.

Mr. HAYWORTH. Ms. Sheehan, thank you very much for your tesf

beneficiary who is here to testify on behalf of the National Arthritis

Foundation.

Ms. Crabbs.

STATEMENT OF BRENDA CRABBS, CURRENT SOCIAL SECURITY DISABILITY INSURANCE BENEFICIARY, BALTIMORE,

MARYLAND, ON BEHALF OF THE ARTHRITIS FOUNDATION

Ms. CRABBS. Thank you, Mr. Chairman. Ladies and gentleman,

my name is Brenda Crabbs, and I am here today on behalf of the

Arthritis Foundation, and I am also an SSDI recipient.

Forty million Americans have arthritis, and it is the number one

cause of disability in America, and the second leading cause of disability payments. Overall, the impact of arthritis and related diseases on the economy amounts to more than $149.8 billion, approximately 2.5 percent of the gross national product.

Women under the age of 65 with musculoskeletal diseases represent 7.3 percent of all SSDI recipients, and I am one of those

women. I have rheumatoid arthritis. I was diagnosed 34 years ago,

and stopped working 5 years ago, so I made it longer than most

with my problem. But I have had three operations in the last 4

years and there is more to come.

There is no expectation that I am going to experience a medical

recovery, so the question becomes who would want to employ me,

and, more importantly, who would want to insure me? I do not

need referral to vocational rehabilitation. I have skills, but there is

no expectation that I will ever get better, only worse.

As a self-employed person who works on a contract basis, Social

Security regulations subject me to an ever higher standard of substantial gainful activity when determining SGA for me, and the Social Security Administration considers the value of my work to the

business that I am contracting with, and evaluates whether I provide significant services to that business.

In terms of my self-employment, I am the business. And the

hours I can work each month are restricted. This higher standard,

combined with the current SGA level of $500 per month, requires

me to give away my skills if I want to have something to do. The $500 cap needs to be adjusted to keep pace with economic

growth. In addition, I constantly worry about inadvertently violating a rule which would cause me to lose my health benefits. I am

even concerned about being here today, frankly.

Existing work incentives are extremely complex and hard to understand. Adequate and well-trained administrative resources are

absolutely essential to serve beneficiaries. The booklets are hard to

understand. I could not figure them out, and I consider myself an

educated person.

So I went to the Social Security office and met with an employment representative. His main advice to me was do not make more

than $500 under any circumstances.
103

I was never told that I could buy into Medicare. I was given a

form to fill out, and told to mail it in, and to continue to report any

work experience that I had.

I could not get the form through the mail. I have to go to the

office to get the form. This is not a user-friendly system, and part

of the disincentive to try working is the lack of faith in the predictability of the system’s response.

Once on Medicare, the loss of those health benefits is a major

disincentive to returning to work. Part-time employment does not

provide health benefits, and private health insurance is not available to those with difficult medical backgrounds.

Current underwriting practices, and limits on benefits are critical disincentives. Employers do not want a disabled person on their

health plan, because it pushes up their insurance rates.

After being disabled for 2 years, a person is offered Medicare,

and the information states that if he does not take it then, the premium will increase by 10 percent for each year he waits.

When I accepted Medicare assignment, I thought that if I did not

take it then I would not have another opportunity until age 65,

which at the time was a long way away for me.

Once a person signs on, Medicare becomes the primary coverage,

and private insurance drops you, even as a secondary insurer. The

only secondary coverage available is a Medigap policy.

For people who are under 65 who are disabled, there are very

few Medigap insurance products available nationwide. None provide prescription coverage.

So for the people who need the coverage most, there is the least

available.

As a divorced woman, I have had firsthand experience of the dilemma of choosing between Medicare or health care provided

through my ex-husband as part of the divorce agreement. His plan

provided excellent benefits, and included prescription coverage. But

I chose to take Medicare because I simply could not afford to risk

the loss of health benefits if something happened to his job.

In choosing Medicare, I lost his plan, even as a secondary insurer, and had to take a Medigap policy, which, of course, forced

me to absorb the expense of prescription drugs.

In order to be self-supporting and get off of SSDI, a person has

to be able to work on a regular basis a substantial amount of time

for good wages. part A costs $4,000 a year. part B adds another

$500. Prescription costs are $3,600.

A Medigap policy premium is $1,200. That is over $9,000 in basic

medical costs before a doctor is visited or a procedure completed.

Then there are the rest of living expenses, food, clothing, rent,

transportation, and so forth. When you are disabled, it costs more

to do everything, whether it is choosing a place to live, or pumping

gas.

Congresswoman Kennelly’s Transition to Work bill brings the

Medicare buy-in program into the real world, and would enable me

to work when I can without limits on the amount I can make, but

still have the safety net when I need it. This would go a long way

toward helping me maintain financial independence, and would enhance the quality of my emotional and psychological well-being.
104

In conclusion, the system badly needs reform. There is sometimes an attitude in society that individuals on disability are derelict and do not want to work. Not only is that picture unfair. It is

simply inaccurate.

Many people on the SSDI roles are educated and have skills that

make them employable in spite of their disability. They need help

simply because life has dealt them a different hand. They want to

work.

The potential loss of Medicare, and complicated rules for returning to work serve as a deterrent for even attempting to leave Social

Security rolls.

Help people work with their disabilities and remain productive

members of society. One set of rules does not fit all circumstances.

The system needs flexibility to deal with different types of disability.

Some consideration should be given to differentiating between individuals who are likely to recover from their illness and those who

are chronically ill and have no chance of medical improvement.

Thank you very much for this opportunity to appear.

[The prepared statement follows:]

Statement of Brenda Crabbs, Current Social Security Disability Insurance

Beneficiary, Baltimore, Maryland, on behalf of the Arthritis Foundation

Good afternoon Mr. Chairman, ladies and gentleman.

My name is Brenda Crabbs and I am here today on behalf of the Arthritis Foundation to speak about Social Security disability reforms and back to work incentives.

I am the chair of the Public Policy and Advocacy Committee for the Maryland Chapter, a member of the Foundation’s national Public Policy and Advocacy Committee

and an SSDI beneficiary.

Arthritis, one of the oldest diseases known to man, is a major factor in the economic and social fabric of the United States. Each year, 40 million Americans with

arthritis and other musculoskeletal conditions make 315 million physician visits,

have 8 million hospital admissions and experience approximately 1.5 billion days of

restricted activity. Arthritis is the number 1 cause of disability in America and the

second leading cause of disability payments. Overall, the impact of arthritis and related diseases on the economy of the United States amounts to more than $149.8

billion, approximately 2.5% of GNP.

The economic realities of the graying of the baby boomers and increased longevity

of the American population cannot be ignored as you consider reforms to the SSI

and SSDI programs. The size of the Social Security disability rolls will mushroom

in the next two decades and serious changes need to be made to minimize the strain

to the disability system. By the year 2020, the number of Americans with arthritis

will jump to 60 million. When combined with other chronic diseases, the potential

cost to the Social Security disability system is staggering.

Of the 40 million Americans of all ages with some form of arthritis, nearly twothirds of them are women. These diseases destroy joint tissue, damage internal organs, shorten life expectancy, weaken the spine, make bones brittle and in many

cases, deprive individuals of physical and financial independence. Osteoarthritis and

rheumatoid arthritis are leading causes of work limitation among women. Patients

with rheumatoid arthritis have a one in three chance of becoming disabled and 50%

of patients with rheumatoid arthritis stop working within 10 years of diagnosis, 60%

within 15 years.

Some facts related to Social Security Disability Payments

• One in ten of all women under 65 receiving SSI payment is a woman disabled

by musculoskeletal disease: the fourth largest category after mental disorders, retardation and diseases of the nervous system.

• Within the age group 60 to 64, the proportion rises to one in 5, only slightly

lower than the leading category.

• Women under the age of 65 with musculoskeletal diseases represent 7.3% of all

SSDI beneficiaries.

• Lifetime costs of lost earnings because of rheumatoid arthritis are close to heart

disease and stroke.
105

I, unfortunately, am one of the 7.3% of women under 65 who has had to stop

working because of rheumatoid arthritis. I was diagnosed 34 years ago and stopped

working 5 years ago. Because of excellent medical care, advances from research and

a lot of determination, I beat the odds and was able to work longer than most, but

I miss working. There is no expectation that I am going to experience a medical recovery. My ability to work is limited by significant loss of function in many joints,

and multiple operations (three in last four years with more to come). So the question becomes who would want to employ me? And more importantly, who would

want to insure me? I don’t need referral to vocational rehabilitation because there

is no expectation that I will ever get better. And yet, it would certainly be better

for my mental and emotional health if I felt like I was able to be productive.

Perhaps a tax credit should be considered for disabled persons who try to work

despite their disabilities and, or a personal assistance tax credit to compensate

working people for the help they need to work. These tax credits would provide an

additional incentive for people to leave the Social Security disability rolls by compensating them for additional expenses such as transportation and health care costs

incurred by returning to work.

In addition, a tax credit for employers might make them more receptive to hiring

persons with disabilities who want to return to work. The credit would make up for

additional expenses that an employer would have to absorb for any changes in the

workplace that would be required to accommodate a person with a disability.

Because of my background, I occasionally have the opportunity to use my skills working from home at my own pace, but I am limited by the $500 cap or ‘‘substantial gainful activity’’ definition. If I exceed that amount, I not only lose my benefits,

I lose my health insurance. The $500 figure does not fit with today’s cost-of-living

and needs to be adjusted to keep pace with economic growth.

As a self-employed person who works on a contract basis, Social Security regulations subject me to an even higher standard of Substantial Gainful Activity. When

determining SGA for me, SSA considers the value of my work to the business and

evaluates whether I provide significant services to the business. The hours I can

work each month are restricted. This higher standard combined with the current

SGA level of $500 per month requires me to give away my skills. In addition, I constantly worry about inadvertently violating a regulation which would cause me to

lose my benefits.

Existing work incentives are extremely complex and hard to understand. Adequate and well-trained administrative resources to serve beneficiaries are essential.

The booklets put out by the Social Security Administration are confusing. I went

to my local Social Security office and met with a representative. His main advice

was not to make more than $500. He never told me I could buy into the Medicare

system. I was given a form to fill out and told to mail it in. The form is not available

by mail and yet the Social Security Administration wants recipients to report

earned income on a continuing basis. This is not a user friendly system and part

of the disincentive to try working is the lack of faith in the predictability of the system’s response.

Once on Medicare, the fear of losing Medicare benefits is a major disincentive to

work. Part-time employment does not provide health benefits and private health insurance is not available to those with difficult medical backgrounds. Current underwriting practices and limits on benefits are critical disincentives. Employers don’t

want a disabled person on their health plan because it pushes up their rates.

After being disabled for 2 years, a person is offered Medicare and the information

states that, if he doesn’t take it then, he won’t have another opportunity until age

65. Once a person signs on, Medicare becomes primary coverage and private insurance drops an individual even as a secondary insurer. The only secondary coverage

available is a medigap policy. For people under 65 who are disabled, there are very

few medigap insurance products available nationwide. None provide prescription

coverage. So for the people who need coverage the most, there is the least available.

As a divorced women, I have firsthand experience of the dilemma of choosing between Medicare or health coverage provided through my ex-husband as part of the

divorce agreement. His plan provided excellent benefits and included prescription

coverage but I chose to take Medicare because I simply couldn’t afford to risk the

loss of health benefits if something happened to his job. In choosing Medicare, I was

forced to absorb the expense of prescription drugs.

In order to be self supporting and get off of SSDI, a person has to be able to work

on a regular basis a substantial amount of time for good wages. Currently, I believe

the Medicare buy-in cost is $332 per month or $4000 per year for Part A. Part B

premiums add another $500 per year. In addition, my prescription costs are approximately $300 per month or $3600 per year. A medigap policy premium is another

$1200 per year. This is over $9000 in basic medical costs before a doctor is visited
106

or a procedure is completed. Then there are the rest of living expenses—food, clothing, rent, transportation, etc. When you are disabled, it costs more to do everything

from cleaning your house to pumping gas.

A simplified, well advertised and affordable Medicare buy-in should be established. Congresswoman Kennelly’s Transition to Work bill brings the Medicare buyin program into the real world and would enable me to work when I can without

limits on the amount I can make, but still have the safety net when I need it. This

would go a long way toward helping me maintain financial independence and would

enhance the quality of my emotional and psychological well-being.

In conclusion, the system badly needs reform. There is sometimes an attitude in

society that individuals on disability are derelict and simply do not want to work.

Not only is that picture unfair, it is simply inaccurate. Many people on the Social

Security disability rolls are educated and have skills that make them employable

in spite of their disability. They need help simply because life has dealt them a different hand. They want to work. The potential loss of Medicare and complicated

rules for returning to work serve as a deterrent for even attempting to leave the

Social Security rolls.

Help people work with their disabilities and remain productive members of society. One set of rules does not fit all circumstances, the system needs flexibility to

deal with different types of disability. Some consideration should be given to differentiating between individuals who are likely recover from their illness and those

who are chronically ill and have no chance of medical improvement.

Thank you for this opportunity to appear before you. I would be happy to answer

any questions you may have.

Mr. C

Ms. Erb.

HRISTENSEN [presiding]. Thank you.

f

STATEMENT OF SUZANNE ERB, FORMER SOCIAL SECURITY

DISABILITY INSURANCE BENEFICIARY; AND MANAGER,

STUDENT SERVICES, ABILITECH, PHILADELPHIA,

PENNSYLVANIA

Ms. ERB. Good afternoon ladies and gentlemen of the Subcommittee. Thank you very much for the opportunity to have the

pleasure of providing my testimony for you this afternoon.

As you can tell, I am using an instrument that I bought as a result of being on Social Security disability. My computer that I have

here is something that I was able to purchase while I was still on

SSDI.

I am here representing not only myself, but I work for an agency

called Abilitech, and we provide services for people with disabilities

who want to return to work. We provide training for people in the

computer fields, so they can then go out and get meaningful and

viable jobs with their disabilities.

As manager of student services at Abilitech, I help people with

all sorts of disabilities who sincerely want to return to work, especially people with severe physical disabilities, mental disabilities,

drug and alcohol issues—all sorts of disabilities.

And we help them learn to develop the skills they need as well

as to write good resumes, interviewing skills—all that sort of thing.

We work very closely—we are a project with industry, and we work

very closely with private industries in the Philadelphia area to

work specifically on people’s needs.

We draw from the expertise of these business leaders, rehabilitation specialists, and the Federal Government to provide people with

disabilities gainful employment. At Abilitech not only do we help

people get jobs, but we also have a component that enables people
107

with disabilities to provide services to local businesses in the form

of training people to use equipment, and so forth.

We work with the advisory committee in our admissions process.

During our admissions process they help us to provide services for

the people, and they help us to determine some of our admissions

criteria, in our selection of students, in our curriculum development. They serve as advisors in helping us to decide what courses

to teach.

And in our internship and placement phases, they also serve as

potential internship host sites, and sometimes even as actual placements in jobs.

I, myself, have been on both sides of the desk. I was born blind,

so I have been educated as a blind person. I attended the

Overbrook School for the Blind as a blind youngster. So the State

has actually invested a lot of money in me. That’s true.

When I was in senior high school, I went on to the local high

school, and this was just before 94–142, so the public school still

did not have to accept me, but they did. And I hope that they were

glad that they did, because I certainly was. I had a good time in

high school.

And I actually graduated from the Shipley High School, which is

a private high school outside of Philadelphia. I studied at Bryn

Mawr College. I received a bachelor of arts degree from Bryn

Mawr, and I received some rehabilitation services while I was in

school.

I received help with readers, and I also got lots of student loans.

And then after I finished my schooling, I was very lucky. I was able

to get a job right away out of going from college.

I worked for many of the agencies serving blind people in Philadelphia, and then I took a civil service job. I said, Well, I want to

broaden my horizons, and get out into the ‘‘mainstream society,’’

and so I took a civil service job, and went into child welfare for several years.

And that was really exciting, because I got to travel all over the

city, and work in foster care. And that was really exciting and challenging work.

However, the demands of the job were such, the unpredictable

nature of the job, led me to consider going back to school, which

I did. I went back to the University of Pennsylvania and received

my master’s degree.

During this time, I went on disability. Had it not been for SSDI,

I would not have been able to return to school. I would not have

been able to take advantage of the opportunity that I had to go

back to school and to live while I was going back to school.

After I graduated, however, it was difficult for me to find employment. So I really did still continue to need SSDI benefits while I

was working part time. I was under the threshold, so fortunately

for that threshold, I was able to work part time, and still continue

to receive benefits.

Mr. CHRISTENSEN. Ms. Erb, Mr. Hayworth has to go to the floor,

and he wants to ask a couple questions before he leaves, and your

time is also expired, and I want to ask you some questions as well.

So if it is OK, we would like to go to some questioning.

Ms. ERB. Sure.
108

Mr. CHRISTENSEN. Good job. I enjoyed your testimony.

Mr. HAYWORTH. Yes, I would like to thank Ms. Erb, and all of

the panelists here today who are on the frontlines, living this challenge, wanting to be part of the work force.

Now, for purposes of full disclosure, as many who join us here

today might ascertain, representing the State of Arizona, I have a

previous acquaintanceship with Ms. Webb. And we had a chance to

sit down a few weeks ago and talk. Weeks turned into months, but

to me it just seemed like a twinkling of an eye.

Not to get scriptural or anything, Susan. But we are glad you are

here today. But your story is very, very compelling. And I want to

talk about the Arizona Bridge to Independent Living. I love the acronym—ABIL.

I would like you to share with my colleagues here some of the

intricacies of what you have done with ABIL that you shared with

me previously, and how you have been able to address and deal

with some of these challenges that you and the other panelists

have pointed out where it appears that there are actually disincentives to try and return to the work force.

Ms. WEBB. I think that the proposal that we brought forward details the solutions, and I think we need to focus on those solutions.

But I think that ABIL represents one of 400 independent living

centers around the Nation, established by title VII of the rehabilitation act.

And what that started out as was finally those of us who live

with disabilities have our own voice. If there is anybody who knows

what these solutions are, it is those of us who have lived them.

And I think that is the basic point that we are trying to make

today, that finally we are very grateful that you folks within Congress recognize that we are professional people, credible people,

who can develop our own proposals, who know what it is like, and

who can come up with solutions using a reasonable and costeffective approach.

I had a meeting with one of your former staff folks on this Subcommittee about a year and a half ago, and she shared with me

that the feeling among many Congressional Members is that people

with disabilities are still entitlement mongers. That’s really all we

want, is to live on all these marvelous benefits that keep us clothed

and fed and housed. And that is not what we want.

And that is what independent living centers were formed to create, was a way to help people be part of the community, not institutionalized, to make our choices, and accept responsibility for

those choices that we make.

Bonnie O’Day talked about the summit in Dallas, and I was one

of the participants in that as well. And at that summit, with 400

people who represented consumers, the overriding final frontier for

us was economic independence.

The ADA has been a marvelous tool. It has given us that boost,

but the fact is that we still have a deplorable unemployment rate.

That is because we are still trapped in these systems.

You have the leadership and the ability on this Subcommittee to

get that ball rolling, to get other Members of the Legislature, other

Committees involved in a comprehensive solution to this.
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Accept our proposal as that. The things you have heard on this

panel today represent divergent views of people who can get off the

system entirely. But some cannot. And the system needs to be

seamless in terms of health care, transportation, being able to

move in and out of it when you need to.

And again, I am not an economist, but that has just got to be

healthy for our country. Reducing dependency means dollars in the

taxpayer’s pocket. Sorry. That is just pure and simple.

Mr. HAYWORTH. Susan, the thing I found gratifying was the

whole notion of getting people together in Houston and trying to

hammer out policies. Not totally unlike what happens in this institution, although we come from a variety of different backgrounds,

and do not have as intimate a knowledge of what you face every

day.

With that in mind, and certainly we want to take the Houston

blueprint, and I think Members on both sides of the aisle think

that is a good working document, but with what is in the hopper

today, have there been specific legislative proposals in the 104th

Congress, or now in the 105th Congress that you think line up with

some, or perhaps all of the goals established in Houston?

Ms. WEBB. Mr. Chairman, and Representative Hayworth, I am

really enthusiastic and excited about what I have seen so far. The

bill that Representative Bunning introduced last session, the bill

that Representative Kennelly has introduced this session, the bill

that Senator Jeffords has introduced last session, and I believe is

drafting again—we are going in the right direction.

I think we just need to continue going where we are going. Providers have come forward with an excellent proposal. I am not sure

about the Ticket to Independence issue from my own personal perspective. I like more of a consumer control/provider partnership.

As a provider myself I know that there is no way that I can keep

people on my service system for a year or more without being paid

for the services I provide. That is not realistic, especially for smaller providers.

But I think that we can form a partnership that includes all the

stakeholders, and I think you are going in that direction. I am very

encouraged.

And I guess you cannot do it. I know you cannot do it without

our input. That is the way the system works. So what we are here

today saying to you is thank you for that opportunity, and we are

here to work with you, to give you the ammunition that you need

to go to the floor and fight for us.

Mr. HAYWORTH. Ms. Webb, thank you very much. To my colleague from Nebraska, the Acting Chairman—well, our Chairman

has arrived again. I thank you very much, and I yield back the

time.

Chairman BUNNING [presiding]. Mrs. Kennelly.

Mrs. KENNELLY. Thank you, Mr. Chairman. Ms. O’Day, Ms.

Webb just referred to the ticket approach, and we had some discussion on it yesterday as you know, and in some of our proposals we

addressed using that kind of a method.

I am going to ask you, from what our discussions have been, if

you would add to it. Should the Social Security Administration give
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tickets to only those they think will use the ticket, or should everybody get the ticket and decide if in fact they want to use the ticket?

And the second question is, if a beneficiary is participating in a

Vocational Rehabilitation Program, and they are in fact offered a

job, should they be made to take that job, and possibly lose their

benefits? How would you see this playing out if we do use this new

system?

Ms. O’DAY. Well, I am a very firm believer in the concept of

choice, whether that refers to choice in the marketplace as to what

kind of car you want to drive, or choice in the marketplace as to

where you receive your rehabilitation services.

Twenty years ago I think choice meant not being pushed into the

kind of job that was a stereotyped position. For example, a sheltered workshop, or some other position that would be ‘‘appropriate’’

for a blind person.

But I think today we are seeing choice as much broader—we are

looking at it in a much broader way. And we are seeing that choice

needs to be what kind of provider, whether public or private, do

you want to go to as a consumer, and what kind of information can

you get as a consumer?

Sometimes people say I went to agency x and they told me about

a particular training program. If they did not provide any other options, then the person is going to be likely to say yes to that training program.

So along with the Ticket to Independence Proposal, we believe

there needs to be some kind of mechanism, perhaps using the private nonprofit network, perhaps funded with a percentage of dollars from the trust fund, that educates people about what their

choices are, and evaluates those choices based on outcomes.

Now, to answer your question. I do not believe that anyone at the

Social Security Administration with all due respect has the expertise to determine when someone walks in the door whether or not

they can work.

I believe that individuals if provided the opportunities and the

options and the supports who are able to work will be able to work.

There are no ways that I have seen that can adequately predict

who can and who cannot work. Based on stereotypes, those of us

sitting at this table would be deemed unable to work.

So I believe that the ticket should be offered to anyone who applies for SSDI, perhaps within a particular age range, and that

they then should be given the choice of what provider they should

go to.

I also believe that there do need to be safeguards so that individuals are not forced into taking a particular job if they do not want

to. I believe that most private agencies, private for-profit and nonprofit operate like businesses, and they have more of a business

mentality than those of us within government may have, and they

understand that if you force someone to do something they do not

want to do, eventually it is not going to work out.

An individual who takes a job that they do not want or do not

like is not going to be able to stay there. They are going to find

some way to leave that job, whether it is poor performance, or moving someplace else, or what have you.
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So I do not believe that most private agencies will force individuals to take jobs. I do not believe that that is an appropriate approach. I hope that answers your questions.

Mrs. KENNELLY. And I would like to comment. Was it Ms. Webb

that said some staffer said that the only thing that people wanted

was the benefits? I certainly hope it was nobody on this Subcommittee. But I think I can speak for the Chairman and myself,

that we understand what people want. People want to live as normal a life as possible, work, take care of themselves.

But the problem we are having is that less than 1 percent of

those who go on disability get off disability. So we have to be very

frank in how we talk about it, because the successes are not as

many as many of us who want to have people get off disability

would hope for.

And that is why we are doing exactly what we are doing. Let me

ask one more question of Mr. Young, Mr. Chairman.

There are several possible types of tax incentives—and as you

know, we are the tax committee, and that is how we are going to

get from here to there—which one might adopt. My bill offers an

incentive directly to the disabled person, through a disabled worker

tax credit.

Mr. Bunning’s bill provides an incentive to the employer by reducing the FICA tax. And then you have suggested a tax credit for

disability related expenses, and obviously we cannot finance them

all.

If you had to pick one, what would your druthers be? I ask you

that question, but it is probably the one you suggested. [Laughter.]

Choose between us.

Mr. YOUNG. I guess I did not get the southpaw question. Actually, Mrs. Kennelly, the tax credit that we proposed, the disabled

worker tax credit, that is aimed at persons with disabilities who

have extraordinary work expenses, is sort of the migration from

your tax credit that came from the NASI proposal for a tax credit

above and beyond EITC.

What we wanted to try and do was focus the tax credit toward

those individuals who actually have extraordinary expenses of

working, so that we get, if you will, the most bang for the buck.

Instead of just giving it to a person, because they have a disability, or because they were a former beneficiary, we aim it toward

people who were former beneficiaries or even current beneficiaries

who are trying to work their way off, so that the persons with the

most severe disabilities and who have the most intense expenses

in going back to work can get some relief through the Tax Code,

keep some more of their income, and be more self-sufficient.

So we kind of chose you, only you differently.

Mrs. KENNELLY. We had someone in here yesterday who had, I

think, $36,000 in expenses per year for work.

Mr. YOUNG. Yes. Not unusual.

Chairman BUNNING. Thank you. Now that I have returned, I get

a chance to ask questions. Both Ms. O’Day and Ms. Webb said one

size does not fit all. And I think that you will not have any disagreement up here.
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In your testimony, Ms. Webb, you recommended that SSDI and

SSI benefits be reduced one dollar for every two earned above

$5,000 in earned income.

Ms. O’DAY. $500.

Chairman BUNNING. Is that what I said?

Ms. O’DAY. You said $5,000.

Chairman BUNNING. Excuse me. $500. You also mentioned that

such an offset would not be available for consumers who begin

working at a high wage.

At what earnings level would you suggest that the two for one

offset not apply?

Ms. WEBB. The NASI information that they provided says that— I think the threshold there is $32,000. That when a person earns

$32,000, that is when the offset would work itself out. And the

NASI recommendation was that that was too high.

I do not have any particular recommendation because my thinking on that is that if I am working and paying taxes, if I am losing

one dollar for every two dollars I earn regardless of what my income is, I’m still taking less from the taxpayer than I would otherwise be if I were not working.

So I do not think that the threshold is the issue. The issue is reducing dependency, rather than getting off the rolls.

Chairman BUNNING. OK. Let me talk to you about CBO, and

their problem. When we put a bill in, we have to get it scored by

CBO, unfortunately—or fortunately.

CBO says that the more we allow individuals with disabilities to

earn once they are allowed benefits, the more individuals with disabilities will be enticed to enter the program.

So it’s kind of a catch-22 for CBO. How do we get by that? In

other words do you have a suggestion on how we can get by that

scoring? Because if we did what you suggested, they would score

it in a negative way, and therefore we would have to go find some

money to offset that CBO scoring.

Ms. O’DAY. I understand. I am a bit familiar with this issue, so

if it is all right with you, Mr. Chairman, I would like to go ahead

and answer.

Chairman BUNNING. And anyone else that would like to do it in

a short period of time, I would appreciate that.

Ms. O’DAY. Thank you. First of all, in looking at the two for one,

the benefits will actually zero out at about $15,000, based on some

statistics that come from the Employment Support Institute at Virginia Commonwealth University.

If you are losing a dollar for every two dollars you earn, that is

the approximate—using averages—that is the approximate place

where you will then be receiving zero benefits.

In terms of the CBO scoring, I would say a couple of things.

There are two issues here. First of all, there are some individuals

who leave the system who earn less than $15,000. And the second

issue is the issue of individuals being enticed onto the program.

My sense is that CBO did not consider the 5-month waiting period, the lack of medical benefits for 2 years, and other issues that

are endemic to this program when they came up with those figures.

However, the statistics that we have show that if 5 percent, only

5 percent of all the individuals with disabilities on SSDI go to
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work, even considering those CBO cost figures, that this will be a

cost neutral proposal.

Chairman BUNNING. That would be a very good goal for us to

have, when we do some kind of legislation. Let me ask Mr. Young,

you recommend making work pay through a variety of measures,

including a disability expense tax credit. Would you like to elaborate on that for us?

Mr. YOUNG. As we were discussing just a minute ago, the disability expense tax credit will kick in, hopefully when the two for one

kicks out.

So that when people go to work and have expenses for personal

assistance services, so they can get up in the morning and get

ready to go to work, for transportation—an adapted van or adapted

car, for adapted computer equipment or a job coach, or some of

those expenses that a person without a disability does not have to

incur when they go to work.

The person would be enabled through working at a high enough

level and being able to keep a bit more of their—the money they

would pay in taxes, Federal taxes, to be able to afford to pay for

those things themselves, as opposed to being dependent upon another Federal or State program for inkind supports, as we call

them, or either personal care services or public transportation or

van service or something like that.

Chairman BUNNING. My time is almost expired, but I want to

ask Ms. Sheehan, you raise a number of very good points regarding

the unique challenges disabled adult children face in trying to

work. The impaired-related work expenses, as I understand them,

are the costs of certain impaired-related items and services that

persons need to work, which are deducted from the gross earnings

in figuring SGA.

They are in essence allowing individuals to keep more of what

they earn.

In your view, are the impaired-related work expenses understood

by families, and are they being utilized?

Ms. SHEEHAN. In my experience, and that may be limited, although I think I have talked to numbers of people on this, I do not

think that people are using it as much as they could. And the reason for that is, and I hate to dump on Social Security, but often

these things are not explained.

The view of parents with kids is, if my kid goes to work, I am

going to lose the SSI and he is going to lose his medical insurance,

and even though that is not true, you hear that.

So that we do not have——

Chairman BUNNING. Are you saying that SSA is discouraging——

Ms. SHEEHAN. No. I am not saying they are discouraging. I am

saying that they are just not helpful. And it varies from office to

office.

Chairman BUNNING. In other words, they do not explain the

ramifications of what you——

Ms. SHEEHAN. Right. And I think that the provider community

does not know enough about it, and so forth.

But once you get on it, and once you understand it, I mean, it

is really making all the difference in the world for John and for
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others, I know. And, of course, the SSDI does not allow this type

of thing at all.

So in that case, people are correct in saying I am going to lose

my benefits if I go to work.

Chairman BUNNING. OK.

Mr. Christensen.

Mr. CHRISTENSEN. Thank you, Mr. Chairman.

Ms. Erb, thank you for your testimony. I appreciate hearing that.

You made a comment that I want to have you elaborate on a little

bit. You said something about being lucky, and that you were lucky

to get a job.

Well, I do not believe you are lucky. You went out there, and you

got that job. You worked hard. You worked hard through school.

And I do not believe in luck, and I do not think you were lucky.

So I give you all the compliments in the world for making it happen on your own initiative.

I do want to ask you about your computer, though. Can you explain to me, when you were typing there a bit ago, were you—what

were you doing? Were you inputting, or were you taking out a

script that was already put in your computer. Explain to me what

you were doing?

Ms. ERB. Well, I was doing a little bit of both. I had to type in

to retrieve the file. Part of my testimony was written, and part of

it was not. I was doing some reading from the computer while I

was sitting here.

I use this—this is actually a braille output device. I type the

braille into it, and braille comes out. And I can also use speech output with this computer.

This computer can hook up to a print printer, and print out print

or it can be hooked up to a braille printer and print out braille.

Mr. CHRISTENSEN. So you were doing a little bit of reading as

well as just on your own.

Ms. ERB. Right.

Mr. CHRISTENSEN. OK. And I cut you off during your testimony,

so if you have full testimony within your computer that you would

like to have printed out and inserted into the record, make sure we

get that done before you leave today.

I have a question though for you concerning your experience as

far as working with outside employers. What do outside employers

see as the barrier to hiring people as yourself, and other people

with disabilities?

Ms. ERB. I think some of the barriers they see are having to provide what they consider to be perhaps expensive equipment, assistive technology, for example, for blind workers, for example, speech

output for computers, other kinds of assistive technology.

I think also sometimes people are afraid that people with disabilities just are not going to be able to perform competitively, and yet

we have, as disabled workers, we have very good records in terms

of our productivity, and in terms of our absenteeism. We are very

reliable workers, generally speaking.

I think that especially today, because of so many advances in

technology, for example, to provide speech or braille output for people with disabilities on the job, the expenses are far lower than

they used to be.
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I think especially in my case, where I as the disabled worker obtained much of the equipment for myself, and the Bureau of Blindness and Visual Services also helped provide with some of it, and

the employer helped, but all three, working in concert with each

other enabled me to perform my job, I think, satisfactorily.

And I think as the ADA becomes more ingrained in our minds

and hearts as a country, that perhaps this will turn out to be the

model that will eventually work into the system, I hope.

But I do think that many employers are afraid of what they consider to be the expenses involved, and I think they are afraid, they

do not necessarily know how to work—they are afraid, what if the

disabled person does not do the job well, how can I fire them?

Instead of looking at the positives, it is like any other unknown.

People just do not know. So I think education for people is probably

one of the best things that we can do.

Mr. CHRISTENSEN. Thank you very much. Thank you, Mr. Chairman.

Chairman BUNNING. Ken, would you like to inquire?

Mr. HULSHOF. Thank you, Mr. Chairman.

Chairman BUNNING. We have two votes on the floor, and after

your inquiry we will recess and go vote, and then we will come

back and continue the questions, if you will be so kind as to be patient with us as we vote and come back.

Mr. HULSHOF. Thank you, Mr. Chairman.

Mr. Young, this is an extraordinary Committee, the Ways and

Means Committee, with the jurisdiction over so many different

issues. And I want to compliment you on how you deflected that

very tough question by Mrs. Kennelly. [Laughter.]

One of the solutions that you propose, and one that I am very

intrigued by, is your suggestion that in discussing the solution to

the barrier of health benefits, to create this optional State Medicaid

buy-in for working SSDI and SSI recipients. Medicaid is not within

the jurisdiction of this Committee.

Have you shared your proposal with the Commerce Committee,

that does have jurisdiction? And if so, can you just tell us briefly

what reaction you have had?

Mr. YOUNG. We have just begun to work with the Commerce

Committee to share our ideas. We have not yet had a chance to

have a formal dialog with them to the extent that we have been

working with this Committee on that issue.

We think that the way we want to present this, and the way of

moving people off of other Federal benefits, and allowing us a

wraparound, if you will, with the Medicaid Program providing vital

services, particularly personal assistance, and durable medical

equipment and prescription medications to the Medicare Program

will be something that the Commerce Committee we hope will see

as fruitful as we think this Committee sees the other work incentives.

Mr. HULSHOF. Good luck in that endeavor. Ms. Crabbs, let me

ask you a question. You mentioned in your testimony that some

consideration should be given to differentiating between individuals

that are likely to recover from their illness and those who are

chronically ill and have no chance of medical improvement.
116

What are the issues that you think are the most important for

us to address in terms of differentiating programs or changes in

these programs for the chronically ill?

Ms. CRABBS. Well, in my situation, just in comparison to the

other things we have heard here, and I do not mean to disparage

anybody’s disability, not at all. But someone who is blind, she has

learned to deal with that. She was born that way, and she does not

have a different challenge every day.

Likewise, Ms. Webb, who was injured a long time ago and is not

experiencing any additional injuries. For people with arthritis, it

changes from day to day. I could get up and get myself organized

to come here today. Tomorrow, I might not be able to get out of

bed.

And that is not unusual. My situation changes from day to day,

from week to week. But when I am able I would like to be able to

work. And it is that irregularity, I guess, of my problem that

makes it very hard to deal with the rules as they are.

And that is why I think we need some sort of flexibility in the

system.

Mr. HULSHOF. I certainly appreciate you sharing your very personal aspects of your life and your story with us. Recognizing the

amount of time we have left, I will yield back, Mr. Chairman.

Chairman BUNNING. Well, we will recess for two votes, and we

will return as quickly as possible, so please be patient.

[Recess.]

Chairman BUNNING. The Subcommittee will come to order. I

have some general questions for this panel, and I would like to proceed, and when my colleagues return from their second vote, they

can do whatever they like as far as asking their questions.

First of all, I am impressed by all of you, and commend you for

the extreme hurdles you have overcome and the great achievements you have made in becoming self-sufficient and productive in

the workplace.

But tell me one thing: Are you all exceptions? Or can we expect

to have a significant number of recipients with similar disabilities

to become as successful as yourselves? Who would like to start?

Ms. O’DAY. I would like to respond, sir. The National Council has

conducted a series of thirteen public hearings around the country

for the specific purpose of hearing from individuals with disabilities

about what their experiences are with return to work.

While there were many people that we heard from who were not

able to work because of the tremendous barriers that they faced in

terms of medical coverage and financial disincentives, and so forth,

we also did hear from many, many people with disabilities who are

working.

There are many people—I think there is a stereotype that individuals with disabilities do not work. And we certainly do. The impetus, I think, of this panel is that we feel that with a holistic and

comprehensive approach to changing some of the structures that

really inhibit work, that many, many more people right now could

work.

I think there are a couple of things you could do that would really make a huge difference. One is to increase the opportunities for

health coverage, so that individuals who work do not lose their
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health benefits. We heard over and over that that was the major

barrier.

And the second thing I think you could do is to deal with the $500 income cliff, so that individuals are not induced to work below

the poverty level and below poverty level wages to be able to keep

their benefits.

Chairman BUNNING. Mr. Young.

Mr. YOUNG. Mr. Chairman, what has been extraordinary or lucky

or fortunate or whatever term you might like to choose among

many of us here on this panel is that we were in a position as we

were trying to go back to work where the systemic disincentives in

the program, we can ignore them. They did not apply to us.

I had family medical coverage. Susan had family medical coverage. We were able to get away with going on that coverage until

the time that we got our own job and were able to get employermandated coverage. I was able to live at home and cut my expenses

way, way down, so that the jobs that I got could cover the expenses

that I had.

The problem is that we cannot—a large group of people will not

move off the rolls unless they have something more reliable to depend on than just fortunate family circumstances or other kinds of

circumstances that happened into their lives.

What we want to do is make sure that everyone has the same

opportunities that we have been able to have over the last few

years so that we can move large numbers of people into the work

force as productively as possible.

Chairman BUNNING. Ms. Webb.

Ms. WEBB. Chairman Bunning, Members of the Subcommittee,

there is something that we have not addressed today. And we were

talking about it while you were out voting.

And that is that those of us who you see here today represent

persons with very significant disabilities, but the rolls are growing

because of disabled workers that are coming off of the workers’

compensation system.

At my agency we run an employment program where we place

people back into the work force in community-based and integrated

jobs. It amazes me in all of the many hundreds of people that have

gone through my program, generally speaking, I think it is a fair

statement to say, that the things that are keeping them from working have very little to do with their disability.

We work with every major employer in Phoenix. We work with

the American Expresses, the Motorolas, the Honeywells, on and on.

And employers, and maybe it is our economy in Phoenix, but employers are dying for good workers, and they really do not care if

a person has a disability. They want somebody with the skills they

need to get the job done.

People with disabilities for whatever reason are out of work for

the same kinds of reasons that other people on other welfare programs are out of work. They are trapped in systems. The systems,

transportation, health care, child care, job training and work force

development, the big four.

If we can solve those problems, people with disabilities will in

fact—and I will come back here 5 years from now and tell you I

was right.
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Chairman BUNNING. You won’t tell me. I won’t be here. [Laughter.]

You can tell Barb. She will be here.

Ms. WEBB. I will tell somebody.

Chairman BUNNING. All right.

Ms. WEBB. Anybody will listen, that people with disabilities can

in fact be very, very vital working members of this community. It

is not our disabilities that keep us unemployed, and I think you

have heard it across this panel today.

The other issue, as was brought out very eloquently, is this is always an all or nothing thing for us today. We are either all on benefits, or we are all not. We have got to have a seamless system that

allows people whose disabilities might be episodic to move in and

out without penalty. And that we do not do today.

So those two factors, I think, are the critical pieces in this.

Chairman BUNNING. Would someone else like to add something?

Ms. SHEEHAN. Just briefly, Mr. Chairman. Thank you for your

comments. I consider my son, John, a very successful human being.

He is working as hard as he can and using every ounce of his energy, and whatever he has in making himself successful.

But I want to make the point again that success for people with

mental retardation might not necessarily be getting off the rolls,

but rather a lesser dependency on the public system, with a little

bit of both, with their work, and with public assistance.

And that can be a measure of success.

Chairman BUNNING. Anyone else? Do you have anything you

would like to add?

Mrs. KENNELLY. No, Mr. Chairman, but I would like to thank the

panel for their exceptional testimony and ask them if they would

continue to work with us as we try to get to the same goals that

we all want.

Chairman BUNNING. I appreciate all of your testimony, obviously,

and it seems to me that if there is a middle ground that we can

come to, where the disincentives are weighted against the incentives to the point where they are not a barrier for work, I think

we can expect to increase the return to work rate to 30 or 40 percent of the people, if we can find middle ground.

Such middle ground would be where workers with disabilities do

not lose their health care, and where there is some kind of incentive program for employers to offset the expense of new technology

and equipment that is needed to accommodate more disabled workers.

And mental health is a very, very critical area. And the fact of

the matter is, if we can get people with mental illness back to work

sometime, it is better than not working at all. And that gives them

added meaning to their lives.

I have some grandchildren that fall under that category, so I am

very familiar with it. I thank you all for your testimony.

[The following was subsequently received:]

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Susan Webb

1. In your testimony, you summarize a number of recommendations involving work

incentives, removing financial incentives, enhancing employer incentives, and extending medical services. You do point out that the National Council on Disability pro-
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posal is designed so consumers have wide-latitude to pick and choose. So, in fact,

are you advocating a type of menu-driven approach, where one size does not fit all?

How would you see such a program being administered, and what role would SSA

play?

1. My testimony on behalf of the National Council on Independent Living (NCIL)

does advocate a menu-driven approach so that consumers of SSI and SSDI benefits

can choose from an array of options to fit his/her individual circumstances. We believe this approach has several advantages:

A. By increasing consumer choice, the consumer also accepts personal responsibility and accountability for those choices. Typically, a case management approach that

focuses on process, procedures and one-size-fits-all regulations relieves the individual from decisionmaking on his or her own life. Consumers are then lulled into a

dependent posture where it is easy to claim he or she is a ‘‘victim’’ of the system

and, therefore, can pass the blame to someone else.

B. Consumer choice by default achieves a consumer ‘‘buy-in’’ to the plan rather

than merely a sign-off role as exists today. Greater likelihood of success occurs when

the consumer truly buys in.

C. In the current system a consumer typically has several gatekeepers, each of

whom have some level of expertise (e.g. vocational rehab counselor, SSA caseworker,

medical practitioners, independent living specialist, etc.) Each of these gatekeepers

specializes in a particular aspect of a consumer’s life. However, the only member

of the team who truly has firsthand knowledge of all aspects of the consumer’s life

is the consumer him/herself. Shouldn’t the one person who knows the most about

the consumer as a whole be the primary decisionmaker about his/her life?

D. NCIL’s (and NCD’s) proposal moves a consumer away from receiving cash benefits simply for being disabled and moves toward public money being used specifically for those services and technologies that directly represent actual costs of work

barriers and disincentives specifically related to disability. The costs associated with

an individual’s disability are very specific to that individual. Not every individual

who is blind, for example, has the same costs associated with working simply because he or she is blind. A menu-driven approach, then, provides for that individual

to take total charge of his or her start/return-to-work effort but only pays for actual

expenses. Those individuals who are blind and live in rural communities, for example, may have a much higher transportation cost than those who live in an urban

area with good public transportation. A totally blind individual may have a higher

cost to acquire computer technology with voice synthesis software than will a person

who is partially sighted who may only need less-costly large-print software.

The administration of such a program should be consumer-controlled and marketdriven. Consumers should be able to choose among existing public programs such

as State Vocational Rehabilitation, Job Training Partnership Act, Personal Responsibility Work Opportunity Restoration Act, Job Corp, etc. using a voucher or similar

method. In addition, a consumer should be able to purchase services (including personal assistance and assistive technology) from the private sector just as he or she

would purchase other goods and services in the community. Several concerns immediately come to mind with this model:

A. How do we ensure that consumers have access in the private sector to all the

types of services needed all across the country, especially in rural communities?

B. How do we ensure that consumers receive quality services and avoid ‘‘fly-bynights’’?’’

C. How do we pay providers in a way that enables them to provide comprehensive, ubiquitous services while still only paying for outcomes?

D. How do we ensure that providers are not ‘‘creaming,’’ that is, only serving

those who are easier and less costly to place, while those with the most significant

disabilities or harder to place get inadequate or no services?

E. How do we ensure that consumers use their vouchers for realistic services with

high potential for positive outcomes? What do we do if consumers purchase services

and then do not reduce reliance on SSI/SSDI?

Admittedly, our position is weak on this issue. The Return-to-Work Group, the

National Academy of Social Insurance and other private provider-based organizations probably can answer these concerns better than we. However, a mechanism

for consumers to evaluate providers and report problems to a consumer-controlled

protection and advocacy entity is a checks and balances approach that is highly recommended. Protection and advocacy entities exist today around the country to ensure that consumers can report problems with existing State VR and Independent

Living programs. Such a methodology could be applied to private providers also.

Current P&A agencies should be changed, however, to require that they be
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consumer-controlled; at least 50% of their Board of Directors and staff should be individuals with disabilities.

A comprehensive, compensable consumer training and program orientation should

be included in the reforms being proposed. NCIL members and consumers report

that consumers receive little or no information today about work incentives and the

information they do receive is often inaccurate. If consumers are expected to control

their own lives and start/return-to-work activities, they MUST have access to accurate, timely information about their options.

NCIL’s Social Security Subcommittee has yet to address the issue of potential consumer fraud or misuse of vouchers. Consumers with disabilities are like every other

segment of the population who pursue training and employment. If barriers and disincentives are reduced, most will succeed and some will fail. The NCIL subcommittee will take up this issue in the near future and report back to you on our position.

Current welfare reform efforts under the Temporary Assistance to Needy Families

(TANF) programs include sanctions of individuals who do not achieve work outcomes. Perhaps a similar methodology could be deployed in the start/return-to-work

of individuals with disabilities at some point in the future. However, given the deplorable unemployment statistics among SSI/SSDI beneficiaries, we believe that

such a significant number of individuals with disabilities could and would return

to work if the disincentives were removed from the system that directing much attention to fraud and sanctions at this time is premature.

The role SSA should play in the whole start/return-to-work effort is, with all due

respect, to just get out of the way. Susan Daniels, Associate Commissioner of the

Office of Disability Policy at the Social Security Administration, is right on target.

She has said many times that the SSA is a safety net there to provide cash benefits

to people who simply cannot work at some point in their life. They are not qualified

to be traffic cops or vocational providers. Yet the current system puts the SSA in

a position to determine whether an individual has the capacity to work, whether an

individual’s work goal is realistic and can only refer an individual with a work goal

to the State VR system that can serve only a limited number of these beneficiaries.

SSA caseworkers are not qualified to make these decisions nor does such a system

empower the person who knows most about capacity to work—the consumer him/

herself. The SCI’s role should be as it was intended originally: determine whether

an individual is eligible for cash benefits based on inability to perform substantial,

gainful activity. Provide the safety net needed by such individuals until such time

as they determine they no longer need them in whole or in part. Although we know

that today only a tiny percentage of beneficiaries voluntarily leave the rolls, this situation should automatically correct itself by removing the barriers and disincentives. In particular, de-linking availability of healthcare coverage from SS and SSDI

is critical to allowing beneficiaries to reduce their dependency. Likewise, a system

that allows for gradually leaving the rolls and reduced dependency by those who can

work part-time or episodically would greatly impact the likelihood of more beneficiaries starting or returning to work.

2. Some individuals are so severely disabled that they may not have any remaining

capacity to work. Although no one should be prevented from trying to work, we

wouldn’t necessarily expect all disabled recipients to work. But, there are some disabled individuals who would be good candidates for rehabilitation services. Yet, we

know that Social Security law requires suspension of benefits for those SSDI and SSI

recipients who refuse to accept vocational rehabilitation services. Should legislation

require that recipients with potential for work take advantage of return-to-work services?

2. At this time NCIL’s position is that beneficiaries found to be eligible for SSI/

SSDI benefits should not be required to start or return to work. Since the overwhelming majority of current beneficiaries are not starting or returning to work, it

is intuitively obvious that something is wrong with the current approach. We believe

that millions of current beneficiaries could start or return to at least part-time or

temporary work. However, most are fearful to even try to do so because those who

have tried have experienced such punitive attitudes and outcomes by the SSA’s inefficiencies and errors, that they never try again and advise others not to try. Further

until the current disincentives and barriers are removed and we have some data on

the results (qualitative as well as quantitative), a system that REQUIRES a return

to work will be more punitive than is justified at this time. Discussion of such a

requirement also poses the $64,000 question: Who determines ‘‘potential for work’’

and how is that determined? We need only look at the ‘‘medicalized’’ Workers’ Compensation system with its ‘‘100% recovered’’ approach to know how that would end

up.
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3. Do we need to provide additional incentives in the law for employers to hire individuals with disabilities?

3. Employers hire qualified individuals to get the job done. Our proposal includes

employer incentives we believe to be useful. However, the most important issue for

employers is not the ‘‘incentives’’ but rather a ‘‘reduction of perceived risk.’’ Employers, especially small employers, want to be assured that they will not increase their

liability and costs. Our proposal includes exemptions of the employer’s FICA match.

However, allowing employers to take tax credits when they actually incur additional

expenses directly related to an employee’s disability makes sense. We know from

data published over the years by employers that the average employee with a disability is not expensive in terms of accommodations. However, have we done an adequate job of employing pepsins with the most significant disabilities? We do know

that only a tiny percentage are returning to work so what would the actual costs

be for these workers? Employers need an assurance that they can recoup extraordinary costs when those occur. Job coaches, sign language interpreters, on-the-job

personal assistance can be costly. Yet we know that an employer tax credit would

rarely cost more than keeping that individual with the most significant needs out

of the workforce and totally dependent upon public entitlements.

4. If only one tax credit could be implemented for disabled Social Security recipients,

would you recommend a personal assistance tax credit or a disabled worker tax credit? Please explain.

4. We highly recommend tax credits for personal assistance but that includes a

broad definition of personal assistance. For example, attendant care in preparation

for and returning from work in addition to on the job, personal assistance on the

job such as sign language interpreters, readers, job coaches, etc. and assistive technology such as voice synthesis software, hand controls, home modifications, etc.

should all be available with a tax credit where it is not employer-provided. The disabled worker tax credit is designed for low wage earners and serves a very different

purpose. We are proposing both but believe the personal assistance credit is critical.

The personal assistance credit also removes those types of services from the typical

‘‘medical’’ category, which we believe is more of 90’s concept! Personal assistance is

a lifestyle issue rather than a medical issue but is just as necessary to the independence and well-being of a person with a disability as medical services.

1. Have you discussed your recommendations with SSA? And if so, what has been

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Bonnie O’Day

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their reaction? I recognize that your forums have been ongoing over the last few

months and your report is about to be finalized, however many of the issues you have

raised have been around for a long time. Why, in your view, are only a few of the

NCD’s recommendations included in the Administration’s ticket proposal?

• The NCD recommendations have been informally shared with Social Security

personnel during the development and public hearing stages. Additionally, Social

Security officials attended several of the public hearings held by NCD. While the

SSA has provided technical information and support during proposal development,

SSA has not formally responded to NCD’s proposals.

• SSA’s Ticket proposal is budget neutral. In contrast, the NCD believes that

some up-front expenditure of funds is essential for the ticket program’s success, and

did not limit itself to ‘‘no-cost’’ approaches. We do believe, however, that over time,

the NCD proposals will prove to be cost effective by returning recipients of SSI and

SSDI to work.

2. You suggest that Congress should designate a certain percentage of trust fund

monies for a competitive grant for information dissemination about return-to-work

incentives. How do you envision such a program working?

• Our intention is that centers for independent living, employment agencies, disability organizations, and other local agencies be offered the opportunity to submit

grant applications to SSA through an RFP process to provide employment counseling services to SSI/DI applicants and beneficiaries. SSI/DI applicants should immediately be referred to such services. Employment counselors located at these agencies would explain how to use the SSI/DI work incentives, inform applicants of the

vocational training and other supports available to them through vocational rehabilitation and other agencies, and help applicants negotiate through the bureau-
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cratic maze so that they can make full use of the work incentives and employment

services available.

3. How important to a successful return-to-work program are rehabilitation provider

evaluations?

• To maximize choice of rehabilitation providers, consumers must have concrete,

performance based information about rehabilitation providers. This information

should be based primarily upon outcome measures such as numbers and types of

placements, wages, types of disabilities served, and consumer satisfaction. This information should be widely disseminated, since independently gathered, outcomebased information is crucial to consumers in making informed decisions. If this information is lacking, consumer choice will be based largely upon public relations

materials distributed by agencies, relating choice to the size of agency advertising

budgets rather than consumer outcomes.

4. Some individuals are so severely disabled that they may not have any remaining

capacity to work. Although no one should be prevented from trying to work, we

wouldn’t necessarily expect all disabled recipients to work. But, there are some disabled individuals who would be good candidates for rehabilitation services. Yet, we

know that Social Security law requires suspension of benefits for those SSDI and SSI

recipients who refuse to accept vocational rehabilitation services. Should legislation

require that recipients with potential for work take advantage of return-to-work services?

• During the Houston meeting, where the first draft of the NCD proposals were

drafted, consumers held a heated discussion about whether recipients should be required to use the work incentive and vocational services. Consumers felt strongly

that a far greater number of SSI/DI recipients could return to work, and that the

culture of lack of expectation of work prevalent in the Social Security system should

be altered. However, there is no fail-safe evaluation mechanism that can accurately

assess an individual’s likelihood of successful employment. Much depends upon the

local economy, education, skill, age, level of disability, and motivation of the recipient. Additionally, a holistic rather than piecemeal approach, which includes vocational training, medical insurance, cash or other assistance and employer incentives

may be needed to enable recipients to return to work. Until all of these elements

are in place, a punitive system which coerces beneficiaries to use return-to-work

services is likely to result in waste of effort for the rehabilitation agencies, complex

administrative enforcement procedures for SSA, and significant anxiety for consumers.

5. Do we need to provide additional incentives in the law for employers to hire individuals with disabilities?

• The NCD believes that employers should receive a tax credit for any additional

costs incurred for hiring someone with a disability. For example, employers are currently required to offer the same level of health coverage to employees with disabilities that they offer to other employees. Under our proposal, the employer would receive a credit only for any additional health care expenses resulting from the individual’s disability. The NCD also supports a tax credit for employers who provide

disability diversity training to employees.

Several hearing participants also testified about the devastating impact of employer discrimination on their efforts to find employment. While not contained in

this proposal, the NCD strongly supports the provision of additional resources to the

Equal Employment Opportunity Commission and the Department of Justice for

ADA education, mediation and enforcement.

6. If only one tax credit could be implemented for disabled Social Security recipients,

would you recommend a personal assistance tax credit or a disabled worker tax credit? Please explain.

The NCD supports a Disability Work Expense (DWE) tax credit that would reimburse 75 percent of an individual’s expenses related to preparing for, traveling to

and from work, and any expenses incurred at work. The reimbursement could not

exceed the individual’s gross earnings, and would be capped at expenses of $15,000

per year.

The DWE Tax Credit would include any personal assistance services (PAS) expenses in preparing for work, traveling to and from work, and during the work day.

Additionally, it would benefit SSI/DI recipients who do not use personal assistance

by covering other disability-related items used for work, such as adaptive equipment, readers or drivers for blind persons, or other supports.
f

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Questions received from Hon. Jim Bunning, and Subsequent Responses

from Tony Young

1. In your testimony, you mention that SSA’s current work incentives are expensive

to administer and too often result in benefit overpayments that recipients must pay

back. Since SSA’s payment system is not able to compute monthly accounting for

earnings, it seems to me that the $1 for $2 offset would result in multiple overpayments for those recipients attempting to work. Are you concerned at all about this?

Yes, this does present a concern. However, we propose several changes to the procedure through which the current $1 for $2 offset for SSI recipients is administered

that would mitigate this problem. First, we recommend that the offset be calculated

on a Quarterly rather than a monthly basis. This would avoid the common problem

of the five pay check month that pushes recipients into an overpayment problem.

Second, we recommend that the offset be administered in $100 increments; that is,

for every $100 earned, a recipient foregoes $50 in benefits. This would level out

many small changes in income that would require a minor adjustment in benefit

payments. These changes to the way benefit offsets are administered, if applied to

the current SSI offset and the proposed SSDI offset, would save SSA millions of dollars in administrative costs over the next five years. In addition, we recommend

that SSA be directed in legislation that it should work with the IRS to begin accessing quarterly IRS earnings statements electronically to facilitate the processing of

any benefits offset. There should be an interagency working agreement between

SSA and IRS to facilitate the administration of the offset. SSA should electronically

access the quarterly earnings reports submitted by employers to ascertain the earnings levels of beneficiaries participating in the offset program, calculate the correct

offset amounts, and distribute the change equally over the next three monthly benefit checks.

2. Some individuals are so severely disabled that they may not have any remaining

capacity to work. Although no one should be prevented from trying to work, we

wouldn’t necessarily expect all disabled recipients to work. But, there are some disabled individuals who would be good candidates for rehabilitation services. Yet, we

know that Social Security law requires suspension of benefits for those SSDI and SSI

recipients who refuse to accept vocational rehabilitation services. Should legislation

require that recipients with potential for work take advantage of return-to-work services?

The legislation should not require recipients to take advantage of return-to-work

services. We know that there are SSI/DI beneficiaries who are good candidates for

potentially returning to work or entering the workforce for the first time. What we

do not know with any certainty is which SSI/DI beneficiaries are those who can successfully enter or reenter the workforce. There is no proven technique or test that

can accurately, reliably predict success in employment based upon disability status.

If there was, it is uncertain whether or not the benefits of such screening would

outweigh the administrative cost of testing SSI/DI beneficiaries for work potential

and tracking their participation. We recommend that every beneficiary be given a

ticket and allow the providers in the free market system to use its marketing tools

to entice beneficiaries to access employment services.

3. Do we need to provide additional incentives in the law for employers to hire individuals with disabilities?

No. Given the current economic demand for workers and the recent questions regarding the effectiveness of incentives for employers to hire workers from targeted

populations, it is inappropriate to provide additional incentives in this law for employers to hire individuals with disabilities. If the Subcommittee wishes, it may consider studying the potential to expand WOTC to SSDI beneficiaries as well as SSI

rector of the Bureau of Rehabilitation Services in Windsor, Conbeneficairies and make it permanent.

Chairman BUNNING. We have a second panel. John Halliday, dif

necticut, and chairman of the Council of State Administrators of

Vocational Rehabilitation, Social Security Relationship Committee;
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Richard Christman, from Metro Industries, from my home State,

Lexington, Kentucky and reading his testimony will be Mary

Gennaro, from the American Rehabilitation Association; Dr. Thorv

Hessellund, president of the National Association of Rehabilitation

Professionals in the Private Sector, from Pleasant Hill, California;

Fred Tenney, president of Southwest Business Industry and Rehabilitation Association in Scottsdale, Arizona; and Stephen Start,

chief executive officer and president of S.L. Start & Associates in

Spokane, Washington.

And Barb would like to introduce her constituent.

Mrs. KENNELLY. Thank you, Mr. Chairman. I am delighted that

Mr. Halliday from Connecticut is able to be with us. As a public

servant dedicated to helping individuals return to the workplace, I

think he is eminently qualified to talk about the barriers to employment for people with disabilities, and I thank him very much

for coming to Washington today to share his knowledge with us.

Thank you, Mr. Chairman.

Chairman BUNNING. Mr. Halliday, would you like to begin,

please?

STATEMENT OF JOHN HALLIDAY, DIRECTOR, CONNECTICUT

BUREAU OF REHABILITATION SERVICES, ON BEHALF OF

COUNCIL OF STATE ADMINISTRATORS OF VOCATIONAL

REHABILITATION

Mr. HALLIDAY. Thank you, Mr. Chairman. Mrs. Kennelly, thank

you very much for your kind remarks.

It is a pleasure and an honor to have the opportunity to address

this Subcommittee on behalf of the Council of State Administrators

of Vocational Rehabilitation.

As you are aware, the public vocational rehabilitation system has

been providing services to SSDI and SSI recipients since the beginning of those programs, and continues to do so. We have demonstrated, through our partnership with consumers, families, other

government agencies and the private sector, success in assisting individuals on SSI and SSDI to enter employment.

Over 45,000 people a year who are SSI and SSDI recipients are

entering employment as a result of that effort. The challenge before

us is to increase both the number entering employment and the

earnings of those individuals.

The association provided, I believe, a white paper to the Members of the Subcommittee.

[The information follows:]
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focus on a couple of key barriers and our main recommendations

Mr. HALLIDAY. I will not go through all of that. I would like to

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if I may.

The barriers we see come in three main areas: One is disincentives. And the panel before us did an outstanding job of identifying

the major ones there.

Clearly the availability of medical coverage is a key factor in preparing for and maintaining employment.

It is the advances in treatment and rehabilitation that allow people to function at work and to increase their employment levels.

The other disincentives are the structural ones, and those are the

ones I would like to spend the most time talking about. They fall

into the following areas.

We need to become much more effective in identifying those on

disability who are involved in rehabilitation activities. In order to

do this, we need to work very closely with the Social Security Administration so that I could come here and say, of the approximately 7,000 people in Connecticut who are active participants in

vocational rehabilitation, x number are on SSI and SSDI.

Today I cannot do this because we have been unable to get the

necessary information from Social Security.

We have to be able to give recipients fast, clear, accurate, and,

most of all, predictable information regarding work incentives. Like

all of us, if I cannot get clear answers in a very complex matter,

and the decisions I make will have direct impact on what my in-
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come is, what my benefits are, and it is fuzzy and it is unclear—

I am not going to act.

We are concerned and scared by contradictory information. We

need to provide consumers clear, understandable information so

that they can make decisions that will hold up over time.

The other structural barrier is the impact of reimbursement on

benefit systems. As I come here before you today, the latest figures

I have show 87 million dollars’ worth of potential reimbursable

costs sitting in Baltimore. These are reimbursement claims the

public vocational rehabilitation agencies are asking Social Security

to consider for people who have gone to work for a minimum of 9

months.

These funds need to be turned around more quickly so that they

get back into the VR system, where they will be spent in returning

individuals to work.

I think one of the things you heard the panel before say, and we

have talked about in our report, is clearly people need work incentive education. Much of the information they get, unfortunately, is

from hearsay, and off the street. It is inaccurate, and does not contribute to their being able to make timely decisions.

Those kinds of changes in that kind of system can be done without adding cost.

The other point that we are deeply concerned with is that we do

not spend our scarce resources on building infrastructure and competing systems. We need cooperation and collaboration between the

public and private sectors to maximize our financial resources.

Many recipients of SSDI are also receiving services from private

programs such as workers’ compensation or disability insurance.

We need to look at jointly working toward the common goal of employment.

Thank you for this opportunity. We are available to work with

you, and look forward to doing so. Thank you, Mr. Chairman.

[The prepared statement follows:]

Statement of John Halliday, Director, Connecticut Bureau of Rehabilitation Services; and Chair, Council of State Administrators of Vocational

Rehabilitation, Social Security Relationship Committee

Chairman Bunning and distinguished members of the Subcommittee, it is a privilege to have the opportunity to provide testimony on behalf of the Council of State

Administrators of Vocational Rehabilitation (CSAVR) regarding the barriers facing

Social Security Disability recipients in their efforts to return to and maintain employment.

The CSAVR is composed of 81 state officials who administer the Public Vocational

Rehabilitation program in the 50 states, the District of Columbia and the territories.

This program has a history of providing vocational rehabilitation services to recipients under the various Social Security Disability Programs since the inception of the

SSDI and SSI programs. Our goal today is to share with your our understanding

of the factors that impact individuals receiving Social Security Disability Benefits

as they consider active participation in our national economy.

We are proud of the history and achievement of the Public Vocational Rehabilitation Program in assisting annually thousands of recipients of Social Security Disability to prepare for, enter, and maintain employment. Of the 1.2 million people

served annually by the Public Vocational Rehabilitation Program, 40% are conservatively estimated to receive SSI and SSDI when they enter or participate in the Vocational Rehabilitation System. Over 200,000 individuals enter work annually

through their efforts with the Public Vocational Rehabilitation Program. Approximately 45,000 of these individuals are also SSI and SSDI recipients. The level of

partnership with consumers, families, and other public and private rehabilitation

programs exhibited in the delivery of services through the Public Vocational Reha-
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bilitation Program is exemplary and this partnership has brought about the success

of the Program. It is through the continued growth and development of such partnerships that our efforts to assist increased numbers of individuals with SSI and

SSDI need to be based.

The mandate of the Public Vocational Rehabilitation Program is to assist eligible

individuals with disabilities to enter and maintain competitive employment in the

full range of economic activities that our society offers.

The barriers to Social Security recipients entering and maintaining employment

fall into three categories: disincentives, structural issues and resource issues.

In the area of disincentives, the barrier is the availability of continued Medicare

and Medicaid eligibility to cover the costs of treatment, medicine and other necessary services that in fact, enable people with significant impairments to enter and

maintain employment. These barriers are well documented and widely agreed to.

The other major disincentive is the loss of income, both perceived, and in some cases

real, resulting in individuals finding themselves in severe economic crisis. There is

broad agreement that we need to continue to work on various modifications to the

Medicare and Medicaid structures in order to enable persons with disabilities to

continue to have access to necessary medical and rehabilitation treatments.

One of the greatest disincentives to Return-to-Work is the lack of understandable

information on what will happen to both cash benefits and medical coverage. I refer

to this as the twilight zone, in that one feels lost in a fog of confusion with contradictory messages often being received. Beneficiaries are frequently told to just go

ahead and take a job, so that they then, only after taking it, will be informed as

to what will happen to their benefits. The system must be simplified to encourage

persons to return to work. The redesign of this system should be focused on a customer service orientation which would result in people having confidence around returning to work. We must decrease the great unknown that we ask people to leap

into when we ask them to consider return to work.

In the area of structural barriers, it is clear that the timing of outreach to encourage beneficiaries to return to work is poor. It is poor because it occurs at a time

when persons with disabilities are either trying to prove they cannot work or when

they have just been allowed benefits. Also complicating the matter is the lack of a

joint method between the Public Vocational Rehabilitation Program and the Social

Security Administration to determine who is receiving benefits.

It gets worse when you look at the reimbursement process where bureaucracy, in

terms of paper, is extremely time consuming to the Public Vocational Rehabilitation

Agency. Then, as if this frustrating process is not enough, there is the unpredictability of response and reimbursement of funds in a timely fashion.

The impact of these two structural areas can be seen clearly when the Public Vocational Rehabilitation Agency tries to set up a process to check with Social Security

on the status of applicants or eligible individuals. There is no easy and consistent

way we can do this nationally. This leaves states in the situation of having to try

to get the information directly from consumers who are often receiving services from

numerous programs and are somewhat confused as to exactly which they are receiving and why. In addition, at the time of placement into employment, there is no

easy way to identify whether or not an individual was, and still is, receiving Social

Security Benefits. This clearly impacts on the reported effectiveness of the Public

Vocational Rehabilitation Program. An example in Connecticut: For a short period

of time we were able to access information and, as a result, identified an increase

in a three month period of 30 percent of the cases we could identify who were in

employment above the Substantial Gainful Activity level who were on SSI and SSDI

and therefore would qualify under the Reimbursement Program. If this is an indication of the true impact Public Vocational Rehabilitation has on employment outcomes for beneficiaries, clearly improvements in identifying those receiving Social

Security would show that, in fact, the Public Vocational Rehabilitation Program is

even more effective than the present data shows.

Due to the lack of predictability around the timeliness of reimbursements, State

Vocational Rehabilitation Agencies find themselves unable to determine funding levels and, thus, unable to commit more funds to the delivery of services to SSI and

SSDI recipients. The current structure of the Return-to-Work Program costs the Social Security Administration no money since the full up front costs for services administration collection is borne by the Public Vocational Rehabilitation Program.

Even under these conditions, Social Security, apparently, has been unable to design

an effective, efficient and timely reimbursement structure. One must, therefore,

raise the question of what will happen with a wider, more complex system of reimbursement that is contained in many of these proposals.

A third barrier is the area of resources. It is interesting that one of the general

assumptions behind many of the Return-to-Work proposals is the idea that access
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to services through the Public Vocational Rehabilitation Program and other rehabilitation agencies is problematic for individuals on SSI/SSDI. I must say that I have

never heard this as a complaint from consumers. We may have heard of individuals

who did not get a particular service, but we have never heard that they can not

get into an agency, make application or have their eligibility determined, develop

plans, etc. If there are limitations on services, it is due to the lack of actual funding

available to the agencies rather than lack of access or openness to serving SSI and

SSDI recipients. These individuals would be placed on a waiting list until funds become available. In fact, the priority set by the Rehabilitation Act as amended in

1992, matches perfectly with the priority of returning individuals on SSI and SSDI

to employment.

The Rehabilitation Act ensures that Public Vocational Rehabilitation Program

funding and the reimbursements received through the Social Security Reimbursement Program go back into vocational rehabilitation services and, thus, those resources are available to serve more individuals. Proposals we have reviewed, to this

point, seem to have no assurances that the funds reimbursed or paid out through

various schemes would, in fact, add any new capacity to provide vocational rehabilitation services at the community level. Many of the proposals suggest that there

might be considerable pitfalls in them, such as the shifting of costs to public programs by creating potential windfalls in private for-profit programs. This would

happen as a result of most of the proposals allowing for-profit programs to serve

only those individuals who are already involved with them due to their agreements

under insurance and other programs. In these situations, there would be no new capacity created and no incentive to expand funds to serve more individuals beyond

those already receiving services. Furthermore, these proposals lack any appeal process or fair hearing for individuals who would receive services.

I have seen some references to private disability programs having higher percentages of success in terms of Return-to-Work figures. It would be interesting to do

some real demographic studies on the populations served by private disability programs. In general, one could assume that they would probably be individuals who

have attained much higher levels of education, job training and income who have

the resources and perceive the risk to protect their present income levels. If such

individuals require disability, they clearly have numerous options for employment

that would not be available to the full range of individuals served by Social Security

who do not possess these advantages. One might then ask, is this really a fair comparison or are we looking at a population with specific characteristics that is served

primarily by private disability programs?

I would like to discuss, for a moment, some of the main recommendations that

the CSAVR has made regarding the Social Security Program. We are presenting to

you today a Paper which we have developed outlining our concerns and recommendations.

First, we must eliminate what we call the ‘‘leap of faith’’ or the ‘‘all or nothing

approach,’’ whereby recipients must be either on or off benefits with no sliding scale,

etc. We recommend for SSDI that consideration be given to some type of sliding

scale benefit rather than the ‘‘trial work period’’ approach. There must be continued

eligibility for Medicare coverage and the type of community health services provided

under Medicaid. We realize that in both of these areas there are cost concerns which

must be projected and considered for possible financial impact.

We recommend simplification of the Work Incentives Program, including employment related work expenses, 1619 A&B provisions, PASS Programs, etc. We further

recommend that the Committee consider these programs being administered by the

Public Vocational Rehabilitation Program rather than by the present system of trying to deal with the Social Security Administration structure. The Social Security

Administration does many functions extremely well, particularly the issuing of

checks and determining of financial disability eligibility. It does not, however, have

the expertise nor the structure to administer incentive programs which help people

deal with planning beyond just the Social Security Programs. Consideration must

also be given to the various other Federal, State, Local resources and programs

available in order to complete and implement a successful Return-to-Work effort.

We strongly urge continued joint effort based on the Agreement that now exists

between the Social Security Administration, the Rehabilitation Services Administration, and the CSAVR. In terms of identifying effective and specific plans for outreach, it is important to provide education and information to Social Security recipients regarding Return-to-Work opportunities. Secondly, we must work to simplify

the reimbursement program so that this can be done quickly with the minimum of

paperwork.

The cooperation of the RSA, the SSA, and the CSAVR will help us begin to chip

away at the mixed message we give our citizens and our communities regarding dis-
153

ability. On the one hand, under Social Security, we identify people as totally disabled, unable to be involved in any economic activity in their community, and in

fact, so disabled that their impairment may result in death. On the other hand,

under Title I of the Rehabilitation Act and the Americans with Disabilities Act, we

assume that persons with disabilities, regardless of their impairment, have the capacity to work, and should have that opportunity. We cannot underestimate the impact of having to implement these paradoxical messages. For example, we ask treating physicians and other health professional to, on the one hand, describe the significant level of impact of impairment such that it prevents the person from doing

any work in the community for at least a year in order for them to be eligible for

Social Security. A short time later, we turn around and ask those same people to

describe what functional strengths and potential for employment the Social Security

recipient has. This double message impacts the individual with the disability, all the

individuals who interact with him or her, and the community at large, creating a

sense of confusion around what potential individuals with disabilities have and

what our public policy is toward disability.

In order to address these larger public policy issues, we have suggested a long

term consideration of a temporary disability program for some groups. For example,

individuals who acquire a disability at a young age could be granted a fixed period

of financial eligibility for benefits, combined with ongoing availability of medical coverage. They would be required to be involved in Vocational Rehabilitation to continue their education and/or development of vocational skills to enter the workforce.

Another way of addressing this would be the consideration of a temporary, partial

disability program which would provide for the needs of individuals who require

Disability after they have developed job skills and have been in the labor market.

This approach would allow them to continue to participate in the labor market rather than having to make the decision to describe themselves as either totally unable

to work or able to work, with nothing in between.

In conclusion, we believe that the Public Vocational Rehabilitation Program is effective in providing vocational rehabilitation services to SSI and SSDI recipients.

Thousands of these individuals enter employment each year. We have streamlined

the Public Program and have reached out to the Social Security Administration. The

Public Vocational Rehabilitation Program has greatly increased its flexibility. We

are working in partnership with Social Security and other public and private agencies, particularly in researching ways to effectively simplify incentives to ‘‘Returnto-Work.’’

This partnership must continue. In addition, there are critical questions which we

must ask:

Do we want to take our precious limited resources and invest them in competing

publicly administered structures which do nothing to increase the resources available?

Is it our goal to create more levels of public programs and greater confusion on

the part of recipients and providers in the community as to who is doing what?

Does it make sense to set up public and private agencies as competitors and risk

damaging the good collaborative efforts which currently exist within the Vocational

Rehabilitation Community?

Our answers to these questions must be ‘‘No’’ if we believe those with disabilities

should be offered the same choices as others to fully participate in the economic activity of their communities.

I wish to thank you on behalf of CSAVR. We stand ready to actively participate

in the development and continued evolution of an effective coordinated employment

program for Social Security Disability recipients.

Christman’s statement?

Chairman BUNNING. Ms. Gennaro, would you read Mr.

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STATEMENT OF RICK CHRISTMAN, EXECUTIVE DIRECTOR,

METRO INDUSTRIES, LEXINGTON, KENTUCKY; AND

KENTUCKY ASSOCIATION OF COMMUNITY EMPLOYMENT

SERVICES; AS PRESENTED BY MARY GENNARO, AMERICAN

REHABILITATION ASSOCIATION

Ms. GENNARO. Thank you, Mr. Chairman. Rick Christman was

honored to have been given the opportunity to testify here today,
154

and I know as a fellow Kentuckian he was thankful for your leadership. And unfortunately weather kept him in Kentucky. All his

flights to try to get here were canceled. So thank you for your kindness in letting me read his testimony.

I am the executive director of Metro Industries, a not-for-profit

community rehabilitation program in Lexington, Kentucky. Metro

Industries provides employment, occupational skills training and

job placement to people with a variety of barriers to employment,

including persons with disabilities.

I am representing today a group of like organizations in Kentucky known as the Kentucky Association of Community Employment Services. Metro Industries is also a member of the American

Rehabilitation Association.

As you are already aware, the state of affairs for persons with

disabilities relative to employment is sad. According to a survey

conducted by Lou Harris for the National Council on Disability in

1994, only 68 percent of persons with disabilities in the United

States are unemployed, an actual increase in unemployment for

this population, compared to 1986.

This disturbing phenomenon has worsened despite our Nation’s

passage of the Americans with Disabilities Act in 1990. While not

all persons with disabilities are SSDI or SSI recipients, this statistic serves to underscore the problem of the explosion in beneficiary

rolls.

Accordingly, in addition to rights and public access for persons

with disabilities, policymakers should equally focus on programmatic innovation and the elimination of work disincentives.

The current system for delivery of employment-related services to

beneficiaries can be improved. What is necessary is a choice-based

market-driven service delivery system which will drive effectiveness and innovation. And, second, the alleviation of risk of loss of

health insurance.

With regard to the implementation of a market-driven service delivery system, and the correct assumption that SSDI/SSI beneficiaries would benefit from having a much larger pool of service

providers from which to select, we know that a provider pool will

not have to be developed from scratch.

In addition to public providers, there already exists in every community providers known as community rehabilitation programs. In

fact, some 6,700 organizations exist to provide employment-related

services to persons with disabilities.

Unfortunately, only a fraction of beneficiaries are referred to

these organizations. By creating a workable payment mechanism,

and directly linking beneficiaries to service providers, the underutilized potential of these organizations will be unleashed.

In the State of Kentucky, members of our association worked in

cooperation with Kentucky’s Department of Vocational Rehabilitation to develop a highly accountable fee for service outcome-based

funding mechanism.

Taking a page from the farsighted vision of Kentucky DVR, a

similar mechanism could also be fashioned for the Social Security

Administration. Because of the 9-month trial work period necessary

for beneficiaries to demonstrate their job placement success, and

the investment needed to prepare someone for employment, a fee
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system based on the attainment of certain milestones will be necessary.

These milestones would include completion of a rehabilitation

plan, 60 days of employment, and 9 months of employment. Then

continued payment based on savings will support ongoing maintenance of the former recipients’ employment status.

Without these milestones, too many providers will find it impossible to participate.

Now, to the issue of work disincentives. Over the course of my

20-year career in vocational rehabilitation, one of the prime fears

I have encountered among recipients and their families is health

care. Most people are far more concerned about loss of Medicaid or

Medicare than of cash benefits.

Because of this fear, when vocational rehabilitation professionals

work with recipients job placement into truly self-sufficient employment is seldom attained. Too frequently, we professionals assist

persons with disabilities to obtain positions below their abilities

and earning capacity simply to preserve health benefits.

The problem of the medical insurance disincentive is a complex

one to be sure. However, our agency has found that the SSI Program and its graduated reduction of cash benefits against earned

income, with the recipient maintaining medical coverage, to be

much more conducive to employment than the structure of the

SSDI system.

A means of allowing recipients to purchase Medicare and Medicaid coverage after attaining self-sufficient employment is certainly

an idea worth serious consideration.

Thank you, Mr. Chairman for the opportunity to comment.

[The prepared statement follows:]

Statement of Rick Christman, Executive Director, Metro Industries,

Lexington, Kentucky; and Kentucky Association of Community

Employment Services

Thank you Mr. Chairman, and distinguished Members of the Subcommittee, for

the opportunity to testify on the important issue of assisting beneficiaries of Social

Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits to increase their self-sufficiency through employment.

I am the Executive Director of Metro Industries, a private, not-for-profit community rehabilitation program in Lexington, Kentucky. Metro Industries provides employment, occupational skills training and job placement to persons with disabilities

and other individuals with a variety of barriers to employment. Today, I am representing a group of similar organizations in Kentucky known as the Kentucky Association of Community Employment Services (KACES). Metro Industries is also a

member of the American Rehabilitation Association.

The state of affairs for persons with disabilities relative to employment is unsatisfactory. 1994 U.S. Census Bureau data indicates that 73.9% of persons with severe

disabilities, age 21 to 64, were not employed. It has been estimated that only about

one out of every 1,000 beneficiaries is rehabilitated each year (GAO/HEHS–96–62).

More people can and must be assisted to work or ‘‘return to work.’’ More that $57

billion in cash benefits was paid out to people with disabilities in 1995 through the

Social Security Disability Insurance (DI) and Supplemental Security Income (SSI)

programs. The United States General Accounting Office reports that if an additional

1% of the 6.6 million working-age SSI and SSDI beneficiaries were to ‘‘leave the

rolls,’’ by returning to work, lifetime cash benefits would be reduced by an estimated

$3 billion (GAO/HEHS–97–46, March 17, 1997). Guaranteeing rights and public access has increased the ability of, and opportunity for, persons with disabilities to

become employed. Now we must also focus on programmatic innovation and the

elimination of work disincentives to increase employment.

The current system for delivery of vocational rehabilitation services to SSDI/SSI

beneficiaries has assisted people to become employed, but many more people with
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disabilities want to work and need access to the services which will enable them

to do so. A key element in helping them move into employment, and off of benefits,

is already in place, namely, the estimated 6,700 community rehabilitation programs

throughout the country. These community based organizations provide directly, or

facilitate the provision of, vocational rehabilitation services to individuals with disabilities. They work with countless businesses across the country. Through quality

evaluation, training, placement and support, they assist people with disabilities to

work to their highest potential. We must expand access to rehabilitation services

and allow consumers to choose their providers from among the many public and private providers available. This will enable more people with disabilities to receive the

services they need to participate in the workforce.

A combined outcome-based, milestone payment system is a necessity. An outcomebased system will help ensure quality results, but milestone payments are also essential for quality. If milestone payments are not available, too many community

rehabilitation providers will find it financially impossible to bear the risk of participating. The program must attract an adequate supply of diverse providers in small

and large communities alike. Providers should receive milestones payments at completion of an employment plan, after 60 days of employment, and after nine months

of employment. This essential for success of the program. Once a person with a disability is working and no longer eligible for benefits, the provider should receive a

percentage of the monthly benefit until five years post employment, while the person continues to remain off of benefits.

The Alternate Participant Program illustrates the problem posed by an inadequate payment system. This program is likely to be little utilized because it only

reimburses for actual costs and payment is only made after a person has completed

nine months of work at the ‘‘substantial gainful activity’’ level or higher. For nonblind individuals with disabilities this would be earnings of $500 a month or higher.

There must be a sharing of risk, otherwise participation will be limited to only a

few large providers who have the cash flow necessary to serve a substantial case

load with only the possibility of future payment.

Lack of access to adequate and affordable health care coverage is a significant

barrier to employment for persons with disabilities, which we must address in any

‘‘return to work’’ effort. Over the course of my 20-year career in vocational rehabilitation and other disability-related positions, one of the prime fears I have encountered among persons with disabilities and their families is loss of health care coverage, so much so, that the risk of the potential loss of one’s Medicaid or Medicare

coverage is often the primary impediment to work. Persons receiving SSDI and/or

SSI, who become employed, should be able to maintain their health care coverage.

Eligibility for Medicare and Medicaid should be maintained up to a certain level of

earnings at which point a person with a disability should be able to pay for continued coverage under these programs. The need for personal assistance and long-term

supports must also be addressed and Medicaid is virtually the only source of reimbursement for long-term services and supports.

We should also attempt to address the current economic disincentive to work

which exists for SSDI beneficiaries. In the current system persons face a sudden

lose of benefits after achieving a certain level of earnings over a period of time. This

loss of support occurs before the individual is earning enough to support him or herself, and acts as a financial disincentive to working.

Participation in the program should be voluntary, at least until the program is

in place for a period of time. It should also be fairly simple for a provider to be ‘‘certified’’ to provide services. Quality assurance should be built into the program. Providers should provide information on their services and outcomes in order to facilitate consumer choice. At the same time, providers should not be ranked or graded,

because this would involve comparisons which cannot be made fairly.

A ‘‘ticket’’ approach presents many concerns for providers. It will make the payment system difficult and uncertain. If a consumer needs more than one provider

at the same time, how will the funding represented by the ticket be disbursed? If

a consumer decides to change providers, how will payment be made?

To enhance the design and implementation of the program, a commission with

representation by consumers, providers and employers should be appointed. Working with the Social Security Administration, such a commission will ensure the development of a program that, from the onset, has the input of all the parties most

critical to its success.

A system which provides for consumer choice, expands access to services, addresses disincentives to work, provides for an adequate payment system, assures quality,

and includes key stakeholders in its design and implementation, will work. We need

to create such a system. Many, many people with disabilities who seek greater independence and wish to more fully utilize their skills and abilities will benefit. The
157

country as a whole will benefit as more of its citizens are able to more fully contribute to the community, lessening their dependence on government and contributing

to the tax rolls. Metro Industries, along with community rehabilitation providers in

Kentucky and throughout the country, stand ready to help create such a system and

work within it to assist more people with disabilities to increase their independence

and self-sufficiency through employment. Thank you Mr. Chairman, and members

of the Subcommittee, for the opportunity to comment.

Hessellund, please.

Chairman BUNNING. Thank you very much. Next would be Dr.

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STATEMENT OF THORV A. HESSELLUND, ED.D., CRC,

PRESIDENT, NATIONAL ASSOCIATION OF REHABILITATION

PROFESSIONALS IN THE PRIVATE SECTOR, FRAMINGHAM,

MASSACHUSETTS

Mr. HESSELLUND. Thank you, Mr. Chairman. My name is Thorv

Hessellund. Today I am here as president of the National Association of Rehabilitation Professionals, NARPPS, to provide our recommendations on Social Security reform.

I will cite how private sector can enhance the current system and

return those Social Security recipients with disabilities back to the

job market. In addition to being president of NARPPS, my education is in rehabilitation counseling. I am a certified rehabilitation

counselor and have been in the field 31 years, 22 of those years as

a private case practitioner and businessowner in the State of California.

I also serve as vice chair of the Washington, DC-based group,

Mainstream, a nonprofit group dedicated to creating jobs for individuals with disabilities.

NARPPS’ members, approximately 3,200 strong, are located in

every State in the country. Our organization represents private sector members who could be either a solo practitioner, a

businessowner, or a member of a regional or national organization.

But we all have one goal in mind.

And that is to take every referral we receive back to the maximum level of productive activity, with the most preferable outcome

being a return to suitable gainful employment.

NARPPS has formed many strategic alliances with this goal in

mind with other organizations, with the goal of providing high

quality rehabilitation services. Some of these organizations include

NASPPR, the National Association of Service Providers in Private

Rehabilitation; Vocational Evaluation and Work Adjustment Association, which is VEWAA; Mainstream, Inc.; the National Management Alliance, based in Cornell; Return-to-Work Group Coalition;

as well as the Case Management Association Coalition.

Who are we? Who are the service providers? Educationally we

are most likely to have a master’s degree in rehabilitation counseling or a related field, a bachelor’s degree or higher in nursing or

it could be a registered occupational or physical therapist.

Our certifications include certified rehabilitation counselor, certified case manager, certified disability management specialist, certified rehabilitation nurse, certified vocational evaluator.

In some States, we must be licensed, depending on the State requirements. Our referrals most commonly come from workers’ com-
158

pensation carriers, long-term disability insurers, health insurers,

managed care companies, employers, attorneys and persons with

disabilities.

We have a proven history of effectiveness of providing savings to

the insurance industry by enhancing the functional levels of the clients we serve. We also must abide by a professional code of conduct, both set by our organization, NARPPS, as well as other organizations we belong to.

We are subject to peer review and malpractice if we do not adhere to these codes.

Our members have been following closely the dialog on Social Security reform. Privatization of vocational rehabilitation services for

Social Security beneficiaries is a huge potential referral source if

set up correctly.

The current system was established with good intention, and

public vocational rehabilitation professionals are some of the most

dedicated. Many of our members got our start there. I worked for

the State agency for 3 years myself.

However, due to the sheer scope and magnitude of the issue, the

public sector cannot do it alone. In fact, the private sector continues to exist and prosper, specifically because of our ability to return individuals with disability to gainful employment over a substantial period of time.

We would now like the opportunity to apply the success rate to

SSA beneficiaries.

What do we need in order to return SSA beneficiaries with disabilities to gainful employment? The consumer group, the previous

panel, did an excellent presentation, and it was informative to hear

we are on the same page along these lines.

First, to minimize the disincentives beneficiaries have that impede them from returning to gainful employment. First and foremost is to protect the beneficiaries’ health insurance, and in this

regard, we are in support of the 5-year continuation of Medicare

coverage that is currently in the Rehabilitation Return to Work Act

of 1996.

Second, to tie beneficiary and service provider incentives to

benchmark outcomes. Third, to give the beneficiary an informed

choice through an option to select the rehabilitation service provider from a number of prequalified public and private sector service providers.

Fourth, to establish benchmark milestone payments for services

rendered. We are in support of the milestone payment system as

proposed by the Return-to-Work Group in concept, and Return to

Work Act. Quite simply, our members would not be able to provide

services if we had to wait for 9 months or longer before we would

be paid for our services. There just would not be a market for us.

Five, the first milestone that we are recommending in terms of

payment is the point of termination of vocational feasibility. This

could be much the same as done by an independent screener, as

now exists with the Department of Labor, Federal Employee Compensation Act.

Sixth, the higher service provider payments come at the point of

completion of an individual employment plan, and ultimately upon

return to work.
159

On behalf of NARPPS, and myself, I want to thank you for the

opportunity to provide this testimony. And we remain available to

work further with the Subcommittee. I would be happy to answer

any questions at the appropriate time.

[The prepared statement follows:]

Statement of Thorv A. Hessellund, Ed.D., CRC, President, National Association of Rehabilitation Professionals in the Private Sector, Framingham,

Massachusetts

INTRODUCTION

Good afternoon, my name is Thorv Hessellund. Today, I am here as President of

the National Association of Rehabilitation Professionals in the Private Sector

(NARPPS) to provide our recommendations on how to reform Social Security. More

specifically, I will cite how the private sector can enhance the current system and

return those Social Security beneficiaries with disabilities to gainful employment.

In addition to being President of NARPPS, I have a Doctorate in Rehabilitation

Counseling, I am a certified Rehabilitation counselor, a certified Case Manager with

31 years experience in the field of vocational rehabilitation, and for the last 22 years

I have been a California based private sector vocational case management business

owner and practitioner. I am also a current Vice Chair of Washington, D.C.-based

Mainstream, Inc.—a national non-profit organization dedicated to improving competitive employment opportunities for individuals with disabilities—and a Director

of Vocational Programs for Paradigm, Inc.—a company that provides national catastrophic injury case management services.

NARPPS members, approximately 3200 strong, are located in every state in the

country. The number of medical and vocational rehabilitation professionals that

NARPPS actually reaches is much larger. Many organizations with multiple offices

and employees often take on limited membership and distribute our Newsletter,

Journals, and other communications internally once received. Our organization represents private sector members who may either be a solo practitioner, member of

a regional or national company, or a business owner. Whether the emphasis of the

company is medical or vocational case management or both, we all have one goal

in mind which is to take every referral to the maximum level or productive activity

with the most preferable outcome being the return to suitable gainful employment.

We are not alone in our dedication and proven results, NARPPS has engaged in

many strategic alliances and partnerships with other organizations united in the

cause of providing high-quality rehabilitation services to individuals with disabilities. Some of these prestigious organizations are: • National Association of Services Providers in Private Rehabilitation (NASPPR) • Vocational Evaluation and Work Adjustment Association (VEWAA) • Mainstream, Inc. • National Management Alliance (Headed by Cornell University) • The Return-To-Work Group Coalition • Case Management Association Coalition

WHO ARE PRIVATE SECTOR REHABILITATION SERVICE PROVIDERS?

Educationally, we are likely to have master’s degrees in rehabilitation counseling

or a related field, a Bachelors degree or higher in nursing, or could be registered

an occupational or physical therapist. Our national certifications include Certified

Rehabilitation Counselor, Certified Case Manager, Certified Disability Management

Specialist, RN, BsN, Certified Vocational Evaluator, OTR, RPT are the most common designations. In some states, we must be licensed. Our referrals commonly

come from workers’ compensation carriers, long term disability insurers, health insurance companies, managed care companies, employers, attorneys, and persons

with disabilities. We serve several masters—our referral source, the payer, who is

not always one in the same, as well as the beneficiary of services. These referral

sources engage the services of private rehabilitation professionals in order to enhance the quality of life of the individual needing rehabilitation services, but also

to minimize the costs and long-term expense and liability involved in settling a

claim or caring for the long-term needs of individuals with disabilities, especially in

workers’ compensation cases.

Private sector rehabilitation professionals have a proven history of providing savings to the insurance industry by enhancing the functional levels of the clients they

serve. We adhere to the NARPPS professional code of conduct as well as those of

our particular certification(s). We are subject to peer review and malpractice if we
160

do not adhere to these codes of conduct. We remain employed and/or in business

only if we achieve results. We are generally perceived only as good as most recent

referral. Though we have generally been paid on a fee for service basis, flat rate

billing for pre-agreed services is becoming more common place.

WE CAN APPLY OUR DESIRE AND ABILITY TO RETURN INDIVIDUALS WITH

DISABILITIES TO GAINFUL EMPLOYMENT TO SSA BENEFICIARIES

Our members have been following closely the dialogue on Social Security reform.

Privatization of vocational rehabilitation services for Social Security beneficiary is

a huge potential referral source. If properly structured, there is opportunity for creative and productive rehabilitation for those recipients who are able and desirous

of benefiting from return-to-work services. In many, if not most states, our members

are becoming increasingly handcuffed by regulations, such as workers’ compensation; managed care, which limit achievable outcomes. We are looking for new markets to utilize our proven capabilities. With Social Security reform, there remains

an opportunity to establish a results based system where the private sector works

in sync with the public sector toward one common goal, to return Social Security

beneficiaries to productive activity and thus taking them off the disability rolls. In

this way, we can work to bring our experience in delivering cost-effective, outcome

oriented services to Social Security beneficiaries with associated benefits of minimizing cost and long-term expense to the Trust Fund.

The current system was established with good intention and public vocational rehabilitation professionals are some of the most dedicated. In fact, many of our members got their start with State VR agencies. However, due to the sheer scope and

magnitude of the issue, the public sector cannot do it alone. The private sector has

a long and proven history of providing cost effective and successful return-to-work

outcomes within the insurance industry. In fact, the private sector continues to exist

and prosper specifically because of its ability to return individuals with disabilities

to gainful employment over a sustained period of time. We would now like the opportunity to apply this success rate to SSA beneficiaries.

WHAT WE NEED IN ORDER TO RETURN SSA BENEFICIARIES WITH DISABILITIES TO

GAINFUL EMPLOYMENT

1) Minimize the disincentives beneficiaries have that impede them from returning

to gainful employment. First and foremost is to protect the beneficiaries’ health insurance. In this regard, we are in support of the five year continuation of Medicare

coverage following return to work as proposed in the Rehabilitation and Return to

Work Act of 1996.

2) Tie beneficiary and service provider incentives to benchmark outcomes.

3) Give the beneficiary an informed choice through an option to select their rehabilitation service provider from a number of pre-qualified private and public sector

rehabilitation professionals.

4) Establish benchmark/milestone payments for services rendered. We are in support of the milestone payment system as proposed by the Return-To-Work Group

and as incorporated in concept in the Rehabilitation and Return to Work Act. Simply stated, our members will not become alternate providers under the current system where payment is not available until after the beneficiary has maintained suitable gainful activity for nine months. The nine months could be reached anywhere

from one year to two or more years following referral, depending on the rehabilitation services provided, and only the largest of national providers would have the

necessary cash flow to wait so long for compensation for their work.

5) The first milestone should be at the point of determination of vocational feasibility. That is, a determination as to the likelihood of the beneficiary benefiting

from vocational rehabilitation services now or in the future. This is to performed

either by an independent screener(such as now exists with the Department of Labor

FECA referrals) or by the long term service provider.

6) The higher service provider payments come at the points of completion of an

individual employment plan and ultimately upon return to suitable gainful activity

for the full nine months.

CONCLUSION

For myself and on behalf of NARPPS, I want to thank you for the opportunity

to provide this testimony. We remain available if needed to work further with the

Subcommittee on legislation to return SSA beneficiaries to gainful employment.

I would be happy to answer any questions the Subcommittee may have for me

as a rehabilitation professional in the private sector.
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Chairman BUNNING. Thank you very much, Doctor. The next person to testify is Fred Tenney, from Scottsdale, Arizona.

STATEMENT OF FRED E. TENNEY, PRESIDENT, SOUTHWEST

BUSINESS INDUSTRY AND REHABILITATION ASSOCIATION,

SCOTTSDALE, ARIZONA

Mr. TENNEY. Chairman Bunning, and Members of the Subcommittee on Social Security, it is with a great deal of pleasure

and optimism that I reappear before this Subcommittee. I would

like to commend the Chairman and the Ranking Minority Member

for maintaining the momentum on this issue in a bipartisan manner.

I would also be remiss if I did not compliment the Subcommittee

staff on their endeavors and their similar commitment to this very

important goal. My principle reason for testifying here today is to

answer the question, Can this be done?

I offer to you that not only can it be done, but that it has been

done. My experience in more than a half dozen research and demonstration projects dealing with SSI and SSDI recipients, including

the often referenced Project Network, demonstrated beyond any

doubt that success in utilizing private sector rehabilitation providers is successful.

Here I must acknowledge the cooperation and professional approach of such people as Dr. Thomas Rush and Ms. Natalie Funk

and others from Social Security in creating a professional environment to implement these projects.

The case management approach to rehabilitating the SSI recipients is a valid approach. While some changes are necessary, I feel

that this prescriptive approach not only works but maintains the

sense of continuity and consistency, and, more importantly, avoids

being another bureaucratic handoff.

The advent of computerized technology and the ongoing medical

and rehabilitation achievements have led many U.S. taxpayers to

question the deep pockets of their Federal and State governments.

Civilized individualism has replaced the cradle to grave social contract that arose early in the 20th century.

Educational institutions, social and religious organizations,

health care vendors and their respective funding sources have been

called upon to provide a system that allows all citizens to be full

participants in the economic achievements the world over.

Critical to the successful implementation of any return to work

program is inherent in the main premises of Project Network: The

case management concept that was able to provide ongoing continuity and coordination in the process of assisting people; a resource management component that insures adequate reimbursement to providers of quality services, and management of those resources to assure availability of services to clients as heeded; and

client empowerment in the whole decisionmaking process, not only

because it is right and reasonable, but because it creates vestitures.

I would like to drone on for a couple of hours, enthusiastically

describing the process and the success that we have had, but I
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would refer you to an article in the upcoming NARPPS Placement

Journal which documents this information.

The commission referenced in our proposal and the bill Chairman Bunning introduced last year is essential. Regardless of the

well meaning attacks, this is not another layer of bureaucracy.

Rather, an oversight commission compiled of all interests looking

out for the welfare of everyone.

It is a venue for all interests to give input outside the bureaucracy. This is a much needed and extremely valuable resource to all

concerned.

In addressing the State/Federal rehabilitation system, the facts

are indisputable. They have been less than responsive to this target population. It is recognized this is a rehabilitation program

meeting the needs of many in the community.

The sometimes heard concern that this bill would eliminate VR

rings hollow when they currently serve less than one-tenth of 1

percent of those SSA beneficiaries referred.

Again, as in the testimony I gave this Subcommittee 2 years ago,

I suggest keeping them in the system, and encouraging them to

participate as any other vendor. But please, keep the playingfield

level.

VR can and will be our partners in this process. We look forward

to our continued close relationship.

There are those who suggest this bill will promote creaming. You

bet it will. The question that goes begging is what is the definition

of creaming? The conventional definition has been serving only the

less disabled. Not so in my world.

Creaming to us in the private sector is serving those who want

to go to work. The severity of the disability has little to do with

our ability to get a person a job. In short, bring us someone who

wants to go to work, and we will almost without fail see that they

are employed in the shortest amount of time.

Incentives is a term that seems to be on everyone’s lips. The only

incentive we found to be critical is the ability to get medical insurance. I urge you to facilitate a system that allows access to health

insurance as part of any bill you pass. Medical insurance has become critical to all Americans.

There will be others who suggest that tax credits for extraordinary expenses associated with employment are important. I have

no dispute with them, but I cannot testify to the critical need.

Employer incentives is a term that I have heard discussed most

often by people who are not in the actual job placement business.

Let me comment on a couple of issues relating to employer incentives.

In the early fifties, this Nation embarked on a hire the handicapped campaign. It must have worked. There is little resistance

to hiring the disabled, and it’s getting better daily.

In short, businesses hire the disabled because it is in their best

interest, and, thankfully, socially accepted, not because of incentives, but because it is the right thing to do.

Frankly, there are more jobs than there are people to fill them.

Demand exceeds supply.
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And I will submit the rest of my testimony in written form to the

Subcommittee. In anticipation of Mr. Collins being here, I had 1

page prepared for him from the last testimony.

[The prepared statement follows:]

Statement of Fred E. Tenney, President, Southwest Business Industry and

Rehabilitation Association, Scottsdale, Arizona

Chairman Bunning, members of the Subcommittee on Social Security, it is with

a great deal of pleasure and optimism that I appear before this Subcommittee. I

would like to commend the Chairman and the Ranking Minority Member for maintaining the momentum on this issue and in a bi-partisan manner. I would also be

remiss if I didn’t compliment the Subcommittee staff on their endeavors and for

their similar commitment to this very important goal.

My principal reason for testifying here today is to answer the question, ‘‘Can the

private sector return SSDI recipients with disabilities to work?’’ I offer to you that

not only can it be done . . . but that it has been done. My experience in more than

a half dozen research and demonstration projects dealing with SSI/SSDI recipients,

including the often referenced Project Network, demonstrated beyond any doubt the

success of using private sector rehabilitation providers. Here I must acknowledge

the cooperation and professional approach of such people as Dr. Thomas Rush, Ms.

Natalie Funk and others from SSA in creating a professional environment to implement these projects.

The ‘‘case management’’ approach tested in Project Network was successful in rehabilitating SSA recipients and would be a valid approach on a larger scale. While

some changes are necessary for full national implementation, I feel that this tested

prescriptive approach not only works but maintains a sense of consistency, and

more importantly avoids being another bureaucratic hand out.

The advent of computerized technology and the ongoing medical and rehabilitation advancements have led many U.S. taxpayers to question the ‘‘deep pockets’’ of

their federal and state governments. ‘‘Civilized individualism’’ has replaced the ‘‘cradle to grave’’ social contract that arose earlier in the Twentieth Century. Educational institutions, social and religious organizations, health care vendors, and

their respective funding sources have been called upon to provide a system that allows all citizens to be full participants in the economic advancements occurring the

world over.

Critical components to any successful return to work program are: 1) a case management component to provide ongoing continuity and coordination to the process

of assisting people, 2) adequate reimbursement to providers of quality services, and

3) client empowerment in the whole decision making process. I would love to drone

on for two hours and enthusiastically describe the process and our successes but I

will refer you to an article to be published in an upcoming NARPPS placement journal which details the results of this approach. Instead I will touch on some areas

of concern I have which have grown out of a year and a half of reviews of the recommendations of the Return-To-Work (RTW) Group, of which I am a member.

The Commission as referenced in our proposal and the bill Chairman Bunning introduced last year would be effective, regardless of the well meaning criticism. This

is not another layer of bureaucracy, rather an oversight commission compiled of all

interests looking out for the welfare of everyone. It’s a venue for all interests to give

input outside the bureaucracy. This is a much needed and extremely valuable resource to all concerned. In addressing the state/federal voc rehabilitation system,

the facts are indisputable, they have been less than responsive to this target population. It is recognized this is a rehabilitation program meeting the needs of many

of the community. The sometimes heard concern that this will eliminate VR rings

hollow when they currently serve less than one tenth of one percent of those SSA

beneficiaries referred. Again as in the testimony I gave before this Subcommittee

two years ago, I suggest keeping them in the system and encourage them to participate as any other vendor. But please keep the playing field level. VR can and will

be our partners in this process. We look forward to our continued close relationship.

There are those who are concerned that the Chairman’s bill of last year would

promote ‘‘creaming.’’ You bet it will! The question that goes begging, ‘‘what’s the definition of creaming?’’ The conventional definition has been, serving only the least

disabled. Not so in my world!! ‘‘Creaming’’ to us in the private sector is serving

those who want to go to work. The severity of the disability has little to do with

our ability to get a person a job. In short, bring us someone who wants to go to

work and we will almost without fail see that they are employed in the shortest

amount of time.
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‘‘Incentive’’ is a term that seems to be on everyone’s lips. The only incentive we

found to be essential is the ability to get medical insurance. I urge you to facilitate

a system that allows access to health insurance as part of any bill you pass. Medical

insurance has become critical to all Americans. There will be others who suggest

tax credits for extra ordinary expenses associated with employment. I have no dispute with them but I can’t testify to the critical need. Employer incentives is a term

I hear discussed most often by people who are not in the actual job placement business. Let me comment on a couple of issues related to employer incentives. In the

early 1950’s this nation embarked on a ‘‘hire the handicapped’’ campaign. It must

have worked. There is little resistance to hiring the handicapped and it’s getting

better daily. In short, businesses hire the handicapped because it’s in their best interest and thankfully socially accepted, not because of incentives but because it is

the right thing to do. Frankly there are more jobs than people to fill them. Demand

exceeds supply. There are probably companies with noble usage of the incentives,

we just haven’t encountered them to any significant degree. That’s not unusual because most of our placements are with small businesses who don’t want to be bothered by ‘‘government red tape.’’ Others see this as a civic responsibility.

I earlier mentioned Project Network. Let me share some salient facts.

• 16% of all benefices who received a solicitation notice from SSA called to find

out about the project.

• 38% agreed to an interview with a case manager.

• 66% of all referenced interviewees agreed to participate in the project.

157 clients were placed during the project.

100 clients remained working at projects end.

It would be difficult to establish the exact cost effectiveness of the project until

the 9 month trial work period expires. However, a glimpse into the future will likely

show $539 a month or $6,470 a year in benefits will be replaced by $881 pr month

in wages. If only 100 clients remain working (without benefit of follow-up) $647,000

in benefit saving per year will be realized. Over a normal 20 year work span without any added inflationary factors the savings on this one little project in AZ will

be in excess of $13 Million dollars.

In summation I have asked myself why am I here today? Why have I worked so

hard for these recommendations to become a reality? In all likelihood I’ll be retired

before it’s implementation. My answer is simple. It’s the same answer you give

every day. Because it’s right for the taxpayers, it’s right for the consumers, it’s right

for our economy and finally it’s just plain right for America.

Mr. Chairman and members of the Subcommittee, thank you for allowing me to

appear before you today.

Mr. Collins is not here, but I would be more than happy if we could

Chairman BUNNING. We appreciate your testimony, and sorry

f

send off and find him somewhere.

Stephen Start, please.

STATEMENT OF STEPHEN L. START, CHIEF EXECUTIVE

OFFICER, S.L. START & ASSOCIATES, INC.; AND COCHAIRMAN, RETURN-TO-WORK GROUP, SPOKANE, WASHINGTON

Mr. START. Mr. Chairman, and Members of the Subcommittee, I

would like to thank you for the opportunity to discuss ways to increase the number of individuals that leave the SSDI rolls to return to work.

My name is Steve Start. I am cochairman of the Return-to-Work

Group, and chief executive officer of S.L. Start & Associates. S.L.

Start is one of the largest providers of residential and return to

work services for people with disabilities in the Northwest.

We have served as one of the original Social Security return to

work demonstration projects, and have been involved in the national Projects with Industries effort for the past 20 years.

Our Project with Industries has returned over 2,000 people to

work.
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A successful return to work program must address the needs of

beneficiaries, employers, and providers. Studies indicate that 15 to

40 percent of the people on disabilities rolls would like to return

to work if given the opportunity. Many, however, are highly fearful

of losing their medical benefits. You have heard it 20 times today.

Chairman BUNNING. Not to disrupt you, but we heard it 20 times

yesterday, too.

Mr. START. Extension of the benefits is essential for an effective

return to work program.

Chairman BUNNING. I think that’s pretty well the consensus.

Mr. START. Yes. Consumers want a choice of providers, control in

developing their return to work plan, and economic gain as an outcome. They need knowledge of the job market, and access to employers with jobs that match their skills and abilities.

Employers are concerned about economic survival and getting

the job done. The key qualities they look for in hiring employees

are people who display positive attitudes, work habits, and a willingness to learn.

Some critical factors about jobs: Over 75 percent of the net job

activity in our country occurs in small, middle and startup companies. Less than 12 percent of the job openings nationally are posted

with public employment agencies, such as employment security

agencies.

Approximately 80 percent of the jobs filled nationally are through

word of mouth or personal relations in the local community. Employment experts dub this phenomenon the hidden job market.

Employers provide more training to more people than all the

trade schools and universities combined. The employment rate for

employment-based training is higher than any other training method. The use of OJT and tax incentives can increase access to jobs,

especially those that require more than entry-level skills.

Projects with Industries, vocational rehabilitation firms and rehabilitation facilities exists in virtually every community in this

country. They are directly tied to the hidden job market. They understand the needs of beneficiaries, are accomplished at matching

job candidates’ abilities with local employers, and many are highly

interested in serving people on the rolls.

Unfortunately, neither current alternative provider program

being implemented by SSA, nor the proposed Ticket for Independence Program will take full advantage of this vast resource.

The provision of both programs to pay providers only after people

have come off the rolls is financially impossible for the vast majority of providers. This approach will produce very limited choice for

consumers, and will fail to effectively access the hidden job market.

It is an attempt to totally eliminate the risk of investing in a viable return to work effort that will essentially guarantee that billions will continue to be wasted on people who want to return to

work.

Many providers will actively participate in a program that shares

some risk by paying outcome-based milestones, combined with long

term, keeping people off the rolls.

We have recommended three simple outcome-based milestones.

An initial $300 payment for a return to work plan signed and committed to by both the beneficiary and the provider. The plan would
166

contain as a minimum employment goal, the method to obtain employment, resources to be used, and a financial analysis of the benefit upon successful completion for that beneficiary.

A second milestone would include the individual obtaining and

retaining employment for 60 days, with a third being leaving the

rolls.

The total cost for the proposed outcome-based milestone program is $2,700 for persons coming off the rolls. Historically State VR

agencies have been reimbursed in the neighborhood of $10,000 to

$12,000 depending on the year per person coming off the rolls to

cover their agency’s cost of rehabilitation.

Pricing the milestone level below cost forces providers to produce

long-term savings to stay in business. The return to work group

has designed a program model to implement such a national scale

return to work program. We have also developed a computer simulation model to assess risk, cost/benefit, and output performance

for a wide variety of programs.

Using even very conservative historically-based performance assumptions that come directly from SSA research and demonstration projects, our simulation indicates that a milestone approach

would produce a low risk and highly cost-effective program.

During initiative 7-year implementation, it predicts over 144,000

people would come off the rolls at a total savings to the taxpayers

of $12.3 billion. The program would pay for itself in 4 years.

A cost/benefit of the program would be 13.9 cents saved for every

dollar invested. A simulation that assumes even very modest impacts from the implementation of medical benefit extensions, worker incentives, or employer incentives increases the number of people coming off the rolls to 264,000.

We recommend that such a program be initiated during this Congress, and that a bipartisan commission made up of consumers,

providers and employers be appointed to oversee such a program’s

refinement, implementation and outcome reporting back to Congress.

Refinement of incentive programs or provider reimbursement can

be tested in various regions during the 7-year rollout.

Chairman BUNNING. Mr. Start, your time has expired.

Mr. START. I am finished. Every day we waste lives and money.

Thank you, Mr. Chairman.

[The prepared statement follows:]

Statement of Stephen L. Start, Chief Executive Officer, S.L. Start & Associates, Inc.; and Cochairman, Return-to-Work Group, Spokane, Washington

Mr. Chairman and Members of the Subcommittee:

Thank you for providing me the opportunity to discuss with you today the development of a RTW program that will assist individuals on the social security disability rolls in returning to substantial gainful employment. I have been involved in the

provision of vocational rehabilitation, employment placement, and supported residential living services for people with disabilities for the past 25 years. My company

provides services in the states of Washington, Oregon, and Idaho. I have managed

in excess of 350 grants and contracts focused on developing and providing innovative approaches to assist individuals with significant barriers to employment and to

maximize their ability to engage in employment activities that will provide a stable

and desirable standard of living. I have also designed, developed, and operated numerous programs to assist disabled people to leave institutional settings and live

independently in their communities. Services we have provided have been funded

through a wide range of contract relationships with a broad array of government

agencies. A small sample includes the Social Security Administration (SSA), the Re-
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habilitation Services Administration (RSA), the Department of Labor, and the Department of HEW at the federal level. Many of our contracts are with agencies of

state and local governments. A project that I am especially proud of and from which

we have learned many lessons about RTW practices is the Inland Empire’s Projects

With Industry (PWI). Our PWI is part of a national initiative funded under the RSA

that has resulted in the development of a national network of projects that represent an activity partnership between rehabilitation, RTW organizations, and employers. For the past 20-plus years, PWIs across the country have provided the most

cost-effective, outcome-based, RTW effort of any initiative in our nation that I am

aware of which has been undertaken by the public sector. My firm participated very

actively in the Research and Demonstration Project (RDP) funded by SSA. As a result of these activities, my company has worked with several thousand disabled individuals and hundreds of employers throughout the Pacific Northwest. Later in my

testimony, I will share with you some important lessons that we have learned from

PWI experience and participation in the RDP process.

In testimony today, I want to focus on what we in the field of RTW have learned

over the years about the four stakeholders in this process; namely, employers, people with disabilities, providers of service, and SSA. I will then focus on the implications of those lessons for policy and program development, and finally outline for

you a cost-effective approach to a national RTW effort that draws on the lessons

that we have learned from the stakeholders.

WHAT WE HAVE LEARNED

About People with Disabilities in Relation to the Job Market:

Many disabled individuals (even those with severe disability) sincerely want to return to work, take control of their own lives, and be productive, self-sufficient citizens. Various studies have indicated that from 15 percent to as high as 40 percent

of those on the social security rolls would like to return to employment.

• Consumers want to have a choice of providers, methods of returning to work,

and the type of occupation they pursue.

• They want to be able to exert real and meaningful control over their RTW effort

and their lives.

• A significant percentage of people on the rolls cannot return to full-time employment and desperately need income and medical support provided by SSDI and SI

programs.

Many are very fearful of losing their medical support. This fear transmits into

placement counselors, mental health professionals, and social workers who interact

with these individuals to such a degree that the service community will often help

disabled people strategize ways to maximize their personal income while avoiding

the loss of benefits. Counseling staff are placed in the untenable situation of asking

someone to essentially risk their life to pursue employment that may turn out to

be temporary under the current eligibility guidelines.

Most individuals with disabilities lack the specific skills and knowledge necessary

to adequately seek out and obtain employment in the competitive workplace. The

behaviors and attitudes that are required for an individual to secure social security

benefits are the exact opposite of the behaviors and attitudes required to convince

an employer that the individual is the right person for a job. The current eligibility

system requires a focus on disability, inability, and dependency to gain access to

benefits. Employers are looking for independent, positive, and upbeat employees

who focus on what they can do, not what they can’t do.

Without RTW assistance, the employment rate for people coming off the rolls will

continue to be incredibly low. The onset of disability and the system to access benefits is often demoralizing and inadvertently takes away from the individual his

sense of self-confidence and focus on goal-oriented, productive behavior that is essential to obtaining and retaining employment.

Some individuals believe that, as a result of the Americans with Disabilities Act

(ADA) and Affirmative Action, employers have an obligation to employ them and

that fear of government intervention will motivate employers. It is our experience

that using the ADA as a threat to gain access to employment for a specific individual virtually guarantees that an employer will not hire that person.

Many people believe that in order to compensate for their disability they must

have highly developed, specific vocational skills to compete effectively in the work

force. Our experience indicates this is not necessarily true.

Many people with disabilities tend to believe that employers basically do not like

people with disabilities, are concerned only about the bottom line, and require significant financial incentive to motivate them to employ people with disabilities.
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While placement professionals know this is not true with the majority of employers,

this fear serves as a barrier to return to work.

THINGS WE HAVE LEARNED ABOUT EMPLOYERS

The primary motive or objective of most employers is to get the job done: operate

a healthy, positive work environment and produce a reasonable return on investment. While profit is an important consideration and essential to survival, many

businesses (especially smaller businesses) were started because of the employer’s

personal attachment to the profession or interest in producing particular goods or

services.

Employers primarily want to hire employees who display a positive attitude, have

good, dependable work habits, have the ability to work as a team player, and display a willingness to learn. Individuals (whether disabled or not) who appear to be

litigious in their approach are avoided at all cost. Some employers are willing to

make significant levels of accommodation to facilitate the productivity problem encountered by a person with a disability, if the employee displays the work habits

previously mentioned. Many employers take pride in their corporate citizenship and

their ability to assist disabled people to become productive and gain independence

from the tax dole.

Many employers are highly intimidated by and afraid of large government agencies such as Employment Security, the Department of Labor, and Vocational Rehabilitation, etc. Employers feel such organizations do not understand, value, or appreciate the private sector and stand ready at a moment’s notice to trigger legal action

if something goes wrong with the employment of a disabled individual or other protected classes of employees. The various programs and laws we have created to help

individuals with significant barriers to employment gain acceptance into employment have created what is perceived as an immense threat to business. This phenomenon may explain why, since the enactment of the ADA, there has been essentially no net gain in employment in our country for people with disabilities.

Some policy makers and advocates believe that the key to employment is targeting large Fortune 500-style companies. The reality is that over 75 percent of the net

job activity in the United States comes from small-and medium-sized employers.

Employment experts have dubbed this the hidden job market. Eighty percent of

those jobs are filled by informal word-of-mouth and through personal relationships

within a local community. Less than 15 percent of the job openings available nationally are posted with public employment agencies. This, coupled with fear of government agencies, may, in part, explain why the public vocational rehabilitation systems have produced poor results.

Employers provide more job training to more individuals than all the vocationaltechnical schools and universities in our nation combined.

Tax incentives and on-the-job training dollars are useful tools (especially with

middle-sized and large employers) in helping individuals obtain employment. Most

employers are focused more on getting a good employee, dependable follow-up, and

an honest relationship with the RTW provider. Some will choose not to utilize such

incentives because of their fear of government intervention in their daily affairs.

Employers and disabled employees sometimes rely on the RTW provider as a mediator to help solve problems and decrease the chances of litigation. If, for example,

a job simply doesn’t work out for a person, a good provider will quickly facilitate

transition into a new job somewhere else. The disabled employee avoids financial

harm and the employer’s chances of facing litigation are greatly decreased.

There is a significant movement on the part of employers in this country to move

away from well-funded benefit packages for full-time employees toward the use of

part-time employees who receive little or no benefit package. While this tendency

disturbs me on a personal level, it has created opportunities for people with disabilities to enter the job market and gain experience. This phenomenon could be especially useful if a working mechanism is in place to allow beneficiaries to sustain

their benefits. Some of the most successful PWIs have aligned themselves with temporary employment agencies to capitalize on this opportunity.

Organized labor has worked as a consistent supporter over the past 20 years of

the PWI employment initiative and, in many cases, has actually taken the lead in

building the bridge between people with disabilities and the employer community.

Many employers (especially large firms) have come to the realization that disability and its related unemployment are extremely expensive. Such employers are developing the internal capacity to do job station modification and other RTW interventions. These efforts, hopefully, will offset some of the growth in utilization of the

SSDI system. Moreover, they provide a mechanism inside of industry to link a RTW

program for those currently on the rolls.
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WHAT WE HAVE LEARNED ABOUT PROVIDERS OF REHABILITATION AND RTW

SERVICES:

The vast majority of professionals employed in these fields entered their profession out of a sincere commitment to help people with disabilities maximize their

ability to be self-sufficient in our society. Most counselors possess a sincere interest

in the welfare of the disabled individual; and if placed in a situation where the welfare of the client is pitted directly against the potential for their company to secure

profit, they will err on the side of the client.

The provider community across the country has developed a highly refined set of

skills to evaluate an individual’s employability, to develop cost-effective RTW plans,

and to use methods to re-engage people in competitive employment. Unfortunately,

many state worker’s compensation systems’ efforts have focused vocational rehabilitation professionals on empirically determining on paper that disabled people are

ready to return to employment. Outcomes have not focused on return to gainful employment. This phenomenon gets people off the state worker’s compensation rolls

but doesn’t return people to work. It also results in the development of statistical

surveys across our country that significantly understate the power of rehabilitation

to actually return people to gainful employment.

Providers are ready, willing, and able to participate in an effective RTW effort for

SSDI beneficiaries. Unfortunately, the current alternate provider initiative by SSA

to ‘‘level the playing field’’ with private providers and state vocational rehabilitation

agencies is more artificial than real. It will not retain a significant number of providers in the RTW effort. The proposed alternate provider method of paying for rehabilitation costs only after placement ignores the substantial losses associated with

those who fail in the rehabilitation process and will require substantial amounts of

working capital. It attempts to place all the risk on the provider and fails to ‘‘level

the playing field’’ because the state vocational rehabilitation agencies are still fully

funded for all their efforts (both successful and unsuccessful) through RSA. The reimbursement that state agencies currently receive upon successful client termination from benefits is a bonus payment or pure profit for the state agency. If Congress were to truly create a ‘‘level playing field’’ and pay all expenses out of General

Fund revenues for attempting to rehabilitate social security recipients and then pay

social security Trust Fund dollars for successful outcomes, thousands of private providers would participate. Such an effort would be prohibitively expensive, however,

and would not represent a balanced approach of sharing risk between the government, the provider, and the person with disability.

Through the RDPs funded by SSA, we learned that returning beneficiaries to

work is hard work, but doable. Successful projects would place 5 to 15 percent of

those originally contacted at the Substantial Gainful Activity (SGA) level of employment as defined by SSA. Even with a 5 percent placement rate, private sector-based

return to work is highly cost-effective and is more than a tenfold improvement over

the current practice.

Beneficiaries participating in the Continuing Disability Review (CDR) process

seem to display a significantly higher employment rate than the general caseload

or those in the application process.

Providers across the country are willing to participate in milestone-based payment

systems that focus on a combination of outcomes and savings to the Trust Fund.

Literally thousands of RTW rehabilitation counseling firms, worker’s compensation

agencies, rehabilitation professionals, PWI operators, and rehabilitation facilities

are in place and process the basic prerequisites to participate in a national RTW

effort. Only a very small percentage, if any, can financially afford to participate in

a system that does not pay any milestone payments but instead withholds all payment until Trust Fund savings are realized.

SSA is currently reviewing another strategy that would pay providers a percentage of the savings to the Trust Fund after a person leaves the rolls. Such rear-end

loaded strategies like the alternate provider program place impossible operating

capital requirements on providers. Only very large providers could even consider

participation.

Many providers throughout the country (especially PWI operators and private

worker’s compensation firms) have very well-established relationships with literally

thousands of employers throughout our country. They provide immediate, readily

available access to small, middle-sized, and large employers throughout the entire

economy.
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WHAT WE HAVE LEARNED FROM WORKING WITH SSA

The vast majority of employees we have worked with in SSA (both locally and at

the national level) are hard-working, intelligent, and dedicated. They possess a sincere and heartfelt commitment for people with disabilities and shoulder a serious

sense of responsibility towards the Trust Funds they administer. By design and

practice, SSA and its staff know very little about the specifics of return to work,

how it works, how to contract for effective services, or how to work with consumers

in a RTW plan. Their corporate culture has been designed around the mission of

protecting those who, as defined by the listings and regulations, are incapable of

work.

Knowledge gained from RTW Research and Demonstration Projects and Project

Network experiences a very short memory cycle within the agency due to personnel

moves and is not widely distributed or understood. The very nature of the experimental models drives up the cost of projects and substantially reduces the effectiveness of the projects. It seems clear, however, that the RDPs have shown that while

SSDI recipients pose significant challenges, they can be returned to work in significant numbers by utilizing private organizations and networks within local communities.

Providers have known how to effectively place people into employment since the

1970’s. The well-intentioned tendency of the agency to prove unequivocally through

scientific study the hows, whats, whens, and wheres of a successful RTW effort will

never, given the nature of return to work itself, be truly successful. Continuing to

research this issue, while putting on hold a national implementation of a private

sector-based program, will result in literally tens of billions of dollars being lost

through missed opportunity. Literally hundreds of thousands of individuals who

could be returned to substantial, gainful activities will be left to sit in idleness and

dependency while we engage in a never-ending effort to empirically prove what people in the RTW and placement field have known for years.

IMPLICATIONS FOR THE DEVELOPMENT OF AN EFFECTIVE AND COST-BENEFICIAL RTW

PROGRAM

Administration and Oversight:

The Return-To-Work Group recommends that:

1. An initial implementation of a national program begin immediately (see implementation plan).

2. A bipartisan commission of 9 individuals (3 consumers, 3 providers, 3 employers) be appointed to assist with rule making, oversee program implementation, review outcomes, recommend ongoing changes to improve incentives and remove program barriers, and report to Congress with SSA on the results of program implementation and recommendation for improvement.

3. The testing and refinement of various incentive strategies will be tested in different parts of the country during the first five years of implementation.

4. Program management will be contracted out to a private firm or firms that will

have a presence in each region of the country. We believe having two firms each

serving different parts of the country will provide a back-up in case one firm cannot

perform to standards.

5. To ensure full geographic coverage, providers must assure that a network of

services is available across a broad geographic area. Services available must include

case coordination (case management), core services (assessment, counseling, training, plan development, placement, and support services), and specialized services

(those designed to deal with unique barriers created by specific disabilities). Service

access can be assured by several small organizations across a geographic service

area coming together through contractual relationships to form their own network.

6. To simplify administration, billing, accountability, and the provision of a seamless service to consumers, SSA (through its program manger) will contract with the

network provider(s) who will be responsible for all subcontractors and held accountable for all outcomes. This approach creates no new bureaucracy or layers, but simply utilizes existing providers and a private management firm.

7. Network providers will have to submit an annual audit to the contract manager

to ensure billings are appropriate, allowable, and accurate. The provider will bear

the cost for such audits.

8. Annual report cards for outcomes and customer satisfaction will be developed

and made available to the public and all potential customers at program entry.

9. Periodic reviews of services and audits will be conducted by review teams contracted through the manger. Teams will consist of a consumer, an outside provider,

and an SSA representative.
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10. Milestone payments will be made for outcomes, in combination with a fiveyear follow-up commission based on Trust Funds savings used to reimburse providers.11. All beneficiaries up for CDR be referred for mandatory RTW assessment.

Those who participate in a RTW plan will receive an extension of benefits until completion and avoid disability review.

People with Disabilities:

To assist those who have a sincere interest in returning to work, we must provide

a safe and understandable protection of medical benefits. The program must encourage and develop individual consumer choice and control throughout all aspects of

the RTW effort. The effort must be grounded in organizations that have existing relationships with small, medium, and large employers in every community of our

country. Meeting with hundreds of providers across the country has traught us that

milestone payments are essential to attracting and retaining these well-established,

small-and medium-sized providers. Counseling and case coordination must focus on

the ability to instill positive work habits and attitudes in guiding people back to employment. Programs must help individuals market themselves in a way that is desirable and nonthreatening to the employment community. The system must provide

incentives for providers to develop service plans and move individuals quickly and

effectively toward return to work; and also provide long-term, ongoing support to assist individuals in retaining employment and developing a positive career ladder approach. Emphasis on simply finding individuals jobs will not result in a long-term,

positive effect of keeping people off the rolls. Tying a significant percentage of the

provider’s fee to continued Trust Fund savings over five years, in combinatoiun with

simple, clear, outcome-oriented milestone payments, will ensure a choice of providers for consumers, increase the access to more employers and jobs, enhance job retention, and, consequently, ensure greater long-term Trust Fund savings.

The model msut be designed to ensure that people with disabilities are responsible for following through on their RTW plan and are enablers of their own success.

Each individual must participate and have active control in the development and

sign off on a RTW plan that contains specific employment goals, both long-and

short-term, specific objectives necessary to reach those goals, and an individualized

economic analysis of the individual’s plan to demonstrate the ability of the plan to

move the person toward financial self-sufficiency. The provider and the consumer

are considered partners whereby the provider and the consumer will financially invest in training and other necessary support to obtain employment. The network

provider, case coordinators, or case manager will assist consumers in taking full advantage of funding currently available through vocational rehabilitation, JTPA, student loan programs, etc.

Employers:

The initiative must include providers of service who have a direct, ongoing relationship with employers of all sizes throughout our economy. Employer incentives

to offset the cost of training and job modification will enhance the total number employed and the number of employers who participate. Incentives are not essential

for all employers or all types of disability. While all employers may not utilize these

benefits, they serve to attract a large segment of marginally interested employers

who will not otherwise participate. The RTW effort must be viewed as a method to

assist employers in being good corporate citizens and not be used as a method to

threaten and intimidate employers into employing people with disabilities. A negative approach will guarantee utter failure.

Providers:

The initiative should utilize reimbursement methods that place heavy emphasis

on rewarding outcomes and provide some incremental payment for completion of

outcome-based milestones. Our research and analysis recommends three milestone

payments for specific outcomes:

1. The development of a mutually agreeable RTW plan—$300

2. Obtain and retain employment for a reasonable period of time (60 days in our

analysis)—$1,100

3. Reaching SGA/coming off the rolls—$1,300

A job retention follow-up fee of 25 percent of savings would also be paid. This reimbursement would be paid monthly and would be based on the percentage of the

annual cost of maintaining the average beneficiary on the rolls for any given year.

The fee would be adjusted annually.

To ensure long-term savings, we recommend a follow-up fee for five years for

keeping individuals off the rolls. Such a system should encourage providers to find
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initial jobs that provide stairsteps to more long-term, career-oriented employment

and provide the incentive to encourage ongoing support of the individual to ensure

the maintenance of employment. Approximately 80 percent of people who lose jobs

in our economy do so because of poor work habits and ‘‘bad attitude.’’ The payment

system encourages providers to deal with these and ancillary issues that have a dramatic effect on long-term employability.

The primary measure of program quality should be a job that is chosen by the

consumer that provides a level of support both financially and intellectually and

that is otherwise acceptable to the customer. Experience by providers with other

ouctome-based payment systems overseen by government agencies has taught us

that agency staff have little or no understanding of the labor market or the full cost

of RTW. They seem compelled to ‘‘Help’’ the consumer attain higher quality outcomes by adjusting process requirements and outcome levels necessary for payment.

Attempts to externally define quality by imposing processes, approaches, or minimum income levels for jobs will retard the individual’s ability to return to work,

limit their access to jobs that provide a platform for labor market reentry, diminish

individual choice, and, in effect, say that people with disabilities are incapable of

making their own informed decisions. The system recommended here will provide

true choice for consumers. If a provider can’t develop a plan and deliver acceptable

services, the consumer will choose another provider. With the customer goes the

funding.

Quality assurance monitoring should be in place that ensures that funds are

spent for allowable outcomes and that individuals are offered a full array of providers to develop their plans, have meaningful employment options, and exercise power

and choice throughout the RTW effort. The initiative must encourage the development of local and regional provider networks that maximize access to the hidden

job market and existing training and support services within local communities.

Providers should have built-in quality improvement programs, submit to annual

Certified Public Audits, have public report cards done on an annual basis, conduct

standardized satisfaction surveys published in their report card, and be reviewed periodically by an external quality assurance team that includes consumer representation.

SUMMARY OF A NATIONAL IMPLEMENTATION MODEL

The following summary represents an overview of an implementation model for

the development of a full-scale, national RTW effort staged over a seven-year period.

The model attempts to establish a balance in dealing with the needs of all the stakeholders, balance risk across all partners, and is based on demonstrated outcomes

from recent RDPs and Project Network. The model produces results that are highly

cost-effective and incorporates the combined milestone and outcome payments previously cited. This payment method substantially limits the Trust Fund’s financial

exposure in developing this effort and essentially assures that SSA does not end up

buying services instead of outcomes. It is also designed to ensure that even with

very conservative or poor results, SSA would receive a positive cost benefit from

their investment in the RTW effort. The payment milestones used have been vigorously negotiated. The milestones represented are below the cost of services historically experienced by providers. The state agency programs have been receiving over

$10,000 on average to cover the cost of those coming off the rolls. The cumulative

milestone reimbursement total for a person in our combined model is $2,600. Providers would have to keep people off the rolls for extended periods of time for profit

to occur.

FULL NATIONAL IMPLEMENTATION MODEL

This full national implementation scenario is presented in four phases that progressively increase the degree of sophistication and the volume of services provided.

It looks at the provision of services to applicants, CDRs, and general caseloads. The

computer simulation program used to generate these outcome numbers utilized different assumptions computing enrollment and success rates for each of these discrete populations. Cost/benefit savings are calculated over the ten-year-average life

of a case as currently reported by SSA. The model does not include the cost of extended medical coverage that has been recommended. PWIs nationally find that approximately 50 percent of the people they place enroll in employer health insurance

plans which will save considerable federal funding. This savings should more than

offset the cost of extended benefit plans that incorporate a staggered buy-in provision. The outcome assumptions used to calculate program costs and savings over

time are based on actual results obtained by SSA Research and Demonstration

Projects, Project Network, and national PWI data. These results were achieved
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under current conditions. The work and employer incentives that have been recommended by various groups should significantly increase the participation, outcome rates, and projected savings. These increased savings would be partially offset

by the cost of such incentives.

OVERVIEW: PHASE I—PREPARATION PHASE

Objective:

Complete basic regulatory development referral mechanism design and set up initial provider network to begin RTW services. Establish four implementation and refinement beta sites, one in each quadrant of the country. Should use RDP/Project

Network or PWIs who have experience for this task. Notify public that the change

is coming. Disability does not equal unemployability and/or retirement.

Timeline:

1 year

Total elapsed time—1 year

Key Activities:

• Set up consumer, employer, provider network and oversight committee.

• Develop fee-for-outcome guidelines.

• Solicit vendor from RDP Group, Project Network, PWI, state certified facility

programs, and state certified injured worker programs.

• Develop self-placement model not requiring provider.

• Develop agreements with providers.

• Develop tracking system/M.I.S.

• Develop necessary regulations.

• Orient SSA staff.

• Develop national public relations campaign strategy and initiate.

• Determine incentives to be tested.

• Begin beta site programs.

Service Enrollment Levels

Per Year Phase Total Cumulative Total

All Phases

Applicants ............................................................... N/A

CDR ......................................................................... N/A

General Caseload ................................................... N/A

Youth ...................................................................... N/A

Total Return-To-Work (SGA) Off Rolls ................ N/A

Totals—Financial Summary

Net Cost Trust Fund Current Phase ($500,000 Public Relations, $300,000

SSA) .................................................................................................................... $800,000

Public Relations Costs .......................................................................................... N/A

Trust Fund Savings Reinvested Annually in RTW ............................................ N/A

Savings to Federal Budget (Over 10 years—Cumulative Program) ................. N/A

Benefit/Cost Ratio (Federal Budget—Over 10 years) ........................................ N/A

Benefit/Cost Ratio (Excluding FICA & FUTA).

(Total Savings/Incremental Cost) .......................................................... N/A

OVERVIEW: PHASE II—OBJECTIVE

Initiate Program

Develop nationwide service delivery capacity with emphasis on getting people

back to work who are medically stable and need support the least (‘‘creaming’’) and

dealing with malingerers. Provide opportunity for youth to seek employment and

avoid disability syndrome. Begin changing public expectation away from disability

equals unemployability toward everyone can participate in some level of gainful activity. Minimize need for incremental funding increase to initiate program.
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Timeline:

2 years

Total elapsed time—3 years

Key Activities:

• Presidential Congressional announcement of new direction.

• Initiate public relations campaign within agency and with local communities.

• Notify prospective participants.

• Initiate referral system.

• Test referral system with Project Network providers, RDPs, and PWIs—first

year.

• Expand referrals second year to facilitators, state certified providers, and individuals.

• Implement provider payment system.

• Implement monitoring system.

• Refine automated applicant referral and screening system.

• Coordinate national public relations campaign.

Service Provided To:

Per Year Phase Total Cumulative Total

All Phases

Applicants ............................................................... 0 0 0

CDR ......................................................................... 45,000 90,000 90,000

General Caseload ................................................... 4,688 9,375 9,375

Youth ...................................................................... 0 0 0

49,688 99,375 99,375

Total Return-To-Work (SGA) Off Rolls ................ .................... 33,237 33,237

Totals—Financial Summary

Net Cost Trust Fund Current Phase ................................................................... $153 million

Public Relations Costs .......................................................................................... $2.4 million total

Trust Fund Savings Reinvested Annually in RTW ............................................ 0

Savings to Federal Budget (Over 10 years-Cumulative Program Nominal $’s) $2.9 billion

Benefit/Cost Ratio (Federal Budget—Over 10 years) ........................................ $13.96 saved for

every $1 invested

Benefit/Cost Ratio (Excluding FICA & FUTA) (Total Savings/Incremental

Cost) .................................................................................................................... $17.98 for every

$1 invested

OVERVIEW: PHASE III OBJECTIVE

Expansion/Refinement

Expand number of providers, refine processes, serve more difficult to serve, extend

services to select applicants, increase service capacity to fully operating, steady state

level. Continue to reinforce with the public the expectation of employability of our

disabled citizens. Operate RTW services exclusively out of savings to Trust Fund

from prior year’s efforts.

Timeline:

2 years

Elapsed time—5 years

Activities:

• Implementation.

• Focus on refinement of referral, follow-up, evaluation of components.

• Disseminate outcome and follow-up reports on all participating providers to clients and public from prior years.

• Full national implementation of applicant RTW referral system.

• Presidential/Congressional progress report to the nation.

• Bring on more specialized services and services to small community providers.

• Maintain public relations campaign.
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Service Available To:

Per Year Phase Total Cumulative Total

All Phases

Applicants ............................................................... 6,250 12,500 12,500

CDR ......................................................................... 45,000 90,000 180,000

General Caseload ................................................... 9.375 18,750 28,125

Youth ...................................................................... 0 0 0

60,625 121,250 220,625

Total Return-To-Work (SGA) Off Rolls ................ .................... 40,554 72,407

Totals—Financial Summary

Net Cost Trust Fund Current Phase ................................................................... 0

Public Relations Costs .......................................................................................... $2 million total

Trust Fund Savings Reinvested Annually in RTW ............................................ $154.5 million

Savings to Federal Budget (Over 10 years—Cumulative Program) ................. $6.6 billion

Benefit/Cost Ratio (Federal Budget—Over 10 years) ........................................ $15.19 for every

$1 invested

Benefit/Cost Ratio (Excluding FICA & FUTA) (Total Savings/Incremental

Cost) .................................................................................................................... $19.78 for every

$1 invested

OVERVIEW: PHASE IV OBJECTIVE

Full-scale Operation

Service level optimized to return maximum number of people to gainful activity,

continue system refinement. Public attitude focuses on ability not disability. Benefits considered temporary assistance for most people with disabilities, not a form of

retirement.

Timeline:

2 years

Elapsed time—7 years

Activities:

• Easier cases have been placed, providers seek out more difficult cases.

• Continue to refine referral system.

• Report on provider success for all prior periods.

• Poor providers drop out.

• More highly specialized providers develop niches.

• More difficult people being placed.

• Providers increase effectiveness.

• Rate of malinger applicants should drop.

• RTW services become more efficient and effective, standards of performance

evolve.

Service Available To:

Per Year Phase Total Cumulative Total

All Phases

Applicants ............................................................... 10,000 20,000 32,500

CDR ......................................................................... 50,000 100,000 280,000

General Caseload ................................................... 37,500 75,000 103,125

Youth ...................................................................... 0 0 0

97,500 195,000 415,625

Total Return-To-Work (SGA) Off Rolls ................ .................... 65,220 134,552
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Totals—Financial Summary

Net Cost Trust Fund Current Phase ................................................................... 0

Public Relations Costs .......................................................................................... $1.0 million

Trust Fund Savings Reinvested Annually in RTW ............................................ $400 million

Savings to Federal Budget (Over 10 years—Cumulative Program) ................. $12.3 billion

Benefit/Cost Ratio (Federal Budget—Over 10 years) ........................................ $14.36 for every

$1 invested

Benefit/Cost Ratio (Excluding FICA & FUTA) (Total Savings/Incremental

Cost) .................................................................................................................... $18.63 for every

$1 invested

CONCLUSION

The key components to bring together an effective working partnership between

people with disabilities, return-to-work providers, employers, and the federal government are known and available. Methodologies to return individuals to employment have been in practice for over 20 years and have demonstrated repeatedly that

individuals with severe disabilities can be returned to gainful employment. Many

individuals currently on the rolls are highly motivated to return to work; and many

employers are ready, willing, and able to provide jobs, especially if reasonable incentives are provided to offset extra costs. The Social Security Administration has acknowledged the need for a return-to-work program and has expressed interest in

pursuing a more aggressive approach. The key ingredient that is needed to bring

together these essential stakeholders is a clear and decisive directive from Congress

and the Executive Branch to proceed expeditiously with such a program. Private

sector providers with substantial levels of experience are also ready, willing, and

able to assist other partners in completing the design and implementation of an effective program.

We request that you give us and our other stakeholders the directive to move forward so that we may begin immediately to assist hundreds of thousands of individuals return to self-sufficiency and initiate an effort to stop the economic drain that

is currently depleting the Trust Fund. We will assist you in whatever way possible

to achieve these outcomes. Thank you for your attention to this issue and for requesting our input.

you, and you have given us great testimony, I would like to let you

Chairman BUNNING. Thank you very much. Since we have all of

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know that if we don’t get to ask all the questions, we are going to

submit written questions to you for your response. I know I am not

going to get to ask all the questions I have and I would like Barb

and J.D. to do the same if they have questions.

[The following was subsequently received:]

Questions received from Hon. Jim Bunning, and Subsequent Responses

from John Halliday

Question 1. Recognizing that you provide services to individuals with severe disabilities along with SSDI and SSI recipients, what is your average cost per client?

The average cost per SSI/SSDI recipient rehabilitated by the public vocational rehabilitation program in FFY 1996 was $4,986.00. The average cost for nonrecipients was $3,261.00. This reflects the actual purchase of service costs for persons closed successfully rehabilitated.

An important issue in the discussion of costs for rehabilitation services is that

SSA considers the public vocational rehabilitation program as the first dollar.

Therefore, the Ticket to Independence proposal, as well as most other proposals, is

based upon the continued use of the public vocational rehabilitation program for

services. The result is that public vocational rehabilitation will be expected to pay

for many of the necessary purchased services and provide vocational counseling.

These costs will not be included in the cost estimates of return to work proposals

of private groups. As a result, public resources will be used to provide the actual

services, but the reimbursement will go only to the private program.
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It is important that there is a clear understanding of the role of the public program in the specific proposals, so that the real cost to the public can be fully understood. A formal cost sharing agreement with the Social Security Administration and

the Rehabilitation Services Administration needs to be developed to address the fact

that public vocational rehabilitation dollars are being used, while the private providers are receiving reimbursement.

Question 2: You mention in your testimony that the timing of outreach to encourage

recipients to return to work is poor. What are the optimum times to provide this outreach?

The experience of the public vocational rehabilitation program is that recipients

are more likely to choose to engage in vocational rehabilitation either long before

they apply for and start receiving benefits or after they have been receiving benefits

for a period of time. Preliminary results from the RSA longitudinal study are that

over 96% of the recipients that use vocational rehabilitation come from vocational

rehabilitation outreach to the community, not from SSA referral. Approximately

25% to 30% of the people who use vocational rehabilitation are SSA recipients. The

enclosed NIDRR study indicates that they have generally been receiving benefits for

40 to 55 months prior to engaging in vocational rehabilitation.

Referral at the time a person is determined eligible for disability benefits is not

generally an appropriate point to initiate outreach. In fact, the Disability Determination Services (DDS) referral process often discourages, rather than encourages,

recipients to apply for vocational rehabilitation. Currently, the DDS refers 10–15%

of applicants to the public VR program at the time of disability determination, immediately following the completion of a complex process to prove their inability to

work. As a result, only a small percentage of the people referred actually follow

through and apply for VR services.

If Social Security is going to begin to place greater emphasis on employment of

its disability program beneficiaries, a complete paradigm shift will be necessary. Beginning at the point of application for benefits and continuing through benefit cessation, beneficiaries should be reminded on a regular basis of the availability of vocational rehabilitation to help them return to work. Further, beneficiaries must

have access to reliable, accurate and comprehensible information regarding work incentives and the impact of work on benefits. Without this, even those individuals

for whom work incentives are potentially beneficial will not risk losing the security

of cash and medical benefits.

Question 3: You mentioned in your testimony that State VR agencies are unable to

service additional SSDI and SSI recipients because of funding issues. Under current

law, State VR agencies are funded through the Rehabilitation Act and are 80% federally funded and 20% state funded. Also under current law, State VR agencies are

reimbursed for reasonable expenses for recipients who return to work for 9 months.

In these instances, State VR agencies are being paid twice. Please explain why you

are under funded for the purposes of serving more SSDI and SSI recipients?

The resources available to the public vocational rehabilitation program are not

sufficient to meet the demand for services from potentially eligible persons. The

funding formula is a fixed amount that does not increase based upon demand for

VR services. The eligibility criteria for vocational rehabilitation is much broader

than for SSI/SSDI. The requirement for an order of selection in the Rehabilitation

Act when states do not have enough funds to meet the demand for services is a clear

acknowledgment of the limited resources.

The lack of sufficiency of funds for vocational rehabilitation services can most

clearly be seen when one compares the VR allotment with expenditures for SSA disability programs. While hundreds of billions of dollars are spent on SSA cash and

medical benefits which keep people dependent on government entitlements, only $3

billion is allotted to VR, which assists individuals to increase their independence.

The present reimbursement structure, as established by SSA to replace a prepaid

approach, was designed to pay only for outcomes. The system was to create an incentive for states to aim for the SGA level of employment when serving SSI/SSDI

recipients. The SSI/SSDI recipients who use the public vocational rehabilitation program have over a 50% employment rate after starting an employment plan. The majority, however, do not choose to work enough hours to achieve or maintain SGA,

resulting in the public program not receiving reimbursement. This is due largely to

financial disincentives in the SSA benefit structure. It should also be noted that,

even in cases where the person achieves SGA, if the recipient has impairment related work expenses or subsidies, vocational rehabilitation often is not eligible for reimbursement.
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Another factor that should be considered is that the public program is the only

program that is required by law to reinvest the funds back into vocational rehabilitation services. The present alternative participant program and the various return

to work proposals do not require that any funds be used for future services. It also

must be remembered that the return to work proposals will no doubt continue to

use the public program as first dollar and minimize the use of private resources.

Question 4: You say that 45,000 recipients enter the workforce each year because of

efforts provided by the state VR program. Yet, in 1996, SSA reimbursed state VR

agencies for little more than 6,000 recipients. Does this mean that the other 39,000

SSA recipients did not remain in the workforce for nine month or were there other

reasons why state VR’s were not reimbursed for these clients?

There are three issues involved in this question. The first is that the 6,000 cases

reported by SSA reflects the number of cases that SSA was able to process for reimbursement, not the number of actual cases that the public program submitted which

are expected to be eligible for reimbursement. Second, without direct access to SSA

data, states cannot easily determine which of their consumers whose earnings are

at SGA level are recipients of SSA benefits. Third, many SSA recipients who go to

work as a result of the VR program choose to limit the number of hours worked,

so as to retain SSA benefits.

In FFY97, SSA had over 20,000 cases in their system submitted by states, representing SSA recipients who had returned to work. At the present allowance rate

of 66%, this would mean over 13,000 cases are likely to be at the SGA level. Even

this significant increase is an understatement of the actual number of SSI/SSDI recipients that the public program has assisted to achieve SGA, as we are generally

unable to access accurate information regarding whether or not individuals are

SSDI/SSI recipients. In Connecticut, we were able to obtain access to a direct way

of checking all of the employment closures for SSI/SSDI eligibility for a short period

of time. The result was that we were able to identify 30% more cases of recipients

who were working at the SGA level.

The public VR program is effective at assisting recipients to enter paid employment. It is the disincentives inherent within the SSA disability programs that keep

individuals working below the SGA level. This is the primary reason CSAVR is recommending a restructuring of the disability program, with particular emphasis on

disincentives around cash and medical benefits. The types of jobs and the wage levels of individuals who return to work through using the public VR program reflects

the diversity of our economy. The key to the SGA issue is that although over 90,000

recipients entered paid employment in the last two years, most chose to keep their

hours worked per week at a level that resulted in earnings below the SGA level.

The NIDRR study showed that the SSDI/SSI recipients worked an average of about

25 hours per week while non-recipients worked over 30 hours per week. The choice

of many recipients is to work to supplement benefits, rather than to replace benefits. The maintenance of cash and medical benefits is seen as critical by many of

these individuals.

Question 5: In your testimony, you recommended simplifying SSA’s work incentives,

including employment-related work expenses, the SSI monthly payment reduction of

$1 for $2 earnings over $85 per month, and the Plan to Achieve Self Support (PASS)

program. You also suggested that these SSA programs be administered by State VR

agencies. How would this work?

The work incentives could be more effective if the method of providing information

was specialized and simplified at the community level. The present structure of

going though the SSA district offices is ineffective and inefficient. The public vocational rehabilitation program has a national infrastructure that could be built upon

so that a system of return to work information and technical support could be developed. The goal would be to use vocational rehabilitation professionals as specialists

to provide education, approval of PASS and IRWE’s and coordination of public/private initiatives. Public VR counselors possess the necessary education, training and

experience to assist individuals in developing vocational goals which will lead to employment. The use of the public VR structure would minimize costs to SSA.

One approach would be for SSA to enter into an agreement with RSA to have the

VR program establish a network of return to work information and education centers in the states. These would build upon the already existing outreach efforts by

many state VR agencies to provide beneficiaries with information on vocational rehabilitation. It is through the state VR agencies’ outreach that approximately 96%

of beneficiaries have chosen to enter the vocational rehabilitation program. There

is clearly a basic infrastructure in place and with some additional resources from

SSA, this could be expanded to increase access for many more beneficiaries.
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The CSAVR White Paper also recommends that SSDI use a gradual reduction in

benefits, similar to SSI. The PASS program is essentially nonexistent at this time.

It has a rejection rate for plans submitted in the 70% to 80% range, and is unpredictable in the time it takes to get a decision. The purpose and processes for the

PASS program need to be clear. Using professional vocational rehabilitation counselors to administer the program would greatly increase its effectiveness.

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Questions received from Hon. Jim Bunning, and Subsequent Responses

from Rick Christman

You mentioned in your testimony that participation in a return-to-work program

should be voluntary, at least until the program is in place for a period of time. Is

there any point at which you think recipients who have work capacity should be required to accept rehabilitation services?

This is an interesting question. Inasmuch as I believe practically every person of

working age with a disability of has some degree of work capacity, the answer

should be ‘‘yes.’’ However, I must also quality this answer and emphasis that it is

important to understand that, for persons with significant disabilities, the full realization of vocational potential takes time and no small amount of expertise. As I

described in my original testimony, the field of vocational rehabilitation has, as of

yet, not been able to return significant numbers of beneficiaries to self-sufficient employment. Thus, to involuntarily compel large numbers of beneficiaries to attain assistance from a system which has not yet sufficiently focused itself on the attainment of self-sufficiency, could very likely result in a public policy disaster of colossal

proportions. Rather, I believe it would be prudent to initiate return-to-work legislation on a voluntary basis. Over time, the innovations and service improvements

which are certain to result from the implementation of a system of market-based

competition, will strengthen the quality of vocational rehabilitation services nationwide. I would foresee that, with time, the enactment of return-to-work legislation

greatly improving the efficacy and capacity of vocational rehabilitation services. Accordingly there could come some future point, which today I could not predict,

wherein Congress could reasonably consider making assessments of vocational capacity for all recipients mandatory.

You also say that providers should not be ranked or graded. How can consumers

make informed choices for services without some type of provider evaluation?

It is essential that consumers have access to clear and accurate information on

the efficacy of providers in order to make informed choices. Basic information and

outcomes-based performance indicators of such data as service locations, service

area, numbers of persons served, types of services offered, types of disabilities

served, success ratios, types of jobs obtained and wages obtained should be readily

available to consumers in an accurate, standardized format. Collection and publication of such objective and obtainable data should be a function of a third party. It

is this objective information which should be the prime driver of recipient choice.

Beyond some basic requirements to insure that providers are legitimate, I would

leave the selection of service providers on the basis of the aforementioned data and

avoid ranking or grading. I believe it will be far better for consumers to have a pool

of providers which is inclusive, rather than exclusive. Ranking or grading, in my

opinion, would be exceedingly complex and very difficult to perform in a reliable,

unbiased manner. Ranking or grading would do little to improve the likelihood of

positive outcomes and only serve to discourage the emergence of new providers, thus

limiting consumer choice.

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Dr. Thorv Hessellund

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1. You mentioned in your testimony that employers and clients often rely on the provider to mediate when problems occur. Under SSA’s ticket proposal, a provision is

made for protection and advocacy services solely for the SSA recipient. While consumers may well need a dispute resolution mechanism, what about providers? In the

ticket proposal, do you see any potential situations arising where the provider may

need a dispute resolution mechanism?

Answer: Yes. For example, there is a dispute over whether or not a bench mark

was (is) achieved which would potentially result in payment to the provider and a

step towards independence for the beneficiary. Suppose the provider is of the opinion that a beneficiary has the capacity to proceed with full participation in a return

to work program or is able to return to work and the beneficiary disagrees with the

opinion. In this case, the dispute is over whether or not payment is due. It is also

about controlling costs in a fixed, benchmark payment environment.
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On another level, it is also about the need for a forum for the parties to express

their opinion regarding return to work issues (capacity to return to work; level of

services provided; cooperation issues on the part of the beneficiary), and setting

precedents.

There also may be situations where an impasse is reached regarding the feasibility of return to work services. Situations may exist where either side may contend

that RTW is feasible and the other side disagrees.

Lastly, for the service provider, I would like to see an option to bring in a second

opinion from an independent vocational evaluator to assist in a determination as to

the feasibility of RTW.

2. You mentioned that your organization’s providers are subject to peer review. Do

you see peer review having any particular role in return-to-work legislation?

Answer: It is NARPPS’ recommendation that all RTW service providers belong to

a professional organization or be accredited through a national commission that has

a peer review mechanism. The purpose is self-governance and preservation of public

trust. There is a national certification process for rehabilitation service providers

(Commission on Rehabilitation Counselor Certification). Additionally, most professional associations—NARPPS included—have a professional code of ethics by which

members pledge to abide. There are varying degrees of state licensing requirements

for providers of RTW services. The national association or an accrediting body provides an avenue for peer review when the code of ethics of an association has been

violated. When questionable ethical behavior on the part of rehabilitation service

providers is identified, it is in the best interest of the general public served by the

profession and the maintenance of trust in the service providers, that the profession

be allowed to review any alleged improprieties and make recommendations as to

their accuracy as well as a remedy, if indicated.

3. You also suggest tying recipient and service provider incentives to benchmark outcomes. Could you provide some examples as to how this might work?

Answer: For example, benchmarks might include:

• Determining the feasibility of return to work. Service provider documents recipient participation in determination, reviews recommendations with recipient and

has recipient sign off on report (agree or disagree) prior to submitting report and

invoice for payment.

• IWRP signed by recipient and provider and submitted to the commission for review and approval. Payment to provider would occur when determination on IWRP

is completed by the commission.

• IWRP successfully completed and signed off as such by recipient and service

provider. Agreement (understanding) by recipient as to time limit and conditions of

remaining benefits.

Questions received from Hon. Jim Bunning, and Subsequent Responses

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from Fred Tenney

A common theme in most of the return-to-work proposals is the need for consumer

choice in obtaining rehabilitation services. You mention the success of case management in SSA’s project network with which you’ve been a participant. Won’t case management happen anyway, as providers work with the recipients to determine vocational goals, ongoing supports, etc? Do you believe a specific case management requirement needs to be addressed in the law?

Yes, I expect case management will be a natural course of events for ‘‘successful’’

vendors. My first blush reaction is to avoid mandating a case management model.

There may well be valid reasons for including it in the legislation but none come

to mind immediately. Hopefully, the consumers will insist on the level of service

they need to become successful. It is certainly without question in my mind that

the ‘‘successful’’ vendors will include that in their arsenal of services.

In your testimony you mention that employer incentives are most often discussed by

people not in the job placement business. Are employer tax incentives critical to a

return-to-work program in your view?

As I noted in my testimony do not feel employer tax incentives are ‘‘critical’’ to

a return to work program. Certainly this would be a tool which would make the job

placement task easier. However, if you review TJTC (targeted jobs tax credits) you

will find that it was rare that small business took advantage of the program and
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the large businesses that did take advantage frankly ‘‘beat the system’’ by surveying

‘‘en masse’’ the ‘‘new hires’ after the fact for TJTC eligibility. There was little if any

attention given to TJTC by human resource departments prior to hire. It’s the party

line to suggest that business and industry needs a financial incentive to ‘‘hire the

handicapped,’’ frankly that is not the case at all. Dependable manpower is at such

a demand level that job placement is not the critical issue.

Should referral of recipients to providers be mandatory?

I have wrestled with this question for some time. If the question is in the literal

sense them yes I do think mandatory referral is essential. To insure that all participants are given the opportunity to access the program mandatory referral is essential. If on the other hand, you’re referring to mandatory ‘‘participation’’ I’m not so

sure the time is right for that. Primarily because I believe the voluntary participation of those who volunteer will be overwhelming. If the program is as successful

as I believe it will be then 5 to10 years down the road we might want to address

those who are reluctant to pursue work. We have bitten off a big bite here with

those folks that ‘‘want’’ to return to work.

Questions received from Hon. Jim Bunning, and Subsequent Responses

from Stephen L. Start

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Question 1: Some witnesses pointed out that milestone payments to providers would

be costly and complicated to administer. What are your views?

In the last 27 years I have administered in excess of 500 government contracts

to provide social services and employment services to a wide range of government

entities. The milestone payment system recommended by the Return-To-Work

Group would be one of the simplest contracts to administer when compared to the

array of other options available.

We recommended three milestone payments: (1) at the completion of a signed

plan, (2) after 30 days or 60 days of employment, and (3) after one year of employment or at the point of time the individual comes off the rolls. Each one of these

payment points is easily verifiable and could be audited by certified public accounting firms available in each community across the country. In our proposal we recommended that every provider have such an audit on an annual basis. We anticipate the total cost of administration for the return-to-work program with this payment methodology would be approximately 4 to 5 percent, paid to a contracted manager. Administrative rates for government programs typically run from a low of 10

percent to as high as 30 and 40 percent. On a comparative basis, the milestone

method we have recommended is very inexpensive.

Question 2: Have you compared the outcomes of your proposal to that of the Administration’s ticket proposal. If so, what are the findings?

The Administration’s proposal anticipates an increase of 3,000 to 6,000 per year

in the number of individuals coming on the SSDI rolls as a result of implementation

of their program. They also predict an additional 1,000 to 3,000 persons per year

coming off the SSI rolls. These numbers are substantially below those anticipated

by the proposal developed by the Return-To-Work Group. In developing our model

and computer simulation to predict outcomes, the Return-To-Work Group utilized

actual research outcomes obtained by Project Network programs conducted by Social

Security and Research and Demonstration Projects conducted with private firms by

Social Security. These research projects have been conducted over the past seven

years and did not enjoy the benefit of Medicaid medical coverage extension or any

of the incentives that are currently being contemplated by the committee. Assuming

then that there is no increase in the success rates obtained over that in the research

projects, our model indicates that over a seven-year implementation period, 134,552

people should permanently move off the rolls. Our projections included a seven-year

phased in ramp-up of providers from across the country with full participation in

year five of implementation. We also assumed that approximately 45,000 CDRs per

year would be notified and encouraged to participate in the project. Based on our

research results, the CDR population has a significantly higher likelihood of enrolling in services and returning to work than individuals who are simply applying for

services or are on the general caseload. Several factors seem to contribute to the

possible differences in projections we have developed as compared to those in the

Administration’s ticket proposal.
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1. The Administration’s proposal apparently has relied upon results obtained by

the public VR agency in returning individuals to work. Our results are based upon

actual research conducted with private firms who have produced significantly higher

results than those obtained in the public sector.

2. The Administration’s proposal does not implement a milestone program, and

therefore, has a very conservative number of providers participating actively in the

program. The milestone proposal presented by the Return-To-Work Group could easily attract several hundred networks to participate and several thousand individual

providers to participate in those networks. After all rehabilitation costs and returnto-work costs are paid, our model predicts a 12.3 billion dollar federal savings to

be realized as a result of the outcomes obtained during the seven-year implementation. The Administration’s ticket proposal would, in all probability, only realize a

savings in the one to two billion dollar range. In other words, there would be a 10

billion dollar opportunity cost loss as a result of implementing the ticket proposal

as compared to the milestone proposal recommended by the Return-To-Work Group.

Computer modeling indicates that the addition of work and employer incentives

could conservatively result in 264,658 people going off the rolls during the same

seven-year implementation period, resulting in a savings of 23.9 billion federal dollars.

Question 3: You mentioned in your testimony that 75 percent of the net job activity

in the United States comes from small- and medium-sized employers. How successful

are providers in placing consumers with small- and medium-sized companies?

Very successful. The Projects With Industry program, which is a national placement effort of private providers funded under the Department of Education, is the

best source of information regarding employers of people with disabilities. The experience of Projects With Industry on a national basis directly parallels the experience

that S.L. Start & Associates, Inc., has had in the northwestern United States. Our

experience indicates that over half of the individuals who are employed through our

project and projects nationally are employed in small- and medium-sized businesses.

The actual percentage may vary depending upon the economic composition of a specific local community and the affiliation of specific projects. There are projects, for

example, that are closely allied with large manufacturers in the aerospace industry

who place exclusively with large employers. There are other projects scattered

across the country that focus virtually all of their activities on small- and mediumsized employers.

Question 4: Is it essential to have all various employee and employer incentives

worked out before we initiate a national program?

No. It is absolutely critical, however, that some form of medical extension be implemented as part of any truly effective employment approach. In order of magnitude, the next most important barrier to deal with is the earning income cliff experienced, especially by those on the SSDI rolls.

There are a variety of approaches that have been suggested to deal with this

issue, but perhaps the tax credit is the most viable way of fully offsetting negative

incentive of returning to work. It is difficult to predict, however, the economic impact and full cost that this approach or others proposed may have on projected savings to the trust fund.

Providers who have participated in previous research projects have been able to

return significantly higher numbers of individuals to employment than the current

state-of-the-art program without the addition of these incentives. We believe that

the addition of incentives will significantly improve the overall performance of the

program, but that a program could be initiated which tests different approaches to

determine which is most effective.

Question 5: You mentioned that employers and clients often rely upon the provider

to mediate when problems occur. Under SSA’s ticket proposal, a provision is made

for protection and advocacy services solely for the SSA recipient. While consumers

may well need a dispute resolution mechanism, what about providers? In the ticket

proposal, do you see any potential situation arising where a provider may need a dispute resolution mechanism?

There are actually several ways in which disputes could arise where the provider

would need a dispute resolution mechanism available to them. For example, if a provider spends a significant amount of private funds to provide education and training

to an individual, and then the individual repeatedly turns down jobs that are well

within their skill base and ability level. The provider would have expensed their

funding in good faith, but the beneficiary would be preventing the provider (through

the lack of their cooperation) from receiving the reimbursement they are due.
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Another situation may be where a provider again expends dollars and professional

service hours to return an individual to work. At the point in time when the individual is ready to obtain employment or shortly after they have obtained employment,

the individual may choose to switch providers or switch the payment provision to

a friend or relative. Without a dispute resolution method, neither the provider nor

SSA would have a systematic way of dealing with this situation. The current rehabilitation act already requires a beneficiary to participate actively in their rehabilitation program to maintain benefits. If an individual has enjoyed the benefits of

services provided by a private provider and then simply refuses to pursue employment, under current law, the individual could be denied future benefits. Some form

of a mediation process must be present to determine where or not the individual

is actively participating and whether or not a recommendation should be forwarded

to SSA to deny further benefits to an individual who is not actively participating

in rehab or seeking employment when they appropriately should do so.

The proposal presented by the Return-To-Work Group for consideration by Chairman Bunning contemplates that, at points in time, providers may, in fact, loan

money to beneficiaries to participate in educational and rehabilitation efforts; or

that the individual may directly contribute their personal finances to the realization

of a rehabilitation return-to-work plan. Conflict could arise when a provider, in good

faith, goes forward and makes their financial contribution to the individual’s plan,

but the beneficiary then reneges or withholds on their share of participation. I am

sure there are other areas that could provide conflict between the provider and the

beneficiary. These three seem to portray the primary areas of problem that might

be anticipated from an outcome-based payment-type model where providers are expected to expense time and personal resources prior to receiving any form of compensation for their efforts. If some form of mediation is not available to providers,

providers will become highly selective in the type of individuals they choose to serve,

resulting in a significant reduction in the number of individuals who would be returned to work.

The use of a milestone payment system would decrease a provider’s financial exposure and, therefore, reduce the probability of conflict between consumer and provider. If this program is to, in fact, be a partnership, then both partners must have

rights, responsibilities, and access to a method to address grievances, should they

arise.

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Chairman BUNNING. Mr. Halliday, I would like to start with your

testimony. Right now the State vocational rehabilitation agencies

are the only source of rehabilitation services for SSA recipients. To

what degree do you provide these services yourself, and to what degree do you contract out to other service providers?

Mr. HALLIDAY. Well, I would like to clarify one part of that question. We are not the only source. One of the largest myths in reading all the materials is that somehow there has developed this

myth that the recipient can only come to the public agency.

The only thing the public agencies offer is the opportunity to

educate the recipient as to what is available, not only through us,

but through the SSA programs, and it is the consumer who chooses.

The consumer has all the choices they want. They can walk into

the public or private program today. They can go to job service,

they can go to DD, they can go to any one of these private providers, or the thousands of others.

So I do not know where that mythology came from, but I find it

quite interesting, and would be interested to know what the source

is.

Second, I would answer the question this way——

Chairman BUNNING. Well, they are the only agency that the Social Security Administration refers to.

Mr. HALLIDAY. That is correct. They are not the only people Social Security recipients are educated about.

Chairman BUNNING. No. But they have to go through you first.

Mr. HALLIDAY. No, they do not.

Chairman BUNNING. Well, then is there some breech in the law

somehow.

Mr. HALLIDAY. No, no. It is the consumer’s choice whether or not

he or she responds to us. If the consumer calls us, and says, Gee,

is there anybody else in the community, I say sure, who do you

want to know about.

Chairman BUNNING. But, see, they have to go through you. They

cannot go directly to the third party.

Mr. HALLIDAY. Absolutely they can. They can ignore our outreach

to them, and tomorrow morning pick up the human service yellow

pages, and walk right down the street. Nothing preventing the consumer from doing any of that at all.

Chairman BUNNING. Well, we will check with the Social Security

Administration about that.

Mrs. KENNELLY. Could I just ask a question? Is it possible there

is a difference on reimbursement?

Mr. HALLIDAY. Let me answer that——

Mrs. KENNELLY. You are the only one that can get reimbursed.

Chairman BUNNING. That is correct.

Mr. HALLIDAY. That is correct.

Chairman BUNNING. OK. Then they have to go through you.

Mr. HALLIDAY. Wait 1 minute, that is a critical issue, though, because what all the choice discussion is really about—and I am all

in favor of choice; I think we are implementing that fine—is the

issue of resources.
196

If we do not put resources, what everyone here previously has

said, what milestones is about is putting more resources into the

system.

But in the era of choice, the consumer is free to choose, and

many do many other publicly funded programs for rehabilitation.

And I think that is an interesting thing we should look at in terms

of what other public resources are being used by recipients. Many

are accessing many other public programs.

But as to the other question, 40 to 50 percent of the dollars in

public vocational rehabilitation are spent outside the public agency.

In Connecticut, it runs 40 to 50 percent. And where we spent that

money is, over 50 percent of that money is spent with community

rehabilitation program providers.

So that what the costs we are reimbursed for, very little of that

cost has to do with services provided in the agency. It is reimbursement of the costs of the services we purchase. If I do a van modification for a consumer, for $15,000, that is the

cost. That $15,000 was not spent in my agency. It was spent with

a private provider.

If I sent persons to a private provider as part of that, for job

placement and situational assessment, and that resulting placement, that cost averages around $2,600 in Connecticut, is——

Chairman BUNNING. I am not going to let you talk all of my 5

minutes. I want to ask you another question.

Mr. HALLIDAY. Sure.

Chairman BUNNING. In your experience, are there certain areas

of the country lacking facilities to provide services? If so, where are

they, and how do you provide services to the other areas?

Mr. HALLIDAY. I can talk about the Northeast. I cannot talk

about other areas of the country.

Chairman BUNNING. Talk about the Northeast, then.

Mr. HALLIDAY. In the Northeast, I have not seen that be raised

an issue. What I have seen be raised as an issue is that waiting

lists occur in public agencies and private agencies because the

funds are not available. The connection is made with the consumer,

but we do not have the money to purchase.

Chairman BUNNING. OK. Let me ask the other four panelists, in

your areas of the country, are there other areas that have that

problem?

Mr. START. I can talk to the Northwestern United States and I

cannot think of a town, for example, in Washington or even northern Idaho, which is about as remote as you get, that does not have

some kind of a provider, community-based, usually nonprofit, but

also private there.

And some outreach, frankly, from a State agency, typically.

Mr. HESSELLUND. In terms of the private sector from NARPPS

I agree. The private sector, there is rural rehabilitation, and then

there is metropolitan rehabilitation. But we cover all the sections.

Chairman BUNNING. How about Kentucky?

Ms. GENNARO. I know that Mr. Christman has said that there

are providers throughout the area. And as you said I am from the

American Rehabilitation Association. We have members from all

over the country.

Chairman BUNNING. Mr. Tenney.
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Mr. TENNEY. Yes, in the Southwest, as well as the Pacific Basin

where I have had some experience, there is a significant network

of providers there that are available to provide these services, if

they have the resources to provide the services. That is the whole

key.

Chairman BUNNING. Barb, go ahead.

Mrs. KENNELLY. Thank you, Mr. Chairman.

Mr. Halliday, I believe you expressed concern that providing the

tickets for the SSDI recipients to use in private vocational training

could create a cost shift from private insurance to public vocational

rehabilitation programs.

Could you expand further? And let me add another question onto

that. If we prevented workers’ compensation from requiring policyholders to use their Social Security tickets on the Workers’ Compensation Vocational Rehabilitation Program, do you think that we

might moderate the threat of a cost shift?

Mr. HALLIDAY. I need some clarification on the second question.

Mrs. KENNELLY. From the private to the public.

Mr. HALLIDAY. Yes. What is presently, as I understand it, existing, is if you buy private disability insurance, often the great majority will require you to apply for SSDI, if you reach a certain

level, and once eligible the income you receive from SSDI is offset

to what the private pays you.

So that is a savings to the private insurance company. Also,

many of the private insurance companies do very aggressive rehabilitation. And as many of the private sector programs here indicate they provide that service.

That is accounted for and paid for in the premiums. We need to

be careful that we do not set up a situation where what was already going to be provided at private cost as a result of what you

and I pay as premiums for that insurance does not in any kind of

ticket proposal end up with the public paying on top of that again.

Because what we would end up with, obviously, is a situation

where we are doubling the resource without more people being

served, as well as the money not going back into further service.

It goes into a profit margin which, I am very in favor of profit margins, but I think the insurance system probably already has that

well taken care of in their premium structure, I would hope.

As far as the workers’ compensation, I think again we need to

look carefully at what the relationship is between being on SSDI

and workers’ compensation, and be cautious again that if rehabilitation services are called for and covered for under the Workers’

Compensation Program, that those are prioritized, and we are not

again replacing those funds with Social Security funds.

I think those are a couple of areas of risk we run here.

Mrs. KENNELLY. Ms. Gennaro, for Mr. Christman. In the testimony that you read for Mr. Christman, he expressed concern about

what would happen when a person needs services for more than

one provider.

Now, when we had the Social Security Administrator here, he

said that he believes providers of different type of services will

enter into arrangements with one another. And maybe network

and offer a range of services to the ticketholder.
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Now, this whole concept of tickets is still controversial. Do you

think they could build up this network, or they could work with

each other with the proposal?

Ms. GENNARO. Well, I know in the testimony, his concern was

simply how would the payment be worked out. And I believe that

something certainly probably could be worked out, but in terms of

the complexity, for instance, if a consumer starts with one provider,

they provide a certain amount of services, and then they switch to

another provider, how do you divvy up the payment. Things like

that will be difficult.

Mrs. KENNELLY. When I was listening to the service talking, I

think we have more work to do on that, in that whole area. And

once again we are going to have to use the expertise of people like

yourself.

Mr. Start, would you like to comment on that?

Mr. START. Yes. In the Return-to-Work Group’s recommendations

to deal with that issue, we recommended that it be required that

a provider certify that they can provide a network of services

across a predefined geographic area, like half of a State, to make

sure the people in rural areas would get served, and to make sure

that case management was in place to provide that seamlessness

of services, and that the full array of services was there.

So that was a provision that we recommended to deal with that

specific issue.

In terms of, by the way, the guidelines, like what would happen

if somebody changed providers after they had had a job for 2 years,

one of the reasons that we recommended the development of a commission was we considered this to be work in progress, and it will

continue to be. And that we need to look at those issues in a combined way for a couple, 3, 5 years, to really refine all of the guidelines.

Mrs. KENNELLY. CBO says that they do not think the Social Security plan will bring that many people back to work, that the

same ones that would have gone back go back. Do you have any

reason why you think CBO is more or less negative on the Social

Security plan?

Mr. START. I really do not. I mean, my major concern with the

Ticket Proposal is just that I do not believe, nor any of the providers that I have talked with, that it will attract enough providers

that will aggressively pursue people, and especially take some risk.

They are only going to place the for sure people, like the current

program. People that are already going to be placed are the only

ones you work with.

Mrs. KENNELLY. Thank you.

Chairman BUNNING. Mr. Hayworth.

Mr. HAYWORTH. Thank you, Mr. Chairman.

At the risk of sounding incredibly parochial, I am very pleased

that on both panels today we have representatives from Arizona.

Chairman BUNNING. That was prearranged to take care of you.

[Laughter.]

Mr. HAYWORTH. Selected especially for us. Well, Mr. Tenney, I

am glad you are here. I am sorry my colleague from Georgia, Mr.

Collins, is not. And I will spare you my efforts to impersonate his

distinctive accent.
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Let us talk some about incentives, and talk about your testimony

where you say that demand exceeds the supply. I am curious about

incentives, though, in small business. Do we see a discrepancy between corporate America and many small businesses when it comes

to hiring in this regard?

Mr. TENNEY. Yes. There is a huge difference, as our experience

has shown. The large corporations, at least in Arizona, the McDonalds and McDonnell-Douglas, and some of those other larger corporations, they get involved in the employer incentives pretty much

after the fact.

They hire these employees, and then they will go out and hire

a specialist to mine that field, that garden of incentives, to try to

see what can we now reap, what kind of a benefit can we now reap

as a result of hiring them, which is certainly not the intent of the

incentives.

With the small businesses, which is where we place almost all

of our people—most of our people go to work in the small businesses—they just do not really want to be bothered with what they

call the government redtape, whether or not it is valid or invalid.

That is not a judgment that we should subject them to.

They do not want to be involved with redtape. They just plain

want people to go to work, and they sometimes find that it is not

only good work, but it is a civic responsibility.

Mr. HAYWORTH. So, really, from your perspective, are you telling

us that there is no real need to try and provide incentives to small

business, based on your experience, or what should we provide?

Mr. TENNEY. Well, it is almost heresy for me to sit in this kind

of meeting and say that, but what the heck I will be out of here

probably soon anyway, so—yes, I would say, I think it certainly

would help us. But I do not think that it is, from my own personal

experience, I have not found that it is that important.

Mr. HAYWORTH. But the key is, if incentives are provided, that

they should be as redtape free as possible.

Mr. TENNEY. As redtape free as possible, but incentives probably

would be better used going to the employees as opposed to the employers. They seem to be the people that I think would most welcome it.

Mr. HAYWORTH. Fred, thank you for your candor and your testimony, and thank you, Mr. Chairman.

Chairman BUNNING. If the panel would sit back and relax, we

have one vote, and we will go over and vote. The Subcommittee will

recess until we return to finish our testimony. Thank you.

[Recess.]

Chairman BUNNING. The Subcommittee will come to order. If the

panel would take their seats, we will try to complete this as expeditiously as possible, without being too quick.

First of all, I want to thank the panel for staying, and I would

like to ask Dr. Hessellund some questions. You recommended providing SSA recipients with an informed choice of prequalified private and public rehabilitation professionals.

What criteria should be used, and how should rehabilitation professionals prequalify for a return to work program?

Mr. HESSELLUND. There are certain standards in the industry at

this point, in terms of certification, certified rehabilitation coun-
200

selor, certified disability management specialist, and I will just give

you my own experience, that I have just—one of my other jobs is

director of vocational rehabilitation programs for a national case

management firm that specializes in catastrophic injuries.

The standards we set were certified rehabilitation counselor with

5 years experience in the field. Now, those are the standards that

we set for providing and having experience with catastrophic injuries.

So I would say that the standards are, there is a general standard you could set, but also that you would be prequalified with particular experience with a particular field, or a particular type of

disability.

So I would say there are two standards. One, and this particular

experience was with catastrophic injuries. So I would say it is both

a level of education, of experience and certification, combined with

experience with a particular type of population or disability.

And that is with the person, the rehabilitation counselor who is

developing the vocational plan. There may be somebody else that

is part of that network, as Mr. Start mentioned earlier, that would

be providing the job placement services.

But that is where I would start and what I would recommend.

Chairman BUNNING. Would anybody on the panel like to make

comment?

Mr. Start.

Mr. START. The Return-to-Work Group, in looking at this issue

recommended that the individual that functions as a case manager

within a network be a certified individual or an individual with the

kind of prequalified experience that he just spoke to, but that we

not require all of the individuals that work with folks have fancy

certifications, because we would overburden it, and it would limit

choice.

A lot of people would like to go with folks that may not be certified or have degrees to provide placement services followup and

further case management.

Chairman BUNNING. Anyone else?

Ms. GENNARO. For community rehabilitation programs, there are

certifications out there. Right now the name escapes me. But I also

know that local offices of MRDD services and mental health services also provide certifications, and programs are also known to the

State VR agency.

So there are systems in place already to assure quality.

Chairman BUNNING. Anyone else?

Mr. Tenney.

Mr. TENNEY. Yes. I would suggest that we really would not want

to require certification on all level of provision of services. That is

a good way to exclude a lot of people from the process, and to include those people who are already in possession.

So I think that in helping to develop the RTW proposal, we felt

that if, indeed, we could do case management certification and then

have the experience factor weigh heavily on the other disciplines,

then we would do just fine.

Inasmuch as it is a prescriptive program, and inasmuch as it is

a performance-based program, you still are not paying for anything

you are not getting.
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Chairman BUNNING. Mr. Start, I would like to ask you a couple

of questions. You mentioned that in order for private providers to

participate in a return to work program they would need substantial amounts of capital.

Several witnesses said yesterday that providers, even small providers, do not need up front capital to serve SSA recipients since

an open market system would create innovative funding opportunities.

What are your views on this issue, and how do we insure that

providers won’t just produce milestones and not trust fund savings?

Mr. START. Well, that is quite a question. I do not know where

the witnesses yesterday got their information that providers could

come up with money to fund, for example, the Berkowitz model, the

model that is based strictly off of savings.

I have helped start six businesses myself, and I can tell you for

sure that you cannot take that proposal to the bank. There is no

way. There is no experience base whatsoever. There is no industry

history, knowledge.

You cannot even take it to a venture capitalist. I mean, they expect literally 1,000 percent return over a 5-year period, is what the

venture capital guys want.

So I do not know where that comes from. What I do know is that

in meeting with hundreds of providers across the country, presenting our proposal, in a variety of States, that many of them say they

could participate with a small level of milestone payment like we

have prescribed toward the front end.

In terms of making sure that you do not end up just buying milestones, it is critical that those milestones be priced, frankly, below

cost, and the milestones that we have recommended are below cost.

People that try to just crank out milestones with that kind of a

performance-based system will go out of business. And keep in

mind that the primary thing here is an outcome-based model,

where the outcomes are reported to the customers.

Customers simply are not going to go to providers that do not

produce results. So somebody that tries to get by with just doing

evaluations, set up an evaluation mill or something like that. They

are going to go out of business in no time at all.

Chairman BUNNING. Did I understand your testimony, or was it

someone else, that it generally costs about $11,000 to rehabilitate

somebody and move them from the rolls, in the present situation?

Your milestone suggestion would be less costly?

Mr. START. Yes.

Chairman BUNNING. Give me that cost.

Mr. START. OK. The numbers I used, the historical numbers that

we had from Social Security research was that on average the

State vocational rehabilitation system is reimbursed about $10,000

to $12,000 for the people coming off of SGA.

That is not necessarily cost at placement. That is 1 year later,

and just for those that are successful. We used $2,700 total cost for

ours.

We have also indexed those numbers, though, against other programs such as the Job Training Partnership Act. I managed about

30 or 40 of those. Mr. Tenney has managed them for 20 years.
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And historical placement rates are, that is just getting somebody

a job. That is not keeping a job for 1 year, like getting people off

the rolls is, costs there run from a low now of about $3,000 to about

$7,500, or so.

It depends on the kind of training, the twist that they want to

put on it, how much education. But by any measure you used,

Projects with Industry has 20 years’ worth of data, in terms of

keeping people off the roll that long.

So I do not see how anybody could practically make any money

off of those kinds of milestones.

Chairman BUNNING. I want to tell you again that I will submit

questions to you also, in writing, in case I did not get to them

today.

The last question I want to ask the whole panel is that we have

heard much testimony about medical coverage, and what a barrier

that is to getting people to work, to return to work, if they are on

some type of disability.

And it was suggested, 5-year Medicare coverage for those that

are on disability right now. I would like to get all of your opinions.

What is necessary, or what do you think is necessary, for that disincentive to be overcome, minimal.

In other words, if we write a bill, a new bill, what would be your

suggestion to put in as a minimal coverage so that this would not

be a barrier for people to go back to work, and they would be free

to get a job, and not fearful of losing a job, fearful of losing their

medical coverage.

So what reasonably can we expect, or what should we expect?

For anybody on the panel.

Mr. HALLIDAY. I think there are two essential criteria. One is the

availability, obviously, and the second is that you are paying for

the kind of services that people who go to work need. They are prescription medication for the physical disability, and this is a particular problem in the Medicare system.

Look at what we cover under Medicaid, and figure out could we

cover—because when we have people covered under Medicaid, we

do not present this problem to a large extent. It’s people covered

under——

Chairman BUNNING. In other words, Medicaid, the system there

is a better system than Medicare because of the——

Mr. HALLIDAY. Oh, yes. What it covered in terms of the nature—

particularly outpatient and community service. That is where——

Chairman BUNNING. What type of—how many years? What are

we looking at.

Mr. HALLIDAY. Well, the other I would look at is a combination

of trying—and some States I know have tried this—of allowing people to go to work and continued Medicaid with a buy-in way that

the private insurance covers what the private insurance will cover,

and the Medicaid is only covering what the private insurance will

not cover.

I mean, to give you the classic example, most private insurers

today will set a limit on durable medical goods. If you use an electric wheel chair, it will cost $10,000 to $15,000.
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If $1,500 is the limit on that, there is no way, no matter what

coverage you have, that you are going to pay the difference of thousands and thousand of dollars.

Chairman BUNNING. Well, but would not people generally have

durable equipment before they go to work?

Mr. HALLIDAY. Yes. But you are going to have to replace it.

Chairman BUNNING. Oh, eventually you will.

Mr. HALLIDAY. Yes.

Chairman BUNNING. And that availability ought to be there.

Mr. HALLIDAY. Right. That is what I am talking about.

Chairman BUNNING. Ms. Gennaro.

Ms. GENNARO. I would say that what you need to consider is

when the person can actually afford to buy in. So in terms of setting a 1-year limit on that, I would be afraid that that would not

be sufficient, because as you have heard from the earlier panel, especially, some people will work to their potential and still not be

able to afford to buy into Medicaid or Medicare.

Chairman BUNNING. We could set a limit or a ceiling or a base

for earnings, and then anything that gets above that would be partially responsible.

Ms. GENNARO. Yes. I think it makes sense to look to see when

the person can afford to buy their own coverage or buy into Medicaid or Medicare.

And also as Mr. Halliday said, consider what Medicare does not

cover, because many people have to try and figure out ways to get

Medicaid coverage, because the Medicare coverage is simply not

sufficient with, for instance, personal assistance care, and, as he

mentioned, prescription drugs.

So you have to make sure that the needs that they have to be

employed are met.

Chairman BUNNING. We do not want to have a disincentive, if we

are going to write a new bill.

Ms. GENNARO. Yes.

Mr. HESSELLUND. When you are sitting on a panel like this, you

want to give an answer, but I will say that that is more of a consumer issue. All I know is that working with the folks and trying

to get them back to work that are on SSDI, this is one of the major

blocks, one of the major barriers.

Chairman BUNNING. So we are going to have to come up with a

solution whether we like it or not.

Mr. TENNEY. In Project Network, which is referenced often, we

talked about 1,300 people. Interestingly enough, the very first

question that they asked was not will I lose my check if I participate in this program. It is will I lose my medical insurance.

So it is essential from that standpoint, and what I would suggest

is that you have sort of a three—you could have a three tier system. Either provide the insurance for them, or subsidize the insurance, or allow them to purchase the insurance, depending on

maybe the level of income.

But at least have it be out there to be able to be purchased. Because if you put a time limit on it, what we have going on now out

there is an increasing number of contract employers.

And one of the big reasons for going with a contract employer if

you are in business is you do not have to provide insurance.
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So often they do not provide any insurance to these people. And

they contract with these disabled people to go to work for them, but

they do not have to pay them any insurance. Makes for a wonderful system for them.

That is their main selling point that that they have, in contracting. So either provide the insurance, or subsidize the insurance

through a similar approach to what you mentioned, either ramping

up to it, but at least, at the very minimum, allow them to purchase

reasonable medical insurance.

Chairman BUNNING. Mr. Start.

Mr. START. Yes. I concur with Mr. Tenney’s comments on that.

And those are in line with the Return-to-Work Group’s.

A couple of other thoughts on it. If employer insurance is available, people should be encouraged, or not reimbursed, I guess, or

allowed to extend their benefit coverage, if it is already there. So

there might be some test to that effect.

What we found in our Projects with Industry is that 50 percent

of the people that we place do get health insurance. Now, you need

to make sure it was adequate health insurance. But in many cases,

the employer insurance is more adequate in terms of drugs and

some other things than the Medicaid coverage.

And another thing, I think, that is absolutely critical is education. There already is a provision in the law for extension. But

the regulations are complicated, and people do not readily explain

that. And I think the first panelist mentioned that earlier.

With a private sector, outcome-based model like we are talking

about, if you do not understand the medical benefit extension coverage, and you cannot sell it to prospective customers, they are not

going to come to you.

And so I think this outcome-driven system that we are talking

about here for the providers is going to force providers to get educated about how those benefits work, how to make them available,

how to build them into people’s plans, or they are going to walk

across the street.

But that education component has been a problem that needs to

be solved as well.

Chairman BUNNING. Thank you. I want to thank the panel for

their input today. We really appreciate your traveling here and giving us the data that we need to eventually write a bill.

With that, the Subcommittee is adjourned.

[Whereupon, at 4:02 p.m. the hearing was adjourned.]

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