U.S. GOVERNMENT PRINTING OFFICE

68–103 DTP WASHINGTON : 2001

CHALLENGES FACING SOCIAL SECURITY

DISABILITY PROGRAMS IN THE 21ST CENTURY

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JULY 13, 2000

Serial 106–94

Printed for the use of the Committee on Ways and Means

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

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

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

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

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

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

JIM MCCRERY, Louisiana

ROBERT T. MATSUI, California

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

LLOYD DOGGETT, Texas

BENJAMIN L. CARDIN, Maryland

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

Advisory of July 6, 2000, announcing the hearing ................................................ 2

WITNESSES

U.S. General Accounting Office, Barbara D. Bovbjerg, Associate Director,

Education, Workforce, and Income Security Issues, Health, Education and

Human Services Division; accompanied by Carol Petersen, Assistant Director, Education, Workforce, and Income Security Issues, Health, Education,

and Human Services Division ............................................................................. 6

U.S. Department of Health and Human Services, Donald Lollar, Ed.D., Chief,

Disability and Health Branch, National Center for Environmental Health,

Centers for Disease Control and Prevention ..................................................... 37

Berkowitz, Edward D., George Washington University ....................................... 32

Burkhauser, Richard V., Cornell University ......................................................... 44

Consortium for Citizens with Disabilities, and NISH, Tony Young .................... 61

OMG Center for Collaborative Learning, Richard C. Baron ................................ 40

UnumProvident Corporation, Ralph Mohney ........................................................ 55

SUBMISSIONS FOR THE RECORD

Social Security Administration, Kenneth Nibali, Assistant Commissioner for

Disability, statement ............................................................................................ 76

American Occupational Therapy Association, Inc., Bethesda, MD, statement .. 81

National Association of Disability Examiners, Lansing, MI, Terri Spurgeon,

statement and attachments ................................................................................. 83

(1)

CHALLENGES FACING SOCIAL SECURITY DISABILITY PROGRAMS IN THE 21ST CENTURY

THURSDAY, JULY 13, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON SOCIAL SECURITY,

Washington, DC.

The Subcommittee met, pursuant to call, at 10:07 a.m., in room

B–318, Rayburn House Office Building, Hon. E. Clay Shaw (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225–9263

July 6, 2000

No. SS–20

Shaw Announces Hearing on Challenges Facing

Social Security Disability Programs in the 21st

Century

Congressman E. Clay Shaw, Jr., (R–FL), Chairman, Subcommittee on Social Security of the Committee on Ways and Means, today announced that the Subcommittee

will hold a hearing to examine the challenges facing the Social Security Disability

Insurance (SSDI) and Supplemental Security Income (SSI) programs in the 21st

century. The hearing will take place on Thursday, July 13, 2000, in room B–

318 Rayburn House Office Building, beginning at 10:00 a.m.

Oral testimony at this hearing will be from invited witnesses only. Witnesses will

include representatives of the U.S. General Accounting Office, disability experts,

and advocates for people with disabilities. 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:

The SSDI and SSI programs provide cash benefits to individuals who are unable

to work because of severe disabilities. In 1999, nearly five million disabled workers

and their families received more than $50 billion from the SSDI program, and four

million low-income disabled adults received $24 billion from SSI. Most of these

beneficiaries also received health insurance through Medicare and Medicaid because

they qualified for this cash assistance.

The Social Security Act first addressed the issue of disability in 1952 by excluding

income earned while disabled from the computation of retirement benefits. The 1954

amendments provided cash benefits, but only for disabled individuals who were at

least age 50. The lower age limit was removed in 1960. The definition of disability

has remained essentially unchanged since the beginning of the SSDI program, and

the same definition was adopted for the SSI program when it began providing benefits for low-income people with disabilities in 1974.

In recent years, numerous technological and medical advances, coupled with a

growing economy, have created the potential for more people with disabilities to

achieve independence. In addition, the ‘‘Americans with Disabilities Act of 1990’’

(P.L. 101–336), has helped promote the full participation of people with disabilities

in society and has fostered the expectation that people with disabilities can work

and have the right to work. The ‘‘Ticket to Work and Work Incentives Improvement

Act of 1999’’ (P.L. 106–170), provided new opportunities for adults receiving public

benefits to pursue work without fear of losing all benefits.

The safety net provided by the Social Security disability program is critically important for individuals with disabilities and their families. Maintaining the safety

net will be particularly challenging in coming decades, when, like Social Security,

the disability program faces financial challenge. According to the 2000 Annual Report of the Board of Trustees, beginning in 2007, the Disability Insurance Trust

3

Fund is projected to run cash deficits and by 2023, the trust fund assets will be exhausted.

In announcing the hearing, Chairman Shaw stated: ‘‘Social Security’s disability

programs have provided vital assistance for people with disabilities for nearly 50

years. Fortunately, today individuals with disabilities have opportunities and support never imagined in years past. As we enter the 21st century, we need to ensure

Social Security disability programs continue to meet the changing needs of people

with disabilities.’’

FOCUS OF THE HEARING:

The hearing will focus on the characteristics of people with severe disabilities and

will identify the supports needed to achieve independence. The hearing will also examine how disability systems in other countries as well as in the private sector have

adapted to meet the changing needs of people with disabilities.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

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

record of the hearing should submit six (6) single-spaced copies of their statement,

along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format,

with their name, address, and hearing date noted on a label, by the close of business,

Thursday, July 27 , 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and

Means, U.S. House of Representatives, 1102 Longworth House Office Building,

Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Social Security

office, room B–316 Rayburn House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

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

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

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

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

files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM

compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may

not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee

will rely on electronic submissions for printing the official hearing record.

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

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

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

by the Committee.

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

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

or organizations on whose behalf the witness appears.

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

telephone and fax numbers where the witness or the designated representative may be reached.

This supplemental sheet will not be included in the printed record.

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

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

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

other forms.

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

Wide Web at ‘http://waysandmeans.house.gov’.

4

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 Comcial Security disability programs in the 21st century. Like Social

mittee as noted above.

Chairman SHAW. Today we will explore the challenges facing Sof Security retirement and survivor programs, the disability program

has been remarkably successful in providing financial and health

care support of those unable to work because of their disabilities.

Yet, this vital program faces more immediate financial challenge

than that faced by the retirement program.

Beginning in just 7 years, disability program outlays will exceed

income. By the year 2023 the trust fund will no longer be able to

pay full benefits. Securing the financial future of this essential

safety net is paramount as we begin the 21st century. Much has

changed over the nearly 50 years of history of this program. This

month we are celebrating our 10th anniversary of the Americans

with Disabilities Act.

This landmark legislation has helped to change the expectations

for work for many people with disabilities as well as expand the

consciousness of Americans to view people with disabilities in

terms of their abilities, not their disabilities. Medical and technological advances have made it possible for many individuals to

achieve independence even though it is independence that they

never thought was possible.

The Ticket to Work and Work Incentive Improvement Act of

1999 developed in large part by this Subcommittee and signed into

law last December removed barriers preventing individuals from

becoming self-sufficient by providing extended health care coverage

and providing more choice and opportunities to obtain needed rehabilitation and support services. These are important achievements

but we must do more. Today we will begin our work by learning

more about the characteristics of people with severe disabilities

today and the support that they need to achieve independence.

We also examine how disability systems in other countries as

well as in the private sector have adapted to meet the changing

needs of people with disabilities. I look forward to hearing the advice and suggestions of the experts that we have assembled in this

room today. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. As many members in

this room are aware, one of our successes in this Congress was enacting the Ticket to Work and Work Incentives Improvement bill

last year. The Ticket to Work Act when fully implemented will help

disabled Social Security beneficiaries receive the rehabilitation

services they need to return to the labor force. The Ticket to Work

Act also provides disabled beneficiaries who return to work with

extended health care coverage to increase the likelihood that they

will be able to remain in the work force.

The Ticket to Work Act represents a great step forward in helping people with disabilities to participate in our Nation’s economy

5

and to share in the prosperity of recent years. However, we should

not consider it the end of our journey. We still have much further

to go before we can call our efforts complete. Consequently, I would

like to thank Chairman Shaw for holding today’s hearing for I

think it is vitally important to examine new ideas for helping people with disabilities realize their goals to participate in the work

force.

During today’s hearing, we will hear testimony about the different approaches foreign countries and private insurance utilize to

help people with disabilities and enhance their ability to return to

work. While I am sure we can learn a number of lessons from these

countries and private insurers, we do need to keep several things

in mind as we explore new ways to help people return to work.

We must be aware that many differences may exist between populations and that the disability programs abroad and private insurers serve populations that may differ somewhat than ours. For instance, private insurance have the luxury of deciding their risk

pools while SSA does not. We must also recognize the differences

that exist between the United States and other industrialized nations in terms of the delivery of social services and the implications

that those differences have for the disabled community.

Health insurance is the prime example. In crafting the Ticket to

Work Act last year, we went through a major struggle for relatively

modest extensions of health care coverage for those disability beneficiaries returning to work. Indeed, in the end the Congress agreed

to a Ticket to Work Act providing 8.5 years of Medicare coverage

for disabled beneficiaries rather than the full 10 years in the original House bill. This aspect of the debate would not be of great concern abroad because of universal health care coverages in those

countries.

In addition, we must be clear that our goal is not simply to move

people with disabilities off the beneficiary rolls but to help them secure a job with salaries that can be supportive to them. One of our

witnesses today will testify about a study that he recently conducted that reveals that people with severe mental impairments

who are gainfully employed are still frequently poor and are likely

to remain so because most of their jobs are low wage, entry level

positions.

Finally, we should expect Social Security to maximize the effectiveness of its resources for helping people to return to work but

we should also be realistic. We cannot delude ourselves and think

that with a few shifts in policy we can do the job and Social Security can do the job on its own within its current budget. Further

progress in assisting people with disabilities to return to work will

require a sustained commitment from across the Federal bureaucracy and may well require dedication of additional resources. So,

Mr. Chairman, again I want to thank you for calling this hearing

and obviously thank all the witnesses as well.

Chairman SHAW. Thank you, Bob. Our first panel this morning

is a friend of this Committee, Barbara Bovbjerg, who is the Associate Director, Education, Workforce and Income Security Issues,

Health, Education and Human Services Division of the United

States General Accounting Office, and she has with her Carol PeVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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tersen, who is the Assistant Director, Education, Workforce, and

Income Security Issues. Welcome, both of you.

As other panels, we have your full statement which will be

placed in the record, and we invite you to proceed as you see fit.

Ms. Bovbjerg.

STATEMENT OF BARBARA D. BOVBJERG, ASSOCIATE DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY

ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION; ACCOMPANIED BY CAROL PETERSEN, ASSISTANT DIRECTOR, EDUCATION, WORKFORCE, AND INCOME SECURITY

ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION

Ms. BOVBJERG. Thank you, Mr. Chairman. Mr. Chairman, Mr.

Matsui, I am pleased to be here to discuss practices that help people with severe disabilities return to work. The Disability Insurance and Supplemental Security Income Programs administered by

the Social Security Administration provide benefits to millions of

people with long-term disabilities. Although many of these programs’ beneficiaries want to work and technological and medical

advances have increased the potential for them to do so, less than

1% of SSA’s disabled beneficiaries successfully return to work each

year.

Disability systems in the private sector and other countries have

designed programs to help disabled workers who can work, do so.

Although measures taken by these other systems may not translate

directly to SSA’s disability programs their practices and experiences may provide approaches for SSA to draw upon. My testimony

is based on our ongoing review of these practices for this Subcommittee in which we have interviewed managers of three private

sector disability insurers and disability program officials in Germany, Sweden and the Netherlands.

Today I would like to focus my remarks in two areas. First, how

disability systems in the private sector and three other counties facilitate and encourage return to work, and, second, how these practices compare with the DI program. I make this distinction, DI/SSI,

because DI beneficiaries’ work experience is more comparable to

that of employees with private disability insurance, but many of

the comparisons we will discuss apply to the SSI Program as well.

First, the systems in the private sector and other countries.

These systems integrate return-to-work considerations early after

disability onset and continue them throughout the eligibility assessment process. With the initial reporting of a disability claim,

these disability insurers immediately set up the expectation that

the claimant will return to work, and collaborate closely with the

claimant, the treating physician, and the employer to assess what

support is needed.

These systems also provide incentives for claimants to take part

in individualized return-to-work programs and to receive appropriate medical treatment. They also provide incentives for employers to offer work to claimants. Claimants with work potential are

required to participate in individualized programs that may include

vocational rehabilitation. Claimants are also assessed medically

7

and required to obtain appropriate medical treatment. Insurers

offer assistance in obtaining such treatment where necessary.

Employer incentives involve paying for employee accommodation,

subsidizing wages, or reducing premiums for employers who re-employ disabled workers.

Managers of these other systems also explained to us that they

match appropriately trained staff with different types of claims to

provide cost-effective return-to-work assistance. Both the insurers

and other countries triage claims by the claimant’s work potential.

They have access to staff with a range of skills and expertise and

they apply this expertise where it could be most effective to assess

and enhance claimant’s capacity to work.

Let me now turn to SSA’s approach. Historically, the agency has

placed little emphasis on helping beneficiaries return to work.

More recently, however, the agency has begun placing a greater

priority on this area. For example, the Office of Employment Support Programs has been established to promote employment of disabled beneficiaries through a variety of means including sponsoring

research and working to remove employment barriers.

Moreover, the new Ticket to Work Act, by expanding access to

vocational rehabilitation services, is also expected to enhance work

opportunities for people with disabilities.

But despite these advances, fundamental policy weaknesses in

the DI program remain. These weaknesses include an eligibility determination process that concentrates on applicants’ incapacities,

an all or nothing benefit structure and return to work services offered only after a lengthy determination process.

This is not to say that SSA could effectively engage in all the

practices that private insurers and other countries have adopted.

Little hard data exist on the effectiveness of return-to-work approaches used in these other systems and even less information is

available with regard to cost. Furthermore, it is unclear that successful practices in other countries would succeed in another sociopolitical environment or that private sector policies could prove directly adaptable to public sector priorities.

Nonetheless, as we have recommended in the past, SSA needs to

adopt a comprehensive strategy for returning beneficiaries to work

and could usefully draw upon the approaches of other systems in

so doing. Because such a strategy may require fundamental

changes to the underlying philosophy and direction of the disability

programs, policymakers would need to weigh carefully the implications of such changes.

However, the prospect of helping individuals improve their productive potential should provide ample reason to consider the experiences of these other systems. Mr. Chairman, that concludes my

statement and I welcome your questions.

[The prepared statement follows:]

Statement of Barbara D. Bovbjerg, Associate Director, Education, Workforce, and Income Security Issues, Health, Education, and Human Services Division

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me here today to discuss the practices of the private sector

and other countries in helping people with severe disabilities return to work. Each

month the Social Security Administration’s (SSA) Disability Insurance (DI) program

pays over $4 billion in cash benefits to people with disabilities. The DI beneficiary

8

1Taken together, these three insurers have experience not only in long-term, stand-alone disability insurance, but also in integrating short-and long-term disability insurance with workers’ compensation and, in one instance, with health care. These insurers are also among the largest

long-term disability insurers in the country, together covering about 52 percent of the long-term

U.S. private disability insurance market in 1997. We focused our analysis on the population of

applicants and beneficiaries whose disabilities are of such severity that they would likely qualify

for SSA’s disability benefits. In addition, we focused our review on private insurers’ group disability insurance policies, which contain return-to-work incentives. 2See SSA Disability: Return-to-Work Strategies From Other Systems May Improve Federal

Programs (GAO/HEHS–96–133, July 11, 1996).

population has grown significantly over the past 15 years, increasing by 67 percent,

while benefit payments have nearly tripled. This growth has contributed to the DI

Trust Fund’s projected insolvency in 2023. Yet, during this period of program

growth, numerous technological and medical advances, combined with changes in

society and the nature of work, have increased the potential for some people with

disabilities to return to, or remain in, the labor force. Many beneficiaries with disabilities indicate that they want to work and be independent, and many can work

if they receive the supports they need, yet fewer than one-half of 1 percent of DI

beneficiaries leave the rolls each year to return to work.

The U.S. private sector, as well as other countries, has designed disability systems

to help disabled workers return to work. In recent years, a growing number of private insurance companies have been focusing on developing and implementing strategies for controlling disability costs by enabling people with disabilities to return to

work. Disability programs financed by social insurance systems in other countries

also focus on return to work and have implemented practices similar to those in the

U.S. private sector.

Today I would like to discuss how disability systems in the private sector and

other countries encourage and facilitate return to work in three key areas: (1) the

eligibility assessment process, (2) work incentives, and (3) staffing practices. I will

describe these three elements for U.S. private sector disability insurers and for

other countries’ social insurance systems and compare the practices of both with

those of the DI program. We are comparing these practices with those of the DI program because the work experience of the DI population is most comparable to that

of employees covered under private disability insurance. However, many of the comparisons discussed would be applicable as well to SSA’s other disability program,

Supplemental Security Income (SSI).

To develop this information, we conducted in-depth interviews and reviewed policy

documents and program data at three private sector disability insurers:

UNUMProvident, Hartford Life, and CIGNA.1 We also interviewed program officials

and other experts on the disability systems of Germany, Sweden, and The Netherlands and reviewed policy documents and studies of these programs. This work updates and expands on our previous work in this area.2

In summary, the disability systems of the private insurers and the countries we

reviewed integrate return-to-work considerations early after disability onset and

throughout the eligibility assessment process. This involves both determining—as well as enhancing—the ability of each claimant to return to work. In addition, these

systems provide incentives for claimants to take part in vocational rehabilitation

programs and to obtain appropriate medical treatment and for employers to provide

work opportunities for claimants. Managers of these other systems also explained

to us that they have developed techniques—such as separating (or ‘‘triaging’’)

claims—to use staff with the appropriate expertise to provide return-to-work assistance to claimants in a cost-effective manner. Although these practices are common

to the private sector insurers and the countries whose systems we examined, limited

data exist on the cost-effectiveness of these approaches.

SSA may face greater difficulty in returning some of its beneficiaries to work than

the private sector insurers, since DI covers a broader population than the private

insurers. Nevertheless, opportunities exist to help disabled workers remain at or return to the workplace. In recognition of these opportunities, SSA has recently begun

placing greater priority on returning beneficiaries to work. Moreover, the new Ticket

to Work and Work Incentives Improvement Act of 1999 (Ticket to Work Act), by expanding access to vocational rehabilitation services, is expected to enhance work incentives for people with disabilities. However, fundamental policy weaknesses in the

DI program remain unchanged. As we have reported in the past, these weaknesses

include an eligibility determination process that concentrates on applicants’ incapacities, an ‘‘all-or-nothing’’ benefits structure, and return-to-work services offered

only after a lengthy determination process.

To address these policy weaknesses, we continue to believe—as we recommended

in 1996—that SSA should develop a comprehensive return-to-work strategy. In deVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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3 In the same year, DI also paid about $4.9 billion in cash benefits to about 1.7 million spouses

and children of disabled workers. 4 Regulations currently define substantial gainful activity (SGA) as employment that produces countable earnings of more than $700 a month for nonblind disabled individuals. The SGA level

for individuals who are blind is set by statute and indexed to the annual wage index. Currently,

the SGA for blind individuals is $1,170 of countable earnings. SSA deducts from gross earnings

the cost of items a person needs in order to work and the value of support a person needs on

the job because of the impairment before deciding if work is considered SGA. 5See GAO/HEHS–96–133, July 11, 1996. 6See SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/

HEHS–96–62, Apr. 24, 1996).

veloping the strategy, SSA can draw upon the experiences of other systems to identify elements of a new federal disability system that could help each individual realize his or her productive potential without jeopardizing the availability of benefits

for people who cannot work. Having identified these elements, SSA would then be

in a position to determine the legislative and regulatory changes needed to test and

evaluate the effectiveness of these practices in the federal disability system.

BACKGROUND

DI provides monthly cash benefits to workers who are unable to work because of

severe long-term disability. Established in 1956, DI is an insurance program funded

by payroll taxes paid by workers and their employers into a Social Security Trust

Fund. Workers who have worked long enough and recently enough become insured

for DI coverage. In addition to cash assistance, DI beneficiaries receive Medicare

coverage after they have received cash benefits for 24 months. In 1999, 4.9 million

disabled workers received DI cash benefits totaling about $46.5 billion, with average

monthly cash benefits amounting to $755 per person.3

To meet the definition of disability under DI, an individual must have a medically

determinable physical or mental impairment that (1) has lasted or is expected to

last at least 1 year or to result in death and (2) prevents the individual from engaging in substantial gainful activity. Individuals are considered to be engaged in substantial gainful activity if they have countable earnings at or above a certain dollar

level.4 Moreover, the statutory definition specifies that, for a person to be determined to be disabled, the impairment must be of such severity that the 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. SSA pays state disability determination service

(DDS) agencies to determine whether applicants are disabled. The program offers

people on the DI rolls incentives that are intended to encourage beneficiaries to return to work—and, potentially, to leave the rolls. For example, the DI work incentives provide for a trial work period in which a beneficiary may earn any amount

for 9 months within a 60-month period and still receive full cash and medical benefits.

Historically, SSA has given little emphasis to assisting beneficiaries in returning

to work, and we have made a number of recommendations for improvement. For example, in 1996, we identified weaknesses in SSA’s return-to-work efforts and recommended that SSA intervene earlier to foster a greater emphasis on assisting disabled applicants and beneficiaries in returning to the workforce.5 We also reported

that the disability determination process encourages work incapacity because applicants have a strong incentive to emphasize their limitations in order to qualify for

benefits. In addition, we observed that the often lengthy and cumbersome application process may itself reinforce applicants’ perceptions of their inability to work.6

SSA has recently begun to place higher priority on emphasizing return to work

for DI beneficiaries. For example, SSA recently established the Office of Employment Support Programs to promote the employment of disabled beneficiaries. In addition, the Ticket to Work Act is expected to enhance work opportunities for people

with disabilities. For example, this new act expanded eligibility for Medicare for DI

beneficiaries and created a ‘‘Ticket to Work’’ voucher program that will allow beneficiaries a greater choice of vocational rehabilitation and employment service providers. SSA has also funded partnership agreements in 12 states that are intended

to help the states develop services to increase the employment of DI beneficiaries.

Private Disability Insurers Implement Return-to-Work Practices to Control Costs

Private insurers provide disability insurance to a selected portion of the U.S.

working population. Unlike SSA, private sector insurers are able to choose the industries to which they market their policies. The characteristics of the private insurers’ beneficiaries can also differ from those of SSA’s beneficiaries because private inVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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7The 24-month limitation on mental impairments does not include time spent in a hospital

or mental institution. Also, the three insurers vary in their descriptions of the types of mental

illness that are covered under this special limitation. One insurer excludes bipolar affective disorders, psychotic disorders, and schizophrenia from this limitation. In contrast, the DI program

does not have time-limited benefits for beneficiaries with mental impairments. In 1999, 26.8 percent of DI disabled workers with an available diagnosis had mental disorders. 8For claimants who receive both private and DI benefits, the private insurers reduce their

disability payments by the amount of the DI payment. 9For example, a 1990–92 study of certain return-to-work practices used by Sweden’s social

insurance offices concluded that social insurance costs had been reduced by returning people to

the workplace sooner. Practices assessed included early screening and contact with disabled individuals.

surers can allow employers who purchase their disability policies to vary coverage

by type of impairment or by class of employee. For example, employers generally

choose to limit coverage for mental impairments to a maximum of 24 months.7 Employers may also choose to provide long-term disability coverage for only their white

collar employees, rather than for all their employees.

The private disability insurance industry, moreover, provides benefits to many individuals who are not as severely disabled as the beneficiaries of the DI program.

However, for the insurers reviewed, almost two-thirds of those receiving private

long-term disability benefits also received DI benefits.8 This group of beneficiaries,

in the cases of the two insurers that provided us with comparable data, was composed of a slightly higher proportion of female and older beneficiaries than the overall DI population. All the insurers had a lower proportion of beneficiaries with mental impairments than the DI population.

Some private sector organizations have recognized the potential for reducing disability costs through an increased focus on returning people with disabilities to productive activity. To accomplish this comprehensive shift in orientation, the private

disability insurers have begun developing and implementing strategies for helping

claimants return to work as soon as possible, when appropriate. Although the private sector insurance companies expect a positive effect on return-to-work outcomes

from these strategies, it is too early to fully measure the effect of these changes.

In many cases, return-to-work processes have only recently been implemented.

Moreover, although the private insurers are now including return-to-work provisions

in the standard contracts that they are writing, a large number of employees are

still insured under prior contracts that lack these provisions. While the insurers

could not provide us with comprehensive cost-effectiveness studies, their initial return-to-work rates are promising. The private insurers reported that, in 1999, between 2 and 3 percent of their long-term disability beneficiaries who also received

DI benefits returned to work or were terminated from the private sector disability

benefit rolls because they were assessed as having the capacity to work.

Other Countries Also Invest in Return-to-Work Efforts

In contrast to the private sector, which covers a selected portion of the U.S. working population, the experiences of Germany, Sweden, and The Netherlands show

that return-to-work strategies are applicable to a population with a wide range of

work histories, job skills, and disabilities. However, these disability systems operate

in a somewhat different social and political context than the DI program. For example, public health care programs in these countries ensure that the retention of

health insurance is not an issue in a worker’s decision on whether to apply for benefits, participate in rehabilitation, or attempt returning to work. In addition, disability systems in these countries offer short-term as well as long-term benefits,

which provides an important basis for comprehensive disability case management.

The social insurance disability programs in these countries have invested in return-to-work efforts and have implemented practices similar to those in the U.S. private sector. While the German social insurance system has had a long-standing

focus on the goal of ‘‘rehabilitation before pension,’’ the reorientation of Sweden and

The Netherlands toward a return-to-work focus has occurred mostly within the past

decade. Although rigorous studies demonstrating the cost-effectiveness of German,

Swedish, or Dutch programs generally do not exist, some limited studies and data

indicate positive results from the return-to-work approach in these disability insurance systems.9

The Eligibility Assessment Process Integrates Return-to-Work Considerations

Throughout

All the private disability insurers and the countries we reviewed have developed

an eligibility process that includes assessing and enhancing the ability of claimants

to work throughout the process. To enable claimants to return to work as quickly

as possible, insurers incorporate return-to-work considerations early in the assessVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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ment process and throughout a customized evaluation of each claimant’s initial and

continuing eligibility for benefits. In contrast, SSA’s return-to-work efforts occur

after its eligibility assessment process. (See Table 1.)

Table 1:—Comparison of Eligibility Assessment Process Features of Private Insurers and Other Countries

With Those of SSA

Process feature Private insurers and other countries SSA

Disability definitionDefinition of disability shifts over

specified time period from less to

more restrictive, recognizing the

possibility of improvement in the

capacity to work through provision

of supports and services, such as

retraining..

‘‘All-or-nothing’’ definition

characterizes individuals as either

unable to work or having the

capacity to work..

Early intervention Intervention occurs soon after

disability onset to identify return-towork needs..

There is a long delay in providing

services because only individuals

who have been awarded benefits—

following an often lengthy

assessment process—are eligible for

return-to-work services..

Ongoing assessment of work potential

Work capacity is periodically

monitored and reassessed, focusing

on returning those with work

potential to work..

There is no integration of return-towork considerations into either the

initial or the continuing eligibility

assessment process..

Private Insurers Incorporate Return-to-Work Efforts From the Beginning of the Assessment Process

All the private insurers we observed incorporate return-to-work considerations

early in the assessment process to assist claimants in their recovery and in returning to work as soon as possible. With the initial reporting of a disability claim, these

insurers, when appropriate, immediately set up the expectation that the claimant

will return to work. The insurers’ process for assessing and assisting a claimant’s

ability to work is illustrated in Figure 1.

12

13

10The private insurers generally define one’s ‘‘own occupation’’ as the occupation a person is

routinely performing at onset of disability. They generally assess how the claimant’s own occu- pation is performed in the national economy, rather than how the work is performed for a specific employer or at a specific location. Two insurers have expanded their ‘‘own occupation’’ definition of disability to include a reasonable alternative position. These insurers require that a

claimant who is judged able to do so accept a reasonable alternative position—a job in the same

general location offered by the claimant’s current employer—or risk losing cash benefits. The

claimant must be qualified to perform this alternative position—which must pay the claimant

more than 60 to 80 percent of predisability earnings, depending upon the insurer—given his or

her education, training, or experience. 11Our review of group disability insurance policies focused on those with an ‘‘own occupation’’ definition of disability that changes to an ‘‘any occupation’’ definition after 2 years. 12The private insurers generally use the same ‘‘own occupation’’ definition for short-and longterm disability benefits. However, in the case of long-term benefits, the definition shifts to the

‘‘any occupation’’ definition after 2 years. When applying the ‘‘any occupation’’ definition, private

insurers generally try to identify several occupations that exist locally that could provide a sufficient salary for the claimant. However, the insurer is obligated only to identify occupations with

a sufficient salary in the national economy and not to find specific job openings or place the

claimant in a new position.

After receiving a claim, the private insurers’ assessment process begins with determining whether the claimant meets the initial definition of disability. In general,

for all the private sector insurers we studied, claimants are considered disabled

when, because of injury or sickness, they are limited from performing the essential

duties of their own occupation, and they earn less than 60 to 80 percent of their

predisability earnings, depending upon the particular insurer.10 As part of determining whether the claimant meets this definition, the insurers compare the claimant’s capabilities and limitations with the demands of his or her own occupation and

identify and pursue possible opportunities for accommodation—including alternative

jobs or job modifications—that would allow a quick and safe return to work. A

claimant may receive benefits under this definition of disability for up to 2 years.11

As part of the process of assessing eligibility according to the ‘‘own occupation’’ definition, insurers directly contact the claimant, the treating physician, and the

employer to collect medical and vocational information and initiate return-to-work

efforts, as needed. Insurers’ contacts with the claimant’s treating physician are

aimed at ensuring that the claimant has an appropriate treatment plan focused, in

many cases, on timely recovery and return to work. Similarly, early contact with

the claimant’s employer is used to encourage the employer to make accommodations

for claimants with the capacity to work.

If the insurers find the claimant initially unable to return to his or her own occupation, they provide cash benefits and continue to assess the claimant to determine

if he or she has any work potential. For those with work potential, the insurers

focus on return to work before the end of the 2-year period when, for all the private

insurers we studied, the definition of disability becomes more restrictive: after 2

years, the definition shifts from an inability to perform one’s own occupation to an

inability to perform any occupation for which the claimant is qualified by education,

training, or experience. Claimants may be found ineligible for benefits under the

more restrictive definition.12

The private insurers’ shift from a less to a more restrictive disability definition

after 2 years reflects the changing nature of disability and allows a transitional period for insurers to provide financial and other assistance, as needed, to help claimants with work potential return to the workforce. During this 2-year period, the insurer attempts to determine the best strategy for managing the claim. Such strategies can include, for example, helping plan medical care or providing vocational

services to help claimants acquire new skills, adapt to assistive devices to increase

functioning, or find new positions. For those requiring vocational intervention to return to work, the insurers develop an individualized return-to-work plan, as needed.

Basing the continuing receipt of benefits upon a more restrictive definition after 2

years provides the insurer with leverage to encourage the claimant to participate

in a rehabilitation and return-to-work program. Indeed, the insurers told us that

they find that claimants tend to increase their efforts to return to work as they near

the end of the 2-year period.

If the insurer initially determines that the claimant has no work potential, it regularly monitors the claimant’s condition for changes that could increase the potential to work and reassesses after 2 years the claimant’s eligibility under the more

restrictive definition of disability. In addition, the insurer looks for opportunities to

assist these claimants when changes in medical technology, such as new treatments

for cancer or AIDS, may enable them to work.

The private insurers that we reviewed told us that they customize their assessment and enhancement of a claimant’s ability to work throughout the duration of

14

the claim. To do this, disability insurers use a wide variety of tools and methods

when needed. Some of these tools, as shown in tables 2 and 3, are used to help ensure that medical and vocational information is complete and as objective as possible. For example, insurers consult medical staff and other resources to evaluate

whether the treating physician’s diagnosis and the expected duration of the disability are in line with the claimant’s reported symptoms and test results. Insurers

may also use an independent medical examination or a test of basic skills, interests,

and aptitudes to clarify the medical or vocational limitations and capabilities of a

claimant. In addition, insurers identify transferable skills to compare the claimant’s

capabilities and limitations with the demands of the claimant’s own occupation. This

method is also used to help identify other suitable occupations and the specific skills

needed for these new occupations when the claimant’s limitations prevent him or

her from returning to a prior occupation. Included in these tools and methods are

services to help the claimant return to work, such as job placement, job modification, and retraining.

Table 2:—Tools and Methods Used to Provide Medical Assessment

Task Tools and methods

Assess diagnosis, treatment, and duration of

the impairment and begin developing a treatment plan focused on returning the claimant

to work promptly and safely.

Consultation of medical staff and other

resources, including current medical guidelines

describing symptoms, expected results from

diagnostic tests, expected duration of

disability, and treatment.

Assess the claimant’s cognitive skills. Standardized mental tests.

Validate the treating physician’s assessment of

the impairment’s effect on the claimant’s ability to work and the most appropriate treatment and accommodation.

Review of the claimant’s file, generally by a

nurse or a physician who is not the claimant’s

treating physician.

Verify diagnosis, level of functioning, and appropriateness of treatment.Independent medical examination of the

claimant by a contracted physician.

Evaluate the claimant’s ability to function, determine needed assistance, and help the claimant develop an appropriate treatment plan

with the physician.

Home visits by a field nurse or investigator or

accompanied doctor visits.

Assess the claim’s validity. Home visits and interviews with neighbors or

others who have knowledge of the claimant’s

activities.

Table 3: Tools and Methods Used to Provide Vocational Assessment and Assistance

Task Tools and methods

Identify transferable skills, validate restrictions on and capabilities for performing an occupation, and identify other suitable occupations and retraining programs.

• Test basic skills, such as reading or math.

• Determine interests and aptitudes.

• Evaluate functional capacities associated

with an occupation, such as lifting, walking,

and following directions.

• Compare functional capacities, work history,

education, and skills with the demands of an

occupation.

Enhance work capabilities and help develop

job-seeking skills.

• Provide resume preparation, development of

job-seeking skills, and help with job

placement.

• Assist in obtaining physical, occupational, or

speech therapy and access to employee

assistance, support groups, or state agency

vocational rehabilitation or other community

services.

• Identify and fund on-the-job training or

other educational courses.

15

13Social insurance offices in Sweden have no mechanisms or sanctions to force employers to

comply with their rehabilitation responsibilities. We reported in 1996 that, according to social

insurance office surveys, employers do not arrange for rehabilitation examinations in about 40

to 50 percent of the cases.

Task Tools and methods

Assess ability to perform own or any occupation, assess potential for accommodation, and

determine whether sufficient salary is offered

locally or nationally for a suitable occupation.

• Observe and analyze the essential duties of

the claimant’s own occupation, another

occupation for the same employer, or an

occupation of a prospective employer.

• Determine the general availability and

salary range of specified occupations.

• Identify for a specified occupation the

potential employers and related job

descriptions, salary range, and openings.

Reaccustom claimant to a full work schedule

and enable claimant to overcome impairment

and return to work.

• Provide work opportunities for the claimant

to gradually resume his or her job duties.

• Procure devices to assist with work or

otherwise help to modify the job.

Other Countries Also Provide Return-to-Work Assistance Early After Disability Onset

and Throughout the Assessment Process

The countries we studied also begin assessing return-to-work needs soon after the

onset of a disabling condition and integrate return-to-work assistance that is tailored to meet individual needs throughout the assessment process. These countries

also provide short-term benefits on the basis of a person’s inability to perform his

or her current job because of illness or injury. These short-term disability benefits— which may be granted for a year or more—are similar to the private insurers’ provision of benefits during the 2-year ‘‘own occupation’’ period of disability in that they

provide a transitional period for assessing an individual’s work potential and providing treatment and rehabilitation.

For example, German laws and policies require that all applicants for disability

benefits be evaluated for rehabilitation and return to work. Based on the principle

that intervention should occur at the earliest possible stage of disability to minimize

the degree and effect of the impairment, intervention in Germany often begins when

the health insurance agency urges a disabled worker receiving short-term benefits

to apply for medical rehabilitation. In addition, vocational counselors often discuss

rehabilitation and return-to-work plans with disabled workers while they are still

in the hospital. The social insurance office then evaluates the person’s capacity to

work and, if necessary, refers the applicant to vocational rehabilitation or other

types of return-to-work services and assistance. These return-to-work measures may

include assistance in retaining or obtaining a job or in selecting an occupation. They

may also involve providing basic training or retraining to prepare for an occupation

and developing workplace accommodations. As long as the person continues to receive short-term disability benefits, the social insurance office will monitor the case

and periodically reassess the person’s work capacity and need for return-to-work assistance. The office will award long-term disability benefits only after it determines

that a person’s earning capacity cannot be restored through return-to-work interventions.

Under Swedish laws and policies, both the private and public sectors are responsible for the early identification of candidates for rehabilitation and return to work.

After an employee has been on sick leave for 4 weeks, employers are responsible

for determining whether the employee needs some type of rehabilitation and are required to report this information to the social insurance office. Social insurance offices closely monitor the use of short-term benefits and intervene when employers

disregard their early intervention responsibilities.13 The social insurance office then

begins the process of determining whether the person will need vocational rehabilitation to return to work. The office arranges for an assessment of the disabled employee’s rehabilitation needs and works with the employer and employee to develop

a rehabilitation plan. Rehabilitation in Sweden is not meant to be a lengthy process,

but rather a short, intensive period of medical and vocational training to help the

individual return to work as soon as possible. As in Germany, the social insurance

offices in Sweden periodically monitor and reassess the rehabilitation needs of individuals receiving short-term disability benefits and, after the first year of benefits,

16

14There are also distinct differences between the methods used by SSA and the private insurers to determine a level of earnings beyond which an individual no longer qualifies for benefits.

SSA regulations, on one hand, apply a standard level of countable monthly income for all people

other than the blind (currently $700), regardless of predisability earnings. In contrast, the private insurers we studied establish an individualized level that is a proportion of each person’s predisability earnings. For disabled beneficiaries with high predisability earnings, the private

sector’s individualized level represents a much greater incentive to work than does SSA’s standard level. However, the private sector’s individualized level may provide less of a barrier to qualify for benefits and thus may encourage more people to apply for disability benefits. 15Social Security Administration, Employment Support Concept Development Plan, Apr. 12,

1999. 16See GAO/HEHS–96–62, Apr. 24, 1996. 17SSA has not yet designed such a project, and it is unclear how early SSA will be intervening

after onset of disability in this demonstration. 18For example, one state is testing the provision of short-term vocational services to DI applicants with recent work histories, with an emphasis on early intervention and quick employment.

consider granting long-term benefits if the person’s rehabilitation potential has not

improved.

In The Netherlands, the employer has had increasing responsibility for efforts to

return the employee to his or her current job or a comparable job within the company since the mid–1990s. This shift of responsibility from the public to the private

sector is intended to encourage greater responsibility on the part of employers in

the prevention and prompt amelioration of employee health impairments. Under

this policy, within about 3 months of the onset of the disability, the employer must

submit to the social insurance agency a preliminary plan to return the disabled

worker to the workforce. A final plan must be submitted within about 9 months.

If the employer determines that the disabled worker cannot return to the workplace,

or if the disabled worker has not returned to work after 1 year of receiving shortterm benefits, the social insurance agency assesses the person’s condition to determine eligibility for long-term disability benefits. The assessment involves evaluations of the applicant’s physical and mental capabilities, which are then matched

against different occupations to determine whether the person is capable of performing any work.

SSA Does Not Incorporate Return-to-Work Efforts Into Its Eligibility Assessment

Process

Unlike the private sector and foreign countries, SSA does not integrate efforts to

return individuals to work into either its initial or continuing eligibility assessment

process. To be considered initially eligible for DI benefits, applicants must meet the

Social Security Act’s definition of disability—an ‘‘all-or-nothing’’ definition that characterizes individuals as either unable to work or having the capacity to work.14 Because the result of the decision is either full award or denial of cash benefits, applicants have a strong incentive to emphasize their limitations to establish their inability to work and a disincentive to demonstrate any capacity to work. The act’s definition of disability—under which a person is unable to do any substantial work in the

national economy—is comparable to the private sector’s most restrictive definition.

In recent years, SSA has piloted numerous initiatives to redesign and thereby improve its disability determination process. But while an internal SSA evaluation recently recommended that the agency ‘‘create an awareness and attitudinal change

to accept employment support as a core SSA mission,’’ the agency has not yet integrated return-to-work considerations into its efforts to redesign its disability determination process.15 Moreover, the recently enacted Ticket to Work Act was intended

to increase beneficiary access to vocational services but does not change the point

in the process at which beneficiaries may receive assistance. Only those individuals

who have met the Social Security Act’s definition of disability and are approved for

DI benefits will, under the Ticket to Work Act, receive a ticket entitling them to

receive return-to-work services. There can be a long delay in receiving services:

SSA’s eligibility determination process ranges up to 18 months or longer for individuals who are initially denied benefits and who then appeal. Since many applicants

have been unemployed before applying and remain unemployed during the eligibility determination process, it is likely that their skills, work habits, and motivation to work deteriorate during this wait, thus decreasing their readiness to work16

However, the Ticket to Work Act authorizes SSA to carry out a demonstration

project to test the advantages and disadvantages of earlier referral of applicants and

beneficiaries for rehabilitation.17 SSA may also gain additional insights into early

intervention approaches through its funding of demonstration projects in 12

states.18

17

19 Although claimants may be involved in the development of the individualized rehabilitation

plans, the insurers make the final decision as to the types of rehabilitation services claimants

will receive. 20The private disability insurers we reviewed told us that their benefits generally replace 60

percent of predisability earnings, depending upon the insurer. 21To illustrate, assume that Ms. Jones is a claimant with predisability earnings of $1,000 per

month and an insurance policy that replaces 60 percent of her predisability earnings. She is

currently not working. Under this scenario, her income would be limited to $600 per month in

disability benefits. However, if she returned to work, even part-time, she would have the opportunity to increase her total income to 100 percent of her predisability earnings or, in this instance, $1,000. If she returned to work and earned $500 per month, the insurer would reduce

her benefit payment from $600 to $500 per month, so that her combined earnings and benefit

payment would provide a total monthly income equal to her predisability income of $1,000.

Other Systems Provide Incentives for Claimants and Employers to Encourage and

Facilitate Return to Work

To facilitate return to work, all of the insurers and the countries we studied employ incentives both for claimants to participate in vocational activities and receive

appropriate medical treatment, and for employers to accommodate claimants. For

claimants who could benefit from vocational rehabilitation, insurers and the countries we studied require participation in an individualized return-to-work program.

They also provide financial incentives to promote claimants’ efforts to become rehabilitated and return to work. To better ensure that medical needs are met, the insurers and the countries we studied require that claimants receive appropriate medical treatment and assist them in receiving this treatment. In addition, they provide

financial incentives to employers to encourage them to provide work opportunities

for claimants. Although these practices are common to the private sector insurers

and the countries we examined, limited data exist to determine whether these incentives for claimants and employers yield positive outcomes. In contrast to the

practices of other systems, the Ticket to Work Act makes participating in rehabilitation and return-to-work services voluntary for DI beneficiaries. In addition, under

law and SSA regulations, receiving appropriate medical treatment is not a prerequisite for award or continuing receipt of DI benefits. Moreover, DI applicants and

beneficiaries may not have access to appropriate medical care.

Private Insurers Offer Incentives to Claimants and Employers to Promote Return to

Work

All the private insurers we reviewed require claimants who could benefit from vocational rehabilitation to participate in a customized program or risk loss of benefits. As part of this program, the return-to-work plan for each claimant can include,

for example, adaptive equipment, modifications to the work site, or other accommodations. All the private insurers mandate the participation of claimants whom

they believe could benefit from rehabilitation, because they believe that voluntary

compliance has not encouraged sufficient claimant participation in these plans.19

These insurers also make special financial incentives available to claimants who

participate in rehabilitation programs, as appropriate. All insurers may defray costs

associated with rehabilitation, such as child care expenses. For example, one insurer

may pay $250 a month per child, up to $1,000 per month. This insurer also increases claimants’ benefit payments by 10 percent, up to a maximum of $1,000 a

month, for those who participate in rehabilitation.

In addition, all of the insurers told us that they encourage rehabilitation and return to work by allowing claimants who work to supplement their disability benefit

payments with earned income.20 During the first 12 or 24 months of receiving benefits, depending upon the particular insurer, claimants who are able to work can do

so to supplement their benefit payment and thereby receive total income of up to

100 percent of predisability earnings.21 After this period, if the claimant is still

working, the insurers decrease the benefit amount so that the total income a claimant is allowed to retain is less than 100 percent of predisability income.

However, when a private insurer determines that a claimant is able, but unwilling, to work, the insurer can reduce or terminate the claimant’s benefits. Moreover,

to encourage claimants to work to the extent they can, even if only part-time, two

of the insurers may reduce a claimant’s benefit by the amount the claimant would

have earned if he or she had worked to maximum capacity. One insurer uses the

claimant’s physician or three independent experts qualified to evaluate the claimant’s condition to determine a claimant’s maximum capacity to work. One of the insurers may also reduce a claimant’s monthly benefit during the first year by the

amount that the claimant could have earned if he or she had not refused a reasonable job offer—that is, a job that was consistent with the claimant’s background,

education, and training. Claimants’ benefits may also be terminated if claimants

18

22 Educating employers about the size and extent of disability costs is an important element

in motivating the employer to promote efforts to return claimants to work. For example, private

insurers educate employers about the direct and indirect costs of not controlling lost time associated with disability, which was estimated by one insurer to be 4 to 6 percent of an employer’s payroll. 23Germany and Sweden also promote disabled workers’ efforts to return to work by providing

them with financial assistance to purchase technical aids; workplace adaptations; and other

work-related needs, such as personal assistants or payment of transportation costs. Additionally,

Sweden provides grants to subsidize the purchase or modification of a vehicle if it is considered

necessary for vocational training or for traveling to work. 24 In Sweden, individuals with reduced work capacity may work full-time and still take part

in the transitional work program. 25 In Sweden, wage subsidies may be maintained at the same level and extended beyond the

4-year period if authorities determine it is appropriate.

refuse to accept a reasonable accommodation that would allow them to work. For

example, if a claimant with impaired vision refuses the offer of a large-screen terminal that would allow the claimant to work, the insurer can terminate his or her

benefits.

Since medical improvement or recovery can also enhance claimants’ ability to

work, the private insurers we studied not only require, but also help, claimants to

obtain appropriate medical treatment. To maximize medical improvement, private

insurers require that the claimant’s physician be qualified to treat the particular

impairment. Additionally, two insurers require that treatment be provided in conformance with medical standards for type and frequency. Moreover, to help ensure

that a claimant is receiving appropriate treatment, the insurers’ medical staff work

with the treating physician as needed to ensure that the claimant has an appropriate treatment plan. The insurers may also provide funding for those who cannot

otherwise afford treatment.

All private sector insurers we studied may also provide financial incentives to employers to encourage them to provide work opportunities for claimants. By paying

for accommodations and offering lower insurance premiums to employers, private

insurers encourage employers to become partners in returning disabled workers to

productive employment. For example, to encourage employers to adopt a disability

policy with return-to-work incentives, all the insurers offer employers a discounted

insurance premium that they can continue to receive if their disability caseload declines to the level expected for those companies that assist claimants in returning

to work. To this end, these insurers fund accommodations, as needed, for disabled

workers at the employer’s work site.22

Other Countries Also Provide Incentives to Claimants and Employers to Encourage

Return to Work

Germany and Sweden also require participation in rehabilitation. Individuals

there may be denied benefits for not participating in rehabilitation when it is recommended by the social insurance offices. Both these countries, as well as The

Netherlands, also provide financial incentives to encourage participation in rehabilitation. For example, they provide supplementary benefits to cover rehabilitation-related expenses, such as transportation and housing costs and the cost of educational

courses, books, and study aids.23 Germany and Sweden also offer transitional work

opportunities that enable people with disabilities to return to work part-time while

earning disability benefits. These individuals can gradually increase their daily

work hours, and thus their earnings, until they reach their maximum work capacity,

with a corresponding decrease in benefits.24 Similarly, The Netherlands provides a

supplemental wage to beneficiaries who work, allowing them to earn a wage equal

to their predisability earnings. The countries we studied also provide appropriate

medical treatment and rehabilitation services to disabled individuals, and social insurance offices in Germany and Sweden may terminate the disability benefits of individuals who refuse to follow such medical recommendations.

In addition, Germany, Sweden, and The Netherlands provide financial assistance

to employers for the purchase of workplace accommodations needed by disabled employees. For example, such assistance may pay for technical aids, special staff or

personal assistants to help a disabled worker perform various work functions, or adaptations of the work environment to meet the special needs of a disabled worker.

These countries also offer financial incentives for the employment of disabled individuals by subsidizing the wages that employers pay them. Wage subsidies are provided for a time-limited period of 3 to 4 years, with the amount of the subsidy declining each year.25 Furthermore, in The Netherlands, employers have an additional

incentive to assist employees in returning to work because the employers’ contribuVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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26For benefits to be denied, treatment must be prescribed by the individual’s treating physician (the licensed physician who attends to an individual’s medical needs). When an individual

has no attending physician, the treating physician is the hospital or clinic where the individual

goes for medical care. 27 In addition, many beneficiaries with affective disorders were not being treated by mental

health professionals. Yet, research suggests that as many as 60 percent of affective disorder

cases can be controlled with appropriate treatment, and SSA believes that providing appropriate

medical treatment to beneficiaries with affective disorders could help them return to work. Outside of the ongoing demonstration project, SSA does not routinely intervene in the delivery of

medical services for its beneficiaries. 28DI applicants may not be covered by health insurance. In addition, new DI beneficiaries

have a 24-month waiting period before Medicare eligibility. Moreover, Medicare generally does

not cover the costs of certain treatment—such as prescription drugs—that may be necessary to

improve functioning for a return to work. 29For example, small businesses may take an annual tax credit for a variety of costs incurred

in providing employee accommodations, such as readers, sign language interpreters, and adaptive equipment Also, all businesses may take an annual deduction for the expense of removing

physical, structural, and transportation barriers to disabled workers Further, state vocational

rehabilitation agencies can provide various services to employers, such as rehabilitation engineering services for architectural barrier removal and work site modifications.

tions to the disability insurance fund are partially determined by the number of

their employees who became disabled in the prior year.

SSA’s Return-to-Work Incentives Are More Limited Than Those Used in Other Systems

In contrast to the private sector and the countries we studied, SSA’s disability

programs do not require rehabilitation for beneficiaries, regardless of their capacity

to work. Instead, the recently enacted Ticket to Work Act establishes a voluntary

system that depends upon the beneficiary’s motivation to pursue rehabilitation services. Thus, a beneficiary who could benefit from rehabilitation might not choose to

seek such services. Further, in contrast to the private sector requirement that an

individual work to his or her maximum capacity, the Social Security Act does not

have such a requirement, which may act as a disincentive to work. In particular,

beneficiaries with low earnings may find it more financially advantageous to periodically stop working, or work part-time and continue to receive disability payments, than to earn more than SSA’s limit of $700 a month in countable income

and lose all cash benefits after completing a trial work period. In recognition of the

potential work disincentive from this all-or-nothing benefit structure, the Ticket To

Work Act requires SSA to conduct demonstration projects under which benefits are

reduced by $1 for each $2 of a beneficiary’s earnings above a level determined by

SSA.

SSA also differs from the private sector and the countries we studied in requiring

medical treatment. The Social Security Act, along with SSA regulations, requires

that benefits be denied when an individual fails, without good cause, to follow treatment prescribed by his or her physician.26 However, if an applicant is not receiving

treatment, SSA still assesses the applicant’s eligibility for benefits and—if the applicant qualifies—awards benefits, even if the applicant would not qualify for benefits

if treated. And unless medical treatment is prescribed, it is not a prerequisite for

continued receipt of benefits once they have been awarded. Indeed, SSA found in

1999 that some beneficiaries with affective disorders—who constitute one of the

fastest-growing groups on the DI rolls—were receiving no medical treatment. However, SSA has recently begun a demonstration project to determine whether providing access to the right medical treatment for beneficiaries with affective disorders

will enable them to return to work.27 Nevertheless, access to medical treatment may

be limited for many DI applicants and beneficiaries.28

In contrast to the private sector and The Netherlands, SSA does not have the

legal authority to use financial incentives to encourage employers to assist those

with disabilities to return to work, thus limiting the agency’s ability to influence

employers. SSA, however, is currently funding demonstration projects in 12 states

to develop ways to increase employment of DI beneficiaries and other people with

disabilities and is looking to employers for help. For example, a goal of one state

project is to solicit employer views on barriers to hiring DI beneficiaries and identify

strategies for, and educate employers about, increasing employment opportunities

for DI beneficiaries. In addition, the federal government provides tax incentives, and

states may provide other assistance to employers to encourage them to return people with disabilities to work.29

20

30The insurers also employ disability income specialists to assist claimants in applying for DI

benefits. 31 According to one insurer, disabilities with subjective diagnoses include certain types of mental illness, fibromyalgia, chronic pain (often back pain), and chronic fatigue syndrome.

Other Systems Strive to use Appropriate Staff to Achieve Accurate Disability Decisions and Successful Return-to-Work Outcomes

Officials of each of the disability insurers and countries that we studied told us

that they have developed techniques for using the right staff to assess eligibility for

benefits and return those who can to work. Both the insurers and the countries have

access to individuals with a range of skills and expertise. Moreover, officials told us

that they selectively apply this expertise as appropriate to cost-effectively assess

and enhance claimants’ capacity to work. In contrast, SSA’s DDS teams of medical

and psychological consultants and disability examiners are hired and trained to assess eligibility of applicants to receive cash benefits rather than to enhance claimants’ capacity to work. As a result, the staff of SSA and the DDSs do not have the

expertise to carry out the role of returning disabled workers to productive employment.

Private Insurers Seek to Use Appropriate Staff to Assess Eligibility and Provide Return-to-Work Services

Each of the private disability insurers that we studied has access to multidisciplinary staff with a wide variety of skills and experience who can assess claimants’

eligibility for benefits and provide needed return-to-work services to enhance the

work capacity of claimants with severe impairments. The private insurers’ core staff

generally include claims managers, medical experts, vocational rehabilitation experts, and team supervisors.30 The insurers explained that they set hiring standards

to ensure that these multidisciplinary staff are highly qualified. Such qualifications

are particularly important because assessments of benefit eligibility and work capacity can involve a significant amount of professional judgment when, for example,

a disability cannot be objectively verified on the basis of medical tests or procedures

or clinical examinations alone.31 Table 4 describes the responsibilities of this core

staff of experts employed by private disability insurers, as well as its general qualifications and training.

Table 4: Responsibilities and Qualifications of Staff Employed by Disability Insurers

to Assess and Enhance a Claimant’s Work Potential

Type of staff Responsibilities Qualifications and training

Claims managers • Determine disability benefit

eligibility..

• Develop, implement, and monitor

an individualized claim

management strategy..

• Serve as primary contact for the

claimant and the claimant’s

employer..

• Focus on facilitating the

claimant’s timely, safe return to

work..

• Coordinate the use of expert

resources..

One insurer gives preference to

those with a college degree and

requires insurance claims

experience and specialized training

and education. Another requires a

college degree, a passing grade on

an insurer-sponsored test, and

specialized training and coaching..

Medical and related experts a• Collect and evaluate medical and

functional information about the

claimant to assist in the eligibility

assessment and help to ensure that

claimants receive the appropriate

medical care to enable them to

return to work..

• At one insurer, physicians also

help train company staff..

Medical staff include registered

nurses with case management or

disability-related experience and

experts in behavioral and mental

issues, such as psychologists,

experienced psychiatric nurses, and

licensed social workers. Two

insurers also employ board-certified

physicians in various specialties.b.

21

32 All three insurers, however, have behavioral care specialists specifically for managing psychiatric claims. 33Two insurers also contract with investigators and surveillance personnel to investigate potential inconsistencies between the claimant’s statements and actual activities. One company

employs field-based investigators who verify claimant information and assess the conformance

of the claim to observed claimant activities. These investigators usually have prior investigative

experience and receive ongoing training on current medical issues and other professional education.

Type of staff Responsibilities Qualifications and training

Vocational rehabilitation experts• Help assess the claimant’s ability

to work..

• Help overcome work limitations

by identifying needed assistance,

such as assistive devices and

additional training, and ensuring

that it is provided..

Rehabilitation experts are masterslevel vocational rehabilitation

counselors. In addition, one insurer

requires board-certification and 5

years of experience..

Supervisors • Provide oversight, mentoring, and

training..

One insurer gives preference to

those with a college degree and

requires 3 years’ disability

experience, some management

experience, and specialized training.

Another insurer require’s a college

degree, more than 12 years’

disability claims experience, and

completion of courses leading to a

professional designation..

a In one company, the medical expert is an employee of a company subsidiary but is often colocated with the insurers’ employees. bOne company, for example, employs 85 part-and full-time physicians, including psychiatrists, doctors of internal medicine, orthopedists, family practice physicians, cardiologists, doctors of occupational medicine, and

neurologists.

The disability insurers we reviewed use various strategies for organizing their

staff to focus on return to work, with teams organized to manage claims associated

either with a specific impairment type or with a specific employer (that is, the group

disability insurance policyholder). One insurer organizes its staff by the claimant’s

impairment type—for example, cardiac/respiratory, orthopedic, or general medical—

to develop in-depth staff expertise in the medical treatments and accommodations

targeted at overcoming the work limitations associated with a particular impairment. The other two insurers organize their staff by the claimant’s employer, because they believe that this enables them to better assess a claimant’s job-specific

work limitations and pursue workplace accommodations, including alternative job

arrangements, to eliminate these limit ations.32 Regardless of the overall type of

staff organization, each of the insurers facilitates the interaction of its core staff—

claims managers, medical experts, and vocational experts—by pulling these experts

together into small, multidisciplinary teams responsible for managing claims. Additionally, one insurer engenders team interaction by physically colocating core team

members in a single working area.

The disability insurers expand their core staff through agreements or contracts

with subsidiaries or other companies to provide a wide array of needed experts.

These experts—deployed both at the insurer’s work site and in the field—provide

specialized services to support the eligibility assessment process and to help return

claimants to work. For instance, each insurer we studied contracts with medical experts beyond its core employee staff—such as physicians, psychologists, psychiatrists, nurses, and physical therapists—to help test and evaluate the claimant’s

medical condition and level of functioning. In addition, the insurers contract with

vocational rehabilitation counselors and service providers for various vocational

services, such as training, employment services, and vocational testing.33

All of the private insurers we examined told us that they strive to apply the appropriate type and intensity of staff resources to cost-effectively return to work

claimants with work capacity. The insurers described various techniques that they

use to route claims to the appropriate claims management staff, which include separating (or ‘‘triaging’’) claimants with work potential and directing their claims to

staff with the appropriate expertise. According to one insurer, the critical factor in

increasing return-to-work rates and, at the same time, reducing overall disability

22

34One of the insurers reviewed cases of claimants who were not expected to recover medically

and to remain work-disabled for the duration of the policy every 12 to 36 months.

costs is proper triaging of claims. In general, the private insurers separate claims

by those who are likely to return to work and those who are not expected to return

to work. The insurers told us that they assign the type and intensity of staff necessary to manage claims of people who are likely to return to work on the basis of

the particular needs and complexity of the specific case. This selective staff assignment is shown in Table 5.

Table 5: Triage of Claims and Illustrations of Selective Staff Assignment for Claims

Management

Triage category Staff assigned Types of return-to-work services provided

Likely to return to

work

• Condition requires medical assistance and more

than 1 year to stabilize medically.

Medical specialist ........................ • Recommend improvements in

treatment plan to treating physician..

• Refer claimant for more specialized

or appropriate medical services..

• Ensure frequency of treatment meets

standards for condition..

• Condition requires less than a

year to stabilize.

Claims manager .......................... • Monitor medical condition. ................

• Maintain contact with employer and

physician to ensure return to work..

• Obtain input from medical and

vocational specialists as needed..

• Condition is stabilized and claimant needs rehabilitation or job accommodation to return

to work.

Multidisciplinary team including

• Vocational expert .....................

• Medical expert .........................

• Claims specialist ......................

• Specialists as needed ...............

Evaluate claimant’s functional abilities

for work..

• Customize return-to-work plan. ........

• Arrange for needed return-to-work

services..

• Monitor progress against expected

return-to-work date..

Unlikely to return

to work

• Claimant is determined unable to

return to work.

Claims manager .......................... • Review medical condition and level

of functioning regularly..

As shown in Table 5, claimants expected to need medical assistance, such as those

requiring more than a year for medical stabilization, are likely to receive an intensive medical claims management strategy. A medical strategy involves, for example,

ensuring that the claimant receives appropriate medical treatment. Claimants who

need less than a year to stabilize medically are managed much less intensively. For

these claims, a claims manager primarily monitors the claimant’s medical condition

to assess whether the claimant has stabilized sufficiently medically to begin vocational rehabilitation, if appropriate. Alternatively, claimants with a more stable, albeit serious, medical condition who are expected to need vocational rehabilitation,

job accommodations, or both to return to work might warrant an intensive vocational strategy. The private disability insurers generally apply their most resourceintensive, and therefore most expensive, multidisciplinary team approach to these

claimants. Working closely with the employer and the attending physician, the team

actively pursues return-to-work opportunities for claimants with work potential.

Finally, claimants who are likely not to return to work (or ‘‘stable and mature’’ claims) are generally managed using a minimum level of resources, with a single

claims manager responsible for regularly reviewing a claimant’s medical condition

and level of functioning.34 The managers of these claims carry much larger caseloads than managers of claims that receive an intensive vocational strategy. For example, one insurer’s average claims manager’s caseload for these stable and mature

claims is about 2,200 claims, compared with an average caseload of 80 claims in the

same company for claims managed more actively.

Regardless of the category into which a claim is placed, the claims manager is

responsible for identifying the appropriate experts and involving them in the management of the claim as an essential element of developing and implementing a cusVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
23

tomized claims management strategy. The claims manager may informally use the

assistance of experts or hold an interdisciplinary team meeting, including clinical

and rehabilitation experts, to obtain advice on developing the claims management

strategy and help in determining which specialized experts need to be deployed to

manage the claim. Further, if the claims manager refers the claim to a specialist,

that specialist may determine that additional expertise is required as well. But the

insurers told us that they escalate a claim to staff with progressively more training

and specialization, and thus higher cost, only if needed to resolve increasingly complex claims management issues. To ensure that staff are utilized cost-effectively, the

private insurers said that they compute the return-on-investment accruing from investing in return-to-work resources for a particular claimant.

Other Countries Also Selectively Apply Specialized Staff to Return Claimants to

Work

Other countries’ social insurance offices also call upon various specialists, such as

physicians, vocational experts, and psychologists, in the process of evaluating and

enhancing a person’s ability to work. If the needed expertise is unavailable in-house,

the social insurance agency may purchase the necessary services from other organizations. The expertise applied is decided on a case-by-case basis depending on the

case’s complexity. For example, the social insurance offices in Sweden are responsible for working with the regional and local employment and rehabilitation offices

to determine the appropriate types of rehabilitation services for a claimant. Medical

assessments of work capacity in Germany and The Netherlands may also be supplemented by advice from vocational or other experts.

Social insurance offices in Germany and Sweden select the appropriate staffing

and services to dedicate to particular cases on the basis of the likelihood of a successful outcome. The staff assignments made and the return-to-work actions taken

by the social insurance offices depend on an assessment of each applicant’s potential

for returning to work. In complex cases of potential long-term disability, more extensive evaluations involving psychologists and vocational specialists may be conducted

to assess the work capacity of an applicant. In Germany, medical rehabilitation is

provided before an applicant’s condition is assessed to determine whether vocational

rehabilitation is necessary. Only if successful rehabilitation seems unlikely, or if rehabilitation has been provided without success, will the social insurance offices in

Germany and Sweden typically grant the person long-term disability benefits. But,

in contrast with the private insurers we examined, once an individual is granted

long-term benefits and therefore considered too severely disabled to benefit from

services, the social insurance offices rarely reassess the person’s return-to-work potential and generally do not offer any return-to-work services or benefits.

The Netherlands also dedicates resources to evaluating return-to-work potential

and providing rehabilitation services on the basis of the particular return-to-work

potential and needs of individuals. But unlike Germany and Sweden, The Netherlands offers vocational rehabilitation to disability beneficiaries who choose to pursue

a work goal even after they are granted long-term benefits.

SSA Staff Are Not Focused on Returning Claimants to Work

In contrast to the private insurers and the foreign social insurance offices, the

focus of DDS staff who make determinations for SSA is to assess the eligibility of

applicants to receive cash benefits. The DDSs do not assess what is needed for an

individual to return to work or help an individual with work capacity to return to

work. Neither do they ensure that DI applicants or beneficiaries receive medical

treatment. To make initial benefit eligibility determinations, DDSs rely on teams

comprising a disability examiner and a medical or psychological consultant. Since

the DDS teams do not carry out the variety of roles related to return to work, they

do not include staff with the vocational skills and expertise who are incorporated

in teams used by the private and foreign disability systems. However, under the

Ticket to Work Act, beneficiaries who voluntarily choose to attempt a return to work

may tap into vocational expertise outside SSA that could provide the additional

services, expertise, and supports to help them in their effort, but only after benefit

award.

Moreover, while SSA funds the state DDSs, SSA’s regulations delegate authority

to each DDS to set hiring policies and determine how to organize staff charged with

carrying out the eligibility assessment function. Consequently, in contrast to the

standardized hiring practices used by the private insurers, considerable variation

can exist among the states in the requisite qualifications for hiring key staff. For

example, among the DDSs, the required educational background for disability examiners ranges from a high school diploma to some college to a college degree.

24

35The law contains several exceptions that allow benefits to be terminated even when a person’s medical condition has not improved. For example, benefits may be disallowed when new

or improved diagnostic techniques reveal that the impairment is less disabling than originally

determined.

In addition, SSA separates beneficiaries into groups according to their likelihood

of medical improvement for the purpose of assessing continuing eligibility for benefits, in accordance with law and regulation. The agency invests greater staff resources in reviewing beneficiaries who are most likely to medically improve than in

reviewing those with less likelihood of improvement. In contrast to practices of the

private insurers and foreign social insurance offices, SSA uses its resources to determine continuing eligibility on the basis of medical improvement and does not separately evaluate whether a beneficiary has the potential to return to work 35

CONCLUDING OBSERVATIONS

Return-to-work practices used in the U.S. private sector and in other countries reflect the understanding that people with disabilities can and do return to work. In

1996, we recommended that SSA place greater priority on helping disabled beneficiaries return to work. We also recommended that the agency develop a comprehensive strategy for this effort. While SSA has begun to focus more on return

to work, it has yet to adopt a comprehensive strategy for implementing this new

approach. For example, it has yet to integrate its return-to-work efforts with its initiatives to improve the disability decision-making process. In short, we continue to

believe SSA is still not placing enough priority on identifying and enhancing the

work potential of its beneficiaries with disabilities. We also continue to believe that

SSA could do this more effectively without jeopardizing the availability of benefits

for people who cannot work.

We acknowledge that limited data exist on the cost-effectiveness of the return-towork approaches used in the other systems we examined. In addition, SSA may face

greater difficulty in returning some of its beneficiaries to work than private sector

insurers do, since DI covers a broader population than the private insurers. Moreover, significant differences exist between SSA’s disability programs and those of

private sector disability insurers and social insurance programs in other countries.

Some of these differences can be attributed to the particular laws and regulations

governing the programs. Although SSA would face substantial constraints and challenges in applying the return-to-work practices of other programs, we believe opportunities exist for providing the return-to-work assistance that could enable more of

SSA’s beneficiaries to reduce or eliminate their dependence on cash benefits.

The Congress recognized the need to focus more on return to work when it passed

the Ticket to Work Act, which authorizes and requires SSA to conduct return-towork demonstration programs. Program managers and policymakers will be able to

learn from the experiences of these demonstrations, and they can also draw upon

the approaches of the other systems to further strengthen and enhance a comprehensive return-to-work focus. Adopting such a focus will, however, require fundamental changes to the underlying philosophy and direction of the disability programs, including the determination of disability. Policymakers will need to carefully

weigh the implications of such changes, but compelling reasons exist to try new approaches. Current estimates project that the DI trust fund will become insolvent in

2023. This financial strain, along with advances in technology and medicine that

can help individuals improve their productive potential, provides ample reason for

examining how practices from other systems could be applied to improve SSA’s return-to-work outcomes.

Mr. Chairman, this concludes my prepared statement. I would be pleased to respond to any questions you or Members of the Subcommittee may have.

GAO CONTACT AND STAFF ACKNOWLEDGMENTS

For future contacts regarding this testimony, please call Barbara D. Bovbjerg at

(202) 512–7215. Carol Dawn Petersen, Barbara H. Bordelon, Kelsey M. Bright, Julie

M. DeVault, William E. Hutchinson, and Mark Trapani also made key contributions

to this testimony.

RELATED GAO PRODUCTS

Social Security Disability Insurance: Raising the Substantial Gainful Activity

Level for the Blind (GAO/T–HEHS–00–82, Mar. 23, 2000).

Social Security Disability: Multiple Factors Affect Return to Work (GAO/T–HEHS–

99–82, Mar. 11, 1999).

25

Social Security Disability Insurance: Factors Affecting Beneficiaries’ Return to

Work (GAO/T–HEHS–98–230, July 29, 1998).

Social Security Disability Insurance: Multiple Factors Affect Beneficiaries’ Ability

to Return to Work (GAO/HEHS–98–39, Jan. 12, 1998).

Social Security Disability: Improving Return-to-Work Outcomes Important, but

Trade-Offs and Challenges Exist (GAO/T–HEHS–97–186, July 23, 1997).

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/

HEHS–97–46, Mar. 17, 1997).

1SSA 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/THEHS–96–147, June 5, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/

have something to add to the remarks?

HEHS

Chairman S

–96–62, Apr. 24, 1996).

HAW. Thank you, Ms. Bovbjerg. Ms. Petersen, do you

f Ms. PETERSEN. No, I do not.

Chairman SHAW. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. Thank you very much,

Barbara, for your testimony. You indicated in your actual written

report that it is difficult to ascertain the cost that is expended on

the various programs that you just mentioned for the disabled in

terms of job retraining programs and obviously others. Is that part

of your conclusion that there is not a lot of transparency in what

the expenditures are in some of the European and other countries?

Ms. BOVBJERG. Well, we could not get cost information from the

other countries and frankly, were we to get that, it would be difficult to know how we could translate it into a projection for SSA

if SSA were to do these things. We did get cost information from

private insurers and, as you might expect, they told us that the

cost ranged depending on the intensity of the intervention. If a

claimant was assessed as being very unlikely to be able to work it

cost them $100 a claim.

On the other end of the spectrum, if they are working with someone who they think really has a very good shot at going back to

their job, they might spend $2,300 a claim. So there is a wide variation and it is unclear when you look at it in the aggregate how

this would translate to the Social Security system because as you

have pointed out there are some differences in client populations.

Mr. MATSUI. So for the foreign countries it is just difficult to get

information from them in terms of what the actual overall cost is

in terms of comparison with the U.S., our Social Security system,

unemployment system, and obviously other aspects of the Federal

Government, state government in terms of cost that goes into it.

Then on the private side they could give you the numbers but because each individual case differs so much it is hard to make an

evaluation as to the effectiveness of the programs. Is that kind of

what you are concluding or part of the summary?

Ms. BOVBJERG. It was hard to know whether those costs predict

what SSA would experience if they were to do similar things. I

think in terms of effectiveness the private sector was uniform in

saying that these measures they took were not only effective but

they were cost-effective or they wouldn’t do them.

26

Mr. MATSUI. OK, good. Have you in your studies brought together unemployment insurance, the health policies, you know,

health care coverage, and rehabilitation services, did you use all

those different aspects that are outside of the Social Security Administration and compare it to the private sector plus the foreign

countries?

Ms. BOVBJERG. Well, when we looked at private sector and foreign countries, we noticed that they did take quite an integrated

approach— Mr. MATSUI. Right.

Ms. BOVBJERG [continuing]. In their return-to-work strategy.

That they do work with medical providers. In the private sector

they are often working with people who have health insurance and

if they are unable to get access to the kind of treatment that the

insurer thinks they need some, insurers will help assure that that

happens. That would be harder for the Social Security Administration. We have a different system. And in other countries it is much

more integrated, with fewer separate agencies.

Mr. MATSUI. It is hard to make comparisons. What about the

earlier intervention by some of these other countries as well? I

mean obviously there is Sweden and a few others, they move very

quickly when it comes to the disabled compared to in our country,

is that correct as well?

Ms. BOVBJERG. Private insurers and the other countries all move

quickly. They intervene very early. They assess work capacity,

work potential right away. After that assessment they then work

with the claimants who have potential to try to see what kinds of

support they need and to try to plan an individualized approach for

each of them.

In Social Security the claimant goes through the process, which

may be lengthy as you know, for determining eligibility and it is

only at that point now under the Ticket to Work Act that they will

be offered vocational rehabilitation services, so it is quite a different approach.

Mr. MATSUI. One of the problems that I am having is I think we

need to re-examine all of this. I think it really has to be done but

in a very comprehensive way. And I am afraid—this Subcommittee

can only take so much and then you have labor and education, you

have other Committees that are involved in this as well.

And somehow we have to find a way to integrate this because I

think the next major step is obviously to provide full services and

quick early services, early intervention, and obviously universal

coverage indefinitely while the need is there, but, you know, how

do we go about that? And the comparisons are very difficult now

because we don’t have that unified approach in this country.

Ms. BOVBJERG. But I think that what we tried to point out in our

statement is that these other systems offer ideas to draw upon.

They are doing these things. They think they are effective. It becomes up to us in the Federal Government to think about how do

we select the things that are going to work best for us and create

a comprehensive strategy?

Mr. MATSUI. Right. And I guess what I want to make sure is that

we get the overall cost comparisons so that we don’t mislead ourselves to think that, well, we can do this with the same dollars that

27

we have or the same resources that we have and expect the same

results because I don’t know if that is necessarily the case. And

your studies cannot give me, and it is not your fault, but your studies cannot give me any assurance that we are moving in that direction because you can’t get information from the foreign countries

and obviously the private insurers are a much different situation.

And somehow we need to—and again I am suggesting that the

next step may be to try to get a more comprehensive idea of what

the overall cost is in these other studies that are being done and

compare them to ours and then see how we can reallocate our resources but also find additional resources should they become necessary.

Ms. BOVBJERG. And to think about what we need, what fits in

with our policy priorities for disability.

Mr. MATSUI. Exactly. Thank you.

Chairman SHAW. Barbara, to follow up on what Mr. Matsui was

talking about, I want to talk about the fragmented services across

many governmental agencies. I assume that other countries have

the same problem and perhaps even in the private sector. How

would you compare that as far as the expeditious nature of the

handling of these to go ahead and process all these things together

so that the disabled get the help that they need, how can that be

rearranged or arranged?

Ms. BOVBJERG. Carol knows a great deal about how some of

these things work in foreign countries.

Ms. PETERSEN. Well, in the foreign countries, in some instances,

services will be provided within an agency and in other instances

there may be services that they need to draw upon from another

agency. For example, in Sweden you have a social insurance board

that handles everything from sickness benefits to long-term disability but when it comes to assessing work capacity, that is done

in the labor ministry and in the agencies that are run under that

ministry.

And in that country and similarly in Germany there seems to be

very well-developed interagency coordination and cooperation. The

agencies work very closely with one another. They are all operating

with the same mission and goal to return people to work—for those

that can—and so there are strong linkages between the agencies.

The private sector relies on contractual agreements with other

firms to provide it with services that it does not provide in-house.

Chairman SHAW. Contrast that with our government services.

Ms. PETERSEN. I am sorry?

Chairman SHAW. Contrast that with our government delivery

system.

Ms. PETERSEN. Our Federal agencies could contract for some of

these services as well but I think they would need to put them together.

Chairman SHAW. Contrast it with existing—with the way we do

it now.

Ms. PETERSEN. Oh. Again, you would need to examine what type

of new system you would want, what elements you wanted in place

and then see whether the existing agencies provide those services

or could provide those services or whether you would want to conVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
28

tract some of that with the private sector. This would have to be

part of a comprehensive strategy that would be developed.

Chairman SHAW. What I would like to see is sort of walk us

through the process that somebody with a disability goes through

when they come in trying to seek some assistance. Maybe that

would be helpful to us.

Ms. BOVBJERG. To seek return to work assistance or to the application process?

Chairman SHAW. The whole thing, just very, very briefly.

Ms. BOVBJERG. Well, when someone comes to SSA and says that

they are disabled the first thing SSA has to do is determine whether they are eligible for the program, you know, are they a citizen,

do they have 20 of the last 40 quarters in covered employment.

Once they do that the person’s disability claim is then referred to

the state-run Disability Determination Service, under contract with

Social Security and that is where the claim is evaluated for whether it meets SSA’s standards for disability.

At this point they were looking at what the nature of the impairment is, does it fit with their medical listings and if the person has

been working. The person cannot be able to earn above substantial

gainful activity. And at various points in the process maybe Social

Security tells them, yes, you are disabled and they put them on the

rolls. At that point under Ticket to Work, they can be offered vocational rehabilitation services but at no point is the person evaluated for work capacity.

We did a report a couple of years ago where we talked to about

70 DI recipients who had returned to work and we asked them

what were the things that were most important to them, why could

they return to work when maybe other people with similar disabilities couldn’t do that. Clearly personal motivation is a factor. They

talked about how they couldn’t possibly have done it without the

support of their family, their friends, their employer, without medical insurance, without the support of their physician.

And virtually everyone said they didn’t get much support from

Social Security but that these supports were really important and

it would have been helpful to have gotten more from the Social Security Administration. So I think if you are someone who wants to

return to work, you can avail yourself of the ticket to get vocational

rehabilitation but you are not getting the kind of help that I think

we see in some of these other systems, where the program really

focuses on individual needs and capacity.

Chairman SHAW. How would that affect cost containment or cost

efficiency? Are we utilizing our dollars to our best ability?

Ms. BOVBJERG. I think that if there are people who can work and

who want to work who are on the disability rolls and we are not

helping them work, then we are not spending that money wisely.

I will say that I think as Mr. Matsui points out, this is not necessarily a small expenditure. We don’t know what it would cost to

try to do some of these earlier interventions. That is something

that I think we might know more about once the Social Security

Administration embarks on their demonstration projects that are

authorized under Ticket to Work.

They are considering an early intervention demonstration which

under a mandate under Ticket to Work we will be looking at once

29

they start it and that may provide some of the information that we

would need to make these decisions.

Chairman SHAW. Thank you. Mr. McCrery.

Mr. MCCRERY. Thank you, Mr. Chairman. This is a very interesting hearing because as Members of Congress we become involved trying to help constituents qualify, in essence, for Social Security disability benefits and we become kind of with tunnel vision

just looking to get them on the program, you know, if they are

qualified and make sure they don’t slip through the cracks and we

often don’t become involved in their efforts to return to work so

this is a very, I think, worthwhile hearing and subject for us to get

into.

You mentioned, Ms. Bovbjerg, that an individual’s motivation is

obviously important in whether he or she returns to work. I am

wondering if in your analysis of other countries’ programs or even

in private sector programs what incentives you found in those programs for either the individuals or maybe the individual’s former

employer to get that individual back to work.

Ms. BOVBJERG. The incentives that insurers provide were among

the most important things that we thought we saw. Insurers begin

working with claimants really early in the process to make sure

that they get vocational rehabilitation. Insurers also review the

medical treatment that they are getting, and make sure that they

get the right medical treatment, help them with a second opinion,

another physician, whatever is necessary.

In terms of employers, the private insurers have the ability to set

the premium that the employer pays, so they are almost uniquely

able to create some direct incentives. They can set premiums to be

lower if the employer is re-employing disabled workers, and they

can subsidize the wages of the disabled worker, and that is also

true in the other countries.

There are a number of things that are done both on the employer’s side and on the individual’s side but I did want to make the

comment about motivation, that what we see is that motivation is

higher the sooner that the disability insurer or the agency works

with the claimant; the longer the claimant is not involved in a return-to-work strategy or is not getting vocational rehabilitation, the

less motivation they have.

Mr. MCCRERY. And you mentioned the pilot programs that SSA

can do under the Ticket to Work Act. Do you think that one or

more of those pilot programs will include this early intervention?

Is there anything that we can do, Mr. Chairman, as a Committee

to encourage SSA to include those types of activities in their pilot

programs?

Ms. BOVBJERG. I believe that SSA is considering that. We are

hopeful that they will look at early intervention because that would

be another source of information and experience.

Mr. MCCRERY. Yeah, I mean the evidence that you brought to us

certainly seems to indicate without any doubt that early intervention is very important but Mr. Matsui and the Chairman have both

raised the question of cost and we don’t have any answers for that

so it seems to me that if we know it is effective in getting people

back to work but we don’t know the cost, we ought to encourage

SSA to utilize some of the money under Ticket to Work that they

30

are authorized to use to discover what in fact the costs are and the

benefits are of early intervention.

It is a rather novel concept in this country, as you know, for SSA

to get involved with rehab before the person is even qualified for

benefits. I mean that is—and sometimes as you know it takes

months and even years for somebody to qualify for disability benefits so there could be a lot of intervention in that interim but for

us to pay for early intervention before the person is even qualified

is a novel concept so I think we need some evidence as to the effectiveness of that and whether it would in the end or in the long run

actually save us money or at least break even. Thank you, Mr.

Chairman.

Chairman SHAW. Yes. Mr. Matsui. Mr. Weller, do you have any

questions at this point? Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I just have a few more

questions and I am sorry I didn’t get to them in the first part of

when I asked you. In terms of the private insurance side of it, it

is hard to make comparisons I would imagine because private insurers can actually, and correct me if I am wrong, but can pick and

choose the various industries in which they seek to make coverage

so they don’t have to get, for example, mine workers if they choose

not to but they could go to lawyers, for example, and so they have

a little more opportunity, I don’t want to use the word cherry pick,

but at least selectively pick cases in which it might be a little easier. So your studies are based upon that first premise, is that correct?

Ms. BOVBJERG. In talking to private insurers, we really talked

about people with severe disabilities in their group so I don’t want

you to think we are talking about returning people with broken

legs to work.

Mr. MATSUI. No, no, I am not saying that, but I am just saying

that overall they can survive and make a profit because their universe is one in which they decide who they are going to cover.

Ms. BOVBJERG. Yes. That is correct. And I think a big difference

or the most significant difference between the caseload in the private sector and the caseload under DI is mental impairment.

Mr. MATSUI. That is why to me it is a difficult thing to make

comparisons because if I can select the people I want to cover, I

could probably pick folks that I—you know, it would be severe disabilities in some cases but on the other hand, you know, just in

terms of the overall efficiency of what I can do is probably much

better than Social Security which has to take all comers. That is

the only thing I am suggesting.

Ms. BOVBJERG. Although I would think that because there is this

triaging concept in the private sector that even with a different

population you wouldn’t expend significant return-to-work resources on claimants who were judged unable to work.

Mr. MATSUI. And the second point I would like to just explore

with you is that in your document you indicate that of those that

are insured and receiving benefits from the private sector twothirds of those same people receive Social Security disability benefits as well. And as a result of that it is really hard then to make

a comparison as to how they are getting along, these people that

31

are disabled, because they still are receiving SSI, Social Security

disability benefits, is that correct?

Ms. BOVBJERG. Yes, that is right.

Mr. MATSUI. And so it makes it difficult then to—you know, quality of life issues. Is that correct?

Ms. BOVBJERG. It is difficult.

Ms. PETERSEN. Well, I was going to add that because there is

such a high proportion of people on the private rolls, that also qualify for DI that we felt that helped us in some ways make comparisons between the two insurers, the public SSA and the private sector, because at least for a very large portion of people the degree

of impairment severity was comparable, although as you point out

there are some differences in terms of occupations and the types

of impairments. The biggest one, as you mentioned, is that the private insurers do not have the same proportion of people with mental impairments.

Mr. MATSUI. Thank you. Thank you, Chairman.

Mr. WELLER. Thank you, Mr. Chairman. I got a couple questions

I would like to direct to Ms. Bovbjerg. In your testimony you stated

that you believe that SSA should intervene earlier to foster a greater emphasis on assisting disabled applicants and beneficiaries in

returning to the work force. How do you believe this should work?

What would you recommend?

Ms. BOVBJERG. Our recommendation for SSA is actually a little

bit of a step back from that; it is to develop a comprehensive strategy for return-to-work. Part of that might include earlier intervention because, as Mr. McCrery mentioned, earlier action is really so

central to what is done in these other systems and the people we

spoke to seem to believe that that is crucial to their success.

But I think that SSA really needs to consider how they would integrate this within their current policies—what would be most effective, what would have to change, how does it work with the

process that is now in place or with a redesigned disability process.

So I would be very reluctant to recommend just taking what one

of the private sector companies does and dropping it into SSA because I think it is much more complex than that. And as we have

discussed earlier, we are not at all clear on what these things

would cost and what the benefits would be.

Mr. WELLER. Also in looking at your testimony you of course focused attention on the less stringent definition of disability that

was used initially by private sector companies. How would it work

if SSA departed from its current all or nothing definition disability

and shifted it to recognize the possibility of improvement in the capacity to work through the provisions of supports and services such

as retraining?

Ms. BOVBJERG. That is one way that other systems address early

intervention. They have this transitional period where they help

people return to work before a more rigorous definition of disability

is applied. That would require a change in law and that would be

something that you would want to look at in light of this comprehensive strategy, and you might want to consider things that

could be done within current law first. I just wouldn’t think about

these things in isolation.

Mr. WELLER. Ms. Petersen, do you have anything to add?

32

Ms. PETERSEN. Well, it is true that the private sector and the

other countries start off with a less restrictive definition and they

move to the more restrictive definition but even when they are assessing their applicants against the more restrictive definition their

determination process looks very different from that of SSA.

Again, SSA’s process of determination focuses on an applicant’s

ability to prove incapacity to work, to focus on the degree of impairment severity, whereas the private sector’s and the other countries’ determination processes focus on an approach to determine what

type of work capacity exists, the potential that the claimant has to

return to work, and what types of supports and accommodations

and other types of assistance, whether it be medical or vocational,

could be put in place to facilitate a person returning to the workplace. So even under more restrictive definitions, the process looks

very, very different.

Mr. WELLER. OK, thank you. Thank you, Mr. Chairman.

Chairman SHAW. Thank you, and I thank the panel. Thank you

very much.

Ms. BOVBJERG. Thank you, Mr. Chairman.

Chairman SHAW. We now have a rather large panel, Dr. Edward

Berkowitz, Professor and Chair, Department of History at George

Washington University; Donald Lollar, Chief, Disability and Health

Branch, National Center for Environmental Health, Center for Disease Control and Prevention, Department of Health and Human

Services, from Atlanta, Georgia; Richard Baron, who is the Project

Director of the Pew Fund for Health and Human Services for Vulnerable Adults, OMG Center for Collaborative Learning in Philadelphia, Pennsylvania; Dr. Richard Burkhauser, Sarah Gibson

Blanding Professor of Policy Analysis and Chair of the Department

of Policy Analysis and Management, Cornell University; Ralph

Mohney, who is the Senior Vice President, Customer Care Center;

and Tony Young, who is Co-Chair, Social Security Taskforce, Consortium for Citizens with Disabilities and Director of governmental

Affairs, NISH, Vienna, Virginia.

Welcome, gentlemen. We have each of your full statements,

which will be made a part of the record and you may proceed as

you see fit. Dr. Berkowitz.

STATEMENT OF EDWARD D. BERKOWITZ, PH.D., PROFESSOR

AND CHAIR, DEPARTMENT OF HISTORY, GEORGE WASHINGTON UNIVERSITY

Mr. BERKOWITZ. Thank you. I believe that history provides the

best means of explaining why our disability programs have the

structures that they do. Once we know why something was done

in the first place, we can begin to decide whether it is worth changing. Planners in the Social Security Administration wrote a tough

definition of disability into their proposals so as to distinguish

sharply between unemployment and disability but they knew that

if the program were administered in too severe a manner then the

courts and the Congress would force Federal officials to admit more

people to the rolls.

They realized that disability was an elastic concept. By 1949 the

opponents of SSDI had begun to argue that people with disabilities

should receive rehabilitation rather than a pension that allowed

33

them to retire from the labor force for life. Conferees considering

disability legislation in 1952 came up with the idea of letting the

states rather than the Federal Government make the initial determinations of disability, a feature of the program that survives to

the present day and which can only be explained by understanding

the historical context in which it arose.

In 1954 officials in the Eisenhower administration argued that

rehabilitation should be expanded rather than passing a disability

insurance program. They wanted to limit tickets out of the labor

force and instead encourage people to enter the labor force. The

Secretary of Health, Education and Welfare recommended, for example, that Social Security trust fund money be used to provide rehabilitation services but not cash benefits to insured people who

became disabled.

Congress passed SSDI in 1956 but in its formative years between

1956 and 1960 SSDI paid benefits only to workers who were 50

years of age or older. That meant that the linkage between applicants for disability benefits and vocational rehabilitation never took

hold since older individuals were not good candidates for rehabilitation. The SSDI program became, like Social Security itself, a retirement program. SSI arose as part of a discussion of welfare reform

that began in 1969.

But policy makers failed to anticipate important trends. Few people thought to ask what effect the new law would have on disability. Instead, Congress reflexively assigned welfare beneficiaries

to the administrative apparatus already established to administer

SSDI benefits. In thinking about SSI, policy makers envisioned

that it would apply mainly to the elderly who had traditionally

dominated the adult welfare categories. At the beginning, people

with disabilities made up less than half of the SSI caseload.

But when Congress was considering SSI the incidence of disability was growing at a unprecedented rate; hence, circumstances

that could have been foreseen favored a rise in the disability categories of SSI. Armed with that knowledge, policy makers might

have designed SSI differently. As things turned out, adults and

children who were either blind or disabled represented nearly twothirds of the SSI caseload by 1994.

That meant that just as disability was grafted onto a retirement

program for the elderly in the SSDI program so it was added to a

welfare measure that Congress intended primarily as a means of

serving the elderly. Another anomaly in SSI was that the entire

discussion focused on the so-called adult welfare categories but

many SSI recipients turned out to be children. That meant that a

disability determination system intended to serve people who had

been in the labor force was forced to handle many claims for children.

It shouldn’t be surprising that a disability system developed in

the thirties and created during the political conflicts of the fifties

and seventies should expenience strains after nearly a half century

of operation, but as we modernize the system we might want to

keep in mind that things seldom work out as planned. If we restrict benefits, for example, we have to be careful to avoid the situation that occurred after 1981 in which policy makers sought to

34

tighten the rolls but ended up greatly increasing the size of the

rolls.

As we modernize, we shouldn’t be blinded by false hopes as I

think have arisen in the implementation of the Americans with

Disabilities Act. The ADA has not led to the substitution of jobs

and independent living for cash disability benefits despite the

hopes of those who lobbied for the law’s creation. In the field of

welfare, we should remember that the SSI Program was itself an

attempt to modernize the system but because policy makers failed

to spot emerging trends the new program developed its own problems.

So I would end by saying that sometimes the only explanation

for a particular policy is historical but even if we know that we are

not ourselves immune from historical forces. Thank you.

[The prepared statement follows:]

Statement of Edward D. Berkowitz, Ph.D., Professor and Chair,

Department of History, George Washington University

I am Edward Berkowitz, and I am the chair of the Department of History at

George Washington University. Much of my research has focused on disability policy

and on Social Security policy.

My job today consists of providing a historical overview of Social Security Disability Insurance and Supplemental Security Income. My hope is that by observing

these programs with a historical eye, members of this committee, who have inherited the present system, will be able to see just why our disability income policy

has the structure that it does. Armed with this information, policymakers can begin

to decide which aspects of the system are worth changing. In the process of making

those changes, I would hope that Congressmen would attempt to spot emerging

trends of the sort that have so often have caused outcomes to diverge from expectations in the field of disability policy. Because this hearing marks a step in that direction, I applaud its intent.

Social Security Disability Insurance

Although Social Security Disability Insurance did not become law until July,

1956, a long period of discussion both in the executive agencies and in Congress preceded its passage. Planners in the Social Security Administration began their consideration of this measure in 1936. They devised a program that they felt could

withstand the pressures of the depression. In particular, they wrote a tough definition of disability into their proposals so as to distinguish sharply between unemployment and disability. Instead of adopting a definition similar to the ones in the existing workers’ compensation and veterans pension laws, they chose to define disability

as ‘‘an impairment of mind or body which continuously renders it impossible for the

disabled person to follow any substantial gainful occupation,’’ and was likely to last

for ‘‘the rest of a person’s life.’’

Even with this tough definition, which is similar to the one in the present law,

many doubted the ability of federal officials to administer a disability program. As

an actuary who served on the 1938 Social Security Advisory Council put it, ‘‘You

will have workers like those in the dust bowl area, people who have migrated to

California and elsewhere, who perhaps have not worked in a year or two, who will

imagine they are disabled.’’ The actuary warned that unless a highly qualified medical staff examined each applicant, the cost of the program would be higher than

‘‘anything that can be forecast.’’

Although the Social Security officials sought a strict definition of disability, they

knew that, if the program were administered in too severe a manner, then the

courts and the Congress would act to make federal officials admit more people to

the disability rolls. One of the principal Social Security researchers thought of disability as an elastic concept. ‘‘Too strict a system invites pressure to swing in the

opposite direction,’’ he said. His remarks foreshadowed the volatility that would accompanied disability insurance after 1956 and in particular the sequence of rapidly

expanding rolls in the 1970’s, attempts to stop the growth of the rolls in the early

1980’s, and the rise in the rolls in the later 1980’s and early 1990’s.

Much of the conceptual work that underpinned Social Security Disability Insurance took place in the 1930’s and early 1940’s. Passage of the measure did not occur

until the 1950’s. The delay reflected the understandable lack of attention to domesVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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tic policy during the years of World War II and the reality that public assistance

paid higher benefits and reached more people than did Social Security between 1935

and 1950. Members of Congress who represented constituents in areas that contained few industrial and commercial workers had no reason to wish to expand Social Security, much less to acquiesce to the passage of Social Security Disability Insurance. Social Security Disability Insurance did not receive serious attention from Congress until the Committee on Ways and Means held hearings on this topic, and

other topics related to Social Security, in 1949. By this time the depression was

over, and wartime conditions had helped to bring rehabilitation medicine to maturity. As a consequence, the opponents of Social Security Disability Insurance argued

that people with disabilities should receive rehabilitation, rather than a pension

that allowed them to retire from the labor force for life. Social Security officials conceded the importance of rehabilitation and even gave serious consideration to recommending that applicants to the disability rolls should receive rehabilitation services

and interim payments before they entered the rolls on a permanent basis. They

managed to persuade the Committee, however, that, important as rehabilitation

was, it did not supersede the need for cash benefits. As a consequence, the Committee included a disability insurance program in the bill that the House of Representatives passed in 1949.

The Senate chose to emphasize rehabilitation, rather than cash benefits, and did

not include disability insurance in its version of the Social Security bill that was

passed in 1950. The House receded in conference, and as a compromise measure

Congress adopted a new public assistance category, Aid to the Permanently and Totally Disabled. Up until 1950, Aid to the Blind had stood alone as a federally assisted public assistance program that reached people with disabilities.

After 1950 Social Security became a popular program that received bipartisan

support, both within the Committee on Ways and Means and in Congress itself. Social Security Disability Insurance, by way of contrast, remained a controversial

measure, and the Senate Finance Committee, in particular, refused to recommend

it to Congress. A series of incremental, compromise laws in 1952 and 1954 paved

the way for the final passage of SSDI in 1956.

The 1952 legislation introduced the idea of a disability freeze, in which a person

could receive Social Security benefits at the normal retirement age, even if he or

she dropped out of the labor force for a substantial period of time because of a disability. This measure passed Congress only after the conferees considering the legislation agreed to the unusual step of letting the disability freeze expire before it

could take effect. More importantly, the conferees came up with the idea of letting

the states, rather than the federal government, make the initial determinations of

disability—a feature of the program that survives to the present day and which can

be explained only by understanding the historical context in which it arose.

In 1954, as part of the Eisenhower administration’s plan to expand the vocational

rehabilitation program and to use the Social Security program as a means of identifying candidates for rehabilitation, Congress passed a disability freeze measure. At

this time, Secretary Oveta Culp Hobby, the second female cabinet officer in the nation’s history, recommended that Social Security trust fund money be used to provide rehabilitation services, but not cash benefits, to insured people who became disabled. She argued that the investment of OASI funds would be small but ‘‘no accountant can estimate the physical rewards, the sense of independence, pride and

usefulness and the relief from family strains which accrue to one of the disabled

when he returns to his old job or to a newly learned job suited to his limitations.’’

Her sentiments reflected the feelings of many within the Eisenhower administration

such as those of Assistant Secretary of Health, Education, and Welfare Roswell Perkins who said that the administration’s philosophy was that ‘‘the first line of attack

on disability should be rehabilitation, in order that people be restored to useful and

productive lives.’’

In 1955 the House once again passed a disability insurance measure and in 1956

the Senate Finance Committee once again opposed it. That set up a dramatic fight

on the floor of the Senate that resulted in the passage, by the barest of margins,

of Social Security Disability Insurance. As a means of gathering support, the proponents of the legislation limited benefits to those fifty or older and did not include

benefits for the dependents of disabled workers.

In its formative years between 1956 and 1960, therefore, SSDI paid benefits only

to workers who were fifty years of age or older. That meant that the linkage between applicants for disability benefits and vocational rehabilitation never took

hold, since everyone agreed that older individuals made the worst candidates for rehabilitation and the state vocational rehabilitation agencies were simply unable to

cope with the large numbers of people who applied for disability benefits. It also

36

meant that the caseload contained a disproportionate number of people with impairments that affected older individuals, such as heart disease and arthritis, rather

than people with impairments or conditions that affected younger individuals, such

as mental disorders. In effect, despite the eventual use of trust fund money to pay

for the rehabilitation of people on the SSDI rolls, the SSDI program became, like

the Social Security itself, a retirement program.

At the time, policymakers tended to think of the system for caring for people with

mental illness, who occupied the majority of the beds in the nation’s hospitals, as

a state responsibility. There was little desire to use Social Security money to subsidize state mental health hospitals. In the earliest drafts of the disability insurance

legislation, prepared in the 1930’s and 1940’s, the planners specified that no benefits

were to be paid to those with mental disabilities. In defense of this position, they

argued that most people with mental disabilities were already taken care of in state

hospitals, that mental disabilities were difficult to diagnosis, and that mental disabilities had created problems in foreign disability insurance programs, such as the

one in Sweden. They worried that benefits for people with mental disabilities would

result in malingering. This suspicion of mental illness as a basis for disability benefits persisted in the program that was passed in 1956 and made it difficult for the

system to cope with the revolution in social policy unleashed by the deinstitutionalization movement in the 1960’s.

Supplemental Security Income

Supplemental Security Income, the other pillar of our modern disability system,

arose as part of a discussion of welfare reform that President Richard Nixon initiated in 1969. Here, as with SSDI, historical particulars mattered. As it became clear

that the President’s comprehensive plan to change the Aid to Families with Dependent Children Program would not pass Congress, attention shifted to the reform of

what policymakers called the adult welfare categories. In particular, the notion

arose that the administration of Aid to the Blind, Aid to the Permanently and Totally Disabled, and Aid to the Elderly should be federalized and run by the Social

Security Administration.

Because policymakers did not engage in the sort of oversight (that, for example,

the present hearing represents), they failed to anticipate important trends. At the

time people pointed to more adequate benefits as a reason for the creation of the

program. In particular, Congress hoped to do away with such things as lien laws

and to model the new law on practices in the more progressive states. Social Security Administration officials supported the law because they hoped it would take

away some of the pressure to raise the minimum benefit under Social Security and

hence strengthen the relationship between contributions and benefits. Few people

thought to ask what effect the new law would have on disability. Instead, policymakers reflexively assigned welfare beneficiaries to the administrative apparatus already established to administer SSDI benefits. Hence, states made the initial disability determinations under SSI, just as they did under SSDI, and the two programs used a common definition of disability.

In thinking about the new program, policymakers envisioned that it would apply

mainly to the elderly, who had traditionally dominated the adult welfare categories.

Social Security officials believed that many SSI recipients would be people already

receiving Social Security benefits but who found that these benefits were not enough

to bring them out of poverty. At first these assumptions proved to be correct. When

SSI began in 1975, blind and disabled adults and children represented only 42% of

the caseload. At the same time that Congress considered SSI, however, the incidence of disability was growing at an unprecedented rate. The highest rates of

growth of the SSDI rolls, for example, occurred between 1971 and 1975. Hence, circumstances favored a rise in the disability categories of SSI. Furthermore, in the

same year that Congress created SSI, it also provided a 20% increase in Social Security benefits and indexed benefit levels to the rate of inflation. This action had the

effect of raising replacement rates under Social Security and lessening the chance

that an elderly Social Security recipient might also need to receive SSI. As a result

of these two forces, adults and children who were either blind or disabled represented nearly two thirds of the SSI caseload by 1994.

That meant that just as disability was grafted on to a retirement program for the

elderly in the Social Security Disability Insurance program so it was added to a welfare measure that Congress intended primarily as a means of serving the elderly.

Another anomaly in Supplemental Security Income was that the entire discussion

focused on what nearly everyone called the ‘‘adult welfare categories.’’ As things

worked out, however, many SSI recipients turned out be children. By 1992, for example, 16 percent of SSI beneficiaries under age 65 were children. That meant that

a disability determination system intended to serve people who had been in the

37

labor force was forced to handle many claims from children. Friction developed between the courts and other overseers of the disability determination process and the

Social Security Administration, leading to such cases as the 1990 Sullivan v. Zebley

decision.

Conclusion

It should not be surprising that a disability system developed in the 1930’s and

created during the political conflicts of the 1950’s and 1970’s should experience

strains after nearly half a century of operation. Still, the warnings of the system’s

founders remain relevant Simply put, things do not always work out as planned in

disability policy. Correcting the system’s flaws by restricting benefits can, for example, lead to a reaction of the sort that occurred between 1981 and 1984. By the time

that Congress acted in 1980 in response to rising disability rolls, the disability incidence rate was already heading down. After the administration moved to implement

the new law in an aggressive manner beginning in 1981, the system nearly fell

apart, as governors ordered their state disability determination offices not to cut

people from the rolls and administrative law judges and the courts reversed many

of the policies of the Social Security Administration. The ultimate result was that

more people, rather than less, entered the rolls.

Similarly, the creation of important civil rights laws such as the Americans with

Disabilities Act has failed to have an immediate impact on the disability rolls. The

ADA has not led to the substitution of jobs and independent living for cash disability benefits, despite the hopes of those who lobbied for the law’s creation.

In the field of welfare, the SSI program, because policymakers failed to spot

emerging trends, developed in ways unanticipated by its founders.

As my testimony has demonstrated, outcomes do sometimes diverge from expectations. It seems to me that fact only increases the responsibility of this subcommittee

to survey the landscape and identify emerging trends. As it does so, the subcommittee should realize that sometimes the only explanation for a particular policy

is historical.

STATEMENT OF DONALD LOLLAR, ED.D., CHIEF, DISABILITY

Chairman SHAW. Thank you. Dr. Lollar.

f AND HEALTH BRANCH, NATIONAL CENTER FOR ENVIRONMENTAL HEALTH, CENTERS FOR DISEASE CONTROL AND

PREVENTION, U.S. DEPARTMENT OF HEALTH AND HUMAN

SERVICES, ATLANTA, GEORGIA

Mr. LOLLAR. Mr. Chairman, Members of the Committee, I appreciate having the opportunity to speak to the Committee today. I am

Dr. Don Lollar, Chief of the Disability and Health Branch in the

National Center for Environmental Health at the Centers for Disease Control and Prevention. The mission of the CDC is to promote

health and quality of life by preventing and controlling disease, injury, and disability.

We do this by identifying public health problems, determining

the scope of these problems, conducting research to identify their

preventable causes and then implementing public health interventions. The Disability and Health Branch’s mission at CDC is to promote the health and well being of all people with disabilities. Our

branch is currently supporting both research to better measure the

disabling process and we support state programs to improve the

health of people with disabilities.

I want to focus on two primary areas. First, I will describe how

the social and physical environment plays a vital role in either inhibiting or encouraging people with a disability to participate fully

in society. Second, I will describe in broad terms how an emerging

World Health Organization (WHO) classification system can influVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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ence how society better defines and meets the needs of people with

disabilities.

Typically when a person with a physical, intellectual or emotional impairment is not participating in society the way other people do, we assume that it is because the person’s disabling condition itself prevents them from doing so. In reality, disability is a

complex interaction of the person with their environment. Some

factors that influence participation are within a person, including

medical conditions, personal strength and limitations, but other

factors are outside a person including the physical and social environments. Advances in technology and changes in attitudes have

made it clear that people with disabling conditions are capable of

doing many things. Technology has provided the tools to help people with disabilities perform daily life tasks vital to their autonomy

such as personal care, mobility, communication and even learning.

Assistive devices and technologies that allow more personal autonomy include power chairs, voice synthesizers and special telephones and computers; but, in addition, factors such as accessibility to buildings or transportation and acceptance by others also

influence participation at work or school. Unfortunately, not all

people with disabilities have access to these technologies nor have

all attitudes in our society changed. As a result, the opportunities

for complete participation that are possible have not been extended

to all persons with a disability.

To describe these various disability dimensions, the World

Health Organization has developed the International Classification

of Functioning and Disability, the so-called ICIDH–2. This classification is a way to understand and communicate more clearly

about the disabling process. The system describes the various dimensions of the disabling process, which includes physical or body

functions, everyday personal activities, societal participation, and

the environmental factors.

ICIDH-two can enable society to better define and meet the

needs of people with a disability. The advantages of this system are

that it combines an understandable framework, which includes environmental factors, and provides a classification system as the

basis for future research. While the concepts of ICIDH–2 are useful

its implementation is just beginning. The future utility of the system will depend on how widely it is used and how well users are

able to apply it.

A useful system of classifying disability elements needs to recognize the complexity of the interactions between people with disabilities and their physical and social environments. Disability policy

should more broadly address the various environmental barriers

that restrict full participation by people with disabilities. CDC

would be pleased to work with this Committee, with other Federal

and state agencies and researchers in the private sector to improve

the health and participation of people with disabilities. Thank you,

Mr. Chairman.

[The prepared statement follows:]

39

Statement of Donald Lollar, Ed.D., Chief, Disability and Health Branch, National Center for Environmental Health, Centers for Disease Control and

Prevention, U.S. Department of Health and Human Services, Atlanta,

Georgia

Mr. Chairman, Members of the Committee.

I appreciate being given the opportunity to speak to the Committee today. I am

Dr. Donald Lollar, Chief of the Disability and Health Branch in the National Center

for Environmental Health at the Centers for Disease Control and Prevention. The

mission of the CDC is to promote health and quality of life by preventing and controlling disease, injury, and disability. We do this by identifying emerging and reemerging public health problems, determining the scope of these public health problems, conducting research to identify preventable causes of public health problems,

and developing and evaluating public health intervention programs. Since 1988, the

mission of the Disability and Health Branch has been to promote the health and

well being of all people with disabilities in the U.S. including the millions of people

served by Supplemental Security Income and Social Security Disability Insurance.

The Disability and Health Branch is currently supporting both research to better

measure the disabling process and state programs to improve the health of people

with disabilities.

I will focus on two primary areas. First, I will describe how the social and physical environment plays a vital role in either inhibiting or encouraging people with

a disability to participate fully in society. Second, I will describe in broad terms how

an emerging World Health Organization classification system might influence how

society better defines and meets the needs of people with disabilities.

Typically, when a person with a physical, intellectual, or emotional impairment

is not participating in society the way other people do, one assumes that it is because the person’s disabling condition prevents them from doing so. In reality, disability is a complex interaction of a person with their environment. Some factors

that influence participation are within a person, including medical conditions, personal strengths and limitations. Other factors are outside a person, including the

physical and social environments. Advances in technology and changes in attitudes

have made it clear that people with disabling conditions are capable of doing many

things.

Technology has provided the tools to help people with disabilities perform daily

life tasks vital to their autonomy such as personal care, mobility, communication,

and learning. Assistive technologies that allow more personal autonomy include

power wheelchairs, voice synthesizers, and special telephones and computers. In addition, factors such as accessibility to buildings or transportation and acceptance by

others also influence participation at work or school. Unfortunately not all people

with disabilities have access to these technologies, nor have all attitudes in our society changed. As a result, the opportunities for complete participation that are possible have not been extended to all persons with a disability.

Let me give you an example. Jonathan is a young 21 year old with cerebral palsy.

Without assistance, he is substantially limited in personal activities, such as mobility and communication. With the aid of a power wheelchair and a voice synthesizer,

he can move around and communicate with others. His family has purchased an

adapted van that allows him to travel.

Jonathan faces several types of barriers to his full participation, some at the person-level and some at a broader societal level. Technology has removed several of

his person-level limitations, such as in the areas of freedom of movement and accessibility. If, however, Jonathan wants to participate more fully in society, such as by

working or developing friendships, other environmental factors must be addressed.

In addition to matching his abilities with potential jobs he might consider, the work

place must be accessible for his wheelchair and, not unlike many of us, his work

setting may need to be adapted to accommodate his needs. Coworkers’ attitudes toward Jonathan—both positive and negative—also impact his participation.

To assess the various disability dimensions, the World Health Organization

(WHO) has developed the International Classification of Functioning and Disability

(ICIDH–2). The ICIDH–2 is a way to understand and communicate more clearly

about the disabling process. The system describes the relationships between the various parts of the disabling process—the physical or body functions, the personal everyday activities, participation in society, and environmental factors. ICIDH–2 provides a common language that allows us to talk with one another about the different

life dimensions people with disabilities experience. The language describes each individual dimension separately and then focuses on how they may interrelate with

each other. Jonathan, for example, experiences impairments of various body systems, has difficulty with everyday activities of moving around, personal care, and

40

communication. With the intervention of assistive technology, his activity limitations are reduced. Even with greater performance in personal everyday activities,

however, he may still be restricted from participating in work, recreation, or even

social relationships. This restriction in participation is, in this case, not associated

with his impairments or his personal activity limitations, but rather due to environmental factors, such as architectural barriers, social program guidelines, or attitudes toward people with disabilities.

The ICIDH–2 may enable society to better define and meet the needs of persons

with a disability. The advantages of ICIDH–2 are that it combines an understandable framework, which includes environmental factors, addresses the interaction of

the person and the environment on participation in society, and creates a commonly

used classification system for future research. While the concepts of ICIDH–2 are

useful its implementation is just beginning. The future utility of the system will depend on how widely it is used and how well users are able to apply it.

To put it another way, participation in work, school, or any other area of daily

life depends on both the individual and their environment. As their circumstances

or situations change, an individual with an impairment or disability who was not

previously able to do so may be able to attend school or work.

A useful system of classifying disabilities needs to recognize the complexity of the

interactions between people with disabilities and their physical and social environments. Disability policy should more broadly address environmental barriers, which

restrict full participation by people with disabilities. CDC would be pleased to work

with this Committee, other federal and state agencies, and researchers to improve

the health and participation of people with disabilities.

Thank you, Mr. Chairman and members of the Committee, for the opportunity to

come before you today. I will be happy to answer any questions you have about

CDC

STATEMENT OF RICHARD C. BARON, M.A., PROGRAM DIRECChairman S

’s Disability Program or any other areas of my remarks today.

HAW. Thank you, Dr. Lollar. Mr. Baron.

f TOR, PEW FUND FOR HEALTH AND HUMAN SERVICES FOR

VULNERABLE ADULTS, OMG CENTER FOR COLLABORATIVE

LEARNING, PHILADELPHIA, PENNSYLVANIA

Mr. BARON. Good morning. My name is Richard Baron, and I

want to focus today on the sometimes surprising results of a research project I recently completed, and the implications of those

results for the Social Security disability program’s dramatically

large number of beneficiaries and recipients who have a serious

mental illness. Let me tell you the gist of my comments first. The

vast majority of people with serious mental illness are desperately

poor, and are likely to remain at or near the poverty level for the

remainder of their lives, whether they work or not.

It is time that the country and SSA commit itself not merely to

getting people back to work or off the SSA rolls, but more significantly to helping people with serious mental illness who work to

claim a fair share of the nation’s prosperity. Although I have recently taken a job at the OMG Center in Philadelphia, where I direct the Pew Fund’s Health and Human Services grant making

program for vulnerable adults, for the past 2 years I have been engaged in an independent research project funded by a Switzer Fellowship from the National Institute on Disability and Rehabilitation Research, exploring the long-term career patterns of people

with serious psychiatric disabilities.

In extensive, qualitative interviews people with serious mental

illness talked with me about their attitudes toward work, the many

jobs they had held in the past, their employment aspirations, and

the impact of the Social Security disability program on their caVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
41

reers. This research offers some surprisingly encouraging news.

First, the people I interviewed were overwhelmingly enthusiastic

about working. They readily understood the financial, psychiatric,

and social benefits that work provides.

There is no great value divide between the rest of us and those

with disabilities. Nearly everyone wants a good job. Second, most

of those I talked to had worked a great deal and had worked successfully, both before and after their diagnosis and before and after

their eligibility for Social Security. Those I interviewed had each

held many jobs with an average job tenure at each job of 18 to 24

months. Interviewees reported that they had been both productive

and personable on the job. They had been well worth their paychecks and they had gotten along with their colleagues.

Third, the people I interviewed reported that they were only

rarely fired. Indeed, about half of my interviewees left jobs for reasons that had nothing at all to do with mental illness: a company

closed down or left town, elderly parents got sick or moved, the

boss made unreasonable demands, or the salary was just too low.

Almost no one had the kind of on-the-job meltdown our rehabilitation programs dread although people sometimes did lose jobs because they were too depressed to get out of the house, too manic

to resist an adventure or too paranoid to face co-workers.

Fourth, I want to underline that people did not receive their first

diagnosis of serious mental illness and grab the next cab for the

local Social Security office. Despite mounting psychiatric problems

people often worked for years trying to avoid a life of public dependency before turning to SSA. And, as you know, many continue

to work after SSA eligibility but only at levels that would allow

them to sustain their critical life line to consistent medical support.

However, beneath these positive notes about the work motivation

and work success of people with serious mental illness lies a harsh

reality. Most people with serious mental illness who have worked

in the past or are working now are employed in entry level, low

wage, minimal benefit, and part-time jobs that do not provide them

access to prosperity. More than 75% of the job placements made by

rehabilitation agencies only help people toward the kinds of secondary labor market jobs that they have already proven fairly

adept at obtaining for themselves.

Thus, there is often little discernible economic difference for people with serious mental illness between working and not working.

Such limited outcomes are unfortunate not only because those jobs

simply do not provide living wages that lift people out of poverty

but also because such jobs no longer serve as stepping stones to

permanent full-time jobs with decent benefits, and those I interviewed were acutely aware of how unlikely it was that they would

be able to find good jobs in the future.

Many understood that this had as much to do with their lack of

educational qualifications as it did with their psychiatric disability.

Their work prospects today are similar to those of many working

class people without disabilities. The gap between the rich and the

poor is widening most often because good jobs are beyond the grasp

of poor people. Either they cannot manage the full-time demands

of the careers emerging in the new economy or they haven’t the college degrees, technical skills, or work histories these jobs demand.

42

We ought not to delude ourselves that helping someone with a

serious psychiatric disability, or with any serious disability or educational disadvantage, to obtain an entry level part-time or even

full-time job is enough. Our economy does not provide the right

kinds of opportunities for the typical SSA client to make real economic progress in the secondary labor market. We have to establish

longer term programs that genuinely help people to move into the

economic mainstream, and this means that we have to make more

substantial educational, training and other investments in beneficiaries and recipients themselves.

It is clearly a failure of public policy to pretend that getting off

the SSA rolls or extending medical eligibility is enough to escape

poverty. It is just not so. I was struck in the course of these interviews by how many women talked about wanting a decent place of

their own and how many men talked about their longing to own a

used car. These are not elaborate delusions or self-indulgent ambitions for today’s Americans but they remain at present completely

beyond the grasp of most people with serious mental illness. This

should not be so. Thank you.

[The prepared statement follows:]

Statement of Richard C. Baron, M.A., Program Director, Pew Fund for

Health and Human Services for Vulnerable Adults, OMG Center for Collaborative Learning, Philadelphia, Pennsylvania

Good morning. My name is Richard Baron, and I want to talk to you today about

the sometimes surprising results of a research project I have recently completed,

and the implications of those results for the Social Security disability program as

it continues to work toward meeting the changing needs of people with disabilities,

particularly the large number of individuals on the SSA rolls who have a serious

mental illness.

Let me tell you the gist of my comments before I fill in some of the details: the

vast majority of people with serious mental illness are desperately poor, and are

likely to remain at or near the poverty level for the remainder of their lives, and

will do so—unless there are significant changes in our national policies—whether

they work or not. It is time that the country commit itself not merely to getting people ’back to work’ or ’off the SSA rolls,’ but, more significantly, to helping people

with serious mental illness who work to claim some fair share of the nation’s re- markable prosperity.

Although I have recently taken a job at the OMG Center for Collaborative Learning, in Philadelphia, where I direct the Pew Fund’s Health and Human Services

grant making program for vulnerable adults, from 1973 to 1998 I worked at Matrix

Research Institute, a private nonprofit research and training center, also in Philadelphia, with a focus on improving rehabilitation and employment services for people with serious mental illness.

For the past two years, however, I have been engaged in an independent research

project, funded by a Switzer Fellowship from the National Institute on Disability

and Rehabilitation Research, in which I explored the long term career patterns of

individuals with substantial and sustained psychiatric disabilities, through in-depth

qualitative interviews with individuals across the Eastern half of the United States.

In these interviews, people with serious mental illness talked at length about their

attitudes toward work, each one of the many jobs they had held in the past, their

employment aspirations for the future, and the impact of the Social Security disability program on all of this.

First, then, this research has some surprisingly encouraging news. The people I

interviewed were overwhelmingly enthusiastic about working: they understood all

too well the financial, psychiatric and social benefits that work provides, and although they report that neither their clinicians nor their rehabilitation programs

are very encouraging with regard to work, they long for the sense of independence

and normalcy that working offers. There is no great ’value divide’ between the rest

of us and those with disabilities: nearly everyone wants a good job.

Second, most of those I interviewed had worked a great deal, and had worked successfully, both before and after their diagnosis, and before and after their eligibility

for the Social Security disability program. Those I interviewed had each held 6 ¥8

43

jobs, and their average job tenure was around 18 months. They reported that they

had been both productive and personable on the job: they had been well worth their

paychecks, and they had gotten along with their colleagues. They knew full well

that they both should and could work in the competitive labor market.

Third, the people I interviewed reported that they had left far more jobs than they

had been fired from. About half of the reasons people left jobs had nothing at all

to do with mental illness: a company closed down or left town; elderly parents got

sick or moved; their boss made unreasonable demands or their salary was just too

low—all the kinds of reasons you hear from people without psychiatric disabilities

in a turbulent job market. While the other half of job losses were indeed related

to their psychiatric disabilities, almost no one had the kind of on-the-job meltdown

our rehabilitation programs dread: most people lost their jobs because they were too

depressed to get out of the house, too manic to resist an adventure, too paranoid

to face coworkers, or too quickly hospitalized to open up the shop that morning.

Fourth, people did not receive their first diagnosis of serious mental illness and

grab the next cab for their local Social Security Office: despite their mounting psychiatric problems, people often worked on and off for years before entering the SSA

rolls, trying to avoid a life of public dependency. And, as you know, many continue

to work after SSA eligibility, walking the fine line that the system of disincentives

forced them to walk in order to sustain their critical lifeline to consistent financial

and medical support.

However, beneath this positive news about their motivation and relative success

at work lies a harsh reality. Most people with serious mental illness who have

worked in the past or are working now are employed in those entry-level, low-wage,

minimal-benefit, and part-time secondary labor market jobs that do not provide

them access to any reasonable measure of prosperity. More than 75% of the job

placements made from the state/federal vocational rehabilitation system or the nation’s critically-needed network of psychosocial rehabilitation agencies—including

those that are part of the nation’s supported employment initiatives—help people

toward the kinds of jobs that they had already proven themselves fairly adept at

obtaining for themselves.

Such limited outcomes are unfortunate not only because those jobs simply do no

provide a ’living wage’ that lifts people out of poverty, but also because such jobs

no longer serve as a stepping stone to permanent full-time jobs with decent benefits.

There was, among the people I interviewed, a pattern of significant gaps in their

work histories. Some of these gaps were no doubt due to prolonged psychiatric hospitalizations and post-hospital recovery periods, but it was clear to me that a good

percentage of unemployment was due to the fact that there is little discernible economic difference for them between working and not working.

Those I interviewed were acutely aware of how unlikely it was that they would

be able to substantially improve upon their current lifestyles, whether they worked

or they did not, and that this ’parchment ceiling’ had as much to do with their lack

of educational qualifications as it did with their psychiatric disability. Their work

prospects, like their work histories, are similar to those of many working class people without disabilities in the current economy, in which the gap between the rich

and the poor is widening: the ’good jobs’ are often beyond their grasp. Either they

cannot manage the full-time ongoing demands of the careers emerging in the ’new

economy,’ or they haven’t the college degrees, technical skills, or work histories

these jobs demand. Like other’s in the secondary labor market, they are often working very hard and getting nowhere, and now they are not even getting by.

We ought not to delude ourselves that helping someone with a serious psychiatric

disability—or anyone with any kind of disability, or educational disadvantage—to

obtain an entry-level, part-time job is enough. It is not. The economy of prosperity

in which we live does not provide enough opportunities for the typical SSA disability

beneficiary or recipient to make progress: people do not move readily from part-time

to full-time employment, because the jobs are not there for them. People do not

move from jobs with few benefits to jobs with full benefits because employer based

health care systems are seeking to diminish rather than expand employee benefits,

particularly in the secondary labor market. People do not move from minimal responsibilities to major assignments because they lack the educational qualifications

to do so.

We have to begin to think about longer term programs that help people to move

into the economic mainstream, and this means that we have to think in terms of

more substantial investments in SSA beneficiaries and recipients. My research

doesn’t allow me to presume that I can readily suggest the public policy alternatives

that address the problem of desperate poverty among people with serious disabilities, but stronger economic support for people with the most severe and medically

demanding disabilities, rehabilitation programs that provide people with access to

44

a job with a living wage, and a stronger support for educational programs, certainly

would seem to move us in the right direction.

But, it is clearly a failure of public policy to pretend that simply getting off the

SSA rolls or extending medical insurance eligibility is enough to escape poverty. It’s

just not so. I was struck in the course of these interviews by how many women

talked about wanting a decent home of their own and how many men talked about

their longing to own a car. These are not overly-elaborate delusions or self-indulgent

ambitions for Americans at the beginning of this new century, but they are, at

present, completely beyond the grasp of most people with serious mental illness.

This should not be so. Thank you.

STATEMENT OF RICHARD V. BURKHAUSER, PH.D., SARAH GIBChairman SHAW. Thank you, Mr. Baron. Dr. Burkhauser.

f SON BLANDING PROFESSOR OF POLICY ANALYSIS, AND

CHAIR, DEPARTMENT OF POLICY ANALYSIS AND MANAGEMENT, CORNELL UNIVERSITY, ITHACA, NEW YORK

Mr. BURKHAUSER. Thank you. My name is Richard Burkhauser.

Before I became a university professor, I taught every grade from

kindergarten through high school and that experience has made me

a show and tell speaker. So I would like to confine my remarks to

three tables that are at the end of my written statement and are

samples of the cross national research that I have done on disability programs over the last couple of years.

Table one looks at disability transfer recipients per thousand

workers by age in the four countries that the GAO report talked

about. There are some similarities in the four countries: the United

States, the Netherlands, Sweden and Germany. That is, the ratio

of people on the disability transfer rolls rises with age in all four

countries. That is to be expected because the onset of a disability

is much higher at older ages. But there are also tremendous differences in these ratios across countries and across time that clearly can’t be driven by differences in underlying health conditions.

My research suggests that there differences are really driven by

policy decisions, decisions that you, Mr. Shaw, and others in Congress must make as leaders of our country.

In the Netherlands the transfer recipient rates increase from 55

per 1000 to 138 per 1000 in the seventies, a 151% increase in beneficiaries. In the eighties this enormous growth slowed down in the

Netherlands and in the other countries in Table 1. However but it

wasn’t until the nineties that the Dutch made a concerted effort to

contain their program growth. Consequently, the ratio of people on

the rolls per 1000 workers between 1990 and 1998 actually fell by

10% in the Netherlands.

How did this happen? Benefit levels were cut and a legal basis

for disentangling the risks of disability and employment were introduced. In 1993 periodic reviews of those on the disability rolls were

made part of the system. All beneficiaries younger than age 45 received elegability reviews based on these new standards. In contrast, the United States had the highest growth in their disability

rolls in the nineties, a 63% increase, and most disturbing there was

an 87% increase in the ratio of younger workers on the rolls.

We have long known that disability programs serve as an early

retirement program for folks with disabilities who would like to get

45

out of the labor force but are too young for early Social Security

benefits. Table two shows how dramatic the differences are in the

way the Netherlands and the United States provide benefits to

such workers. If you look at the employment rate of men aged 51,

52 and 53 in the United States and the Netherlands they are about

the same in the two countries. Labor force participation rates then

fall gradually in the United States to about 67% by age 60.

In contrast, the Dutch go from 82% at age 53 to 21% at age 60.

Fully 33% of men in the Netherlands receive disability transfers at

age 60. This suggests that if there is a will, there is a way to put

as many people on the disability rolls as policymakers desire and

the Dutch have succeeded in demonstrating this point. You might

argue that this is appropriate social policy for older people. However, it is not so clear that it is appropriate social policy for younger people.

Table 3 looks at the United States employment rates of men and

women with and without disabilities and their median household

incomes between 1982 and 1998. What it shows is that business cycles affect all of us in about the same way. Growth is good for everyone. Recessions are bad for everyone. If you look at employment

rates from 1982 to 1989, which is the growth period of the Reagan

boom of the 1980s, you will see that employment of both those with

and without disabilities increased between 1982 and 1989 as did

their median household income.

We had a recession between 1989 and 1993 in which employment

fell and median household income fell for both groups. Now here

is the most serious news about what is going on in the 1990s in

the United States for folks with disabilities. After 1993, we have

had stupendous economic growth in this country which has led to

increases in employment for men and women without disabilities,

and has led to substantial increases in their real median household

income.

In contrast, the employment rates of men and women with disabilities are actually lower in 1998 than they were in 1993, the employment trough of the last business cycle. Real employment of

men with disabilities has fallen about 25% since the last business

cycle peak of 1989. (For women it is about 24%.) Median household

income of men with disabilities has fallen by about 5%. What is

going on? In my view, there has been a major shift from work to

the disability rolls, both Disabilities Insurance and Supplemental

Security Income, by folks with disabilities in the 1990s.

Let me conclude by saying that the lesson of the Netherlands is

that the disability transfer population can be quite large if disability transfer rolls are used as an alternative to long-term unemployment or welfare programs. But the experience of Germany and

Sweden suggests that these rolls can be kept within socially acceptable limits, if a work force strategy of accommodation, rehabilitation, and integration of people with disabilities in the labor market

is implemented.

The recently implemented Ticket to Work Act is certainly a step

in the right direction but future legislation is likely to be needed

to shift United States disability policy toward more work-orientated

outcomes. Thank you.

[The prepared statement and attachment follow:]

46

Statement of Richard V. Burkhauser, Ph.D., Sarah Gibson Blanding Professor of Policy Analysis, and Chair, Department of Policy Analysis and

Management, Cornell University, Ithaca, New York

LESSONS FROM EUROPEAN DISABILITY POLICY EXPERIENCE

Work in the marketplace is the principal source of income in modern industrial

societies, and ameliorating economic risks associated with exits from the labor force

due to health problems or ‘‘old age’’ is a fundamental goal of all modern social welfare systems. Yet the mix of private and public insurance against such risks varies

greatly across countries, and the resulting structure of retirement and disability

programs and the signals they send with respect to how and when to leave the labor

market are more likely to explain the dramatic differences in across country disability rolls and in employment at older ages than differences in underlying health

conditions in those countries.

International evidence suggests that public policies are the most important factor

in determining the relative size of the disability-transfer population. Over time,

countries have used different eligibility criteria to define this protected population

and different processes to implement this protection. Table 1 shows that the percentage of the working age population receiving disability transfers in the United

States, The Netherlands, Sweden, and the western states of Germany varies across

age groups and over time. As would be expected, since the prevalence of health-related impairments increase with age, disability transfers among working age people

increase at older ages in all four countries. Past that similarity, dramatic differences

are observed across countries and within each country over time.

No country demonstrates the power of policy to affect the rate of growth in the

disability-transfer population better than The Netherlands. No one would suggest

that the underlying health of the Dutch working age population has deteriorated at

a more rapid pace than that of the other countries in Table 1. Yet the growth in

the prevalence of the Dutch working age population receiving disability transfers in

the 1970s far exceeded those of other countries. Policy changes in the 1980s slowed

that growth, and dramatic policy changes in the 1990s have turned it around. Benefit levels were cut and a legal basis for disentangling the risks of disability and

unemployment were introduced. But real changes in the rolls only began in 1993

when eligibility standards and the process for continuing benefits were dramatically

tightened. In 1993, periodic review of those on the disability rolls was made a part

of the system. All beneficiaries younger than age 45 were reviewed based on the

new standards.

As can be seen in Table 1, as a result of these reforms and others, the prevalence

of disability transfer recipients per 1000 workers fell by 10 percent between 1990

and 1998. While the ratio of disability transfer recipients to workers in 1998 is still

higher in The Netherlands than in the other countries, it is the United States which

experienced the greatest growth in its disability rolls among the four countries in

Table 1 in the 1990s. Most ominously, the fastest growth in the United States disability transfer rolls was among younger persons aged 15 to 44.

It has long been recognized that disability transfer programs act as a form of

early retirement for older workers with some level of disability. Hence transfer payments rather than rehabilitation or integration into the workforce via job creation

or quotas, have dominated policy in all four countries for this older age group. Table

2 compares the age specific employment rates of men aged 51 through 61 in The

Netherlands and the United States in 1992 and shows how disability transfers and

private employer pensions are used as a bridge to the earliest social security retirement age in these two countries.

But the rapid increase in the disability rolls among younger workers is a much

more controversial policy outcome and one that has already pushed the United

States ahead of Sweden and Germany in the prevalence of disability transfers in

this age group. The rapid increase in the SSI-children program population in the

early 1990s is a major example of the increased use disability based transfers to

provide a minimum income level to younger persons. In contrast, both Swedish and

German policies are much more focused on integrating younger workers with disabilities into the labor market than is United States disability policy.

One possible consequence of the relaxation of eligibility standards for SSI-disability and SSDI benefits in the late 1980s in the United States is that while the

disability transfer rates have been rapidly rising, the employment rates of men and

women with disabilities in the United States have been falling. As Table 3 reports,

not only did the employment rates of men and women with disabilities fall as the

country moved from a business cycle peak in 1989 to a business cycle trough in 1992

47

but they continued to decline thereafter despite six consecutive years of economic

growth.

The lesson of The Netherlands suggests that the size of the disability transfer

population can be quite high if disability transfer rolls are used as an alternative

to long term unemployment or welfare programs. But experience in Germany and

Sweden suggests that these rolls can be kept within socially acceptable limits if a

‘‘work first’’ strategy of rehabilitation and integration of people with disabilities into

the labor market is implemented. The recently implemented Ticket to Work/Work

Incentives Improvement Act is certainly a step in the right direction, but future legislation is likely to be needed to shift United States disability policy toward more

work orientated outcomes.

REFERENCES

Aarts, Leo J.M., Richard V. Burkhauser, and Philip R. de Jong (eds.). Curing the

Dutch Disease: An International Perspective on Disability Policy Reform. Aldershot,

Great Britain: Avebury, Ashgate Publishing Ltd. (1996).

Burkhauser, Richard V., Mary C. Daly and Andrew J. Houtenville. ‘‘How Working

Age People with Disabilities Fared Over the 1980s and 1990s Business Cycle.’’ Cornell University Working Paper. (2000).

Burkhauser, Richard V., Debra Dwyer, Maarten Lindeboom, Jules Theeuwes, and

Isolde Woittiez. ‘‘Health, Work, and Economic Well-Being of Older Workers, Aged

51 to 61: A Cross-National Comparison Using the United States HRS and The Netherlands CERRA Data Sets.’’ In James Smith and Robert Willis (eds.), Wealth, Work,

and Health: Innovations in Measurement in the Social Sciences. Ann Arbor, MI: University of Michigan Press, (1999), pp. 233–265.

Table 1.

—Disability Transfer Recipients Per Thousand Workers by Age in Four OECD Countries, 1970 to 1998

Age 1970 1975 1980

Growth

Change

1970–1980

(percent)

1985 1990

Growth

Change

1980–1990

(percent)

1995 1998 a

Aged 15 to 64 Years

United States ............................................................................................................................... 27 42 41 52 41 43 5 64 70 The Netherlands .......................................................................................................................... 55 84 138 151 142 152 10 142 137 

Sweden ........................................................................................................................................ 49 67 68 39 74 78 15 106 27Germany ....................................................................................................................................... 51 54 59 16 72 55 ¥7 57 60 

Aged 15 to 44

United States ............................................................................................................................... 11 17 16 45 20 23 44 39 43 The Netherlands .......................................................................................................................... 17 32 57 235 58 62 9 57 59 

Sweden ........................................................................................................................................ 18 20 19 6 20 21 11 32 34 Germany ....................................................................................................................................... 7 6 7 0 8 5 ¥29 6 8 

Aged 45 to 59

United States ............................................................................................................................... 33 68 83 151 71 72 ¥13 103 104 The Netherlands .......................................................................................................................... 113 179 294 160 305 339 15 271 241 

Sweden ........................................................................................................................................ 66 95 99 50 108 116 17 151 145 Germany ....................................................................................................................................... 75 64 84 12 103 75 ¥11 87 81 

Aged 60 to 64

United States ............................................................................................................................... 154 265 285 85 254 250 ¥12 314 329 

The Netherlands .......................................................................................................................... 299 437 1,033 245 1,283 1,987 92 1,872 2025 

Sweden ........................................................................................................................................ 229 382 382 67 512 577 51 716 709 Germany ....................................................................................................................................... 419 688 1,348 222 1,291 1,109 ¥18 1,347 1,020 

(a) U.S. data are from 1997.Source: Derived and updated from Aarts, Burkhauser, and De Jong (1996), Table 1.1.

Table 2.

—Prevalence of Work and Transfer Benefits for Men by Age in The Netherlands and in the United States

Age

United States The Netherlands

Working a Disability Transfers b Not Working Employer Pen- sion c Other d Working a Disability Transfers b Not Working Employer Pen- sion c 

51 ............................................................................................................................................... 82.6 4.1 0.9 12.4 83.3 13.7 0.0 52 ............................................................................................................................................... 84.9 3.0 2.4 9.9 87.5 8.1 1.9 53 ............................................................................................................................................... 82.8 3.5 0.5 13.2 81.9 14.1 1.7 54 ............................................................................................................................................... 84.6 2.9 2.7 9.8 74.6 17.2 1.9 55 ............................................................................................................................................... 78.5 4.5 1.8 15.3 72.2 16.7 3.5 56 ............................................................................................................................................... 76.9 5.0 6.3 11.8 59.0 23.9 10.2 57 ............................................................................................................................................... 80.3 4.6 7.0 8.0 58.7 17.4 15.6 58 ............................................................................................................................................... 71.5 7.5 9.2 12.0 49.0 25.0 19.0 59 ............................................................................................................................................... 68.9 6.5 9.3 15.3 44.1 23.2 27.5 60 ............................................................................................................................................... 67.9 6.1 12.6 13.3 20.9 33.3 42.3 61 ............................................................................................................................................... 65.9 5.6 16.0 12.5 16.8 26.9 50.5 

a Those who are working at the time of the interviewC1993 in The Netherlands and 1992 in the United States.b Those who are not working and are receiving disability transfers at the time of the interview.c Those who are not working or receiving disability transfers but who are receiving private pension benefits at the time of interview. d Those who are not working and receiving neither disability transfers nor private pension benefits at the time of interview.

Source: Burkhauser, Richard V., Debra Dwyer, Maarten Lindeboom, Jules Theeuwes, and Isolde Woittiez.(1999) Data from The Netherlands are weighted values of the 1993 Wave 1 CERRA Household Survey. Data from the Unite

weighted values of the 1992 Wave 1 Gamma Release of the Health and Retirement Survey.

50

Table 3.—Employment Rates and Median Household Size-Adjusted Income of Civilian Aged 25 through 61 by Gender and Disability Status in 1982, 1989, 1992, and

1998a

Groups b

Employment Rate c Percentage Changed

1982 1989 1993 1998 1982–89 1993–98 1989–98

Men without Disability .............. 95.1 96.1 94.5 95.1 1.0 0.6 ¥1.0

Men with Disability .............. 41.7 44.0 37.2 34.4 5.4 ¥7.8 ¥24.5

Women without

Disability ......... 69.3 77.0 78.3 80.8 10.5 3.1 4.8

Women with Disability .............. 29.3 37.5 33.4 29.5 24.6 ¥12.4 ¥23.9

Groups b

Median Income e Percentage Change d

1982 1989 1993 1998 1982–89 1993–98 1989–98

Men without Disability .............. 27,399 31,888 30,076 33,486 15.1 10.7 4.9

Men with Disability .............. 13,948 16,477 14,490 15,717 16.6 8.1 ¥4.7

Women without

Disability ......... 24,486 28,841 27,512 30,384 16.3 9.9 5.2

Women with Disability .............. 13,200 14,789 13,061 14,173 11.4 8.2 ¥4.3

Source: Burkhauser, Daly and Houtenville (2000) calculations based on the March Current Population Survey, 1981–1999. a Those less than age 25 or more than age 61 or in the Armed Force are excluded. In our study, persons are considered to have a dis- ability if they report having a health problem or disability, which prevents them from working or limits the kind or amount of work they can do.b Disability status is for year following income year. Beginning in survey year 1994, computer assisted interviews were used which slightly

modified the question we use to define disability. c Includes as employed only those who work 52 hours or more in a given year and have positive earnings.

dWhen calculating percentage change, we use the average of the two years as the base.

e All dollar amounts are in 1998 dollars. Income is household size-adjusted by dividing income by the square root of household size. Negative sources of income were converted to zero. In addition, the bottom and top 5 percent of the household size-adjusted income distribution are excluded from the analysis.

Richard Burkhauser, Ph.D.

DEPARTMENT OF POLICY ANALYSIS AND MANAGEMENT, CORNELL UNIVERSITY

The experiences of other countries can shed some light on the search for appropriate Social Security Disability Insurance (SSDI) and Social Security Income (SSI)

program eligibility criteria for people with disabilities. This discussion focuses primarily on experiences with disability-transfer programs in four countries—the Netherlands, Germany, Sweden, and the United States (Aarts et al., forthcoming).

Before recommending dramatic changes in our current SSDI and SSI eligibility

criteria, one has to ask several questions. Is the current system sufficiently in trouble to warrant such changes? If so, what is the evidence of the failure of the current

system to achieve its objectives, and what criteria were used to determine the size

of this failure? Without answers to these questions, it is difficult to either put a new

system into place or to determine whether or not the new system is superior to the

current system.

International evidence suggests that public policies are the most important factors

in determining the relative size of the disability-transfer population. Over time,

countries have used different eligibility criteria to define their protected population

and different processes to implement this protection. Described below are some of

the differences across countries and over time in these criteria and processes as well

as an overview of the tradeoffs that should be considered in establishing them.

Table 5–1 shows that the working age population receiving disability transfers in

the Netherlands, Germany, Sweden, and the United States varies across age groups

and over time. As would be expected, since the prevalence of health-related impairments increases with age, disability transfers among working age people increases

at older ages in all four countries. Past that similarity, dramatic differences are observed across countries and within each country over time.

Table 5.1 Disability Transfer Recipients per Thousand Workers by Age, in Four OECD Countries, 1970 to 1995

Age 1970 1975 1980

Growth

Change

1970–1980

(percent)

1985 1990

Growth

Change

1980–1990

(percent)

1995

Aged 15 to 64 Years

United States ............................................................................................................................................... 27 42 41 52 41 43 5 64 The Netherlands ........................................................................................................................................... 55 84 138 151 142 152 10 142 

Sweden ......................................................................................................................................................... 49 67 68 39 74 78 15 106 Germanya ..................................................................................................................................................... 51 54 59 16 72 55 ¥7 47 

Aged 15 to 44

United States ............................................................................................................................................... 11 17 16 45 20 23 44 39 The Netherlands ........................................................................................................................................... 17 32 57 235 58 62 9 57 

Sweden ......................................................................................................................................................... 18 20 19 6 20 21 11 32 Germany ....................................................................................................................................................... 7 6 7 0 8 5 ¥29 6 

Aged 45 to 59

United States ............................................................................................................................................... 33 68 83 151 71 72 ¥13 103 

The Netherlands ........................................................................................................................................... 113 179 294 160 305 339 15 271 

Sweden ......................................................................................................................................................... 66 95 99 50 108 116 17 151 Germanya ..................................................................................................................................................... 75 64 84 12 103 75 ¥11 87 

Aged 60 to 64

United States ............................................................................................................................................... 154 265 285 85 254 250 ¥12 314 The Netherlands ........................................................................................................................................... 299 437 1,033 245 1,283 1,987 92 1,872 

Sweden ......................................................................................................................................................... 229 382 382 67 512 577 51 716 Germanya ..................................................................................................................................................... 419 s 688 1,348 222 1,291 1,109 ¥18 890 

a German data refer to the population in the states in the former Federal Republic of Germany.

Source: Derived and updated from Aarts, Burkhauser, and de Jong (1996), Table 1.1.

52

FIGURE 5–1.—Targeting social policies on the working age population with disabilities. SOURCE: Burkhauser, 1997. Reprinted with permission of Dr. Richard V.

Burkhauser, Cornell University.

Those differences have more to do with the policies that govern the disability eligibility determination process than with changes in the underlying health and disability patterns of those populations.

The preponderance of evidence to date suggests that overall health in each of

these countries, measured either by morbidity or mortality scales, has improved sigVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
53

nificantly over the last 25 years. Yet the number of people on disability-transfer programs relative to the working population has increased in all four countries.

No country demonstrates the power of policy changes to affect the rate of growth

in the disability-transfer population better than the Netherlands. No one would suggest that the underlying health of the Dutch working age population has deteriorated at a more rapid pace than that of the other countries in Table 5–1. Yet the

growth in the prevalence of the Dutch working age population receiving disability

transfers in the 1970s far exceeded that of the other countries. Policy changes in

the 1980s slowed this growth, and dramatic policy changes in the early 1990s have

turned it around. (See Aarts et al. [forthcoming], for a fuller discussion.)

The dramatic differences in disability-transfer populations seen in Table 5–1 can

be explained using Figure 5–1. Circle A represents the entire working age population with disabilities, using the Americans with Disabilities Act of 1990 (ADA) definition, namely, working age people who have a physical or mental impairment that

substantially limits one or more major life activities, or a record of such impairments, or who are regarded as having such impairments. This definition is more allencompassing than that of Nagi or the World Health Organization, since it includes

people who have limitations, but may or may not be failing in some socially expected

role. Previous studies applying this broader definition to the United States have

found that from 8 to 12 percent of the total working age population would be included in the population with disabilities depending on the data set and questions

used (Bound and Burkhauser, forthcoming).

When the ADA definition is applied across countries or over time in the same

country, the size of the overall population in circle A does not dramatically change.

However, two subsets within this population, circle B—the eligible disability-transfer population—and circle C—the actual disability-transfer population—will change

dramatically.

Circle A is more or less invariant to policy decisions. It is a function of demographic characteristics, such as age and gender. But it is also affected by the quantity and quality of medical care, the wealth of the country, and the education of the

population with regard to their personal health. In the long run, circle A can increase or decrease as a result of medical innovations. It decreased when polio was

eradicated and will do so again if a cure is found for AIDS. But circle A can also

increase. If medical innovations prolong life but do not offset ensuing impairments

and functional limitations, then circle A would increase, as, for instance, it did in

the case of advancements in medical care for severe spinal cord injuries.

By contrast, the size of the population in circle B has historically been a reflection

of public policy in all four countries in Table 5–1. Eligibility rules vary across the

countries. Only in the United States is eligibility limited to those who are totally

disabled. In the other three countries, eligibility is offered to those who are partially

disabled. The criteria for failure to perform work are also important in determining

the size of the circle B population. In the United States, the definition is strict and

relates to any substantial gainful employment, while Sweden and Germany use a

commensurate work definition. That is, if the impairment prohibits a person from

doing the kind of work the person has been doing in the past, this is sufficient to

become eligible for disability-transfer benefits. In 1993, in an effort to reduce system

growth, the Netherlands abandoned its definition of commensurate work and adopted a ‘‘substantial gainful employment’’ criterion like the one used in the United

States. This change in eligibility criteria is one of the reasons for the reduction in

the relative size of the disability-transfer population in the Netherlands in the

1990s seen in Table 5–1.

A major distinction between the United States disability-transfer program and

that of other countries in Table 5–1 is the availability of immediate benefits. The

United States has a five-month waiting period and no universal short-term disability program, although many individual employers have short-term disability

benefits programs. Sweden, Germany, and the Netherlands all have sickness benefits that can continue for several years. Since 1993, however, the Netherlands has

required employers to pay for the first six weeks of sickness benefit. When that policy was imposed, the proportion of workers receiving sickness benefits declined.

Labor market considerations affect the size of the eligible population. Prior to

1987, the Netherlands had an elaborate procedure to measure earning capacity in

which officials looked at the characteristics of a person’s past jobs. They tried to link

the characteristics of these jobs to their measure of the person’s impairments. They

also had a very intricate six-category system of partial disability, starting at the 15

percent disability level. However, if a person was declared to be partially disabled,

even if only at the 15 percent level, but was not currently employed, the person received a full disability benefit unless the government could show otherwise. Hence

while the Netherlands had an elaborate system of trying to assign a share of disVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
54

ability to each individual, the overriding importance of labor market considerations

effectively meant that very few people actually got partial benefits.

Circle C represents the population currently receiving disability benefits. The size

of the circle C population depends on application decisions by the potentially eligible

as well as on acceptance decisions by program gatekeepers. Applications are sensitive to general economic conditions. They rise in bad economic periods and fall

when the economy improves. For individuals, the size of their benefits and their

ease of access to them relative to other alternatives is an important factor in their

decision to apply. In disability systems that emphasize work through rehabilitation

and quotas, such as in Germany and Sweden, even though disability-transfer benefits are relatively generous, transfer rolls remain relatively low because many in the

transfer-eligible population work.

The relative size of disability-transfer benefits compared to those offered by other

government programs also makes a difference. For instance, transfer benefits in the

German disability system are not much different from the benefits offered by other

German transfer programs. By contrast, relatively easy access and high benefits relative to other transfer programs in the Netherlands and in the United States have

meant that during the trough period of the business cycle, much greater pressure

is put on their disability-transfer programs.

Circle B and C populations do not necessarily have to coincide. Some in circle B

work and therefore do not apply for benefits, while others in circle B do not know

they are eligible and therefore do not apply. Finally, some in circle B have applied

for benefits and are eligible, but they are mistakenly denied benefits. This is known

as type–2 error.

Circle C is not a subset of circle B, because some of the circle C population are

awarded benefits even though they are not truly eligible. This is Type–1 error.

These people are currently unemployed and have disabilities, but they are capable

of substantial gainful employment and hence do not actually meet circle B eligibility

criteria.

Policy choices make a difference in the size of the two circles and in the degree

that they coincide. In its effort to redesign the disability decision process, SSA must

decide what it is trying to achieve—for example, reduce the size of circle C, insure

that circle B and circle C coincide, insure that circle C is a subset of circle B, minimize Type–1 error, or minimize Type–2 error. If SSA is interested in reducing errors, which is more important—reducing false eligibility or false ineligibility? The

discussion at this meeting suggests that we are primarily focusing on reducing

Type–1 error. But in making judgments about what we are trying to achieve, it is

important to think about the social costs of both types of error when discussing the

tradeoffs between added administrative costs and the reduction of such errors.

One important criterion that could be used in any evaluation of a redesigned system is its ability to reduce the uncertainty of outcomes on the part of all parties

involved. Ex ante the system should provide better information about the likely outcome for people with disabilities who are required to make the difficult choice of if

and when to apply for benefits.

Half of the people with disabilities who have gone through this process and have

been denied benefits never work again. There are two reasons why they never work

again: (1) the system mistakenly denied them benefits, and (2) the scarring effect

of the system itself. If a person invests in trying to get on the program, the rational

way to do so is to do everything possible to diminish the possibilities of being judged

capable of performing any substantial gainful activity. A person with disabilities

planning to apply for benefits has to be unemployed for six months prior to application and during the determination process. Obviously, people out of the workforce

for two years are much less likely to get back into the labor force, regardless of their

initial condition, than those who try to get back to work before applying for benefits.

Therefore, it is possible that a more complex method of reducing errors could lead

to worse outcomes, if that system increased the uncertainty of the final outcome to

the applicant. Rather than searching for a system that reduces errors based on some

gold standard, which in the end will be to some degree arbitrary, a redesigned system should reduce the uncertainty of the process and hence the social costs associthere.

ated with the disruptions in the lives of people with disabilities.

Chairman SHAW. Thank you. Mr. Mohney. Watch your cord

f

55

STATEMENT OF RALPH MOHNEY, SENIOR VICE PRESIDENT,

CUSTOMER CARE CENTER, UNUMPROVIDENT CORPORATION, PORTLAND, MAINE

Mr. MOHNEY. Thank you, Mr. Chairman, Members of the Committee. My name is Ralph Mohney and I am Senior Vice President

for the Customer Care Organization of UnumProvident Corp. I appreciate this opportunity to testify about UnumProvident’s roll as

the world’s leading provider of disability insurance. First, however,

I would like to commend this Congress for passing the return-towork legislation that was enacted last year.

Your efforts eliminated two significant return-to-work barriers by

continuing government health insurance and by setting up trial return to work opportunities. My comments will focus on how to

build upon this landmark legislation. UnumProvident is a publicly

traded insurance holding company. We provide insurance solutions

to a wide clientele ranging from individuals to small employers to

several of the nation’s largest industrial companies and internationally in Japan, Europe and Canada. We are the world’s leading provider of disability insurance.

UnumProvident’s disability claim organization, which we call

Customer Care, provides critical support for very diverse customers. The organization fulfills this traditional roll of thoroughly,

fairly, and objectively evaluating claims, paying legitimate claims

promptly and with a high level of service, and defending against

those few claims that are not legitimate. But our claim management employees then go beyond the traditional role to proactively

assist insureds in their return-to-work efforts.

This involves providing specialized resources when appropriate to

help each individual regain the ability to earn an income and become self-sufficient once again. The UnumProvident claim management model is driven by four important elements, triage, early

intervention, impairment-based claim management, and face-toface interaction provided by our GENEX subsidiary. Nearly half of

our new long-term disability claimants are able to return to work

within 6 months of receiving benefits.

For our claimants who are also receiving Social Security benefits,

we experience a recovery rate that is roughly six times the reported

Social Security recovery rate. As stated in the Ticket to Work legislation, one-half of 1% improvement in Social Security disability recovery rates would yield $3.5 billion of savings for the program. Social Security can improve its experience if the logical next steps of

last year’s legislation are adopted.

I recommend that this Subcommittee explore the following four

key areas based on our experience in the private sector. The first

area is triage. Over one million new claims are received for Social

Security disability payments each year. The conditions of these individuals range widely from situations involving permanent and

total disability to shorter term disability where recovery can be expected. An appropriate triage system applying the right resource to

the right claim at the right time will enhance return-to-work effectiveness and insure appropriate use of resources.

The second area is early intervention. For claimants with recovery potential early and ongoing clinical intervention is essential to

return-to-work success. We have found that face-to-face personal

56

attention, particularly our expert GENEX resources, are invaluable

in terms of evaluating appropriateness of care. The third area is

continual claim management. Social Security policy should go beyond simply determining initial eligibility and focus more on the

ongoing eligibility for benefits and more continual review of claims.

Again, we return 50% of long-term disability claimants to work

within the first year. Ongoing management is essential for this success and it is important to integrate medical advances into the continual review process. The fourth area is adaptable benefits and incentives. Recovering from disability really is an incremental process and adaptable benefits are essential to address the stages of

disability. Features such as transitional work funding and partial

payments, as well as assistance through vocational training.

In addition, legislation could provide more incentives for employers who return employees to work. These recommendations will

create financial value for the individuals and for the Social Security program. While there will be initial cost, the long-term savings

will prove significant. In conclusion, let me say that there is dignity

associated with a person’s ability to work and great value in the

ability to live a full and independent lifestyle. This philosophy and

its focus on abilities is behind all of the customer care resources of

UnumProvident. Thank you once again for allowing me this opportunity.

[The prepared statement follows:]

Statement of Ralph Mohney, Senior Vice President, Customer Care Center,

UnumProvident Corporation, Portland, Maine

My name is Ralph Mohney, and I am the Senior Vice President for the Customer

Care organization of UnumProvident Corporation (UnumProvident). I appreciate

this opportunity to share our corporate best practices through testimony about

UnumProvident’s role as the world’s leading provider of disability insurance.

First, however, I would like to commend this Congress for passing the return-towork legislation that was enacted last year. Your efforts eliminated two significant

return-to-work barriers by continuing government health insurance and by setting

up opportunities for trial return to work without forfeiting Social Security disability

benefits if the process is not successful. My comments will focus on how to build

upon this landmark legislation.

Corporate Background and Philosophy

UnumProvident is a publicly traded insurance holding company formed by the

merger of Unum Corporation of Portland, Maine, and Provident Companies, Inc., of

Chattanooga, Tenn.

UnumProvident has major centers of operation in Chattanooga, TN; Portland,

ME; Columbia, SC; and Worcester, MA. Our international presence includes disability operations in the United Kingdom, Canada and Japan. In addition, the company utilizes the resources of its subsidiaries, GENEX and OCI, headquartered in

Pennsylvania and Wyoming respectively. The single largest functional area within

UnumProvident is our unique Claims Management area, which we have named

Customer Care. It is an area of rapid growth—we recently held a ribbon-cutting

ceremony for a new claim management operation in Glendale, CA to serve the West

Coast market.

UnumProvident provides insurance solutions to a wide clientele, ranging from individuals through small employers to several of the nation’s largest industrial companies. UnumProvident reported total revenue of $9.4 billion for the twelve months

ending March 31, 2000. The company holds the following industry-leading positions:

Individual income protection #1

Long-term disability income protection #1

Short-term disability income protection #1

Group long-term care #1

57

1McNeil, J.M. (1997) Americans with Disabilities: 1994–95. U.S. Bureau of the Census Current Population Report P70–61. Washington, DC: U.S. Department of Commerce. 2 National Safety Council, Accident Facts, 1996 Edition.

We strive to deliver on our customer commitment through our integrated product

solutions, return-to-work expertise, and responsive service. We are dedicated to our

purpose, ‘‘protecting everything you work for.’’ Having built the premier leadership position in the insurance industry’s strongest

growth markets, we are deploying our people, technology, integrated product and

service offerings, and multiple channel network to deliver the value the marketplace

demands. UnumProvident serves many customers. For this discussion, I will focus

on the group long-term disability insurance solutions we provide to employers to assist their employees during times of disability.

Meeting Customer Needs

UnumProvident is in the business of protecting our customers’ income. Disability

insurance is not a mandated form of financial protection. It is a choice. Therefore,

we are committed to educating consumers about the value of disability insurance

as an essential and necessary form of financial protection. The statistics clearly support this need. Approximately 54 million Americans (1 in 5) have a disability. This

represents 21 percent of the total population of the United States.1 To place that

in an employer perspective, in 1995, 120,000,000 workdays were lost because of

work injuries.2

We recognize that disability affects all walks of life, and our comprehensive and

affordable income protection portfolio addresses this spectrum. Our company seeks

opportunities to position our three leading product platforms—individual, group and

voluntary benefits—to appropriately cover the continuum of life needs that are experienced by our customers.

UnumProvident’s product strategy is designed to fit the industries for which we

write business. We recognize that today’s consumer marketplace has a multitude of

different needs, many of those being nontraditional. For example, we do not automatically exclude high-risk industries such as trucking or high-rise construction

from insurance coverage; if otherwise eligible, they have the option to purchase catastrophic disability coverage. For customers who have suffered disability and wish to

reenter the workforce in a self-employed fashion, we offer financial support they can

use to start their own business. UnumProvident also participates in the important

long term care market, leading the industry in providing group long term care. Our

product pays benefits for the loss of two or more ‘‘Activities of Daily Living’’ or se- vere cognitive impairment. A simplified indemnity model pays the full monthly benefit amount selected, regardless of the actual expenses incurred.

Through special risk coverages such as these, UnumProvident is able to help answer non-traditional financial needs through creative solutions.

Customer Care Background

UnumProvident’s disability claims organization provides critical support for these

diverse customer needs. The organization fulfills the traditional role of thoroughly,

fairly and objectively evaluating claims, paying legitimate claims promptly and with

a high level of service, and defending against those few claims that are not legitimate. Our claim management employees then go beyond the traditional role to

proactively assist insureds in their return-to-work efforts. This involves providing

specialized resources when appropriate to help each individual regain the ability to

earn an income and become self-sufficient once again.

UnumProvident terms its claims management organization the Customer Care

Center. This name was chosen because it truly reflects the department’s mission— serving customers, protecting them against loss of income, and caring enough about

our customers to assist them in return-to-work efforts when disability strikes. We

believe that our success lies not just in how we manage claims, but in the policies

and procedures that form the basis of our organization. Through appropriate contracts and service, we ensure that our customers are receiving the benefits for which

they have paid. In 2000, we expect to manage more than 400,000 new disability

claims across our six Customer Care Centers in the United States.

The Claim Management Model

The response to our interpretation of marketplace needs has been the creation of

a Customer Care organization focused on assuring that every income protection

claim receives the most effective early intervention and the most appropriate management possible. The UnumProvident claim management model is driven by these

four important elements:

58

3 Annual Review of Disability Management, 1992, The Washington Group/Health Institute for

Rehabilitation and Disability Management.

Triage: During triage, each claim is examined and the appropriate resources are

assigned to meet the specific claim criteria. Claims are channeled to one of five different claim management pathways, depending on the level of clinical and other resources which would be appropriate for the claim. Detailed evaluation occurs within

five days of claim receipt.

Early intervention: An emphasis on early intervention speeds recovery and return

to work. For claims with clinical issues, nurse case managers make contact with the

attending physician, employer and insured within 48 hours of claim receipt. The

purpose of this contact is to evaluate appropriateness of care, to develop treatment

plans geared toward return to work, and to ensure that employers are willing to

make reasonable accommodations.

Duration-and impairment-based management: The state-of-the-art initial triage

process speeds claims to the most appropriate care pathway. In addition to durationbased units, our impairment-based specializations include cardiac, orthopedic, psychiatric, and general medical claims. This month, we will be staffing our newest impairment-based unit at all sites—the cancer unit.

This approach is driven by teamwork and expertise. For example, in the psychiatric unit, a claim is received and evaluated by a consultant. After review, the

consultant channels the claim to the appropriate claim specialist based on level of

difficulty or complexity. The specialist builds a claim action plan and brings the

claim to a roundtable that includes a psychiatrist or psychologist. The roundtable

may refer the claim to an addictionologist or neurologist, or may seek external expert input. These experts will examine appropriateness of care as well as expected

duration of the claim. Such teamwork allows us to place specific focus on the impairment in a way that promotes knowledgeable service and increased return-to-work

potential.

GENEX: When more personal face-to-face interaction is appropriate, field-based

case managers and vocational rehabilitation specialists with our GENEX subsidiary

work directly with the employer, employee, treating physician and customer care

specialist to ensure that medical care and treatment are directed toward return-towork goals.

UnumProvident has invested significantly in medical and rehabilitative resources

to support the claim management model. They include:

• Nearly 100 physicians and several hundred nurse case managers and vocational rehabilitation counselors;

• More than 700 nurse case managers and vocational rehabilitation professionals within our GENEX subsidiary, located in over 100 offices across

North America; and

• 3,000 Customer Care Center employees organized around specific durations and impairments.

The claim management model is an important factor in UnumProvident’s ultimate

goal to offer a quality customer experience. By building a strong level of expertise

in each duration-and impairment-based medical area, the company offers improved

specialization, individualized customer service, and significantly improved return-towork experience.

Nearly half of our new claimants are able to return to work within six months

of receiving benefits. For claimants who are also receiving Social Security benefits,

we experience a recovery rate that is roughly six times the reported Social Security

recovery rate. As stated in the return-to-work Ticket to Work legislation, a one-half

of one-percent improvement in Social Security disability recovery rates would yield

$3.5 billion over the work life of such individuals. Social Security can improve its

experience if the logical next steps are adopted to build on progress made by the

legislation.

Return-to-Work Emphasis

UnumProvident understands that the best insurance against unnecessary work

disruption is the ability to return an employee to a productive lifestyle in a timely

fashion. Each year, more than 750,000 Americans experience injuries or illnesses

that keep them out of work for five months or longer.3 For the employer, this may

mean absorbing extensive and unnecessary lost time costs. Employee replacement

and retraining costs become an additional, unexpected expense.

Some large and small employers have corporate health and return-to-work practices and policies that are clear, comprehensive and coordinated—actively inviting

employees back to work. Most employers, however, randomly tend to the work disVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
59

ruption in their work force. They may provide unclear or competing expectations

about returning to work through their organizational policies and practices.

The employers who demonstrate the greatest success in controlling the impact of

work disruption and lost time are those who incorporate formal return-to-work

strategies within their employee relations activities and benefit plans. At

UnumProvident, our corporate Return to Work Dividend Program is a consultative

service offered to employers to structure policies and procedures to achieve returnto-work success. The program offers a unique blend of policy and staff development

opportunities through:

• Return-to-work programs that assist employers in defining the impact of lost

time and creating practical return-to-work strategies; • Integrated disability management that assists organizations in determining its

readiness and capacity to integrate the wide range of its disability insurance, workers’ compensation, lost time and healthcare programs;

• Absence management strategies to evaluate, select and develop programs that

manage FLMA, intermittent and casual lost work days; and • Assistance that enhances the employer’s capacity to apply computer-based assistive technology.

Another important element of UnumProvident’s return-to-work commitment is an

understanding of the science of disability. The company is a leading proponent of

disability research, with groundbreaking work based on the realization that disability management goes far beyond simply verifying and paying claims. We continually make investments in understanding both the scientific and human aspects of

disability at every stage of life so we can offer more than just a benefit check to

our customers.

A core part of this commitment to understanding disability is the work done by

our Disability Research Alliance. Current initiatives include active physician education and employer education programs. The Alliance is also partnering with the

Washington Business Group on Health and Watson Wyatt Worldwide in the ‘‘Progression of Disability’’ study. This study, conducted with Virginia Commonwealth

University, addresses the variables that occur in the progression from short-term

disability to long-term disability to Social Security benefits.

Visible Impact

I would like to illustrate the information I’ve shared with you about our claim

process and philosophy through several return-to-work success stories. Increasingly,

we are finding that some claims thought to be long-term in nature actually have

the potential for recovery. These stories demonstrate the impact that return-to-work

support and medical advances can have on claim results.

• A 48-year old Virginia AIDS claimant who stopped working in March 1996 saw

his condition begin to improve in May 1999 as a result of new drug therapy. A

UnumProvident vocational rehabilitation counselor discovered in phone discussions

with the claimant that he was interested in returning to work full-time. The outcome is shown in this letter from the claimant to the counselor:

• ‘‘It was very nice to talk to you on the phone about the happy news of my new

job. You were the first person with whom I shared this good news. I am thankful

to you for your counseling and consultation. You gave me the inspiration and courage to stand once again on my own feet. It was very encouraging when you told me

that I have the skills and potential, that I just needed to polish my skills and my

re ́sume ́. On a regular basis, you were in touch with me, asking how I was doing.

By your blessings, I finally achieved my destination. I got a job

inllllInternational, Inc. Thank you very much once again for the blessings, inspiration, support and courage you gave me for the last nine months.’’

• Kevin Bibeau was involved in a car accident that left him severely disabled. At

the time of his accident, Kevin knew very little about his employer-provided disability insurance. He found that his UnumProvident coverage enabled him to meet

his living expenses and allowed him to go back to work part-time and receive a continuous salary. UnumProvident then collaborated with his employer, helping him return to his full-time job as an engineer sooner than originally expected. Kevin’s experience with UnumProvident has caused him to encourage others to consider the

value of long-term disability insurance. According to Kevin, ‘‘Long-term disability insurance is the best-kept secret. . . I don’t think people believe anything is going to

happen to them that will cause them to go on long-term disability. It’s nice to know

it exists and that you have it just in case.’’

• A North Carolina claimant has been physically disabled under our policy for 12

years and has been denied benefits by Social Security three times. After 12 years

out of the workforce, she wants to move on with her life and find a way to rejoin

60

the workforce. UnumProvident is now working to provide her a lump sum amount

that will allow her to purchase a small franchise business that will allow her to actively return to work.

These stories demonstrate creative solutions, as well as the honorable purpose

and potential impact shared by all providers of disability insurance.

The Millennium Workforce

Over the past 100 years, it is estimated that there have been more than 250,000

pieces of state and federal legislation defining and reforming the nature and scope

of our response to work place injury and illness. In spite of these efforts, the fundamental nature of injury and illness in the work place remains the same. To address

the challenges at hand, we must alter the basic concepts of disability.

As we move ahead and form a new understanding of disability, research shows

us several critical points about the work force of the new millennium:

Impairment does not equal disability. Impairment is objective. Disability is subjective and is created by the benefit plan design. The plan determines how long someone stays out of work, not how long they suffer from the impairment.

Ambiguity limits recovery and return to work. All too often, the employer fails to

define the expectations for an individual to return to work. Clear corporate policies

supported by well-defined work prescriptions reduce the incidence of lost time.

Corporate policies sometimes disable employees. Corporate policies can be the

greatest contributor to employee disability. The most common disabling corporate

policy is the ‘‘100% or nothing’’ threshold. This policy says that an employer is willing to wait until the employee is cleared of all impairment before coming back to

work. In fact, the employee will regain functional capacity incrementally.

In the case of Social Security, current policies encourage individuals to argue they

are fully disabled and can not return to work. Otherwise, they are not eligible for

benefits. In convincing the system, they also convince themselves.

Physicians are not HR managers. Physicians are not prepared as HR managers.

They understand impairments but not the occupation requirements of specific jobs.

They need to be trained to be able to define the conditions under which an employee

can resume a safe transition back to full work.

Disability cloaks performance problems. Some supervisors use a disability program

to solve job performance problems. This is a very expensive practice and reflects an

inadequate human resource program.

Return-to-work best practices. Proven strategies that reduce lost time and prevent

extended disability are:

• Create clear, consistent and early return-to-work expectations; • Implement a formal planning process; • Provide formal supervisor training on the process; and • Establish transitional return-to-work pathways based on job demands and

worker functional capacities.

These key points should serve as instruction for disability insurers as they craft

programs and implement solutions for the marketplace.

Recommendations

Based on the experience and expertise of UnumProvident, I would like to provide

recommendations to the Subcommittee on Social Security for consideration as the

Subcommittee considers challenges in the 21st century.

Let me reiterate, last year’s Ticket to Work legislation removed important returnto-work barriers that were contributing to the historical less than one-half of onepercent recovery rate of Social Security recipients. Now we need to take the next

steps and change the infrastructure to facilitate return to work for Social Security

disability claimants. Also it will require that the concept of disability be altered—

disability does not mean inability, it means experiencing and recovering from disability in stages.

I recommend that the Subcommittee explore the following four key areas based

on our experience in the private sector:

• Triage: Approximately three million new claims are received for Social Security

disability payments each year. The conditions of these individuals range widely from

situations involving permanent and total disability to shorter-term disability where

recovery can be expected. An appropriate triage system applying the right resources

to the right claim at the right time will enhance return-to-work effectiveness and

ensure appropriate use of resources.

• Early intervention: For claimants with recovery potential, early and ongoing

clinical intervention is essential to return-to-work success. At UnumProvident, this

intervention takes the form of three-point contact with the attending physician,

61

4 Richardson, Mary, 1994. The Impact of the Americans with Disabilities Act on Employment

for People with Disabilities. Annual Reviews, Public Health. 15:91–105.

claimant and employer. We have found that face-to-face personal attention, specifically, our expert GENEX resources are invaluable in terms of evaluating appropriateness of care.

• Continual claim management: It is recommended that Social Security policies

go beyond simply determining initial eligibility to achieve more focus on ongoing eligibility for benefits and more continual review of claims.

It is important to maximize the level of expertise applied to claims, and to integrate medical advances into the continual review process. The impairment-based

model used by UnumProvident has already resulted in a significant increase in applied expertise and medical resources, therefore better meeting the customer’s

needs. We feel this is the best way to leverage and apply specialized care.

• Adaptable benefits and incentives. UnumProvident’s plan designs include return-to-work features such as transitional work funding and partial payments, as

well as assistance through vocational training. It is recommended that Social Security continue to align its government assistance in a similar manner to encourage

return-to-work efforts. Recovering from disability is an incremental process and

these types of adaptable benefits are essential to address the stages of disability.

In addition, legislation could provide more economic incentive for the employer to

entice employees to return to work. It would also prove helpful to quantify ratings

experience by industry to encourage employers to visualize how disability can drive

up costs. With ratings as reference, employers will have more incentive to be actively involved in the disability management process, as has been the case in terms

of worker’s compensation management.

These recommendations will create financial value for the individuals and for the

Social Security program. While there will be initial costs incurred, the long-term

savings will prove significant.

Conclusion

There is dignity associated with a person’s ability to work and great value in the

ability to live a full and independent lifestyle. This philosophy—and its focus on

abilities—is behind all the Customer Care resources of UnumProvident.

Quite simply, we believe that the general population does want to be active in society and part of the workforce. Statistics support this belief—sixty percent of Americans not working say that they would like to if the opportunity were made available.4

For those of us in the disability insurance industry, it is both our job and responsibility to ensure we make that opportunity a reality. In closing, I would like to

thank you once again for offering me this opportunity to testify. I would now be

happy to answer any questions.

STATEMENT OF TONY YOUNG, CO-CHAIR, TASKFORCE ON SOChairman SHAW. Thank you, sir. Mr. Young.

f CIAL SECURITY, CONSORTIUM FOR CITIZENS WITH DISABILITIES; AND DIRECTOR, GOVERNMENTAL AFFAIRS, NISH, VIENNA, VIRGINIA

Mr. YOUNG. Thank you, Mr. Chairman, for this opportunity to

testify on behalf of the Consortium of Citizens with Disabilities

Taskforce on Social Security. Federal disability programs were created assuming that people with disabilities would remain unable to

work throughout their lives. This static view of disability meant

that little thought was given to what might happen if people returned to work after receiving benefits.

However, we now know that disability is not static but a dynamic

condition. Medical advances, new technologies, improvements in

services and supports, along with enhanced expectations of people

with disabilities, have all conspired to change the very definition

62

of disability. The consequences of this new disability dynamic have

rippled through the Federal disability system, revealing that it is

not ready to meet the challenges ahead.

Many people are surviving injuries, disabling diseases, or traumatic accidents to live with significant disabilities. Some have access to the latest technology, medications, surgeries, therapies, and

other disability management procedures. However, many do not

have access to these state-of-the-art services nor will they have access to potential advances in genetic treatments. This opportunity

gap will widen the discrepancy in work opportunities for those in

SSA disability programs.

The changing demographics of individuals on the SSA disability

programs, the nature of their disabilities, the age of onset, the

length of time in the programs, and related factors has had and

will have a profound impact on SSDI and SSI. We offer some brief

statistics on page two of our written statement. It must be noted

that people on Federal disability programs are markedly different

than those on private disability or those on disability programs in

other countries.

What works for one population may or may not work for others,

yet while there is much diversity among disability beneficiaries

they share common concerns including an easy transition from benefits to personal support rather than a sudden cutoff of benefits,

easy re-entry to benefits if work is not successful, no total cutoff

of benefits until reaching a living wage with comparable health

coverage, and a flexible benefit for individuals who can only work

episodically such as those with mental illness.

While Federal disability programs provide needed cash assistance and supports there are weaknesses in these programs we wish

to discuss. These include Social Security’s definition of disability

which continues to focus on near complete inability to work, the

unrealistically low substantial gainful activity level, the poor coordination among programs providing Federal assistance to people

with disabilities, the poor integration of SSI with work programs

for older, disabled children, the ineffective tracking of earnings,

and the remaining work disincentives not addressed by the Ticket

to Work and Work Incentives Improvement Act.

In addition, SSA is facing complex future work challenges. During the next 20 years, the number of people who reach full retirement and early retirement ages will increase substantially and this

will have an enormous impact on SSI’s operations. The SSA customer population has changing expectations about technology and

it has more claimants that are non-English speaking or limited

English speaking.

Further, SSA must provide increased employment services for

people with disabilities, must maintain an aggressive schedule of

continuing disability reviews, and other eligibility reviews, and

must implement new approaches to prevent fraud and abuse all

while operating a disability determination process that remains

complicated and lengthy. These problems are aggravated by SSA’s

own aging work force which soon will lose significant numbers of

experienced staff including senior leadership personnel.

The task force recognizes no single hearing can capture all the

questions that need to be addressed about the future of Federal

63

disability programs and that this is just the beginning of an exploration of ways to modernize the disability program. We also recognize that some of these questions fall under other Committees’ jurisdictions, which may indicate a need for greater coordination for

disability programs within Congress.

We offer several other issues in our written statement that the

Committee should examine as it continues its investigations, including SSA policies on technology acquisition, CDRs under Medicaid section 1619(b) or Medicare, Medicaid’s 209(b) provisions, and

the Medicaid 1619(b) formula for individual determinations among

others. We appreciate the Subcommittee’s interest in these issues

and look forward to continuing to work with you in modernizing

the disability programs. I would be happy to answer any questions

you have.

[The prepared statement follows:]

Statement of Tony Young, Co-Chair, Task Force on Social Security, Consortium for Citizens with Disabilities, and Director, Governmental Activities,

NISH, Vienna, Virginia,

ON BEHALF OF

American Association on Mental Retardation

American Council of the Blind

American Network of Community Options and Resources

American Occupational Therapy Association

Brain Injury Association

Easter Seals

Epilepsy Foundation

International Association of Psychosocial Rehabilitation Services

InterNational Association of Business Industry Rehabilitation—INABIR

National Association of Developmental Disabilities Councils

National Association of Protection and Advocacy Systems

National Association of Social Security Claimants Representatives

National Mental Health Association

National Multiple Sclerosis Society

NISH—Creating Employment Opportunities for People with Severe Disabilities

Paralyzed Veterans Of America

The Arc of the United States

Title II Community AIDS National Network

Chairman Shaw, Mr. Matsui and members of the subcommittee, thank you for the

opportunity to testify today on the Future of SSA Disability Programs. I am Tony

Young, Director of Government Activities for NISH and Vice Chair of the Consortium for Citizens with Disabilities. CCD is a coalition of nearly 100 national organizations advocating on behalf of people with all types of physical and mental disabilities. I am testifying today in my role as a Co-Chair of the CCD Task Force on Social Security.

INTRODUCTION

We appreciate having this opportunity to examine the needs of persons with disabilities who are on, or who will be participants in, the SSA disability programs—

Social Security Disability Insurance [SSDI] and Supplemental Security Income

[SSI]. SSDI began in 1956 as an early retirement program for injured workers who

could not struggle through to the regular retirement age of 65. SSI, created in 1972,

was a program intended to supply a minimum level of economic support to the elderly, blind or persons with disabilities whose work history was insufficient to qualify them for SSDI.

Since their inception, these disability programs have evolved unevenly whereby

individual problems in the programs were identified and partially solved, not always

with a comprehensive view or purpose. Changes have come only when program parameters have been found to be grossly out of line with reality. For instance, the

substantial gainful activity [SGA] level was finally raised in 1999 to $700 per month

after having been set at $500 per month since 1990. Some program criteria, such

as the SSI earned income disregard, has not been changed since the program began

in the early 1970s.

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1GAO/HEHS–96–62, SSA Disability Program Redesign Necessary to Encourage Return to

Work, April 1996 2Disability Watch, Disability Rights Advocates, Volcano Press, Volcano, CA, 1997

3 American Council of the Blind

4 1998 N.O.D./Harris Survey of Americans with Disabilities

Federal disability programs, as originally envisioned, were based on the assumption that people who became disabled would remain disabled throughout the rest

their lives. This static view of disability meant that little thought was given to what

might happen if people returned to work after becoming eligible for benefits. However, disability is not static. Disability is a dynamic condition. Medical advances,

new technologies, improvements in rehabilitation services, and the expectations of

people with disabilities have all conspired to change the meaning of disability, the

very definition of disability. The consequences of this new disability dynamic have

rippled through the federal disability system, revealing a system that has not adapted to meet the challenges ahead.

DEMOGRAPHICS, SOCIETY AND THE ROLE OF PEOPLE WITH DISABILITIES

The changing demographics of individuals who might benefit from the SSA disability programs—the nature of their disabilities, the age of onset, the length of

time in the programs, and related factors—has had and will have a most profound

impact on SSDI and SSI. Some brief statistics provide a snapshot of Americans with

disabilities and the circumstances in which they live.

In 1996, the Government Accounting Office [GAO] 1 reported that, during the period 1985 to 1994, the number of people with disabilities on SSI and SSDI increased

from 4.2 million to 7.2 million. By 1994, 57% of people on SSI aged 18 to 64 were

those with mental impairments. For those on SSDI the percentage was 31% of the

DI population. The DI and SSI populations became somewhat younger during that

time period: DI beneficiaries in ‘‘middle age’ [30 to 49] increased from 30% in 1986

to 40% in 1994; for SSI beneficiaries the increase was from 36% in 1986 to 46% in

1994.

The majority of Americans with disabilities are of working age [57.6%]. Native

Americans have the highest disability rate of all racial groups [17.6%]; Asians and

Pacific Islanders have the lowest rate [7.2%]. For whites and African Americans, the

rates are 15.3 and 15.9 percent respectively but Hispanics report a disability rate

of only 10.5%. Disability rates are highest in rural areas [although most people with

disabilities live in metropolitan areas (74.8%)]. Disability rates are 3 times higher

among people who did not finish high school than among those with college degrees.

People with disabilities, according to a 1992 National Health Interview Survey, include 4 million Americans with heart disease, 3.7 million with arthritis, 1.5 million

with mental disorders, 1.4 million with mental retardation or learning disabilities.

There are over half a million Americans with spinal cord injuries or dysfunction and

654,000 with hearing impairments.2 Another 1.4 million individuals have visual impairments.3

Only 3 in 10 working-age adults with disabilities are employed full or part time,

compared with 8 in 10 non-disabled adults. This low rate of employment has led

to an income gap not reduced since 1986. One in 3 disabled adults, compared to 1

in 8 non-disabled adults, live in households with incomes below $15,000.4

Any examination of federal disability programs must be viewed in light of the

evolving societal factors surrounding people with disabilities—such as the Individuals with Disabilities Education Act [IDEA] and Americans with Disabilities Act

[ADA]—and the shifting expectations of the role that individuals with even the most

severe disabilities can play in the lives of our communities and economy. Among the

most exciting advances have been our expectations for individuals with the most significant support needs. For example, over the past twenty years we have moved

from building institutions to creating individualized living arrangements in the community for individuals who have been labeled with a significant cognitive disability.

Well over 200,000 individuals who once were never expected to spend their days beyond the protective walls of congregate settings such as sheltered workshops or

adult day activity centers are now working in the community in real, competitively

paid jobs through supported employment. They now do what the rest of us do: go

to a wide array of jobs, collect their paychecks, and go home, many with supports,

some with none.

The nation will celebrate the tenth anniversary of the Americans with Disabilities

Act later this month. That Act recognized what the disability community has known

for years, that ‘‘disability is a natural part of the human experience.’’ The protections afforded by the ADA have opened the windows on the disability experience

65

5GAO/HEHS–96–147, Social Security: Disability Programs Lag in Promoting Return to Work

and revealed a myriad of individual skills and capacities that very closely parallel

those of people without disabilities. This exposure, along with an explosive growth

of technology, research and training, best practice services and supports, individual

awareness and self-determination have changed forever the way that we approach

disability in this country from public policy to practice.

NEW TECHNOLOGIES, MEDICAL ADVANCES AND IMPROVEMENTS IN SUPPORTS AND

SERVICES

Much of the changing attitudes toward people with disabilities and their capabilities have been driven by the transformation of the workplace and the environment

through technology, breakthroughs in medical science, and innovations in supports

and services used to enhance the independence of individuals with disabilities. Four

years ago, the GAO noted that, despite poor return-to-work outcomes under SSI and

SSDI, ‘‘many technological and medical advances have created more opportunities

for some individuals with disabilities to engage in work. Electronic communications

and assistive technologies—such as scanners, synthetic voice systems, standing

wheelchairs and modified autos and vans—have given greater independence to some

people with disabilities, allowing them to tap their work potential. Advances in the

management of disability—like medication to control mental illness or computeraided prosthetic devices—have helped reduce the functional limitations associated

with some disabilities. These advances may have opened new opportunities, particularly for some people with physical impairments, in the growing service sector of the

economy.’’ 5

Finally, the development and replication of new supports and services has made

it possible for many more people with disabilities to receive the rehabilitation and

on-going supports they need to work. Psychosocial rehabilitation, occupational therapy, and job coaching are just some of the services now available to people with severe mental and physical disabilities. These services help people assume and maintain work and also include services to develop or enhance self-care skills so that the

individual can function in society.

Many people with significant disabilities are surviving injuries at birth, disabling

diseases, or traumatic accidents. Some of these survivors are living longer, more

healthy lives. Some, however, are not. Some of these survivors have access to the

latest technological aides that make them productive and independent. Many other

survivors do not have access to this technology. Some individuals have access to the

latest prescription medications, surgical techniques, intervention therapies, and

other modern disability management procedures. Most people with severe disabilities do not. The future holds potential for remarkable advances in gene therapy and

similar genetic treatments that some will have access to, but many still will not.

This opportunity gap will widen the discrepancy in work opportunities for those who

might qualify for SSA disability programs.

Different types of supports and expectations are needed and appropriate for people of different ages and with different types of disabilities. Disability is as individual as the person who experiences it. Each disability has its own personality,

with strengths, weaknesses, and even quirks. Each must be treated appropriate to

its own personality in order for the individual with the disability to be successful

at whatever they might attempt to do.

Clearly, age and disability are interrelated when it comes to work aspirations. A

young adult who has never worked will have greatly different aspirations than an

individual in mid-work life with several years of work experience, and that individual will have different aspirations than an older individual who has many decades of work experience.

Their needs for income and supports will vary greatly as well. To treat everyone

equally is to mistreat the majority of those on the program. Individualized assessments of needs and services are essential to successfully assisting people with disabilities to work. There must be incentives for people to encourage them to risk

leaving the benefit program, and there must be an easy transition from benefit support to personal support. It is essential that all persons be allowed to seamlessly

reenter the benefit program should they fail in the effort to work.

It is possible to identify common concerns for all as well as particular concerns

of subgroups. Common concerns include: 1) an easy transition from benefits to personal support rather than a sudden cutoff of benefits; 2) easy reentry to benefits if

work is not successful; 3) no total cutoff of benefits until one reaches a living wage

with comparable health coverage; and 4) a flexible benefit for individuals who can

only work episodically, such as those with mental illness.

66

6GAO/HEHS–96–126, People with Disabilities: Federal Programs Could Work Together More

Efficiently to Promote Employment, September 1996 7 Ibid.

WEAKNESSES OF FEDERAL DISABILITY POLICY

Definition of Disability—In a 1996 report, the GAO identified at least ‘‘fourteen

different definitions of disability used by federal programs alone, and many of these

definitions provided considerable agency and state discretion in eligibility

determinationa. . . For example, programs administered through the Department of

Education, such as VR, defined eligibility in terms of physical or mental impairments, whereas the programs administered through SSA defined disability in terms

of the inability to work.’’ 6

One of the most serious problems with current disability program design and policy derives from the fact that Social Security’s definition of disability continues to

focus on near-complete inability to work. Furthermore, the measure for ability to

work is set at a level of income that does not provide even a base of support necessary for most people to live. Many of the policies that penalized people with disabilities for working have been addressed through last year’s Ticket to Work and

Work Incentives Improvement Act. Yet, the retention of the unrealistically low substantial gainful activity [SGA] level continues to punish rather than reward people

who attempt to leave entitlement programs through work. We recognize that considerable debate has already occurred on this subject. However, we reiterate once again

our firm belief that federal disability programs must respond to modern reality rather than remain mired in the mind-set of the last century.

In the past, CCD has recommended changes in the definition of disability that

would: retain the criterion of mental or physical impairment [or combination of

both] verifiable by accepted clinical methods; replace the concept of SGA with an

assessment of functional limitations in all areas of life activities; and consider vocational, medical and other factors in an overall assessment of an individual’s functioning in areas of major life activity. Furthermore, attention must be paid to how

temporary, recurring/intermittent, or partial disability is addressed by federal disability programs.

Whatever future steps Congress may take in this regard, CCD urges you to proceed with caution. Any proposals to revise the definition of disability, whether

through statute or regulation, should be subjected to careful analysis of the effects

on people with disabilities and a realistic assessment of the true meaning of disability, including for those who are able to work with necessary, on-going supports.

Multiplicity of Federal Disability Programs—In 1996, the GAO found that federal

assistance to millions of people with disabilities was provided through 130 programs

in 19 federal agencies.7 Very often, service delivery is performed through numerous

public and private agencies at the state and local level. In the fiscal year studied

[1994], GAO revealed that the federal government spent over $60 billion on 69 programs targeted exclusively to people with disabilities. In addition, people with disabilities benefited from between $81 billion and $184 billion in spending through 61

partially targeted programs. This list of programs did NOT include AFDC, the forerunner of Temporary Assistance to Needy Families [TANF]—as GAO eliminated

programs not specifically intended to address disability. How well these programs

coordinate with one another and how well they serve the people they were created

to help are questions worth considering.

Interaction with Other Governmental Programs—As noted above, SSA disability

programs do not exist in a vacuum. There are over 100 federal programs that affect

people with disabilities. It is imperative to examine how the SSA disability programs interact with other poverty programs, e.g., job training, Food Stamps, housing subsidies, transportation supports, long-term supports, and similar programs. A

major issue for individuals with severe disabilities concerns the need to stitch together a patchwork quilt of income, and in-kind supports in order to live. Too often,

taking a job unravels this quilt in ways that undermine the work effort and trap

them in poverty and government cash assistance.

For example, Medicaid policy allows some states to have stricter Medicaid income

levels, asset levels, income disregards and even medical disability definitions than

SSI. This means that incentives for SSI recipients to return to work are seriously

undermined because the Medicaid needed to support work attempts is not always

available if Medicaid rules are not the same as those of SSI. In addition, continuing

disability reviews [CDRs] that find people ‘‘no longer disabled’’ not only deprive

them of cash benefits but they cost such persons continued Medicaid and Medicare

which, under current law, are supposed to be available to those who leave the SSI

and SSDI rolls to work. Furthermore, the Medicaid formula for determining medical

67

8 Center for Budget and Policy Priorities, Feb. 2000, ‘‘Recent Studies Indicate that Many Parents who are current or former welfare recipients have disabilities or other medical conditions’’

expenses used for individualized computations of earnings thresholds in determining

continued eligibility under Section 1619(b) now only recognizes publicly-provided attendant care costs and fee-for-service per capita Medicaid expenditures on behalf of

that particular patient. Accounting for the true costs of supports becomes an issue

when states’ Medicaid reimbursements are only recorded as capitations to managed

care contractors—-and do not, therefore, fully recognize the high costs of services

actually rendered to particular disabled individuals.

HUD housing programs do not have earnings disregards. Local public housing authorities do have authority to institute earnings disregards for public housing

units—-but NOT for Section 8, vouchers, Section 212, Section 811 or the special subsidies for people with disabilities established by Congress in the late 1990s. And

even this limited authority has so far been largely directed at helping TANF mothers in public units return to work.

A growing body of research indicates that a large proportion of parents receiving

TANF [or who have left TANF] have disabilities or health conditions that may affect

their ability to succeed in the workforce if they are not provided with the appropriate supports and services to help them succeed.8 In addition, many families who

are eligible for Medicaid or other publicly funded health insurance coverage are not

enrolled in those programs, due to the de-linking which has occurred.

These are but a few of the complexities of the social security disability programs’ interactions with other government programs.

Integrating SSI with work programs for older disabled children—Children in the

IDEA era have, generally speaking, been entitled to a free and appropriate public

education and, theoretically, have had access to an array of services while in school.

However, they lose these supports upon attaining a certain age and often fail to advance into the world of adult employment as a result. Children and their families

need the services accorded by IDEA in order for them to perform at satisfactory levels to achieve their educational goals. These same or similar services may be required for them to then meet their vocational goals. In addition, there is the need

to eliminate the penalties built into the current system for young people who need

ongoing supports even while working.

Work Incentives—The Ticket to Work and Work Incentives Improvement Act, in

reality a major achievement in addressing certain deficiencies in federal disability

programs, is placed here to draw attention to remaining hurdles confronting people

on SSI and SSDI. Furthermore, because PL 106–170 has yet to be implemented, we

cannot predict how successful it will be in eradicating barriers it was created to remove. A major problem with the SSDI program has been its eligibility determination

system that forces applicants to assert that they have no residual work capacity in

order to qualify for benefits. Then, if someone attempted to work, the system

abruptly withdrew all supports that individual needed to survive. The Ticket to

Work and Work Incentives Improvement Act took significant steps toward eliminating this bias through its provisions assuring extended Medicare coverage for

workers with disabilities and the easier return to benefits should a work attempt

fail. However, SSDI retains the assumption that work beyond a very modest, lessthan-minimum wage level of earnings means that a person is no longer ‘‘disabled’’. The concept of appropriate supports means the elimination of all financial and

psychological disincentives to work. In the past, applicants for SSDI had to undergo

months of review in which they had to assert no capacity for work. They waited

months for benefits, often after months of appeals, and waited again to qualify for

Medicare coverage. Only recently, did they have the presumptive eligibility for entrance into the vocational rehabilitation system and, even if they did receive VR

services, they were warned not to earn too much, lest they lose all of their benefits.

If implemented properly, the Ticket to Work and Work Incentives Improvement

Act could address many of these disincentives. The extension of Medicare will assure continued health care coverage for SSDI recipients. Depending on how and

whether they are adopted by states, the Medicaid buy-in provisions have the potential to provide more complete health care supports to beneficiaries going to work.

Again, depending on how SSA implements the Ticket to Work program, beneficiaries

should have greater choice in provider and type of vocational rehabilitation services.

And, the benefits outreach, counseling and assistance, if done properly, can offer

beneficiaries clearer road maps to navigate the consequences of going to work. For

those with a recently acquired disability, early intervention of the type envisioned

through the counseling and assistance planners may mean the difference between

returning to work and languishing on the disability rolls for years. Finally, the expeVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00071 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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9Testimony of Cynthia Fagnoni, Director, Education, Workforce and Income Security Issues,

General Accounting Office, to the Ways and Means Social Security and Human Resources Subcommittees, Hearing on Social Security’s Readiness for the Impending Wave of Baby Boom

Beneficiaries, Feb. 10, 2000 10 Ibid. 11Testimony of the Honorable Stanford Ross, Chair, Social Security Advisory Board, before

the House Subcommittee on Social Security, Committee on Ways and Means, February 10, 2000

dited reentry provisions offer some measure of reassurance that benefits will not be

difficult to obtain should a work attempt fail.

However, while the system manages to make initial disability determinations, it

is totally inadequate at tracking income and earnings as people take advantage of

the aforementioned services. This inadequacy will become more apparent as people

take advantage of the recently enacted work incentives legislation. For example,

while overpayments to beneficiaries who work have always been problematic, they

promise to become catastrophic if left unchecked. Beneficiaries will more deeply mistrust the program, providers won’t get paid under the Ticket if the benefits continue

unnecessarily, the fiscal strain on the program will continue, and other parts of the

disability program will suffer as SSA struggles to correct the problem without adequate resources. Congress must address the need for systems improvement and

modernization.

CHALLENGE OF THE BABY BOOM

It is no secret that during the next twenty years, there will be a large increase

in the number of people who reach both retirement and early retirement ages. Strategies must be explored to help individuals reaching early retirement age, who lose

their ability to perform their existing jobs, to remain in the workforce for as long

as possible. Currently, the SSA disability programs only respond once someone’s disability has reached the acute stage in which an individual is driven out of the workforce entirely.

The sheer number of baby boomers will have an enormous impact on SSA’s operations. According to SSA’s Office of the Actuary, by 2010, SSDI applications will increase by 54% and SSI disability applications by more than 10%.9 Over the same

period, the increase in the normal retirement age also will affect the number of disability applications.

In addition, SSA has been faced with more complex and changing work challenges. The disability determination process is complicated and lengthy. The SSA

customer population has changing expectations about technology. More claimants

are non-English speaking or limited-English speaking, leading to a need for more

bilingual staff. Recent legislation requires SSA to provide increased rehabilitation

and employment services for people with disabilities, to maintain a schedule of continuing disability reviews and other eligibility reviews, and to implement new approaches to prevent fraud and abuse.

The problem is aggravated by the fact that SSA’s workforce also is aging and will

begin to lose significant numbers of experienced staff, including senior management

and leadership personnel. More than one-half of SSA’s 63,000 employees will be eligible to retire by 2009 or leave government service after twenty years with pension

rights.10 Between 2007 and 2009, about 3,000 employees are expected to retire per

year. The service delivery problems have been exacerbated by SSA’s prolonged period of downsizing—since 1982, SSA’s workforce has declined by 27%. At Subcommittee hearings earlier this year, the Social Security Advisory Board, the Commissioner of Social Security, and the General Accounting Office raised the issue of

how SSA should plan to retain experienced staff and train new managers to meet

these needs.

The CCD Social Security Task Force has voiced concern for some time over the

continued long-term downsizing of the SSA workforce and believes that failure to

conduct appropriate and timely CDRs and other eligibility reviews could lead to decreased trust in the integrity of the Social Security and SSI programs. In addition,

the new efforts to assist people with disabilities to go to work, through the Ticket

to Work and Work Incentives Improvement Act of 1999, will require new and expanded approaches for SSA interaction with beneficiaries. Adequate staffing levels

are critical for these and other efforts to be successful, especially given the coming

disability and retirement years of baby boomers.

The independent, bipartisan Social Security Advisory Board has unanimously

urged that SSA’s ‘‘administrative budget, like its program budget, be explicitly excluded from the statutory cap that imposes an arbitrary limit on the amount of discretionary government spending.’’ 11

69

We believe that the entire Limitation on Administrative Expenses [LAE] should

be removed from under the domestic discretionary spending caps so that SSA’s administrative functions can continue to operate smoothly for beneficiaries. [For background, see CCD statement for the record, March 16, 2000]

ISSUES FOR THE FUTURE

No single hearing can capture the entire range of questions that need to be asked

about the future of federal disability programs. The CCD Social Security Task Force

recognizes that this is just the beginning of an exploration of ways to modernize

SSDI and SSI. We also recognize that some of these questions fall under other committees’ jurisdictions. That, however, may indicate a need for greater coordination

among Congressional bodies responsible for programs affecting people with disabilities. Based on our testimony, we would like to offer several issues that the committee should examine as it continues its investigations.

• Does the definition of disability under social security adequately capture the

spectrum and continuum of disability today? Does it reflect the interaction of vocational, environmental, medical and other factors that can affect the ability of someone on SSI or SSDI to attain a level of independence? • Do current SSA program policies foster or hinder acquisition of technology that

will lead to greater independence? Are these technologies covered under impairment

related work expenses? Would someone acquiring necessary supports to go to work

encounter problems with asset and resource limits imposed under federal disability

programs. Should tax credits or other incentives be provided for people to obtain

these supports to go to work? • How competent is SSA at communicating with its SSI and SSDI beneficiaries

with visual impairments? Frequent failure of SSA to produce notices and documents

in accessible formats lead to penalties imposed on such beneficiaries and increased

administrative expenses in dealing with the consequences. • Should CDRs be reevaluated for those covered under Medicaid Section 1619(b)

or individuals still relying on Medicare to prevent denial of the very health care coverage offered to encourage people to work? • Can the stricter income, asset levels allowed under Medicaid’s 209[b] provisions

undermine promotion of Medicaid buy-ins and other initiatives designed to assure

continued health care coverage for individuals on SSI and SSDI going to work? • Are changes needed in the current Medicaid 1619[b] formula for individualized

determinations to allow for other medical costs of working disabled persons met by

other programs? [e.g. Medicare, state pharmacy assistance, AIDS Drug Assistance

Programs, WIC, public maternal and child health programs, cash medical purchases

and private health insurance.] • Why are earnings disregards recognized for SSI, SSDI, Medicaid and Medicare

purposes not so honored by housing subsidy programs as well? Income and assets

excluded by the PASS program are excluded under the housing statutes. The HUD

programs should similarly recognize other disability-related disregards. • How well do veterans’ programs interact with and serve veterans with disabilities who rely on SSDI and/or SSI? • Can steps be taken to replicate the earnings disregards and work incentives of

the SSI and SSDI programs in Medicaid and the AIDS Drug Assistance Programs?

This is important for individuals dependent for drugs on non-SSI-based Medicaid

(e.g., TANF-related cases) and the AIDS Drug Assistance Programs rely for essential pharmacy coverage on programs which currently have NO meaningful earnings

disregards or other work incentives. • Should state standards for exemption from welfare time limits and work/training requirements make allowances for families in which either a primary or secondary parent cares for a child with a disability? Studies suggest that at least 20%

of TANF cases have disabled primary caretakers, children or second parents (since

many states can and do now include two parent families).

Again, these are but a few questions that arise when considering the array of federal programs affecting Social Security beneficiaries with disabilities. We appreciate

the subcommittee’s attention to these issues and look forward to continuing to work

with the members in examining the future of the disability programs.

Chairman S

Mr. MCCRERY

HAW

. Professor Berkowitz, having been a history major

. Thank you, Mr. Young. Mr. McCrery.

f in undergraduate school, I welcome the opportunity to grill a proVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00073 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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fessor of history. I found your testimony very interesting and as

was sometimes the case though in my history classes, I learned a

lot of facts but I am not sure the point that I learned. So I am

going to ask you, if you would, to describe for us any of these

emerging trends that you cautioned us to be aware of. Can you

identify any of those for us that you discovered in your research?

Mr. BERKOWITZ. Yes, sir. I guess the most important one is simply that we should recognize that when you try to tighten the rolls

as one might want to do in pursuing a work strategy then you have

the risk always of expanding the rolls and what I meant to say by

that is that this was tried in the eighties in a bipartisan way. Congress passed a law in 1980 which encouraged the Social Security

Administration to periodically re-examine people who were on the

disability rolls and in 1981 aided by a GAO report the new administration decided to do that and to pursue that policy aggressively.

What in fact happened though was that this policy was pursued

so aggressively that administrative law judges who were part of the

system of disability determination and the courts, which are part

of this disability determination system, and ultimately the Congress itself, including this Subcommittee, but many others throughout Congress cautioned the Social Security Administration not to

move aggressively on this matter. Too many people were being

dropped from the rolls, and new legislation was passed in 1984 at

the end of a very long process. As Professor Burkhauser pointed

out, the disability rolls went up a great deal in the long run.

So in trying to cut the rolls we can make the mistake sometimes

of actually defeating our objective. That would be lesson number

one.

Lesson number two might simply be that when we pass a new

law like as we did in 1972 with the creation of the Supplemental

Security Income Program, we should try very hard to look at

prevaling trends. What happened in the case of SSI, I think, is that

the discussions that began in 1969 were all centered on President

Nixon’s welfare reform proposals.

People didn’t think much about the so-called adult welfare categories, and they failed to see that, just as the discussion was maturing over several Congresses, the disability incidence was going

up. So by the time the law was passed and by the time it was put

in place there was a tremendous rise in the disability rolls. This

is an example of not looking at the trends in the middle of trying

to put together a very delicate political deal, another lesson that we

have to look at.

I guess a third and final lesson is that I think we should emphasize here as we think about interventions on the disability rolls

that the person who is trying to apply for disability benefits is facing a great deal of uncertainty. He doesn’t know whether he is

going to get benefits, and so therefore he is very reluctant to engage in rehabilitation. I am put in mind of a description from the

thirties from Harry Hopkins’ WPA and other welfare programs of

how hard it was for someone in the thirties to actually go in and

ask for help from the Federal Government. It was the last thing

they wanted to do.

Many of these people that are entered on the disability rolls are

in similar positions and therefore as we think about our intervenVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00074 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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tions we should think about the uncertainty that they face. These

are all lessons I draw.

Mr. MCCRERY. So are you suggesting that we should be more aggressive, the government should be more aggressive in getting individuals into rehabilitation from the outset rather than having this

lingering doubt about whether they are going to qualify for benefits.

Mr. BERKOWITZ. Well, I have suggested in the past that there

might be an interim benefit status that we might call rehabilitation

status which would precede full benefits. But there is a very delicate question of policy that you would have to consider at some

length. The other thing that you might think about is that we have

always put SSDI together with Social Security, just as we do in

this Subcommittee.

Maybe that is not the right way to think about disability policy.

I think we have seen in the last 10 years or so, sort of a separation

between the notion of retirement and Social Security and SSDI.

Maybe we need to look at SSDI as a somewhat different program.

Maybe there needs to be—the same way there is a Committee to

consider the problems of the aging in Congress—some sort of oversight Committee that looks at disability. But these are all big

changes that you would have to consider for a great deal of time

before making.

Mr. MCCRERY. Thank you, Mr. Chairman. I see my time has expired. I may want to come back after you all have finished and ask

a couple more questions.

Chairman SHAW. Mr. Tanner, do you have any questions?

Mr. TANNER. Mr. Chairman, I apologize for being late. I have

been unavoidably detained by about three other—this is the only

job that I have ever had where one thinks nothing of it to be scheduled to be in three different places all at the same moment, and

so I apologize and I am looking forward to reading through the

record. Thank you.

Chairman SHAW. OK. Mr. Baron. You indicated that a majority

of the people with a serious mental illness are desperately poor and

likely to remain at or near the poverty level for the remainder of

their lives and will do so whether they work or not unless there

are significant changes in our national policies. What changes

would you want us to consider?

Mr. BARON. I would want to consider a fairly broad range of

changes. There are certainly a great many people in the disability

community generally and among people with mental illness who

have the capacity to go on to higher education and post-graduate

degrees, who have the capacity to reach on any levels of professional engagement. We need to invest more heavily in making sure

people have access to and financial support to increase their education. It is a commonplace observation that the higher your educational level the more substantial your income is likely to be.

We need to help more people with disabilities and certainly more

people with serious mental illness to get the educational qualifications that they need and to place a much greater emphasis on education. We need to place a much greater emphasis on specific skill

training for those who are not going on to college educations so

that they have a set of skills that make them much more likely to

72

work. But I also think we need to take a look at those people who

are not likely to go on to college educations, who are not likely to

benefit from technological skilled training programs, and think

clearly about how we provide greater financial and other sources

of support to people who are, like many Americans, working to

make a living within the working class in our country.

We need to find a way to help people grab hold of prosperity in

a job market that makes it very difficult for them. Further, we

have among disabled populations in general, but certainly within

the population of people with serious mental illness, a number of

people who are not going to be able to work full time. Their disability is going to preclude full-time work.

I don’t want to presume to suggest the specific policies that we

need to mount to address those problems but we do need to find

a way to make it possible for people whose optimal vocational level

is at part-time to earn a decent living and to combine that living

with disability payments and social supports that make it possible

for them to go beyond the poverty level.

Anybody who is working, full time or part time, and is dependent

upon secondary labor market jobs lives at or near the poverty level.

I am not sure that we want serious disability of any kind to relegate people to a poverty level existence.

Chairman SHAW. Mr. Mohney—by the way your name tag there

is misspelled. It is spelled with an A instead of an O. You reported

a recovery rate among your clients, who are also Social Security

beneficiaries, of roughly six times that of Social Security. Do all

these recoveries represent successful return to work and what aspect of your claim management do you believe is most responsible

for this success, which is rather startling?

Mr. MOHNEY. I would say that the vast majority of these recoveries reflect successful return-to-work. In terms of the aspects of

the claim management process clearly it is the things we talked

about. It is triage, recognizing that different claims are different

and have different recovery potential matching up the right types

of resource with the right claim on a very individualized basis to

understand and promote return to work.

It involves continuing review. Disabilities, again our experience

is that most disabilities do not last a long period of time and so

we need to work with our insureds to focus on their abilities to

focus on opportunities to provide vocational rehabilitation services

that might benefit them. Early intervention is key and one of the

problems with the length of time associated with the approval process for Social Security is that we find that many times insureds

have to fight so hard to be accepted that they accept a disability

mindset and that once that mindset has been accepted it is very

difficult to get them to think in terms of return to work and be as

interested in vocational rehabilitation.

Motivation is key and I think we need a system that is fair on

the front end in terms of the approval process and very interactive

throughout the process geared toward return-to-work.

Chairman SHAW. Well, are you—compare that with the Federal

system.

Mr. MOHNEY. My impression of the Federal system is that there

is opportunity for improvement, particularly along the lines of the

73

ongoing claim management particularly in the areas of early intervention having clinical resources review the situations, look at the

appropriateness of care, looking at whether treatment plans are developed toward returning the person to work versus simply getting

them out of the hospital. I believe that there is tremendous opportunity there as it relates to the continual review and as it relates

to getting individuals focused on their abilities and their potential

for return to work and supporting that.

Mr. TANNER. Mr. Chairman.

Chairman SHAW. Yes. Mr. Tanner.

Mr. TANNER. The thought occurred to me, in this system does it

make sense to look at the definition of disabled—is the definition

of disabled adequate or would a less restrictive definition be of

any—make any sense?

Mr. MOHNEY. Mr. Tanner, I clearly think that would be and we

talked earlier about a comprehensive strategy and review of the

situation. I believe the definition of disability needs to be revised.

In particular, we find on the private side real benefit where individuals are able to return to work gradually and that is typically

how return-to-works occur. It does not occur all at once but it occurs gradually with a buildup in time and hours. And on the private side we do provide partial benefits such that they are not simply dropped from our roll. I think that that would be a significant

incentive that would be beneficial in the program, yes, sir.

Mr. TANNER. Does anyone else have a comment about that?

Mr. BERKOWITZ. May I, sir?

Mr. TANNER. Yes.

Mr. BERKOWITZ. Even if we did have a change in definition, it

would be important to remember that the original system was created as a reaction against the workers’ compensation program,

which those of you who have served in state legislatures know is

still a major concern in states today.

The problem in the workers’ compensation program in the states

has been permanent partial disabilities, partial disabilities that

prove to be a major problem, and if you were to move in a direction

of some sort of partial disability definition, you would be opening

up many problems for potential expansion of the rolls so that would

have be looked at very carefully.

Mr. TANNER. I understand that but I am talking about making

sense as to the goal of helping people achieve independence. Yes,

sir. Mr. Young.

Mr. YOUNG. CDC has long advocated for a modification of the

way we look at disability, something that looks more at functional

limitations and functional abilities and then uses those results to

help serve people in the best way possible. What we do right now

is just determine whether people are making $700 a month or not

and that tells you something but it doesn’t tell you a lot more.

And that next look, the functional abilities, impairments, barriers, between that person and the job are the questions that need

to be asked and the solutions that need to be determined for where

a new definition of ability to really be effective and for us to really

make progress on transforming the current early retirement program into a full support program for those who need to retire but

a support program for those who want to work as well.

74

Mr. BURKHAUSER. Mr. Tanner, my grandmother used to say that

the road to hell is paved with good intentions. The Dutch had a

partial disability program and the reason that their disability

transfer rolls are so high today is that they had an elegibility test

which if you were judged to be 15% disabled but weren’t employed

meant you were eligible for full disability benefits unless it could

be shown by the agency that it was unemployment and not disability that was causing the problem.

This type of entry into their system was probably the major reason why the Dutch rolls are twice the size of the United States or

any other country in the world. We need to take serious the notion

that folks with disabilities can work and change our policy goals so

that our first priority is to get folks with disabilities into employment.

That is what Sweden and Germany do. Even though they have

very high replacement rates, much higher than we have in the

United States, they have a view that no one can get onto the disability benefit rolls unless they have gone through a year or two

of rehabilitation and it is shown that they can’t work. Hence income benefits are definitely a second round program in those countries.

Mr. TANNER. So the problem is not necessarily definitions but

more execution of rehabilitation.

Mr. YOUNG. No, the problem is both. The definition does feed

into the problem because you come into the system and you spend

at least 5 months and maybe 2 years proving you have not a bit

of residual work capacity. And then the next thing you get that

happens is you get a letter saying would you like to go to voc

rehab. And the disconnect in people’s minds is just phenomenal.

If we are serious about supporting people with severe disabilities

who want to work, we have to change the way we start that mind

process going and support people right up at the front but then recognize that no matter what you do, what supports you provide,

what training, what technology, some people will not be able to

work. Find those folks, give them what they need, find the folks

who can work, support them as they need, and then let the process

go on.

Chairman SHAW. Mr. McCrery.

Mr. MCCRERY. Professor Burkhauser, you mentioned just now

again your work first strategy. In your testimony you said that in

order to keep rolls at socially acceptable levels a work first strategy

must be employed. Leaving aside the question of what is a socially

acceptable level, could you expound a little on the work first strategy? What are some of the tools that we should look at to implement a work first strategy?

Mr. BURKHAUSER. In both Sweden and Germany you go on a

temporary disability benefits program before you go into the permanent system and every worker who comes onto the temporary

rolls in Sweden and Germany is given rehabilitation that connects

them to the work force. It is only after that has proven unsuccessful that people are allowed onto the permanent rolls.

Mr. MCCRERY. Excuse me. Is this done prior to a determination

of disability? In other words, is it done upon application of the individual for benefits or how does that work?

75

Mr. BURKHAUSER. One of the things that goes on in these countries that is different than here is that each has a sickness benefit

so people receive this benefit almost immediately and can be on

that program for a couple of months. At that time employers are

involved with the social agencies to see whether the worker needs

rehabilitation. In addition there are in Sweden, jobs targeted for

folks with disabilities. In Germany there are quotas. Firms with 16

or more workers are required to employ a worker with a disability

for every 16 workers.

In Sweden and Germany firms are not allowed to fire a worker

based on health conditions, so there are all sorts of firm level programs that are institutionalized that make it more likely than in

the United States that firms will accommodate their employees

who experience the onset of a disability. In our country, as Tony

Young was saying, there is a long period following the onset of a

disability before you are entitled to disability benefits and it is only

after you get the benefits that there is some effort to do some rehabilitation.

The key is to put the rehabilitation effort up front. One possibility would be to have a system where you pass an initial screen

that is sufficient to get you into a rehabilitation program and possibly a temporary benefit. But this would strictly be a temporary

benefit to go along with rehabilitation. The determination for permanent benefits would then occur after 6 months or even a year

or 2 years.

Mr. MCCRERY. OK. Thank you. Thank you, Mr. Chairman.

Chairman SHAW. Thank you. I will throw this out to anyone who

would like to take it. What are we doing here with regard to taking

someone who may be physically impaired so that they cannot be

rehabbed to get back into being a carpenter, an electrician or a

plumber, but they are not mentally impaired, so that they can get

into another field through advanced education. What are we doing

about that?

Mr. YOUNG. We have the Rehabilitation Act that is supposed to

address those issues and in fact.

Chairman SHAW. How is that operating?

Mr. YOUNG. Well, there is a hearing in itself, sir. The Work Force

Investment Act, which has lots of money for job training in there

that I guess is part of what we need to talk about as far as coordination of disability programs and what Social Security can do and

what the Rehabilitation Services Administration can do and what

the Department of Labor can do as far as retraining people. But

there are lots of people who do to rehab every year and I think

about 200,000 or so get placed in new jobs.

Of course, the demand is much greater than the number of people who actually go through the process and end up with jobs and

that is the end of the story.

Chairman SHAW. Do we need three agencies doing that or would

it be better to try to focus on one agency?

Mr. YOUNG. Again, sir, I think that is a hearing of itself. I think

we very well don’t need three agencies doing that.

Chairman SHAW. Maybe we ought to look into that next year.

Mr. YOUNG. I think that would be a good idea.

76

Mr. BERKOWITZ. Mr. Chairman, there was a period when we

spent a substantial amount of trust fund money essentially subsidizing the vocational rehabilitation program in an effort to get

people rehabilitated. I think it is fair to say that that was not a

particularly strong success and we changed it and no one is that

sad that we did.

The other thing that I might add is that over time as we have

tried to organize the government, we have created a lot of distance

between vocational rehabilitation and our SSDI program. Vocational rehabilitation is one of the bargaining chips in the creation

of the Department of Education and so it went over there when it

was created. And of course SSA is now an independent agency but

that bureaucratic distance and indeed rivalry between vocational

rehabilitation and SSA has been a factor in the historical record

and that hasn’t helped coordinate efforts between the two agencies.

Mr. MOHNEY. Mr. Chairman, I would add that on the private

side we have had great success in focusing on retraining and focusing on labor market surveys and functional capacity assessments

to match up individuals who perhaps have some impairment, some

restrictions and limitations, but are interested in working and finding other occupations that they can be successful in. It has been

cost effective. It must be applied selectively. I don’t think there is

a broad, one category fits all approach, but when applied selectively

to individuals it can be highly cost effective.

Mr. BARON. Could I?

Chairman SHAW. Yes, sir.

Mr. BARON. Just one other observation that in thinking through

how to better utilize government dollars to retrain and re-educate

people, I would want to caution us to think as closely as we can

about the kinds of jobs we want to train and educate and prepare

people for and to be clear that the kinds of jobs that are going to

be developing over the next decade or two are quite different than

the kinds of jobs that we might have prepared people for a generation or even a decade ago and that if we want to provide people

with retraining and re-education for new careers it ought to be for

new careers that lead them toward prosperity and do not lead them

back into jobs that it is going to be hard for people to make economic progress through. And that is a different kind of investment

and probably a much greater investment than many of us have currently been thinking about.

Chairman SHAW. Well, thank you all very much. They called the

vote at just the right time. I was afraid they were going to call it

around 11 and we were going to have to make you gentlemen wait

but I appreciate your time and I appreciate your testimony. It has

been very helpful. Thank you. We are adjourned.

[Whereupon, at 11:42 a.m., the hearing was adjourned.]

[Submissions for the record follow:]

Statement of Kenneth Nibali, Associate Commissioner for Disability, Social

Security Administration

Mr. Chairman and Members of the Subcommittee:

Thank you for providing me the opportunity to discuss initiatives to ensure that

the Social Security Administration’s beneficiaries with disabilities receive the supports needed to achieve independence. This is an important issue, and the Social

Security Administration (SSA) has placed a high priority on helping its Social SecuVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00080 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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rity Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries return to work.

I will discuss SSA’s disability process, the current work incentives available to individuals with disabilities and the Ticket to Work legislation that will provide more

opportunities for individuals with disabilities to return to work. I will also discuss

some of the differences between SSA’s programs and private insurer programs.

Social Security Disability

Generally, when people think about Social Security, they think about retirement

benefits. Nearly one third of Social Security beneficiaries, however, are the surviving family members of workers who have died or are severely disabled workers

or their wives and children. The protection provided by the SSDI program is extremely important, especially for young families. For a young, married, average income worker with two children, Social Security is the equivalent of a $223,000 disability income insurance policy. In the event of severe disability, the SSDI program

stands between these families and poverty. Additionally SSI serves the most economically vulnerable population with disabilities, most of whom are living in poverty.

In June 2000, 5,884,200 beneficiaries were receiving Social Security benefits on

the basis of disability—4,959,500 disabled workers, 724,400 disabled adult children,

and 200,300 disabled widows and widowers. In addition, 170,800 spouses and

1,419,800 minor and student children of disabled workers were receiving benefits.

Further, 5,304,324 blind or disabled individuals received SSI benefits. About 30 percent of these individuals received both SSDI and SSI benefits. Thus, in June, SSA

sent benefits to over 9.5 million individuals on the basis of disability. In fiscal year

1999, disabled workers and their dependents received over $50 billion in cash benefits under the SSDI program and disabled individuals received over $24 billion in

cash benefits under the SSI program.

Furthermore, SSDI benefits are the gateway to the Medicare program to those individuals who have been eligible for disability benefits for 24 months. These benefits

provide health care coverage that to many SSDI beneficiaries is simply irreplaceable, since many would not be able to obtain insurance in private markets simply

because they are disabled. The Medicare program paid over $24 billion in benefits

in fiscal year 1999 to individuals whose entitlement to Medicare is based on their

SSDI benefits. Thus, almost $75 billion was paid in fiscal year 1999 from the Social

Security and Medicare programs on behalf of disabled workers and their families.

As with the retirement program, SSDI is funded through a payroll tax on covered

earnings, paid by employees, their employers, and the self-employed. The current

DI payroll tax on earnings is 0.9 percent for employees and employers, each, and

1.8 percent for the self-employed.

SSDI is designed to protect workers covered under the Social Security program

who become severely disabled, with applicants judged on the basis of a uniform set

of standards. The criteria we use to award disability benefits requires that the condition either be expected to result in death or last at least 12 months. To qualify,

the individual must be unable because of a medical condition to perform any substantial work in the national economy. Thus, the inability to do one’s own past work

or the inability to find suitable employment are not a sufficient basis for meeting

the definition of disability. Our regulations provide for a five-step sequential evaluation based on the statutory definition of disability, and require that a claimant not

currently be engaging in substantial gainful activity (SGA)—a level of work currently set at $1,170 per month for blind beneficiaries and $700 per month for nonblind beneficiaries, a level recently proposed to be adjusted annually to the national

average wage index. Additionally, applicants must have worked 20 quarters during

the 40 quarter period ending with the quarter in which disability began (special provisions apply for workers who are under age 31), and they must complete a 5-month

waiting period after the onset of the disability.

After a claim is taken in one of Social Security’s field offices, it is forwarded to

one of the State Disability Determination Services. These State employees are responsible for following up on at least one year’s worth of medical evidence in support of the claim, scheduling consultative examinations if necessary, and making the

disability determination at the initial and reconsideration (the first level of appeal

of an adverse initial determination) levels. The States are fully reimbursed for making these determinations. The process of evaluating an individual’s disability accounts for the administrative costs for the disability program being somewhat higher (3.0 percent of benefits) than those for the retirement and survivor program,

largely because of the cost of obtaining medical evidence and the need for a thorough evaluation by a physician or other highly trained professional reviewer.

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While the Social Security eligibility criteria are very strict, we also have a very

structured system to ensure that applicants’ rights are protected and that those applicants who are eligible actually get their benefits. Currently, a physician must be

part of the decision-making team, although we are testing a system where certain

claims, generally the most severe and obvious cases, would be decided by a trained

layperson. After a reconsideration denial, a claim can be appealed to an administrative law judge, then the Appeals Council and up to a federal court. We also are testing a model that would streamline the process by eliminating the reconsideration

step. While the primary purpose of SSDI is to replace a portion of income, the program also includes provisions designed to encourage beneficiaries to return to work.

Current Work Incentive Provisions

Work incentives assist beneficiaries with disabilities to enter or reenter the workforce by protecting entitlement to cash payments and/or health care until this goal

is achieved. Some work incentives are common to both the SSDI and SSI programs,

while some are unique to one program or the other. Because even the common work

incentives may be treated differently by either program, I would like to briefly discuss work incentives as each program treats them.

SSDI Work Incentives

There are several work incentives for SSDI beneficiaries built into the Act, most

notably impairment-related work expenses (IRWE), the trial work period (TWP), the

extended period of eligibility for reinstatement of benefits (EPE), and continuation

of Medicare. The availability of these incentives is dependent upon the disabled beneficiary continuing to have a disabling impairment.

Certain impairment-related work expenses may be deducted from gross earnings

when determining SGA. An expense qualifies as an IRWE during a period of work

when:

• The item or service enables them to work;

• They need the item or service because of their disabling impairment;

• They pay the cost and are not reimbursed by another source (e.g., Medicare,

Medicaid, private insurance);

• The expense is ‘‘reasonable’’—that is, it represents the standard charge for the

item or service in their community.

The TWP enables disabled beneficiaries to test their ability to work by allowing

them to receive full benefits regardless of how high earnings might be. The TWP

continues until the accumulation of 9 months (not necessarily consecutive) of ‘‘services’’ performed within a consecutive 60-month period. We use this ‘‘services’’ rule

only to control when the TWP stops. ‘‘Services’’ means any activity in employment

or self-employment for pay or profit or of the kind normally done for pay or profit

(whether or not it is SGA). We currently consider work to be services if earnings

are more than $200 a month (or more than 40 self-employed hours in a month). SSA

recently proposed this level be increased to $530 per month.

Following the end of the TWP, beneficiaries have a 3-month grace period before

beginning the 36-month extended period of eligibility. During the EPE, the beneficiary does not receive a cash benefit in any month earnings exceed SGA. Cash benefits can be reinstated anytime during this 36-month period that the beneficiary

earns less than SGA and continues to meet the definition of disability. Currently,

Medicare coverage continues during this period and for three additional months. At

that point, individuals with disabilities can buy Medicare coverage. Effective October 1, 2000, based on the new Ticket to Work Incentives Improvement Act, premium-free Medicare is extended an additional 4 years.

In addition to providing incentives to work, we also refer beneficiaries with disabilities to their local State Vocational Rehabilitation (VR) agency, or to other service providers in the public and private sector who try to help beneficiaries return

to work. In fiscal year 1999, SSA paid State VR agencies about $120 million for

their services provided to over 11,000 beneficiaries with disabilities who worked at

least 9 months at the substantial gainful activity level. Although this was a record

year for reimbursements, we look forward to much more progress in this area.

Under the Ticket to Work and Work Incentives Improvement Act of 1999

(TWWIIA), disabled beneficiaries will receive a ticket that they may use to obtain

employment services, vocational rehabilitation services, or other support services

from an employment service network (EN) or a State VR agency. The ticket will be

assigned to the participating employment network of the beneficiary’s choice, assuming the EN is willing to accept the assignment. Under the TWWIIA, the number

and scope of available ‘‘rehabilitation’’ options for beneficiaries was expanded to inVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00082 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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clude public and private VR services, including employment services and assistive

technology. All ENs must meet the qualifications set by the Commissioner.

A purpose of the TWWIIA is to provide disabled beneficiaries more supports to

test their ability to work. In addition to improving access to services, a disabled beneficiary using the ticket is not subject to continuing disability reviews. Thus, disabled beneficiaries receive a greater opportunity to become self-sufficient without

losing their benefits.

SSI Work Incentives

Some general information about the SSI program is useful to explain the work

incentive provisions as they apply to that program. The SSI program differs from

Social Security in that the monthly Federal benefit standard (currently, $512 for an

individual and $769 for an eligible couple) is reduced dollarfordollar by the amount

of the individual’s ‘‘countable’’ income—i.e., income less all applicable exclusions.

The result of this computation determines whether the individual (or couple) is eligible and the amount of the benefit payable.

SSI law defines two kinds of income: earned and unearned. Earned income is

wages, net income from selfemployment, remuneration for work in a sheltered workshop, royalties on published work, and honoraria for services. All other income (including income received in kind) is unearned.

When determining an individual’s countable income, exclusions are taken for various types of income. There is a general $20 exclusion, applied to an individual’s unearned income. In the case of earned income, we exclude a portion of the $20 general exclusion that has not been used, and then exclude the first $65 and one-half

of the remainder of the earnings. This greater exclusion for earned income acts as

a work incentive for all SSI recipients.

In determining the benefits of individuals with disabilities, we exclude IRWEs.

For these individuals, we exclude work expenses directly related to the individual’s disability, such as attendant care services, assistance in travelling to and from work

and personal assistance related to work.

Under SSI we also exclude income saved or being used to pursue a plan for

achieving selfsupport (PASS) that has been established by a disabled or blind person. These plans are established to help blind and disabled individuals become selfsupporting by excluding income that is set aside to help the individual reach a specific occupational goal. In December 1999, there were 1,045 SSI recipients with a

PASS established, although not all of those individuals reported earnings for that

month.

We also encourage self-sufficiency among SSI recipients who are under the age of 22. Under the Student Earned Income Exclusion, students can exclude up to $400

of earned income per month when determining their eligibility. The maximum yearly exclusion is $1,620. Recently, President Clinton proposed raising the monthly and

yearly exclusions to $1,290 and $5,200, respectively.

Finally, the laws governing SSI contain provisions that enable blind and disabled

individuals to continue working and receiving income beyond the limit that would

normally result in ineligibility.

Under section 1619(a) of the Social Security Act, a disabled beneficiary who would

cease to be eligible because of earnings over the SGA limit (currently $700 a month)

can continue to receive cash benefits until the amount of earnings would cause him

or her to be ineligible for benefits under SSI income counting rules. Being a recipient of this special benefit equals being an ‘‘SSI recipient’’ for Medicaid eligibility

purposes.

Section 1619(b) provides ‘‘SSI recipient’’ status for Medicaid eligibility purposes

for certain SSI recipients. These individuals have earnings that preclude the continued payment of an SSI benefit but are not sufficient to provide a reasonable equivalent of the SSI, social services, and Medicaid benefits that the individuals would

have in the absence of earnings. For these individuals, the loss of the social service

and Medicaid benefits would seriously inhibit their ability to continue working.

According to SSA’s Office of Research, Evaluation and Statistics, there were approximately 340,000 SSI disability beneficiaries (or 6.4 percent) who were working

in December 1999. About 70,000 of these individuals were receiving benefits under

section 1619(b). These beneficiaries do not receive an SSI payment but retain their

Medicaid coverage. Almost three-fourths of those who received this type of SSI benefit had amounts of earned income below the substantial gainful activity level.

Ticket to Work and Work Incentives Improvement Act of 1999

Last December the President signed the TWWIIA into law. I want to express

again my thanks to the Chairman and the members of the Subcommittee for your

support in getting the ‘‘Ticket’’ passed. This legislation will help individuals with

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disabilities who want to work by lessening their fears about losing health care coverage and income during attempts to work.

It improves and expands their VR choices, providing enhanced work incentives,

outreach activities and new service structures. Ever since the TWWIIA was enacted,

we have been actively engaged in the hard work of implementing its various provisions. We again look forward to working with you as the different provisions take

shape and begin to show the results we anticipate—more people with disabilities entering or reentering the workforce.

We will be reporting to Congress regularly about the progress of the TWWIIA program. By December 2002, we must report to Congress on the adequacy of our payment rates to employment networks. Over the next six years we must make three

separate reports to the House Committee on Ways and Means and Senate Committee on Finance evaluating the progress of program activities, as well as conclusions on whether or how the program should be modified.

Currently, we are preparing an NPRM package to implement these provisions. We

plan to begin implementing the ticket provisions in some States in January 2001,

distributing tickets in a staged process through May 2001, with the remaining

States phased-in by January 2004. We are currently accepting applications from

those who want to serve as employment networks.

The new law requires SSA to conduct demonstration projects to evaluate the effects of reducing benefits $1 for every $2 of earnings over a certain limit. Beginning

in December 2001, annual reports to Congress are required on the projects, with a

final report due no later than one year after the project is complete. Currently, we

are in the process of designing the parameters of the $1 for $2 demonstration

projects. Additional legislation would be required before implementation of these

projects may begin.

Additionally, Congress extended SSA demonstration authority until December

2004 to allow SSA to explore various projects that will enable more individuals to

return to work. We are assessing which experiments and projects we shall pursue.

Private Insurance vs. Social Security Administration’s Disability Programs

The SSA disability programs differ from other insurance programs offered through

the private sector in a number of ways ranging from the definition of disability to

beneficiary characteristics and timing of benefits. However, SSA can still benefit

from lessons learned by these alternate insurance providers in determining how to

further improve its programs.

Private systems often use a less restrictive definition of disability. Generally, the

first definition for disability in private insurance is the inability to do the person’s

own occupation; this makes for a quicker and easier determination. After six months

to two years, the definition extends to any occupation. SSA must make a long-term,

broad-ranging entitlement determination. Favorable SSDI determinations normally

cannot be changed without demonstrating medical improvement, while a private insurance determination can be reversed or discontinued without determining that the

individual’s disabling condition has medically improved. Furthermore, SSA must

meet strict requirements for providing claimants legal due process and for ensuring

uniformity across its national program.

SSA’s beneficiaries are on average more severely and permanently disabled than

workers in those other systems and have significantly lower expected return to work

rates. Private insurers often target policies and services to relatively low-risk clients

such as professional or technical employees. Some insurers may not offer individual

disability insurance to people in higher risk jobs, or may offer it at a cost to the

employee that is prohibitive. SSA provides benefits to any eligible disabled worker

or low income disabled person and must accept disabled individuals with high-risk

as well as low-risk profiles for high lifetime disability costs.

SSA tends to serve on average a less affluent and less educated population than

private disability insurance providers do. As such, applicants under the SSA-administered disability programs often require greater assistance with the disability application and adjudication process than do applicants for private insurance disability

benefits especially since the latter may receive employer assistance in pursuing

their claims. The SSDI and SSI programs must cover individuals with all types of

impairments (pre-existing conditions, mental impairments, etc.) while private insurers can choose what conditions they will cover.

One-half of SSDI claimants have been out of work for over a year before applying

for benefits. This is due to a combination of reasons, such as the availability of

short-term insurance from the employer, the claimant’s decision to wait for the termination of sick leave and Worker’s Compensation benefits, or the claimant’s reliance on COBRA coverage. The current connection with the employer is often broken

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and sometimes health insurance lapses. Therefore, some SSDI applicants do not

have complete and current medical documentation of their disability. Private insurance is frequently associated with an employer-based benefit program, and documentation of the medical condition is often available through the employee’s employer-provided health insurer. In some cases, the employer will assist the claimant

in obtaining evidence under the terms of their insurance coverage. Additionally,

there is typically not an extended period during which the applicant does not have

health insurance coverage.

SSA agrees that earlier intervention, and earlier identification and provision of

necessary return-to-work assistance for applicants and beneficiaries should be researched and considered as part of an overall return-to-work strategy. However, applications for SSDI and SSI are often months after the onset of the episode. Other

than through our new demonstration project authority, SSA cannot refer disability

claimants for reimbursable VR services until they are awarded benefits. We agree

that earlier intervention to assist presumably disabled applicants with securing appropriate return to work services should be researched and considered as part of an

overall return-to-work strategy. How best to coordinate this with State unemployment insurance, State temporary disability benefits, and State workers compensation programs are just some the details that will need to be worked out.

Conclusion

We want to build on the momentum provided by the enactment of the TWWIIA

and to increase incentives to work for all people with disabilities. Our commitment

is to make every effort to enrich the lives of all people with disabilities and to help

all those who want to work do so. One of the best ways for SSA to do this is to

continue its active implementation of the TWWIIA program, including the evaluation of its progress and our reports to Congress.

We know that return to work efforts must include coordination with other Federal

departments and agencies as well as the private sector to find new and innovative

ways to encourage work. Solutions to the redesign of the Federal disability programs require the active involvement of several Federal agencies, including the Departments of Education, Labor, the Treasury, and Health and Human Services. On

March 13, 1998, President Clinton signed Executive Order 13078, establishing the

Presidential Task Force on Employment of Adults with Disabilities. The mandate

of the Task Force is to evaluate existing Federal programs to determine what

changes, modifications, and innovations may be needed to remove barriers to employment opportunities faced by adults with disabilities. The work of the Task Force

will help ensure that national initiatives identified will receive high priority within

respective departments and agencies.

The private rehabilitation community, private insurers, consumers, employers and

advocates for people with disabilities can greatly assist SSA in implementing the

TWWIIA. We will continue to look for ways to further enhance the productive capabilities of disabled beneficiaries with our private sector business partners.

We look forward to working with the Subcommittee and Congress to achieve our

mutual goal: removing as many barriers to work as possible and providing as many

incentives and supports as possible to enable people with disabilities to participate

in the workforce.

Statement of American Occupational Therapy Association, Inc., Bethesda,

fMaryland

The American Occupational Therapy Association (AOTA) submits this statement

for the record for the hearing on July 13, 2000. AOTA commends the Subcommittee

for holding this hearing in its ongoing efforts to address the challenges facing the

social security disability programs and its recipients.

AOTA supports the notion put forth by the Consortium of Citizens with Disabilities (CCD) that the original assumption of federal disability programs was that people who become disabled would remain so throughout the remainder of their lives,

and that little thought was given to what would happen if these individuals returned to work after becoming eligible for benefits. We agree with CCD that disability is a dynamic condition, evolving in response to advances in technology and

medical intervention, improvements in services and the expectations of persons with

disabilities. Many individual and policy barriers continue to prevent persons with

disabilities from achieving economic independence through work and work-related

rehabilitation services (such as occupational therapy).

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What is Occupational Therapy?

Occupational therapy is a health and rehabilitation service reimbursed under

Medicare, Medicaid, health insurance policies, the Rehabilitation Act, worker’s compensation, and other programs. Occupational therapy services can help individuals

with disabilities desiring to enter or return to the workforce to assess their capabilities, to learn skills, and to achieve success in the work place. Using purposeful activity (or ‘‘occupations’’), such as work simulation and conditioning activities, occupational therapists assess and intervene with individuals whose ability to function in

a competitive work environment is affected due to physical or emotional illness, injury or condition. Occupational therapy intervention includes assessment of functional limitations and capabilities needed to perform meaningful, productive work.

Occupational therapy practitioners are licensed or otherwise regulated in every

state and territory. They use their knowledge of the structure and function of the

human body, the effects of illness and injury, and the components of activity to

achieve recovery, to improve functioning and to increase clients’ involvement in productive and other activities.

Performance areas, performance components, and performance contexts are the

parameters of occupational therapy’s domain of concern.

• Performance areas are broad categories of human activity that are typically

part of daily life. For occupational therapy, these are activities of daily living

(ADLs), including instrumental activities of daily living (IADLs), work and other

productive activities, and play or leisure activities.

• Performance components are fundamental human abilities that, to varying degrees and in differing combinations, are required for successful engagement in desired performance areas. These components are sensorimotor, cognitive, psychological, and psychosocial.

• Performance contexts are situations or factors that influence an individual’s engagement in desired and/or required performance areas.

Occupational therapy assessment involves examining abilities in and the relationship between performance areas, components and contexts. Intervention may be directed toward elements of performance areas (e.g. dressing, vocational options), performance components (e.g. strength, endurance, problem solving) or the environment.

Occupational Therapy and Work Rehabilitation

Occupational therapy contributes to the promotion and management of productive

occupation as well as the prevention and treatment of work-related disability.

Through skilled observation and evaluation of a person’s performance, occupational

therapists can identify a person’s interests, abilities, and needs as they related to

general work performance and to specific job and workplace design. Appropriate

intervention strategies are developed based on the evaluation results, and are designed to explore and expand work options, to enhance or develop work-related capacities, and to obtain or retain employment.

In providing work-related services, including workplace redesign, work disability

prevention, and management programs, occupational therapy performs several tasks

including:

• Evaluating the client’s work roles and work performance and the impact of their

abilities on performance

• Analyze work tasks and the work environment

• Collaborate with other team members in coordinating occupational therapy

services

• Provide recommendations about adapting work tasks or environments for the

worker and/or employer

When developing interventions, occupational therapists consider the client’s age,

interests, values, culture, skills and abilities, motivation, and psychological and psychosocial status as well as work role, task demands, work environment, and available resources. Intervention strategies may include direct services or consultation to

individuals and groups.

Successful return to work can be dependent on many issues that an occupational

therapist is qualified to address, including looking at the individual’s physical and

psychological tolerances essential to appropriate fulfillment of the vocational planning process, and development of appropriate work behaviors that will improve retention and reduce recidivism. For example:

Conclusion

Occupational therapy can be an important component of a program to enable individuals to return to work, tailoring rehabilitation, work training, and job modificaVerDate 20-JUL-2000 14:58 Mar 06, 2001 Jkt 060010 PO 00000 Frm 00086 Fmt 6633 Sfmt 6602 K:\HEARINGS\68103.TXT WAYS3 PsN: WAYS3
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tions and placement. AOTA stands ready to assist the Subcommittee in its efforts

to improvement federal disability programs to enable persons with disabilities to

have the opportunity to work. Congress has begun this work by passing the Ticket

to Work and Work Incentives Improvement Act (TWWIIA) last year (P.L. 106–17).

TWWIIA is a major step toward eliminating many of the existing barriers to work

in federal disability programs. We applaud the Subcommittee for taking the next

step and looking at other barriers to work for persons with disabilities.

Statement of Terri Spurgeon, President, National Association of Disability

Mr. Chairman and Members of the Subcommittee, on behalf of the members of

Examiners, Lansing, Michigan

f the National Association of Disability Examiners (NADE) I want to take this opportunity to thank you for holding this series of hearings on the problems and challenges facing the Social Security and Supplemental Security Income (SSI) disability

programs today. Our membership is committed to the preservation of the disability

program and deeply concerned about the problems we encounter in the administration of these programs. Those concerns have been described in earlier testimonies

before this Subcommittee and will not be reiterated here. We would, however, like

to address those issues involving the solvency of the disability trust fund and return

to work barriers and incentives.

The Social Security and SSI disability programs play a vital role in the lives of

millions of Americans. Disability benefits provide an important safety net for disabled individuals and their families. However, we believe that the majority of those

who apply for these benefits would prefer to remain in the workforce. We welcomed

the recent efforts of the Congress and of the Social Security Administration (SSA)

to facilitate and encourage a beneficiary’s efforts to return to work by removing barriers such as loss of medical coverage and by authorizing and establishing return— to-work demonstration projects.

Individuals who understand that their claims will be reviewed at the appropriate time are much more likely to take advantage of return to work

initiatives. We strongly support SSA’s focus on continuing disability reviews

(CDRs) and we appreciate the Congressional initiatives to provide the necessary

funding to conduct these reviews. The public should be able to expect that the Social

Security Administration (SSA) will administer the disability program in a cost-effective manner. We believe it is vital that sufficient resources continue to be made

available to permit to become-and remain-current on these reviews. These reviews

are vital because of the importance they have on the economic security of the disability trust fund and on the public’s confidence in the disability program. However,

while we support the present CDR initiative, we believe this process would be more

effective if the current Medical Improvement Review Standard (MIRS) were revised.

(A copy of NADE’s analysis of this subject is attached for your review.).

Although time-limited benefits are common in many private disability programs,

and have been proposed as one means to encourage claimants to obtain appropriate

treatment and rehabilitation to re-enter the work force, we do not advocate such a

proposal for the Social Security or SSI disability programs at this time. Unlike private insurers and other disability programs, the programs administered by Social

Security do not award benefits for partial or short-term disability. By definition, individuals who are awarded Social Security or SSI disability benefits are unable to

engage in any substantial gainful activity for a period of not less than 12 months.

These individuals should be able to expect that SSA will not terminate those benefits unless there is a change in their condition that would warrant termination. At

the same time, however, we believe that disability benefits should be paid only to

those who meet the statutory definition of disability and that individuals who are

capable of returning to the workforce do so. This requires an efficient and effective CDR process.

The CDR process has not been utilized in the way it was envisioned. SSA’s need

to utilize limited funds for more pressing needs have made it impossible to pursue

the CDR process without the recent special appropriations from the Congress.

NADE firmly believes that if CDRs can be conducted timely, if genuine errors in

decision-making can be corrected at the CDR level by changes in the MIRS, and if

additional disincentives to return to work can be eliminated, then a medical review

standard can serve both the disabled population and the general public better than

the wholesale changes that time-limited benefits would entail.

The General Accounting Office, in their July 13, 2000 testimony, noted that, ‘‘In

recent years, SSA has piloted numerous incentives to redesign and thereby improve

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its disability determination process.’’ NADE has supported these efforts and many

of our members are, or have been, involved in piloting and prototyping this new

process. We would hope that simplifying and streamlining the process would enhance and support the current return to work initiatives.

While NADE supports efforts to make the decision making process more efficient,

we do not support change for the sake of change. It appears that SSA is planning

to go forward with national roll-out of the new disability claims process before

data—including the impact this new claims process has had on both administrative

costs and program costs—has been fully assessed. Earlier we contacted Commissioner Apfel expressing both our concerns with and suggestions for national roll-out.

A copy of that correspondence accompanies this testimony.

We would also like to take this opportunity to express our concern that several

of the states involved in the prototype of the new disability claims process are reporting that hundreds of claims have been received for which they have yet to initiate any case development. These claims are sitting untouched, filed away, until

such time that the DDS has sufficient staff to initiate the required development.

This backlog of cases was created as the DDS’s made the required adjustments to

begin processing claims in the new manner prescribed by the prototype. The DDS’s

were not given sufficient lead time or training to prepare for the new process. These

backlogs do not serve the public interest, improve a claimants potential for return

to work, or enhance the public’s confidence in the disability program.

NADE is concerned about the viability and stability of the Social Security and SSI

disability programs and the integrity of the disability trust fund. We appreciate

your willingness to solicit a wide range of viewpoints and suggestions for improving

these programs. NADE feels honored to be invited to submit our views and we offer

the expertise of our members, working with the Subcommittee, as a means to

achieve that goal.

[Attachments are being retained in the Committee files.]

Æ