Established in 1956, DI is an insurance program that provides monthly cash benefits to workers who are unable to work because of severe long­ term disability. Workers who have worked long enough and recently enough are insured for coverage under the DI program. To meet the definition of disability under the DI program, 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 (SGA). Individuals are considered to be engaged in SGA if they have countable earnings above a certain dollar level. Once a person is on the disability rolls, benefits continue until (1) the beneficiary dies, (2) the beneficiary becomes eligible for Social Security retirement benefits at full retirement age, (3) SSA determines that the beneficiary is no longer eligible for benefits because his or her earned income exceeds the SGA level, or (4) SSA decides that the beneficiary’s medical condition has improved to the point that he or she is no longer considered disabled. In 2002, SSA paid about $60 billion in DI cash benefits to 5.5 million disabled workers, with average monthly benefits amounting to $834 per person. In addition to receiving cash assistance, beneficiaries automatically qualify for Medicare after 24 months of DI entitlement. During the 1970s, as the number of disability awards increased significantly and resulted in substantial cost increases for the DI program, the Congress became concerned about the growth of the DI program and program rules that provided disincentives to returning to work. To encourage DI beneficiaries to return to work—and, potentially, to leave the benefit rolls—the Congress has, over the years, enacted legislation providing various work incentives. Such incentives include a trial work period during which beneficiaries may earn any amount for 9 months within a 60-month period and still receive full cash and medical benefits and continued Medicare coverage that allows beneficiaries to maintain eligibility for Medicare for at least 39 months following a trial work period as long as medical disability continues. In an effort to further address these issues, the Congress, in 1980, required SSA to conduct demonstration projects to evaluate the effectiveness of policy alternatives that could encourage DI beneficiaries to reenter the workforce. A key aspect of this demonstration authority is SSA’s ability to waive DI and Medicare program rules to the extent needed in conducting these projects. The legislation granting DI demonstration authority also identified a variety of policy alternatives for SSA to consider testing, including (1) alternative ways of treating DI beneficiaries’ work-related activity such as methods allowing for a reduction in benefits based on earnings and (2) modifications in other rules, such as the trial work period and Medicare eligibility waiting period, that may serve as obstacles to DI beneficiaries returning to work. In addition, this legislation identified several requirements pertaining to the design and evaluation of DI demonstration projects. In particular, these projects were required to be of sufficient scope and carried out on a wide enough scale to permit a thorough evaluation of the policy alternatives studied such that the results would be generally applicable to the operation of the DI program. The law additionally required SSA to submit reports to the Congress announcing the initiation of DI demonstration projects as well as periodic reports describing the status of these projects and a final report on all projects carried out under the demonstration authority. SSA was directed to make recommendations, when appropriate, for legislative or administrative changes in its reports to the Congress. Another important aspect of SSA’s DI demonstration authority is that unlike other SSA research activities, which are funded through congressional appropriations, these projects can be paid for with DI Trust Fund and Old-Age and Survivors Insurance Trust Fund monies. Therefore, SSA is not required to obtain congressional approval for DI demonstration expenditures, although it is required to receive approval from the Office of Management and Budget for an annual apportionment of Trust Funds for these demonstrations. SSA’s DI demonstration authority has always been granted on a temporary basis and therefore has been subject to periodic review and renewal by the Congress. After initially granting this authority for a 5-year period, the Congress subsequently renewed it several times, in 1986, 1989, 1994, 1999, and 2004. The renewal of SSA’s authority has sometimes been delayed so that SSA has, on several occasions, gone without DI demonstration authority. For example, after its demonstration authority expired in June 1996, SSA was not again granted DI demonstration authority until December 1999. Most recently, the Congress extended this demonstration authority through December 2005. In addition to granting this general DI demonstration authority, the Congress may enact legislative mandates for SSA to conduct specific DI demonstration projects. For example, the Ticket to Work and Work Incentives Improvement Act of 1999 required SSA to conduct a demonstration to assess the effectiveness of a benefit offset program under which DI benefits are reduced by $1 for every $2 in earnings (above a certain level) by a beneficiary. SSA’s authority to conduct this demonstration is similar in some respects to the authority it has under its general DI demonstration statute. For instance, the statute allows waiver of DI and Medicare program provisions to carry out this benefit offset demonstration. However, some differences exist between the two authorities. In particular, the benefit offset demonstration authority provides a more detailed and comprehensive list of demonstration objectives for SSA to fulfill than does SSA’s general authority. For example, the benefit offset demonstration authority lists six “matters to be determined,” which include assessments of project costs; savings to the Trust Funds; and project effects on employment outcomes such as wages, occupations, benefits, and hours worked. Regardless of the authority under which they are carried out, demonstration projects examining the impact of social programs are inherently complex and difficult to conduct. Measuring outcomes, ensuring the consistency and quality of data collected at various sites, establishing a causal connection between outcomes and program activities, and separating out the influence of extraneous factors raise formidable technical and logistical problems. Thus, these projects generally require a planned study and considerable time and expense. Adding to these complexities are other administrative or statutory requirements affecting SSA’s DI demonstrations. For example, SSA’s policy is that its demonstration projects must not make those who participate in the project worse off, which could limit the specific types of policy alternatives the agency can study or the methods used to study such alternatives. Although the legislation granting DI demonstration authority does not prescribe the use of particular methodological approaches, SSA has repeatedly recognized that the law’s general requirements for demonstration evaluations require SSA to conduct these projects in a rigorous manner that provides the agency with a reliable basis for making policy recommendations. Rigorous methods are required to estimate the net impact of a tested disability policy option because many other factors, such as the economy, can influence whether a beneficiary returns to work. In an August 2002 report to the SSA Commissioner, an SSA advisory panel stated that it is widely agreed that experimental designs, “when feasible from operational and budgetary perspectives and when they can be conducted without serious threats to their validity, are the best methodology for determining the effects of changes in government programs.” In addition, SSA officials and other researchers have noted the advantages of experimental designs in providing policymakers with more clear-cut results that are less subject to debate than results derived from other methods. However, when experimental designs are not feasible or desirable, the use of quasi-experimental designs offers a reasonably rigorous evaluation alternative that may, under certain circumstances, offer advantages over experimental designs. Other factors may also limit the rigor of DI demonstrations, including insufficient sample sizes, inconsistency in demonstration design or implementation across multiple project sites, and deficiencies in data collection. Such design, implementation, and evaluation weaknesses may hamper SSA’s use of project results as a basis for making policy recommendations because they limit the agency’s ability to (1) control for factors external to the demonstration, (2) generalize demonstration results to a wider population of DI beneficiaries, and (3) isolate the effects of specific policy interventions from the overall effects produced by a demonstration. The Office of Program Development and Research (OPDR) is the entity within SSA that develops and implements demonstration projects for the DI and Supplemental Security Income (SSI) Programs. OPDR program and research staff—sometimes with the assistance of outside research organizations—identifies the broad outlines and requirements of disability program demonstration projects, including the basic objectives, scope, and methodological standards for these projects. SSA then issues formal notices requesting public or private sector organizations to submit offers to conduct the demonstration projects, which may include development of a detailed design plan, provision of technical support, collection of project data, or evaluation of project results. On the basis of SSA’s review of submitted proposals and bids, the agency may enter into grants, cooperative agreements, or contractual arrangements with one or more organizations to carry out demonstration projects. For example, a single demonstration may involve cooperative agreements with states to design and implement projects as well as contracts with one or more research institutions to provide technical assistance to the states and evaluate demonstration results. Project managers in OPDR have the primary responsibility for overseeing demonstration projects to ensure that they meet SSA’s technical and programmatic requirements. OPDR collaborates with SSA’s Office of Acquisition and Grants in issuing formal project notices and solicitations and, subsequently, in overseeing grant or contract performance. SSA has not used its demonstration authority to extensively evaluate a wide range of DI policy areas dealing with return to work. Until very recently, SSA has focused its demonstration efforts primarily on a relatively narrow set of policy issues dealing with the provision of vocational rehabilitation and employment services, despite being given the authority to assess a much broader range of policy alternatives. Even in the area of vocational rehabilitation and employment issues, SSA’s use of DI demonstration authority has not been comprehensive and, therefore, did not extensively address key policy issues that the agency is currently grappling with under its Ticket to Work program.