Hearing on Encouraging Work Through the Social Security Disability Insurance Program
Hearing on Encouraging Work Through the Social Security Disability Insurance Program
SUBCOMMITTEE ON SOCIAL SECURITY
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
June 19, 2013
Printed for the use of the Committee on Ways and Means
COMMITTEE ON WAYS AND MEANS
SAM JOHNSON, Texas
|SANDER M. LEVIN, Michigan
CHARLES B. RANGEL, New York
JIM MCDERMOTT, Washington
JOHN LEWIS, Georgia
RICHARD E. NEAL, Massachusetts
XAVIER BECERRA, California
LLOYD DOGGETT, Texas
MIKE THOMPSON, California
JOHN B. LARSON, Connecticut
EARL BLUMENAUER, Oregon
RON KIND, Wisconsin
BILL PASCRELL, JR., New Jersey
JOSEPH CROWLEY, New York
ALLYSON SCHWARTZ, Pennsylvania
DANNY DAVIS, Illinois
LINDA SÁNCHEZ, California
JENNIFER M. SAFAVIAN, Staff Director and General Counsel
SUBCOMMITTEE ON HUMAN RESOURCES
PATRICK J. TIBERI, Ohio
|XAVIER BECERRA, California
LLOYD DOGGETT, Texas
MIKE THOMPSON, California
ALLYSON SCHWARTZ, Pennsylvania
Advisory of June 19, 2013 announcing the hearing
Mark G. Duggan, Ph.D.
Professor, The Wharton School, University of Pennsylvania
Mary C. Daly, Ph.D.
Group Vice President and Associate Director of Research, Federal Reserve Bank of San Francisco
National Director Managed Disability, GENEX Services
Lisa D. Ekman
Director of Federal Policy, Health & Disability Advocates, on behalf of the Consortium for Citizens with Disabilities Social Security Task Force
Budget and Policy Manger, Division of Vocational Rehabilitation, Vermont Agency of Human Services, Burlington, Vermont
David Weaver, Ph.D.
Associate Commissioner, Office of Program Development and Research, accompanied by Robert Williams, Associate Commissioner, Office of Employment Support Programs, Social Security Administration
Hearing on Encouraging Work Through the Social Security Disability Insurance Program
Wednesday, June 19, 2013
U.S. House of Representatives,
Committee on Ways and Means,
The subcommittee met, pursuant to call, at 10:00 a.m., in Room B‑318, Cannon House Office Building, Hon. Sam Johnson [chairman of the subcommittee] presiding.
[The advisory of the hearing follows:]
Chairman Johnson. The committee will come to order.
Good morning. Welcome to our hearing on Encouraging Work in Social Security Disability. The Disability Insurance program provides essential income security to people with disabilities and their families. And we are glad to have all of you here today.
Over the past 40 years, changes in demographics, Federal policy, and the availability of jobs have driven a 300 percent increase in the number of people receiving Disability Insurance benefits from 2.7 million to over 10 million. Within 10 years, over 12.4 million beneficiaries will receive $207 billion in benefits. That is up 53 percent from the $135 billion paid last year. So it ought to come as no surprise that in their 2013 Annual Report, the Social Security Trustees again warned us that these most vulnerable beneficiaries face a 20 percent across‑the‑board benefit cut in just 3 years unless Congress acts. Those who depend on this critical benefit are counting on us to act, and we will.
In the last 3 years, this subcommittee has held 10 hearings on disability. As we work to protect and preserve this vital program, we also need to consider how to help those who can and want to work. Work contributes to an individual’s well‑being. Work sustains families. Work drives our economy. When people aren’t working, we all suffer.
Unemployment in this country remains unacceptably high at 7.6 percent. Those with disabilities seeking to get back into the workforce face a higher unemployment rate of 13.4 percent. But the unemployment rate only tells part of the story. It doesn’t count those who are no longer looking for jobs because they are out of the labor market. And it doesn’t consider the toll on human dignity as those who may want to work can be trapped by the disability program since earning a dollar too much could mean losing thousands of dollars in cash benefits.
While not everyone receiving disability benefits can return to work, experts tell us more people would return to or stay at work if given the right kind of help to do so. Surveys show 40 percent of beneficiaries are interested in working, yet only one‑half of 1 percent leave the rolls annually due to earnings from work.
And today we are going to examine the views of our expert witnesses regarding the impact of the disability program on the economy, efforts by other countries to return individuals to work, and new ways to encourage work. We will hear from a frontline service provider about the challenges facing those with disabilities trying to stay on the job and the help that enables them to stay at work or get back to work as soon as possible. We will also get an update from the Social Security Administration regarding its efforts to help those individuals return to work.
Now more than ever, how every dollar is spent matters to our country and to our taxpayers. Programs that don’t achieve positive results must be reformed or end. I have seen firsthand how beneficiaries and employers benefit when the system works. We went to the Walgreens distribution center in Waxahachie, Texas, where they are working. There, with the help of the Texas Department of Assistive and Rehabilitative Services, those with disabilities, including former beneficiaries, work side‑by‑side with the other workers doing the same job for the same pay. Those who can and want to work should not be sentenced to a lifetime of near poverty with no way out. We can and we must achieve the results taxpayers expect and those with disabilities deserve.
I now recognize the ranking member Mr. Becerra for his opening statement.
Mr. Becerra. Thank you, Mr. Chairman. Thank you for holding this hearing. And we thank all of the witnesses for being here.
American workers earn their Social Security Disability Insurance. Nearly 160 million Americans contribute to Social Security, earning protection for themselves and their families when they retire or if they should die or if they become severely disabled.
We should support the work efforts of disabled Americans. But at the same time, it is essential that we do no harm to those who cannot work and need the Social Security benefits that they have earned. This requires a careful balancing. On the one hand, Social Security should not be a barrier to work. That is, individuals who qualify for benefits but may be able to return to work should be able to try to work without risking their income and their health.
At the same time, we should keep in mind that only those who have demonstrated that they are unable to work qualify for Disability Insurance. Although many Disability Insurance recipients would prefer to be working, most are simply too sick or impaired to sustain work. Only about four in 10 applicants, the sickest and most severely disabled, qualify for DI. A significant number of DI beneficiaries have terminal illness. In fact, about one in five men and about one in seven women die within a few years of becoming eligible for the benefits.
By law, workers with disabilities that do not prevent them from working do not qualify for benefits. DI benefits replace only about half of a typical worker’s predisability earnings. So, few beneficiaries would give up their work for DI if they were able to work.
Studies of actual DI beneficiaries show that while many DI beneficiaries make an attempt to work, most are not able to sustain employment.
Another point: budget cuts and the so‑called sequester law undermine the Social Security Administration’s work promotion efforts. The Social Security Administration’s budget is about $800 million lower this year than it was in 2010 due to a series of budget cuts and the sequester. As a result, local SSA offices have lost more than 10 percent of their staff, including some of their most experienced case workers. With less staff and the loss of various senior, more experienced staff, Social Security often struggles to administer the complicated rules intended to protect beneficiaries who try to return to work.
Before we institute any new rules or requirements for disabled workers, we need to consider carefully whether we are prepared to pay for the cost of assisting them. Our track record quite honestly is a cautionary tale on this point.
Finally, Social Security Disability Insurance payments are just one small part of our overall national strategy to promote fairness and work for disabled Americans. DI is for those with the most severe impairments with almost no capacity to work. For the majority of disabled Americans who are able to work, we also have a Federal State vocational rehabilitation system, anti‑discrimination and accommodation requirements through the Americans with Disabilities Act. We have special education services for every child who needs them. We have various pathways to affordable health insurance, and we have a Federal income tax credit program for those who are disabled.
I think our discussion here today will demonstrate that there is a need to improve support for those with partial impairments, a much larger group of people than those who qualify for Disability Insurance. But in such tight fiscal times, we need to be fully aware of the costs and trade‑offs. As a rule, Americans who are able to work with some support are not eligible for any benefits from Social Security because Social Security is not meant to be a partial disability system. If we are going to talk about changing the rules to allow more people to combine work and Disability Insurance, we also need to discuss how we will pay for the added cost of coverage for less disabled workers.
There is no doubt that there is room for improvement in our national policy for supporting people with disabilities, including those who can work and those who cannot. However, we cannot pretend that this can be done on the cheap, that all we need to do is make a few tweaks, and thousands of DI recipients will all of a sudden be able to support themselves through work. And we must be careful not to do so at the expense of those Americans who have no choice but to rely on the disability benefits that they paid for and have earned.
The question I have for my colleagues and our witnesses is, what are we, Congress, willing to invest to support work among people with disabilities? Should our efforts be aimed primarily at the sickest and most disabled, the people who qualify for Social Security Disability Insurance? If so, the first step is to provide SSA with adequate resources to administer the work incentives and support services Congress has already authorized. Or should we cast the net more broadly to assist those who are struggling to work, despite the effects of their impairments, but do not meet the very strict eligibility criteria for Social Security? I look forward to hearing from our witnesses today as we sort through these challenges.
I yield back, Mr. Chairman.
Chairman Johnson. Thank you.
As is customary, any member is welcome to submit a statement for the hearing record.
And before we move on to our testimony today, I want to remind our witnesses to please limit your oral statements to 5 minutes.
However, without objection, all of the written testimony will be made part of the hearing record.
We have one witness panel today. Seated at the table are Mark Duggan, a professor from the Wharton School, University of Pennsylvania, PhD.
Mary C. Daly, another PhD, group vice president and Associate Director of Research, Federal Reserve Bank of San Francisco; Kevin Ufier, National Director, Managed Disability, GENEX Services; Lisa Ekman, Director of Federal Policy, Health & Disability Advocates, on behalf of the Consortium for Citizens With Disabilities Social Security Task Force; James Smith, Budget and Policy Manager, Division of Vocational Rehabilitation, Vermont Agency of Human Services.
Thank you for being here.
David Weaver, PhD, Associate Commissioner for the Office of Program Development and Research, accompanied by Bob Williams, Associate Commissioner for the Office of Employment Support Programs, Social Security Administration.
Mr. Duggan, welcome. Thanks for being here. Please proceed.
STATEMENT OF MARK G. DUGGAN, PH.D., PROFESSOR, THE WHARTON SCHOOL, UNIVERSITY OF PENNSYLVANIA, PHILADELPHIA, PENNSYLVANIA
Mr. Duggan. Chairman Johnson, Ranking Member Becerra, and members of the committee, it is truly an honor to be with you here today. The Social Security Disability Insurance program currently provides insurance against the risk of disability to more than 150 million American adults. The program represents an extremely important part of our Nation’s safety net, as it protects workers and their families from the risk of a disability that prevents or greatly inhibits a person’s ability to work. As shown in figure one, enrollment in the SSDI program has grown steadily since the late 1980s, from 2.3 percent of adults 25 to 64 in 1989 to 5.0 percent in 2012.
As I outlined in my written testimony, several factors have contributed to this growth in SSDI enrollment, including an aging of the Baby Boom population. As people at higher ages are more likely to receive SSDI has contributed as has a growth in employment among women, which has made more of them insured for the program. But these factors contribute less than a third to the growth in SSDI enrollment outlined above.
A more important factor outlined in figure two has been an evolution of the diagnoses with which individuals have been qualifying for SSDI benefits resulting from a liberalization of the program’s medical eligibility criteria that occurred in the mid 1980s. Looking at the figure, you can see that conditions circulatory and neoplasms award rates have remained roughly flat. Strokes, heart attack, cancer, and so forth has been very little change in the award rates. Those are the four series in the middle. And each bar represents an award rate in 1983, 1989, 1999 or 2009.
On the other hand, if one looks at, for example, diseases of the musculoskeletal system, an example of that would be very severe back pain, the award rate over this period has increased by a factor of five, from 0.4 to 2.0, as measured above.
Another important driver of the growth factor in SSDI enrollment is the sensitivity of the program to economic conditions. As outlined in figure three, applications to the SSDI program are highly responsive to the unemployment rate, with applications rising during economic downturns and falling when the economy improves. Several other factors have contributed as well. But my research and the research of many others suggests that the SSDI program is having a large and growing important impact on the U.S. labor market.
In order to receive an SSDI award, a person must be deemed unable to engage in substantial gainful activity. Once on the program, SSDI recipients have little incentive to return to work, as earnings beyond the SGA threshold will lead to a termination of benefits. And given that the present value of an average SSDI award is $270,000, including Medicare benefits, that is a risk many SSDI recipients will be reluctant to take.
The growth in SSDI has coincided with a significant reduction in employment rates among individuals with disabilities. For example, from 1988 to 2008, the employment rate of men in their 40s and 50s with a work‑limiting disability fell from 28 percent to 16 percent. As shown in figure four, there has been a growing gap in employment rates between workers with and without disabilities that has coincided with the growth in SSDI enrollment.
Previous research has also shown that workers have become much more likely to respond to adverse demand shocks in the economy by applying for SSDI rather than seeking a new job. This is going to serve to reduce both the unemployment rate and the labor force participation rate below what it otherwise would be, and it also reduces employment, as SSDI recipients so rarely leave the program to return to the workforce.
My analysis of the application data shown in figure two indicates that more than 2.5 million people have applied for SSDI as a result of the economic downturn. The steady increase in SSDI enrollment since the 1980s has contributed to a differential decline in labor force participation among both men and women in the U.S. relative to other industrialized countries.
One way to improve incentives for workers in the SSDI program is to intervene sooner for individuals with work‑limiting conditions so that they can continue to work. Many people with more subjective disorders, such as back pain, could benefit from such early intervention.
In a recent paper, David Autor and I have proposed adding a front end to the SSDI system that would include early intervention for rehabilitation‑related services with the goal of keeping workers with work‑related disabilities in the labor market.
An additional approach would be to improve work incentives for people on the SSDI program to return to the workforce. Recent evidence from Norway indicates that programs that increase the incentive to work among people on Disability Insurance can lead to a large growth in their labor supply.
The lack of progress and improving work incentives in SSDI stands in marked contrast to the Temporary Assistance to Needy Families program. Reforms introduced in the late 1990s led to substantial gains in employment among past, current, and potential future TANF recipients and to a steady drop in program enrollment and expenditures. Based on my own research and that of many others, I believe similar progress is possible within SSDI and the need for such progress is, indeed, urgent both because of a pending expiration of the trust fund and the trends in the U.S. labor market as described above.
Chairman Johnson. Thank you, sir. You sped that up and made it on time. Congratulations.
Mr. Duggan. I did. I was watching that clock.
[The statement of Mr. Duggan follows:]
Chairman Johnson. Dr. Daly, welcome. Please proceed.
STATEMENT OF MARY C. DALY, PH.D., GROUP VICE PRESIDENT AND ASSOCIATE DIRECTOR OF RESEARCH, FEDERAL RESERVE BANK OF SAN FRANCISCO, SAN FRANCISCO, CALIFORNIA
Ms. Daly. Thank you. Chairman Johnson and members of the committee, it is an honor to be here. I will say that my remarks today are my views and do not necessarily reflect those of the Federal Reserve System.
That said, I wanted to make three points this morning. The first point is referenced in figure one and basically is the following: That the growth in the DI program that we have witnessed over the last couple of decades is not completely explained by factors that are transitory, such as the aging of the population, the entry of women onto the DI program because of their increased eligibility, or the increase in the normal retirement age.
In fact, if I control for those three things, similar to Professor Duggan, what we find is that the red line, which shows growth controlling for those factors, has continued to rise. And that is the portion that is unexplained by these transitory variables. And if you extrapolate out that growth, you think that the program might be in an unsustainable position.
The second point I would like to make is that, in the United States, we are not alone in having these types of challenges. In fact, our European counterparts faced similar challenges more than a decade ago. They had rapidly rising disability recipiency rates that were not explained by demographic or health trends. They undertook particular reforms in those areas to try to curb the growth in the benefit roles and stem the tide of new beneficiaries in particular.
I want to focus on figure two on two countries. There are other countries you could use as an example, but these two countries I think paint a nice picture. I want to refer your attention to Sweden and the Netherlands. Both of those countries had very rapidly rising disability recipiency rates and recipiency rates that, on average, have been far higher than the United States. When the OECD evaluated these rates, they concluded that the difference in the U.S. and these countries is that these countries have much more generous systems that replace a larger share of earnings.
The important thing though in this chart for today’s discussion I believe is to look at the last decade of the experience. And you see notably that, in Sweden and the Netherlands, caseloads have begun to come down. The recipiency rates falling. In contrast, the U.S. recipiency rate continues to rise. So the question before us is, how did they do this? And what happened?
And for the rest of my remarks, I want to focus on a 30,000‑foot level view of what they did. So, in both the Netherlands and Sweden, they began the program with fundamental reforms. They had tried many times to tweak the existing system and reduce caseloads and found those attempts lacking. So they attempted fundamental reform.
The very first stage of fundamental reform was to modernize the definition of disability and no longer consider it to mean incapacity. They had programs similar to ours, that in order to get any kind of services, you had to prove that you were unable. They said, this is not the right expectation. It is not good for people with disabilities. And it is certainly not good for our economy when we need all the productive assets to be able to contribute.
With that in mind, they then made the following observation: They said just because we observe that many people with even severe disabilities do not work is not empirical evidence that they cannot work. So we don’t want to confuse ‑‑ this is their words, not mine ‑‑ we don’t want to confuse what we observe today under a particular program design with what is possible in the future if we change the program design.
Importantly, both countries attempted different program designs. They took different trajectories. In the Netherlands, they incentivized employers by making them pay for the first 2 years of support for disability if you put your worker into a disability system, and you are experience rated if you move them onto long‑term benefits. You have to pay a higher DI premium.
In Sweden, they work through the state adjudicators to put time limits at 3, 6 months, 12 months and 30 months. They would have checkpoints, evaluate your functional capacity. And if people were able to find jobs and work up to that capacity, their earnings were subsidized. If they didn’t, they considered that noncompliance and would remove them from the benefit system.
The point of both of those projects or both of those reforms is this: Early intervention matters. Getting in right when a person has an impairment is the critical component of those reforms. And enforcing that with a social expectation that you work if you have a disability unless you can’t and you demonstrate you cannot, but then also having a commitment ‑‑ and I think we heard this earlier in the opening remarks ‑‑ a commitment to support work, very similar to what we did with TANF, if you recall, that the expectation is that you work, but there is support for work.
The other thing I would note is that they had much less success in reducing the stock of existing beneficiaries. Both those countries have now said that that is a much more difficult problem to solve and that the returns on investments are best made to reduce the flow of new beneficiaries onto the system.
I will conclude by saying that the important metric I think for evaluating any reform is to ask, did people with disabilities suffer? Were people made worse off? And in these countries, they were not. Incomes remained and the same, and employment rates rose.
Chairman Johnson. Thank you.
[The statement of Ms. Daly follows:]
Chairman Johnson. Mr. Ufier, you are now recognized.
STATEMENT OF KEVIN UFIER, NATIONAL DIRECTOR MANAGED DISABILITY, GENEX SERVICES, WAYNE, PENNSYLVANIA
Mr. Ufier. Thank you, Mr. Chairman and members of the committee.
I appreciate this opportunity to testify concerning the best practices for returning employees back to work who have medical impairments and facilitating return to work for these employees on their stay‑at‑work programs.
Many of GENEX Services’ business clients include individuals, small employers, mid‑sized companies, Fortune 500 corporations. I would like to discuss our perspective of what we have seen in terms of what disability is and assessing employees to stay at work.
Disability is not merely having a medical condition. Disability is a medical‑legal construct. A medical diagnosis alone does not equate to the adjudication of disability or a lifetime entitlement to unemployment, though many individuals perceive disability benefits as everlasting once they begin.
Disability is usually considered of a limited duration, except in those instances where there is a rapidly deteriorating condition without a reasonable expectation of improvement exists for terminal cases. For our customers, disability episode can result in millions of dollars a year beyond just the sick time benefits. Most importantly, the episodes result in lost productivity, lost revenue for employers. Employers and insurers engage GENEX to develop strategies to help keep people at work under stay‑at‑work ‑‑ return‑to‑work programs or rapid return to works.
We understand that motivated employees who want to return to work are the best candidates to be successful in returning to work. We also recognize that the sooner the intervention by employers and claim administrators in providing support through processes of return to work promote better improved outcomes.
When employers provide return‑to‑work programs and immediate support of an employee upon a disability event, there is an expectation that the employee will make an effort to immediately attempt to return to work or start on that process. Typically, the return‑to‑work programs will have formal written policies in place that encourage return to work once the employee is on disability. These are known as transitional return‑to‑work programs. The employer should provide the training of operations and other essential staff concerning the return‑to‑work process. Employer management, human resource, and benefit team members know their assigned roles and responsibilities in the process. There is usually an internal corporate sponsor that promotes the program internally, basically a champion within the company.
The return‑to‑work process permits increased incremental ability for someone to try to go back to work through a scheduled duration. Often an option of light duty is written into a program that will allow for safe work functioning during a period of adjustment back to the work environment. The return‑to‑work program always applies accommodation principles to provide for minimum risk of additional loss of functioning during the attempt for return to work. Each individual worker will have their own return‑to‑work plans specific to the requirements of their own job and their own medical restrictions.
Transitional work is not permanent. It is meant to be a short duration. The goal is always to return a person to their own job full time. Conditioning programs, such as work hardening, can be utilized to accelerate the work capacity when appropriate. When an individual worker has developed restrictions or limitations prior to filing a disability claim, many employers utilize a stay‑at‑work program to encourage continued productivity at work, yet accommodating the employees for a designated function and for a short period of time. Stay‑at‑work programs include many of the same elements as transitional work but are deployed prior to the actual disability event. Many programs also employ ergonomic programs, which is assessing the interaction between the work site and the human psychology and physical activities. And that can be invaluable in preventing additional limitations to the individual that is going back to work as well as preventing, even, disability.
In general, employers and claims administrators should engage the workers as soon as possible about continuing to work in some capacity or planning to return to work. Steps include setting up expectations that employees will go back to work, have employers involved in the return to work for employees, monetary incentives for work return to work, pay for adaptive equipment, day and elder care issues, dedicated support or professional staff promoting return to work within the organization, and corporate human resource operational structure which outlines roles and responsibilities for return to work. This outlines our philosophy that we have experienced at GENEX. And I thank you for the opportunity to express these views.
Chairman Johnson. Thank you, sir.
[The statement of Mr. Ufier follows:]
Chairman Johnson. Ms. Ekman, welcome aboard. Please go ahead.
STATEMENT OF LISA D. EKMAN, DIRECTOR OF FEDERAL POLICY, HEALTH & DISABILITY ADVOCATES, ON BEHALF OF THE CONSORTIUM FOR CITIZENS WITH DISABILITIES SOCIAL SECURITY TASK FORCE
Mr. Ekman. Good morning.
Chairman Johnson, Ranking Member Becerra and members of the subcommittee, thank you for the opportunity to testify at this hearing on encouraging work through the SSDI program.
My name is Lisa Ekman, and director of Federal policy for Health & Disability Advocates, and I am testifying today on behalf of the cochairs of the Social Security Task Force of the Consortium for Citizens with Disabilities. The SSDI program provides vital income security to millions of people with impairments so severe that they are unable to perform substantial work, many of whom would live in abject poverty and be homeless without them.
And only, as Ranking Member Becerra said, people with the most significant disabilities receive SSDI benefits. Of the 57 million Americans with disabilities and the 38 million with significant disabilities, only about 14 million receive any type of income support through the Social Security system.
The U.S. already has one of the strictest if not the strictest definition of disability in the developed world. The people receiving benefits are diverse, including for example people with heart disease, end stage renal failure, significant intellectual disabilities, severe mental illnesses, severe physical disabilities, advanced stage cancers, debilitating arthritis, deafness, and blindness. And the vast majority of the people receiving SSDI simply do not have the capacity to work at any meaningful level.
Many factors must be present for people with significant disabilities to be able to obtain and sustain work. The person’s health and impairment must allow them to do so. And this is the most important factor. More than eight out of 10 people with disabilities who weren’t working, in a recent Bureau of Labor Statistics survey, said it was their disability itself that prevented them from doing so. But they also must have access to affordable housing and transportation, health insurance, and the services and supports required to work, including personal attendant care and assistive technology for many.
The Social Security system does not provide nor should it provide any of the items on that list besides income support. SSDI does exactly what it was designed to do, replace wages for people who are no longer able to work due to a severe impairment. And although we strongly support efforts to increase employment of people receiving SSDI and people with disabilities who do not receive SSDI, we do not believe such efforts will result in significant numbers of people achieving economic self‑sufficiency or no longer requiring SSDI benefits if they already do.
Contrary to assertions made by some, SSDI is not a disincentive to work for people with work capacity. Many SSDI beneficiaries do work, but it rarely results in earnings that allow people to leave the rolls and stay off of them. Researchers examined earnings of a group of beneficiaries for 10 years and found that 28 percent of them attempted work and 4 percent had benefits terminated due to earnings. The same Bureau of Labor Statistics survey mentioned before found that income support from any government program, including SSDI, had absolutely no effect on the work efforts of 92.5 percent of people with disabilities surveyed.
And SSDI benefits are modest, the least generous of all OECD countries, except for South Korea. Wage replacement rates are very low, as Mr. Becerra pointed out, less than half of what their prebenefit wages for more than a majority of beneficiaries. And many people live near or below poverty, despite receiving SSDI benefits.
We cannot examine SSDI in a vacuum. We have to look at the entire disability support system. And we should not blame SSDI for the failure of other programs in that system. We need to look at Medicaid, which provides health care and supports and services, such as personal attendant care; the Department of Labor programs, which provide training and job search assistance; and the vocational rehabilitation program, the sole mission of which is to assist people with disabilities to obtain or maintain employment. We also need to look at the funding for these programs, which are already inadequate and provide more funding to them to help accomplish the goals of helping people with disabilities work.
It is the role of these other programs to help people with disabilities work. SSA does not have the infrastructure or expertise to do so. Any new programs to delay or prevent workers who develop workers from applying for SSDI should not be administered by or funded through the Social Security system. The best time to intervene is at least several years before people apply for SSDI. And we explain the reasons for that fully in our testimony.
In addition, the Social Security Administration already lacks sufficient resources to do their existing workload, let alone to take on a new role. And the resulting overpayments, due in large part to inadequate staff, are a major disincentive to work and could be avoided by increasing SSA’s budget and dedicating staff to this important workload.
We do believe there are improvements that could be made to the SSDI work incentives, and we outlined those in our testimony.
In conclusion, when considering the reforms suggested here today, we urge Congress to evaluate them based on the principles contained in our written statement, avoid any proposal that could have the unintended consequence of having less people be hired who have disabilities, such as experience rating SSDI taxes, and to use caution in making international comparisons with other countries with less stringent disability definitions, much more generous benefits, much more expensive social insurance and pension programs, and provide already much more adequate services and supports. Thank you.
Chairman Johnson. Thank you.
[The statement of Ms. Ekman follows:]
Chairman Johnson. Mr. Smith, please, go ahead.
STATEMENT OF JAMES SMITH, BUDGET AND POLICY MANAGER, DIVISION OF VOCATIONAL REHABILITATION, VERMONT AGENCY OF HUMAN SERVICES, BURLINGTON, VERMONT
Mr. Smith. Chairman Johnson, Ranking Member Becerra, and members of the subcommittee, thank you for this opportunity to talk to you about a major disincentive to return to work for SSDI beneficiaries.
My name is James Smith, and I have worked directly with SSDI beneficiaries since 1986. Over the years, I and my staff have talked with thousands of SSDI beneficiaries about their efforts to return to work. Based on this experience, I am convinced the current SSDI work rules undermine their efforts because they do not make work pay.
In fact, the rules do the opposite. In particular, I am referring to the so‑called cash cliff built into the SSDI work rules. The cash cliff works as follows: If a beneficiary earns above the so called substantial gainful activity or SGA level, the amount that is already below the poverty line, that single dollar results in a complete loss of SSDI cash benefits.
In my written testimony, I provided you with a typical case study of how the SGA cash cliff works. In this case, Joe’s total monthly income is actually reduced if he increases his working hours from 15 to 20 hours per week. He would actually have to work 31 hours simply to match the income he had working 15 hours a week. At the same time, he would risk complete detachment from the program. Because Joe has schizophrenia and his illness is unpredictable, this is a very risky proposition for him. As a result, Joe does not attempt to increase his earnings, and continues to receive his full SSDI benefits. Nobody wins.
Joe’s case is not an exception or an outlier. My staff and I see this issue play out every day. The obvious alternative to the SSDI cash cliff is a gradual $1 for $2 earnings offset, whereby benefits are decreased by $1 for every $2 of earnings. So the beneficiary is always better off the more they work.
To its great credit, Congress has already implemented an earnings offset in the SSI program. The SSI earnings offset has been in place for over three decades and provides SSI beneficiaries with a clear incentive to work. So this is by no means a new or untested approach.
While the merit of an earnings offset for SSDI seems common sense, until recently, there has been no research data to support it. However, data from a four‑State pilot, including Connecticut Wisconsin Utah and my State Vermont, provides clear evidence that an earnings offset for SSDI benefits would result in increased earnings. Just over 1,800 SSDI beneficiaries participated across the State, using a rigorous random assignment experimental design. Overall, the studies showed the offset led to a 25 percent increase in the number of beneficiaries earning above the annualized SGA or cash cliff amount. So, clearly, the 1 for 2 did increase beneficiary earnings.
The question is, what were the policy implications? How do we improve the SSDI work incentives and still be cost‑effective? First, implement a graduated 1 for 2 earnings offset to always make work pay. Second, Congress should consider starting the threshold for the offset at less than SGA. Right now, Social Security pays 100 percent of a beneficiary’s benefits unless the beneficiary earns above the SGA threshold. Therefore, most work activity does not result in any savings to the program. If you were to start the offset at, for example, 50 percent of SGA, you would be much more likely to generate savings to the program, just like the SSI program.
Third, eliminate the trial work period. Right now, Social Security pays 100 percent of benefits during the 9‑month trial work period, regardless of how much a beneficiary is earning. With an offset, savings would be generated from the first month a beneficiary goes to work, just like the SSI program.
Four, allow beneficiaries continued attachment to the SSDI program regardless of work activity. This would be as long as they continue to be medically eligible. Disability can be unstable and unpredictable. Beneficiaries with schizophrenia or multiple sclerosis, for example, may have periods of time when they can work 40 hours a week and other periods where they cannot work at all. Continued attachment would give beneficiaries the security they need to try to work, without the fear of being completely cut off.
Finally, implementing a graduated offset would eliminate a major barrier to the success of the ticket‑to‑work program. Unless the SSDI work rules always make work pay, the ticket‑to‑work program will never achieve its full potential.
So, in summary, what I propose is to support return to work by always making work pay within the SSDI program. You can potentially increase savings to the SSDI program by starting the offsets at a point less than SGA, simplify the work incentives for both beneficiaries and Social Security, and align the SSDI program work rules with the goals of the ticket to work program. Thank you.
Chairman Johnson. Thank you, sir.
[The statement of Mr. Smith follows:]
Chairman Johnson. Dr. Weaver, welcome. Please proceed.
STATEMENT OF DAVID WEAVER, PH.D., ASSOCIATE COMMISSIONER, OFFICE OF PROGRAM DEVELOPMENT AND RESEARCH, ACCOMPANIED BY ROBERT WILLIAMS, ASSOCIATE COMMISSIONER, OFFICE OF EMPLOYMENT SUPPORT PROGRAMS, SOCIAL SECURITY ADMINISTRATION
Dr. Weaver. Chairman Johnson, Ranking Member Becerra, and members of the subcommittee, thank you for the opportunity to discuss our responsibility to help beneficiaries with disabilities to return to work.
My name is David Weaver, and I am the Associate Commissioner for Program Development and Research. Joining me today is Bob Williams. He is the Associate Commissioner for the Office of Employment Support Programs.
Congress has included a number of incentives in the Social Security Act to encourage disability beneficiaries to work. My written testimony provides further detail. Generally, these incentives provide beneficiaries with continued benefits and medical coverage while attempting to return to work or pursuing an employment goal. As illustrated by the work incentive chart in my written testimony, our work incentive provisions are complex and difficult for disability beneficiaries to understand and for us to administer. Simplifying these rules would help our beneficiaries and would streamline our administrative process.
Since the beginning of the disability program, State vocational rehabilitation, or VR, agencies have been the primary providers of employment support for our beneficiaries with disabilities. The 1999 legislation that created the ticket‑to‑work program expanded the universe of service providers and gave beneficiaries choices beyond the State VR agencies to obtain services and supports needed to secure and maintain employment.
Under our current ticket program rules, any adult disability beneficiary is eligible to participate in the ticket program. Individuals eligible to participate in the ticket program may choose to receive services from a State VR agency or an employment network. We contract with employment networks, or ENs, to provide or coordinate the delivery of employment support services to our disability beneficiaries. Some State VR agencies also act as ENs.
In order to become an EN, an entity must apply and meet our qualifications. In addition, ENs must meet performance standards that are part of every agreement that we sign with the ENs. As of May 31, 2013, there are 44,452 tickets assigned to 653 ENs.
The Ticket Act created two other programs to supplement the assistance available at our field offices. The Work Incentives Planning and Assistance, or WIPA, program and the protection and advocacy for beneficiaries of Social Security program. The two programs authorize grants to organizations with ties to the disability community at the local level. These programs are useful tools in our return‑to‑work efforts, and we thank you for your continued support of them.
The Ticket Act authorized us to test how certain statutory changes to the disability program would affect beneficiary work activity. Pursuant to this demonstration authority, we initiated four demonstration projects, including the Benefit Offset National Demonstration, or BOND, and the Youth Transition Demonstration, or YTD. The BOND will measure the effect of reducing Title II disability benefits by $1 for every $2 a beneficiary earns above substantial gainful activity, or SGA. The YTD identified services, implement service interventions, and test modified Supplemental Security Income and resource exclusion, intended to lead to better education and employment outcomes for youth with disabilities.
Demonstration projects are the best vehicle for identifying promising program changes and measuring their effects on disability beneficiaries and potential beneficiaries. For example, we completed a four State pilot for the BOND in 2008, which we used to inform the design of a nationwide BOND. The pilot also yielded some preliminary outcomes, such as more beneficiaries earning above SGA and more beneficiaries receiving higher benefit amounts.
We also found that YTD services increased the paid employment rate for disabled youth relative to control groups from 24 percent to 43 percent in West Virginia, and from 13 percent to 23 percent in Miami, Florida. Based on these research findings, we have asked the WIPAs to focus outreach in the coming year to families with disabled youth. The YTD demonstration shows that WIPA services to this population can increase employment among disabled youth.
Our authority to initiate disability demonstration projects under Title II of the act expired in December 2005. The President’s budget for fiscal year 2014 includes a legislative proposal that would authorize us to test ways to help people with disabilities remain in the workforce. In addition to providing new authority to test early interventions, it would re‑establish and broaden the Title II demonstration authority that we previously had. Thus, we would be able to further test effective ways to boost employment and support current disability beneficiaries who are seeking to return to work.
We urge you to support this important proposal. We are proud of the role our disability programs play in the Nation’s social safety net. It is not realistic to expect every disability beneficiary to become financially independent by working. However, we must find ways to improve work outcomes for those who can. Thank you for the opportunity to testify at today’s hearing.
Bob Williams and I are happy to respond to any questions.
Chairman Johnson. Thank you, sir. We appreciate your testimony.
[The statement of Dr. Weaver follows:]
Chairman Johnson. Thank you all.
As is customary for each round of questions, I will limit my time to 5 minutes, and I will ask my colleagues to also limit their time to 5 minutes.
Mr. Becerra. Yes, sir.
Chairman Johnson. Dr. Daly, you referred to the transformation of the DI program from a last‑resort cash income program for those not able to hold any substantial gainful employment to a long‑term unemployment program. What are the causes of that transformation?
Ms. Daly. By my read of the evidence, the program has become, as Professor Duggan has indicated, more cyclically sensitive. Am I supposed to answer now, by the way?
Chairman Johnson. Sure.
Ms. Daly. I realize I don’t know the rules.
Chairman Johnson. You are following them perfectly.
Ms. Daly. Absolutely brilliant.
So the programs become more cyclically sensitive. When academics evaluate why it has been more cyclically sensitive, I think they form a consensus ‑‑ academic economists, anyway ‑‑ form a consensus that the eligibility rules that allow vocational and functional criteria to be part of the decision and not just the medical criteria allow people when they get displaced in downturns to think about moving on to benefits ‑‑ disability benefits as opposed to searching for work. So that makes the program potentially another avenue since we don’t have long‑term unemployment insurance in the United States, another avenue for getting income support that is outside of the original intention of the disability program but is obviously a good way, a potentially good way, to guarantee yourself an income when work is hard to find, especially when you have impairments.
Chairman Johnson. Dr. Duggan, do you have anything to add to that?
Mr. Duggan. Thanks for the question.
I agree with what Dr. Daly, with the thrust of her comments.
I think an additional point worth making is there are a number of factors that show there is a strong connection between economic conditions and enrollment applications to this program, the sensitivity of it to the unemployment rate. Also over time, we have seen a steady decline in employment rate among individuals with disabilities. That is just sort of ongoing, and beyond that, a real shift in the conditions with which people are qualifying for benefits into somewhat more subjective, which is not to say that they are not valid, but it is just somewhat more subjective conditions. And recent research by Till von Wachter and others has show that the employment potential of the individuals in these rapidly growing diagnoses is much higher than among let’s say a person with late stage cancer or ALS or something else. So there really has been a steadily growing effect of the program on the labor market.
Chairman Johnson. And you told us that 2.5 million extra people have applied for disability. How does that growth impact our economy? And how do we reverse that trend?
Mr. Duggan. Yes. So if one just sort of traces out the additional applications that have occurred over the last several years as a result of economic conditions, it is about 2.5 million, perhaps a bit more. And I think that is going to ‑‑ research by David Autor and myself in the past has shown that has led to ‑‑ that kind of response leads to a reduction in the labor force participation rate and in the unemployment rate. So the unemployment rate right now, if you look economy‑wide, we see this unemployment rate coming down from 10 to 7.5 percent, but labor force participation has come down even more, so that the employment population ratio hasn’t really grown. And I think it has a measurable effect on the Nation’s overall unemployment rate and the overall labor force participation rate.
And I think there is a lot of concern about this among people I think across the ideological spectrum. Is it going to be the case that this recent decline in the labor force participation rate is pretty problematic, given the demographic changes that are now going on?
Chairman Johnson. We can’t get them back to work, is what you are saying?
Mr. Duggan. I think there is some potential to get these individuals back to work through the programs that were mentioned in some of the other testimony today.
But I agree that the biggest bang for the buck is going to be from intervening with people somewhat sooner. And the path to that potentially is really high. With the typical DI award, if you look at what the Federal Government disburses ‑‑ and this doesn’t even take into account the foregone tax revenue from the person not working ‑‑ is $270,000. If we can figure out a way to sort of get in there sooner with people so that they can return to work, that is going to have a huge payoff for the economy.
But I do think that improving incentives among existing recipients is something worth doing, and there is evidence that it can make some progress, too. But I think it alone is not going to be enough to reverse things.
Chairman Johnson. Yeah.
Dr. Daly, do you want to add to that?
Ms. Daly. I do want to add to that and put a calculation on this. Myself, as part of my role in thinking about unemployment rates in the United States, at the Federal Reserve Bank, we calculated how much ‑‑ if we use historical allowance rates on disability for the number of applications we have, it accounts for about a quarter of the decline in labor force participation that we have seen. So that would be, if history is any guide, that would be a permanent decline in labor force participation in the United States, as Professor Duggan has noted, because those individuals rarely come off the rolls.
I will say one more thing about that. If you look back at Sweden in particular ‑‑ but you can look at other countries. Sweden is a good example. After the great financial crisis that they had in 1990, their incapacity rate went from something like 8 percent to 16 percent. And those were permanent reductions in their labor force until they dramatically reformed their system. So I think these are real issues that add to the urgency of reforms in addition to the insolvency.
Chairman Johnson. Thank you, ma’am.
Mr. Becerra, you are recognized.
Mr. Becerra. Thank you, Mr. Chairman.
And thank you all for your testimony. It is very enlightening.
Mr. Duggan, I think what I gather from your testimony is that early intervention is very important. And improving incentives to keep people working — very important because once they get into this nose‑dive of becoming disabled and feeling disabled, it is tougher to get them to sort of come out of that and stay up in the air flying.
Ms. Daly, I think the same sort of thing, periodic evaluations in my notes here. Early intervention matters. Support work. And you asked a really important question: Did people suffer or were they made worse off as a standard to sort of decide whether we are doing something better or not?
And then, Mr. Ufier, you mentioned all the services that your company is providing to try to keep people at work, even if they are starting to tip into that area of disability.
All that, I think we have to sort of internalize and do more of. But from what I hear Dr. Weaver and Mr. Williams say, SSDI, as Ms. Ekman says, doesn’t do any of that. Social Security Disability Insurance is simply to pay someone who is now fully disabled. It is the vocational rehab programs and all the rest that are really there to do that. And so my sense, from everything I hear you saying is, we have got to really beef up the work we are doing to give people the incentive to stay working and to make sure we capture them before they become too disabled to stay at work or at least work for good periods of time. So I think we have a lot of work to do, as Mr. Ufier is doing with his company, to try to make sure we are doing everything we can from letting anyone fall over the cliff and become permanent ‑‑ you know disabled to the point where you can’t work.
So a quick question, Mr. Ufier. What kinds of services ‑‑ give us very quickly because I am going to run out of time. What are the most important services that you think we need to provide folks to stop them from tipping over to becoming folks who just won’t go back to work?
Mr. Ufier. It is an early intervention, being involved right at the beginning of a claim when an individual goes out, employers being involved. So some kind of pressure on the employers to be immediately involved within the first weeks of disability. I deal with a lot of the private sector, which is short‑term and long‑term disability. So as soon as a person goes out, there is involvement from the employer to engage the employee to stay at work and to think about, okay, you can’t work at the moment, but you will in the near future. Let’s see what we can do about that.
Mr. Becerra. So what does “see what we can do about that” mean? What kind of services do you offer?
Mr. Ufier. We would be offering medical intervention with assessing how limited the person is functionally. As I mentioned, disability is not just having a diagnosis but how that diagnosis impairs a person to return to work. So perhaps up front, a person may have a diagnosis, a back injury. But what is the likelihood? How long will they stay out of work?
Mr. Becerra. So a medical diagnosis, probably follow up, rehab? You are investing money to keep that person at work.
Mr. Ufier. Absolutely.
Mr. Becerra. So this is not free?
Mr. Ufier. No.
Mr. Becerra. Your company is paying money to ‑‑ you are probably figuring, it is better to keep an experienced, capable employee on board than try to train someone to do all this stuff anew.
Mr. Ufier. Yes. We use nurse case managers and voc rehab people up front rather than later in the process to say, let’s keep you at work.
Mr. Becerra. But you have to invest money to make this work.
Now, Dr. Weaver and Mr. Williams, my biggest concern is that we keep cutting the budget of the Social Security Administration at a time that we are talking about investing more to keep people at work to make sure that we intervene early and that we do everything we can to keep someone from tipping over, based on their disability, to the point where they can’t work. How do you manage if 10 percent of your Social Security Administration offices ‑‑ I mean, 10 percent of the staff in your Social Security Administration offices in the field have been cut?
Dr. Weaver. Thank you for the question. I think staffing is an issue at the agency. You mentioned the reductions in our workforce. Particularly in this area where we talk about the complex work incentives in the law. As our Inspector General said, it is a very work‑intensive process. You actually have to put staff on these cases to make sure that beneficiaries don’t have their benefits inappropriately stopped. And they can take advantage of all the employment supports that Congress has put in the law. So, in general, I would say that our experience with administering the employment supports and work incentives already in law has been difficult.
Mr. Becerra. So, Ms. Ekman, you probably deal more with folks who have these disabilities, and they are on that verge of becoming unemployable. What does SSA need to do to try to deal with the fact that they are getting cut?
Mr. Ekman. Well, first, thank you, Ranking Member Becerra. I think first, I will reiterate that we do not believe that the Social Security Administration is the right agency to perform early intervention or provide these work services to people who are still in the labor force. We think it is a few years before, at least, application. We find that people try to work for as long as they can, often beyond when it is healthy for them, exhaust their savings, and all their other resources, trying not to apply before they walk through Social Security’s door.
So I think the Congress needs to give Social Security more resources to perform program integrity work as well as to process earnings reports and to make sure that the person gets the right payment at the right time. It can take up to 8 months on average to process a report. And by that time, a person may have tens of thousands of dollars of overpayments, which will require them in most cases to quit their job and go back on benefits. So it is very counterproductive. And providing enough resources to handle that workload would go a long way towards supporting work.
Mr. Becerra. Thank you.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you.
Mr. Renacci, you are recognized.
Mr. Renacci. Thank you, Mr. Chairman.
I want to thank all the witnesses for their testimony.
As I listen to all the testimony, I am thinking that we have got to get to a way of making SSDI better. And I want to start with the one thing that I know the Chairman mentioned in his opening statement. In a most recent beneficiaries’ survey, 40 percent of beneficiaries said they were interested in working and getting back to work. Yet in 2010, only 0.5 percent left the rolls due to the earnings from work. That is where we should start. We should figure out how we can make things better for those 40 percent.
If we can get 25 of the 40 percent back to work, that is a 10 percent savings, and that is what the taxpayers are looking for. That is what they are asking Congress to do, figure out ways to make the program work better.
I want to talk about two individuals in my district. And these are the two that I want to focus on and then maybe ask some questions on how we can do it better. One that I talked about in a previous hearing, I remember golfing with a guy who was on SSDI every week, swinging the golf club, walking with his cart. And he was on SSDI. So he is definitely somebody that can get back to work out of that 40 percent. But he didn’t want to get back to work.
And I also had another individual in my district who recently contacted me. He just is on his medical leave. And he had his third back surgery. And he just received SSDI. He is telling me that he wants to go back to work. His intent is to get back to work. And the problem is that he has now received his SSDI payments, and he is concerned because he is going to fall into what we have talked about, this problem of, you receive it, you lose your skills in work, and you start to go down this path of, well, I am just going to accept the payment. So those are the two that I kind of want to talk about.
And the first one, Dr. Duggan, how do we help that second individual? The first individual definitely shouldn’t be on SSDI. The second one that I am talking about, how do we help that person?
Mr. Duggan. Well, thanks very much for the question. So we have heard a bit of discussion of this program in Vermont that improved incentives among SSDI recipients there to work and that that did generate significant employment gains there. So, basically, allowing people who are on the SSDI program, rather than having this cliff in benefits, if they go over it, they are gone for good potentially, having this benefit offset that enhances individuals’ incentives to work.
The recent evidence from Norway, they did an intervention that was not even ‑‑ didn’t even enhance incentives as much as that one, and it had a big payoff in terms of increasing employment among Disability Insurance recipients. So I think there is some scope for us with modifications to the program to help get people back to work so that it pays for them to do it.
And the evidence again and again and again shows that financial incentives matter. This is an area in which if a person works and they can keep more of that earnings, that is going to inspire them to push harder to get back to work and that will enhance our economic growth. So I think there is a lot that we could do there.
Mr. Renacci. Dr. Daly, you referred to a Swedish disability program, and I know one of the other witnesses said that we shouldn’t be comparing to some of the other countries. Do you agree with that?
Ms. Daly. No, I don’t agree with that. I would agree with the following statement: We shouldn’t just go and take an off‑the‑shelf program from another country that is quite different from us and adopt it wholesale and think that that would work. But I do think that looking to other countries and seeing where they have got similar experiences to ours and see that they have been successful.
And I will point to Sweden as an example, that at the same time they were scaling back their disability program, they were actually also scaling back their unemployment, long‑term employment insurance programs and their welfare programs. And they were doing this because they were trying to move away from a culture that they had had in their country where too many working age people, that is their words, not mine, were moving on to some sort of a transfer program.
So I think it is not just the case that these countries have much better benefits elsewhere and people move from disability to those other benefits. It is actually the case that they are trying to ‑‑ they call it labor market activation — they are trying to re‑enter numbers of people back into their labor market.
I will also conclude, if I may, with the idea that the main thing to take from other countries is that the observation ‑‑ I said this in my testimony, I want to reiterate it ‑‑ the observation that people with disabilities currently don’t work in the United States is not the same as evidence that they cannot work if they are given the opportunity to do so. So I think that is an important lesson we can learn from other countries.
Mr. Renacci. Thank you.
Mr. Ufier, I am going to run out of time, but as an employer, I just wanted to make this comment. You know, there were two types. When an employee got hurt at work, that was Workers’ Compensation. Then there was the employee who became disabled, and usually, that person just moved off the work roll, and we weren’t able to get back with them and try and bring them back to employment. They had moved on already. The person on Workers’ Compensation, you know, we were able to work through.
So I am out of time, but at some point in time, I would love to hear how you really handle those differences.
Mr. Chairman, I yield back.
Chairman Johnson. Thank you.
Mr. Kelly, you are recognized.
Mr. Kelly. Thank you, Mr. Chairman.
I would like to go back to Ms. Daly. Why did Sweden ‑‑ what was their driving force? What did they look to reform what they were doing? What was the mover for that?
Ms. Daly. Really they had ‑‑ really the biggest mover was that they were looking at 20 percent of their working age population being on some sort of a government transfer program, and they ‑‑ that is fiscally unsustainable for any nation, so they were taking a thorough look at those programs, and that what they recognized is that the disability program was a program that people thought, I have paid in, I pay my taxes, I deserve to have this type of support, but that it was getting away from the overwhelming evidence that in the modern world of disability, that people with disabilities can work.
And so they were driven fiscally, but they actually felt that in their own review of their ‑‑ in their own policy, they felt it was holding to their core values, which is that no citizen should be sidelined from the opportunities to participate in the labor market and gain a productive life, and they should be making those investments.
Mr. Kelly. And I would think that all would agree.
Sometimes we have a difficult way, we define people, we try to paint them all with the same brush. There are certainly people that cannot go back to work. I understand that.
But what I have a difficult time trying to wrestle with today is we have had so many advances in technology, the way we treat people after an injury. And I agree, you were talking about early intervention, early detection, early intervention is the best thing for anybody. It doesn’t matter whether it is a disease or some type of an injury, you have to get to it early. The earlier to it, the better chance of fixing it.
But, again, going back to this, and because I think it is really important what you said about the Netherlands and Sweden, it says ‑‑ and on page 7 of your testimony, in the past decade, the Netherlands and Sweden fundamentally reformed their disability programs by changing the culture in social expectations regarding people with disabilities.
And I think that is what we constantly wrestle with, because sometimes it is the social expectations. I am an employer, and I have had people who have gotten hurt on the job. They can’t work, they can’t work; I understand that, but I do know this from growing up and from participating in athletics: The longer you are away from school, the harder it is to go back; and the longer you are off the field, the harder it is to get back on field and want to play again. So I think that early intervention and getting them back on the field, but all of you are dealing with the same thing.
Now, again, disabilities are defined differently. Some people are never going to be able to return to work, I get that, but I think the whole process we are talking about now is are we incentivizing people to go back to work or are we disincentivizing people by the programs that we have right now? Again, not painting everybody with the same brush, but explain to me, when you say the “social expectations,” what are we talking about there?
Ms. Daly. So if you look at documents written by the Netherlands and by Sweden, by policymakers, and these were bipartisan documents, and also at the OECD level, the OECD itself has written these documents, the very first paragraph in many of these documents says the following: People with disabilities deserve the opportunity to work. People with disabilities want to and can do work, and ‑‑ and this is where they put it in underlined or all capped type ‑‑ people with disabilities have the responsible to try to work.
So that is what I mean by changing the social expectation. And the reason I think European countries are a good example of this to look to is that traditionally the European nations have been more generous with their safety nets ‑‑ Ms. Ekman mentioned this ‑‑ and more willing to have that be a social contract that they would sign. And they actually are saying it is not good for the individuals with disabilities, and it is not good for our economy, so this is what I mean by changing the culture. And the results have been, as I said, to increase the employment of people with disabilities, maintain or increase their incomes and not move them onto other welfare‑type benefit programs. So, you know, they are in the first 5 years of their reform, so I don’t think we should call these all victories, but I think it is useful evidence to look to.
Mr. Kelly. Well, I have got a lot of friends, and I ‑‑ like Mr. Renacci, who have gone through these things, but I will say this: It is the excitement about waking up in the morning and being able to get out of bed and go somewhere and do something productive that really drives, not just Americans, but all human beings. And when we have these programs that we can get people back into the workforce where they are contributing members of society, and by the same token, those that can’t, I understand that ‑‑ don’t label them as not wanting to go back to work or not having that desire to go back to work. Listen, there are some people that just can’t, and those are the people that we want to help, but the other way, we got to get them early, and we got to get them back on the field as soon as we can. I think that is the best way to work.
Mr. Williams, I do want to say something to you. You have overcome a great deal of adversity, and I think that just having you here today and having you present sets a great example of what it is that drives the human spirit to make them, make them do things and maybe they will say, it is going to be harder for me than somebody else, but I don’t care, I am still going to achieve. So I applaud you for what you have done with your life. Thanks so much.
And I yield back.
Chairman Johnson. Thank you.
Thank you all for your participation.
Mr. Griffin, you are recognized.
Mr. Griffin. Thank you, Mr. Chairman.
I want to associate myself with the remarks of Mr. Kelly.
Thank you all for being here.
Thank you, Mr. Williams.
This is incredibly important, because I hear about this issue a lot back home. And what I have learned from being here 2 and a half years and from being in politics before is that anecdotes are not the end of the story, but usually, they indicate something. If you are hearing things on the ground, they indicate something is going on. And they are not all 100 percent truthful, but they indicate that there is some truth out there associated with the anecdotes that I hear.
And I will tell you that in this area, when I am home in Arkansas, I hear anecdotes about abuse with regard to this program all the time. And I know that they reflect an ongoing problem. You don’t hear numerous stories, and say, well, those are a very small percentage; that almost never happens. I hear about these instances, like the golfer, because they are relatively common; so much so, that I hear jokes about, well, maybe I will just get on disability. And you hear that kind of joke all the time. It is almost like the American people know that this program doesn’t work the right way on the whole, and so they know it is relatively easy to game. And it is not only a fiscal problem generally, but more importantly, it impacts the people who need it, as Representative Kelly pointed out.
And I want to mention, in addition to the golf situation, there are several anecdotes that I have come across, and I finally decided that if I were to ignore them, it would be malpractice on my part. And there is one lady who volunteered to handle all of the arrangements, all of the emailing, all of the phone calls for a high school reunion. And the comment that she made was, I am on disability, so I can handle all this. Well, there are jobs where she could use those skills.
The other individual is an individual who had been a veterinarian for years, and he said, he pulled his back or something, and he hasn’t worked in years. And he is always engaged with me on policy issues and everything ‑‑ just in his free time, because he has lots of it. And he rides motorcycles and does all kinds of stuff, and he is on disability, and I know him very well. There is another lady, actually related to the vet, who is in a similar circumstance.
This is common. And my constituents that need disability because they can’t ever go back to work are as angry about it as everybody else, because it is really not fair at the end of the day.
And I wanted to ask you, is there some sort of financial incentive to report the fraud in this area, like a qui tam incentive? I guess the first question is, how do people that can play golf the way Mr. Renacci’s friend did, how do they get complete disability? How does that happen? Are the rules such that allow it? Is there fraud going on? Are there employees that just don’t know what they are doing, and they just say, you are approved? How does that happen? Deception? Anybody? Does anybody have any idea how that happens? Dr. Weaver?
Dr. Weaver. Sure. I will respond. I mean, we ‑‑ there is a fraud hotline operated by our Office of Inspector General. We provided numbers to Congress to try to quantify that issue. We don’t think fraud is rampant in our programs. Generally, people in our programs have pretty serious health impairments. We try to follow the definition Congress put in law that the individual can’t work a substantial gainful activity for up to 12 months due to an impairment or an impairment that will result in death. So I do think we feel like we run the program as Congress has written the definition, but we do have ‑‑ there is a fraud hotline. We don’t think fraud is rampant in our programs.
Mr. Griffin. Okay. We need to write a better definition, it sounds like. It looks like I am out of time.
Mr. Chairman, would it be possible to have 30 more seconds?
I know that all these can’t ‑‑ they look fraudulent to me, the ones that I mentioned, may or may not be. I guess we all have different definitions of disabled and fraud. Some ‑‑ yes, ma’am.
Ms. Ekman. I wanted to make a couple of points. One is that disability and ability to work change over time. So just because at this point someone is able to golf or ride a motorcycle doesn’t mean when they were approved for benefits, they could have or that they could have worked.
So one of the things that Congress could do to help with that problem is to get more resources to the Social Security Administration to perform what ‑‑ the continuing disability reviews that are required by statute. The Social Security Administration cannot do them with the resources that they have. So a huge ‑‑
Mr. Griffin. Bigger budget.
Ms. Ekman. Within ‑‑ they would need a bigger budget to do it. And Congress has previously given funds dedicated to that purpose, and they have also cut them in the past few years. So if we really are worried about that, I would say, give more resources to Social Security to do CDR’s on time.
And the other thing is that, you know, just because someone, as I said, looks like they are able to do something on a certain day, a lot of disabilities are cyclical or they get worse and they get better, and it does not mean that someone is committing fraud because on that particular day, they are able to drive or, you know, ride a motorcycle or play golf. And so I think it is important to draw a distinction between fraud and changes in health conditions that Social Security doesn’t have the resources to accurately monitor.
Mr. Griffin. Well, I know these individuals, and so I will say this: I don’t know, you know ‑‑ whether they are committing fraud is another issue, but I can tell you that the people I am talking about are able and have been able, and if you are playing golf and you are on disability, that is fraudulent to me, but, you know, that is not the legal definition.
Mr. Duggan, you wanted to jump in? By the way, this is the same Social Security Administration that uses a 1976 cost accounting program. So, you know, I think there is some stuff that can be done on your side. Maybe we need to enable you, but ‑‑
Mr. Duggan. So I think that the data that I showed earlier pretty clearly indicates that the characteristics that the medical conditions with which people are qualifying for disability has changed enormously over time.
If there is one thing to take away from the SSDI program, it is that in the last two or three decades, it has shifted from a program that provides benefits to people with stroke, heart attack, cancer and so forth to one that differentially provides benefits for more subjective conditions, like mental disorders and back pain.
To me, as I look at all the available data ‑‑ and SSA is fabulous in their production of data, I have to say. I am just ‑‑ you know, I know a lot of people there, and they do a great job with the data.
One thing that you can get, just anyone here could go to the SSA Web site and see that 40 percent of SSDI awards are made on appeal. So basically you have a person who applies, they are rejected. They apply again; they are rejected. They appear before an ALJ. And it is pretty striking to me that 72 percent of the cases that appear before ALJ’s, cases that have been rejected not once, but twice, are overturned, those initial decisions.
And what to me is especially problematic on the incentives front is that those people have been rejected twice and appear before ALJ’s are the very people with perhaps the biggest employment potential among the people who are applying for SSDI, and yet we are giving them the absolutely worst incentives of everyone, because we are basically having them languish through this long process. So I think that there is a lot of scope for us to sort of rethink what is happening with this program. But those numbers don’t lie. I mean, that ‑‑ it is a totally different program than it was 20 years ago.
Mr. Griffin. Yeah. Thank you, Mr. Chairman.
Mr. Chairman, I would love to join with you in getting whatever ideas we have here and putting them into legislation. I think this is an area ripe for reform, and I think we could have a bipartisan agreement on that.
Chairman Johnson. Well, we need to reform the ALJ program to start with, and you probably agree with me.
Mr. Duggan. Yes.
Chairman Johnson. But, you know, our Inspector General, the IG, is doing a good job at checking on these people who claim a disability, and they are undermanned as well. I am sure you all who are familiar with the system know that.
Mr. Becerra, you had one comment?
Mr. Becerra. Yes. And thank you, Mr. Chairman.
I think, bipartisanly, when we find these bad apples ‑‑ and we saw those videos, Mr. Chairman, in some of the previous hearings where some of these folks were walking into the disability office with canes and walkers and then leaving, you know, virtually doing kicks and all the rest. I think, bipartisanly, we want to descend on those folks. We want to slice and dice those bad apples so that they are ground to a pulp, and they do not show up, because they ruin it for everyone else who really is disabled. As Mr. Kelly said, there are some folks who just cannot work. And we have to go after them.
And I would say this with all due respect to my colleagues, to Mr. Griffin and Mr. Kelly, we talk about these anecdotes as if they are the rule. If we know someone who is abusing of the system and playing golf, we are Members of Congress, we are sworn to uphold the laws of the land. Why aren’t we reporting those folks ourselves? If we ‑‑
Mr. Griffin. Well ‑‑
Mr. Becerra. Yeah. If I could just finish, if I could just finish. And I hope I do incite some conversation about this, because, you know, I hear these stories, and we all hear the stories, oh, that, you know, so and so is abusing of the system and playing golf and on full disability. Give me the name of that person, I will report him, but I don’t want even ‑‑
Chairman Johnson. Even if they are a Republican?
Mr. Becerra. I don’t care if they are ‑‑ I don’t care if they are D or R. They are making it tough for the folks who are truly ‑‑
Mr. Renacci. Will the gentleman yield for 30 seconds?
Mr. Becerra. I will. I will. I absolutely will yield, but if I could just make the point. I think we have to, as I just said, descend on those folks that are giving a bad rap to an essential program that people paid for. People don’t get Disability Insurance unless they paid into the program, and people don’t get it unless they are extremely disabled. If we find those bad apples that we catch on video abusing the system, you know, as I said, I want to lock ‑‑ I want to throw them in the ‑‑ you know, wherever and lock the key and, as I said, slice and dice them, because we can’t afford to have those folks. But we cannot, we cannot stand here or testify in public, because there is a camera here, and we cannot try to give the American people the impression that of the millions of people who are receiving disability benefits, not all of the millions, because there are lots of millions more who are disabled under the definition of the Americans Disabilities Act and et cetera, who are receiving benefits, but not disability benefits. But for those who are receiving disability benefits who have proven that they are the most disabled of Americans, I would hate for us to tank a system that they have paid for simply because of those bad apples. And so I think absolutely on a bipartisan basis, we should descend on those folks.
And with that, let me yield, Mr. Renacci.
Mr. Renacci. Thank you, Mr. Becerra.
I do want to explain that comment. You know, I probably haven’t golfed for years since I have been in Congress. I have only been here about 2 and a half years. This was about 10 or 12 years ago. But I think the key to that was as we were all golfing, we all wondered how this individual was able to get Social Security, because I could tell you, if I was golfing today and that occurred, I would be reporting him, but this is ‑‑ I think the American ‑‑
Mr. Becerra. If you give me his name, I will still report him.
Mr. Renacci. Well, I am not even sure where he is anymore.
Mr. Becerra. Let’s find him. Let’s go after that guy.
Mr. Renacci. The question here for the American people is, the American people see this and they are fed up with it.
Mr. Becerra. Absolutely.
Mr. Renacci. And people were fed up 10, 12 years ago. I assumed that as an American back then who wasn’t in Congress that he must be okay, he must have been able to get it, it must be a program he is allowed to have. Today, I know different, and that is the problem in America.
Chairman Johnson. We are going to let Mr. Kelly make one last comment and then we are going to close this down.
Mr. Kelly. Thanks, Mr. Chairman.
And I want people to take this personally. There is not a better example in the room right now of somebody who has disabilities but refused to let that stand in the way of going back to work, and that is you. And I mean that sincerely.
Mr. Becerra. That is right. Bipartisanly.
Mr. Kelly. And I know. We talk about bipartisan issues, but then we try to slice and dice each other so that one can be the hero and one can be the villain. It is not good enough in this body anymore to do the right thing. It is okay to do the right thing, but you got to make the other side look really bad.
Listen, the whole purpose of this hearing today, and Mr. Young said something in a hearing yesterday that ‑‑ a saying, and he said, Well, now we have run out of money, so we just have to start thinking. The whole purpose of this hearing is how do we sustain this, because I am not painting anybody with the same brush. I know how difficult it is for people who are hurt to get back to work, but I also know the path we are on right now is unsustainable. And I keep saying this thing, that unless Congress acts, unless Congress acts. Well, depending on which side you are sitting, what does it mean by “Congress acts”? Is it throwing more money in the program or is it making the program more sustainable by really thoughtful responses and regulation reform that we need to have?
You are all working to get people back to work. And again, I said about Mr. Williams, what you do every day, you get up with a purpose in your life. I can’t imagine putting people in a position they get up that want to go to work, and we have made it impossible for them to see the benefit of working anymore, because we have disincentivized that whole process. So, again ‑‑
Mr. Williams. Can I respond?
Mr. Kelly. Please.
Mr. Williams. What has not been said today is there are about 4 million Americans with disabilities who are employed. Most make less than $20,000 annually.
I would suggest that a critical question we will need to grapple with is, how do we reward those workers? And it is not just about services. It is creating opportunities for them to get and keep good jobs and careers that can lead to better self‑supporting futures.
Mr. Kelly. Well said. And listen, you are a champion. You are a champion. And I am going to tell you, you may be hampered physically, but mentally you have absolutely no problems extolling the human spirit and the desire to somehow overcome whatever we have to overcome every day to add to the value of this country. So thank you so much.
And, Mr. Chairman, thank you for what you have done, and I yield back.
Chairman Johnson. Thank you.
I want to thank our witnesses for being here today and for your testimony, and also our members who are present today.
You know, work is important for Americans, their families and this economy. We can and must achieve the results taxpayers expect for those with disabilities that they deserve.
With that, the subcommittee stands adjourned.
[Whereupon, at 11:27 a.m., the subcommittee was adjourned.]
Questions For The Record
Public Submission For The Record
Health and Disability Advocates
National Disability Rights Network
National Employment Network Association
Paralyzed Veterans of America
R. Larkin Taylor Parker