DISABILITY INSURANCE PROGRAM
ACTUARIAL STUDY NO. 114
II. EXPERIENCE OF DISABILITY DETERMINATIONS
A. Substantial Gainful Activity (SGA)
Substantial work activity involves the performance of significant physical or mental duties that are productive in nature. The degree to which an impairment limits an individual's ability to perform basic work activities is essential in determining the severity of the disability. Basic work activities include: sitting, standing, walking, lifting, carrying, handling, reaching, pushing, pulling, climbing, stooping, seeing, hearing, speaking, understanding, carrying out simple instructions, using judgment, responding appropriately in a work setting, and dealing with changes in work routine.
Gainful work activity is work performed for remuneration or profit. Certain earnings criteria have been established as reasonable indications of whether an individual is engaged in SGA. An employee averaging over $700 per month will ordinarily demonstrate SGA; less than $300 per month will ordinarily demonstrate lack of SGA; between $300 and $700 per month will require that consideration be given to all circumstances related to the work activity. The dollar amount associated with defining SGA is specified in regulations, and was originally set at $100 at the inception of the DI program. This amount has been updated from time to time as actual wages within the economy have increased. Recent updates in the SGA amount include an increase in 1990 to $500 from $300; and an increase in July 1999 to $700 from $500. Since 1977, blind persons have been subject to a separate SGA amount. Figure 1 shows a history of the level of SGA.
Figure 1.--Substantial Gainful Activity Amounts for the Disability Insurance Program 1957-1999
To establish the presence of an impairment, an individual must provide supporting medical evidence along with the disability claim. The Social Security Administration's Listing of Impairments is used to determine the severity of the disability. The listings contain examples of common impairments for each of the major bodily systems that are deemed to be of such severity as to prevent a person from performing SGA. However, a diagnosis of a listed impairment alone may not be sufficient to establish disability; associated symptoms, clinical signs, and laboratory findings must accompany it. In addition, claimants are asked to provide the names of employers and job duties for the last 15 years.
Many individuals are found to be disabled even though impairments fail to meet the level of severity required in the medical listings. In these cases, an individual's medical condition is evaluated in conjunction with age, education, and job skills. These vocational factors are given increasing weight with the advancing age of the worker, and are particularly significant in the determination of disability among workers age 50 or older.
The leading diagnostic categories for disability varies by gender and year of award. Table 1 shows the leading causes among disabled workers relative to the DI program. Mental disorders represent the largest single category of new awards among both males and females, as ranked by average percentage over the period 1993-1997. Note that revised listings for mental impairments (published in 1985) led to the re-adjudication of a large number of cases, resulting in a jump in new awards in 1986.
Musculoskeletal disorders have increased significantly over 1995-1997, for both sexes. This category has become the leading cause for awards in 1996 and 1997. One possible explanation for this would be the aging of the baby-boom generation (birth cohorts 1946-1964), which may be experiencing a higher incidence of arthritic, back, and bone disorders as they enter their late 40s and early 50s.
Among males, circulatory disorders have always been a leading cause; however, awards in this category have generally declined since 1987. Awards based on neoplasmic disorders have also declined in recent years. In both cases, these recent trends are due, in part, to improved medical treatments. Awards based on infectious disease increased significantly in 1990 due to the increasing impact of HIV infection. This category has been declining since 1994, with a significant drop occurring in 1997.
Awards based on neoplasm and nutritional disorders rank higher among females than males; awards based on circulatory disorders and infectious disease rank lower. Higher prevalence of cancer, eating, and chemical disorders among females may account for this; in addition, circulatory and HIV impairments are not as prominent.
C. Determination Process
At the initial stage of a claimant's request for disability benefits, the State Disability Determination Services (DDS) will make a decision to allow or deny the claim. A claimant who is dissatisfied with the initial decision may request further review. This review process consists of several steps, which must be requested within specified time intervals, and in the following order:
Table 2 presents data on the disposition of claims for disability benefits across the various review stages, for calendar years 1988-1998. The data are tabulated by year of filing and are shown separately by whether or not there is a concurrent claim for SSI benefits. As mentioned earlier, both programs use the same definition of disability for adults. However, eligibility for SSI benefits is further dependent upon the claimant's countable assets and income, which may include DI benefits.
Many factors exist that affect the number of disability claims filed as well as the frequency of subsequent decisions to either allow or deny benefits. However, the impact of any one factor is difficult to gauge; in general, they may be administrative, economic, or demographic in nature. Below is a list of some of the leading determinants which may have a significant impact on both the number of claims filed and the rate of favorable determinations 4:
Roughly 1.25 million claims for DI disabled worker benefits were filed in 1994. Since then, filings have declined to an estimated 1.03 million in 1998. Applications grew by an average of 7.3 percent annually over the period 1988-1994, with a 17.4 percent increase in 1991 alone. As mentioned above, many factors contributed to the growth in disability applications over that period.
More recently, many of the trends that led to program growth have reversed, leading to a decline in DI enrollment. Some factors contributing to the decline since 1994 include a robust economic expansion and lower levels of unemployment; leveling off of female labor force participation; a decline in HIV-related impairments; and the elimination of drug-addiction and alcoholism as material causes for disability.
E. Initial Decisions
Growth in the initial allowance rate during 1988-1991 is attributable to many of the same factors that caused application growth over the same period. The DI program saw similar significant growth in both applications and allowances in the early 1970s with the introduction of the Black Lung and SSI programs.
Beginning in 1992, the allowance rate began to decline even as application growth continued. This may be indicative of less severe impairments among applicants, which led to a lower percentage of allowances among new claims.
It is worth noting that allowance rates tend to be much lower among concurrent DI-SSI claims than DI-only claims. This may be due to differences in the composition and economic status of the filers. Concurrent filers tend to be of lesser means (reflective of the nature of the SSI program) and are thus more likely affected by changes in the economy. Many times the only alternative is to seek aid from Federal, State, or local programs. Consequently, concurrent filers may exhibit less severe disability, or provide less evidence of impairment, resulting in fewer allowances.
Finally note that as pending decisions are cleared, the ultimate allowance rate will be lower than that shown in table 2, for years where pending claims exist. This is due to the greater processing time needed for denials.
Allowance rates at the reconsideration level have been very consistent. Although the reconsideration stage is de novo 5 in concept, it is similar to the initial stage in that disability determination is mostly a "paper review" process where claimants are rarely observed by the decision-maker. Assuming some uniformity among the initial decision-makers, it follows that initial denials are seldom overturned at reconsideration.
G. Appeals Beyond Reconsideration
The subjectivity inherent in assessing disability leaves considerable room for interpretation of evidence. As a result, overturned decisions at the OHA level and beyond remain relatively high. Factors that contribute to the high reversal rate include:
Class action suits can also have an impact on the determination process. Public pressure has surfaced in controversial areas such as mental impairment issues; the amount of leverage given to allegations of pain; statements by treating physicians in the absence of clinical evidence; how HIV-related impairments and cardiovascular diseases are evaluated; use of vocational factors in the absence of a single debilitating impairment; and the consistency of DDS decisions with SSA policy. Although the number of claimants directly involved in any one case may not be large, the outcome may have a broader and subtler influence on subsequent rulings and determinations.
Finally, recent attempts to redesign the disability determination process may lead to a reduction in the OHA allowance rate. Federal efforts aim to improve the process by striving to reach the proper determination at the earliest possible stage, thus reducing the decision writing backlog as well as the rate of overturned decisions at the OHA level.
July 30, 1999