Statement by Dr. Shirley Charter,
Commissioner of Social Security
before the Senate Finance Committee
Subcommittee on Social Security and Family Policy
March 14, 1995
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Social Security Disability Insurance (SSDI) and the Supplemental Security Income (SSI) disability programs. As you requested, I will address the reasons for growth in both disability programs and some measures we are actively pursuing to address the growth and the resulting costs.
Before I begin my discussion, Mr. Chairman, let me point out that there are some indications that the growth of the program has slowed. In 1993 and 1994 SSOI applications and awards have remained about the same, and applications and awards for the SSI disability program have actually decreased. However, it is impossible to draw a conclusion for the long term based on this limited experience. Nevertheless, I would like to make it clear that the Administration is concerned about the increase in the disability programs over the past several years. As I will be discussing in further detail later in my testimony, preliminary findings show that program growth is driven by both an increase in applications and a decrease in terminations. The fluctuation in the number of applications and terminations are, in turn, driven by economic, demographic, and program-specific factors which I will describe. There are actions we have taken and can take to address program-specific factors relating to growth; however, as you know, certain changes are beyond the Social Security Admnistration's (SSA's) control, such as personal health status, environmental conditions, and general economic and demographic factors.
It's important to realize that the current growth in disability costs is not a new experience for the disability program. In the Social Security Amendments of 1977, Congress increased the funding of the DI program to accommodate this growth in program costs. However, by the time the Social Security Amendments of 1983 were enactd into law, disability incidence rates had declined significantly, and the future cost of the DI program was projected to be much lower than previously estimated. The funding for the DI program was accordingly reduced in the 1983 amendments. Subsequent developments, including legislative changes and court decisions, have led to higher rates of program growth approaching the growth experienced in the 1970s. Had the funding provided for the DI program in the 1977 amendments been retained, the DI Trust Fund today would actually have an actuarial surplus over the next 75 years.
To facilitate our discussion today, as you requested, I will begin by providing you with a look at what we believe are the reasons for the recent overall growth in the SSDI and SSI programs, particularly focusing on the last 5 years. I would then like to briefly address the two categories of benefits in the SSI disability program which have been the focus of much attention in recent years--children and drug addicts and alcoholics. Following that, I will describe our initiatives to address program-specific factors contributing to growth in the disability programs. Finally, I will discuss our action plan for the future.
Reasons for SSDI and SSI Disability Program Growth
The number of people receiving disability benefits from these two programs rose from 5.4 million in 1989 to 7.9 million in 1994, an increase of 46.6 percent. As a result, benefit payments grew from $33.8 billion 1989 to $58 billion in 1994, an increase of 72 percent.
To determine the causes for the recent growth in disability, SSA, in conjunction with the Department of Health and Human Services (HHS), conducted an analysis in 1992 of the SSDI program and prepared a report for the Board of Trustees of the Federal OldAge and Survivors Insurance and Disability Insurance Trust Funds. We surmised that certain factors--such as unemployment and demographics--contributed to the recent growth in the SSDI program. However, although there has been general agreement among experts that these factors account for much of the recent growth in the disability program, we were unable to quantify the impact.
After receiving our 1992 report, the Board of Trustees recommended that we initiate a research effort to establish whether the growth represents a temporary phenomenon or a longerterm trend.
In response to this recommendation, and in cooperation with our colleagues in HHS, we contracted with Lewin-VHI, in 1993, to produce an independent assessment which would quantify the reasons for disability program growth. While we do not yet have a final report on this study, preliminary findings confirm many of our earlier assumptions.
Both our past and current analyses and that of Lewin-VHI indicate that disability program growth can be attributed to the reasons I mentioned earlier, the economy, demographics, and program changes. Let me explain how these three elements have influenced the increase in disability applications.
Economic conditions appear to be a large factor in affecting application rates for the SSDI program. The most direct way this can occur is when severely impaired workers, who previously worked despite their disabilities, lose their jobs and apply for benefits. Similarly, the most recent recession put more people in poverty, thus increasing the universe of potential eligibles for SSI benefits. As the economy has improved, the SSDI program is experiencing a slowing in applications.
In addition, two demographic factors have largely contributed to increased applications:
- the aging of the baby boomers has made them more vulnerable to disability; and
- an increasing proportion of women have worked long enough to be insured for SSDI benefits.
We believe these demographic trends will continue to be a source of program growth in the future.
In addition to the influence of economics and demographics, there are a number of program-specific factors which have caused increases in the disability program. For example:
- Legislation, regulations, and court decisions have resulted in chang.es to both the SSDI and SSI disability programs. One example is the Supreme Court's decision in Sullivan v. Zebley which mandated a change in the way SSA evaluates disability in children. The Court held that instead of evaluating children with disabilities using solely a medical listing criteria, SSA must provide children with a functional assessment based on their ability to perform age appropriate activities. The new criteria increased the number of children eligible for SSI benefits. While the Zebley case involved children applying for SSI benefits, we believe that the wide publicity given the case may have prompted some workers to apply for SSDI benefits as well.
- As a result of a 1984 congressional mandate, we revised the criteria for evaluating disability, particularly involving mental impairments. These revisions contributed to recent increases in the proportion of applications that result in benefit awards.
- SSA's "outreach" efforts have also influenced the disability growth in recent years. Outreach efforts--intended to inform potential eligibles about the SSI program--have also influenced the number of SSDI applications, because many of the SSI applicants are eligible for SSDI benefits. Also, the growth has been influenced by increased public awareness of the disability programs due, for example, to congressional actions or class action court cases which sometimes mandate that SSA conduct public information initiatives. Advocacy groups also conduct their own outreach efforts.
- Finally, State cuts in general assistance and State and local efforts to have persons with impairments apply for Federal programs have contributed to the increase in SSI disability claims.
We expect to have a final report on Lewin-VHI's study this aummer. This report will further refine and extend their preliminary findings and attempt to det rmine if these effects are likely to recur in future recessions.
Having discussed the underlying reasons for the increase in the number of people applying for disability benefits, I would now like to turn to the other end of the spectrum--disability terminations, or the number of people leaving the disability rolls.
Disability benefits are terminated when a beneficiary medically recovers, returns to work, or dies. In addition, disability benefits are terminated when beneficiaries reach age 65 because they are transferred to the retirement rolls. The percentage of beneficiaries whose disability benefits are terminated has steadily declined. There are several reasons this has occurred. For example:
- The baby boom cohort has contributed to a general lowering of the average age of disability beneficiaries;
- There have been more awards to people with mental impairments who tend to be younger and physically healthier, and therefore remain on the disability rolls longer;
- The 1984 Disability Benefit Reform Act required a medical improvement standard for continuing disability reviews;
- Medical and technvlogical advdnces have increased life expectancy; and
- There has been an increase in the number of female beneficiaries, who tend to have a greater life expectancy than males.
Clearly, these factors are, to a great extent, beyond our control. However, SSA conducts two important activities- continuing disability reviews (CDRs) and "employment strategies"--which can affect the number of disability terminations. CDRs help ensure that only those who are truly disabled continue to get disability benefits, whereas our employment strategies are intended to help beneficiaries who remain disabled enter the workforce, despite their disability. I will discuss these activities in greater detail in just a moment.
Growth in Specific SSI Program Areas
Now that I have described some of treasons for growth in both the SSDI and SSI programs, let me turn to a discussion of the area where growth has been most controversial--the SSI program. While it is true that both programs have been growing rapidly, in tha last 5 years, the SSDI program has grown by about 37 percent compared to approximately 53 percent for the SSI disability program. In the SSI program, thre are two groups of SSI recipients which togetiaer represent about 20 percent of the SSI disabled population--children (18.5%) and drug addicts and alcoholics (2%). Much discussion has surrounded these categories of recipients in recent years. Therefore, I would like to briefly discuss the growth in the number of these recipients.
Growth in the Number of SSI Children
I will focus first on the growth in the number of disabled children receiving SSI benefits. Growth in this category of beneficiary is the single most important factor in the growth of the SSI disability program. During the past 5 years, the number of disabled children receiving SSI has tripled--growing from about 296,000 in 1989 to just over 890,000 at the close of 1994. Children now represent about 18.5 percent of the total SSI disabled population compared to 9 percent 5 years ago.
Moveover, during that same period, program costs associated with children grew from about 1 billion dollars annually to five billion dollars annually.
We believe that this increase can be attributed to three major causes: the Zebley decision (which I mentioned earlier); updates to the medical criteria for evaluating mental disorders in children; and outreach efforts mandated oy the Congress.
The increase in the number of children receiving SSI, particularly based on ental impairments, along with the evaluation of behavioral criteria, has led to allegations about abuse in the SSI program. SSA, the Congress and the media have received inquiries from school teachers, psychologists, and State legislators alleging that some children with relatively mild impairments, such as learning disabilities and other behavioral problems, are being found disabled; and that parents may be coaching their children to misbehave or underperform in an effort to receive benefits.
Mr. Chairman, although these complaints are anecdotal in nature, I want to assure you that we have investigated every allegation and will continue to do so. I am determined to maintain the fiscal integrity of the SSI program.
For instance, in an effort to determine whether these alleged abuses exist, we undertook a study of childhood disability claims to see if new regulations were being applied correctly and whether there was any evidence of malingering or coaching. Our study focused on impairments involving behavioral abnormalities and learning disorders.
We found that the rules governing the evaluation of disability in children were generally being applied correctly by those making disability determinations. Of course, if any problems are found, we will certainly take corrective action. In addition, studies by the Office of Inspector General for the Department of Health and Human Services and the General Accounting Office have not found evidence of widespread abuses in the program. Nevertheless, we are continuing to look for ways to ensure that only those children who meet the current statutory and regulatory definition of disability receive benefits. Let me mention here that the Commission on the Evaluation of Disability in Children, which was mandated by the Social Security Independence and Program Improvements Act of 1994 is examining the statutory definition of disability for children. The Commission, in consultation with the National Academy of Sciences will study the effects of the current SSI definition of disability as it applies to children under age 18 and their receipt of services, including the appropriateness of an alternative definition. It will also examine the feasibility of other major changes in SSI benefits for children, including the desirability of providing benefits through non-cash means, such as vouchers. In addition, the Commission will look at other issues, including ways to increase the extent to which benefits are used to help a child achieve independence and an ability to work. We understand that the Commission has expedited its review and we are very optimistic that the forthcoming recommendations from the Commission will assist us in determininappropriate reform in the eligibility criteria and payment options for childhood disability benefits.
While we feel confider that we are administering current law and regulations properly, we do agree with the concerns about the growth of the program. The criteria for determining whether a child's impairments are significant enough to warrant Federal assistance for that child and his or her family is an appropriate subject for serious discussion. While change may be warranted, we are not convinced that the measures currently under consideration in the House provide the answers.
- Changing a large part of the program from direct cash benefits to state block grants reduces the flexibility of families to determine the best way to spend money to assist their children with disabilities. At the same time, it would require the creation of State bureaucracies to administer programs for service that would be more complex than the Federal cash benefit program currently in place.
- "Fixing" the definitional issue by simply removing a step in the process rather than better defining by law and regulation the population of children to whom assistance should be provided may lead to the inadvertent exclusion of children with serious disabilities.
The Administration sees the need for careful reform in this area. We believe prudence dictates waiting until the reviews identified above are completed.
Growth in the Number of Drug Addicts and Alcoholics
Mr. Chairman, let me now briefly address one other area of growth in the SSI disability rolls: the inrease in the number of individuals who receive benefits based on drug addiction and alcoholism. Although DA&A recipients currently represent only 2 percent of the SSI disabled population, this area of growth has been the subject of much attention and controversy, as well as recent legislation. And, in fact, over the past 5 years, the number of individuals receiving SSI based on DA&A has significantly increased--from about 17,000 in 1989 to just over 100,000 in December 1994. The growth in the DA&A rolls has primarily resulted from two factors:
- Emphasis on the need for the State Disability Determination services (DDS), which make the disability determination for SSA, to code accurately cases involving DA&A impairments; and
- Active outreach activities to promote awareness of the availability of SSI payments for those who have serious mental illness in addition to substance addictions.
The growth in the number of SSI recipients receiving disability benefits based on DA&A has also led to increased public concerns and questions about the fun mental nature of the SSI program and whether it is appropriate to provide cash benefits to such recipients. Questions have also been raised about the responsibility these individuals have to.seek recovery. Unlike many other disabled individuals, those suffering from substance addictions can, to varying degrees, influence their recovery by their own actions.
In response to such concerns, the Social Security Independence and Program Improvements Act of 1994 included new restrictions on the payment of benefits to SSDI and SSI beneficiaries whose disability is based on DA&A. The new provisions generally limit the payment of SSDI and SSI benefits to 36 months, establish mandatory, progressive sanctions for noncompliance with treatment, and require installment payments of retroactive benefits to representative payees.
We are implementing the new provisions and are hopeful that these new measures will provide strong motivation for individuals disabled by substance addiction to improve their condition and become self-supporting.
Initiatives to Address Program-Specific Factors
Mr. Chairman, you also asked me to disccss options to address the increasing proqram growth. As I stated previously, preliminary findings of the Lewin-VHI study clearly indicate that high unemployment is one of the most important factors influencing growth in the SSDI program. Again, the state of the economy is beyond SSA's control; however, if low levels of unemployment are maintained, it may have a corresponding effect of decreasing the number of SSDI and SSI applications filed.
Although economic and demographic influences are beyond SSA's control, let me describe to you efforts we have been making to address factors within our control.
Let me turn first to initiatives to ensure that only children who are eligible under current law and regulations receive SSI disability benefits. Since the implementation of the childhood disability regulations in 1991, we have conducted a special review of SSI disability childhood medical determinations to ensure that they are correct In addition, we have:
- Provided training to all adjudicatcrs on those issues which are most easily misinterpreted and on the adjudicator's role in detecting coaching and malingering;
- Reviewed all childhood disability claims in which coaching or malingering is either alleged or suspected;
- Established several 800-numbers across the country for teachers and other school personnel to make confidential anonymous reports about perceived coaching or malingering; and
We are assessing the childhood disability regulations to determine whether the new standards are being applied correctly or whether they require some adjustment. On this point we are working with the Commission on the Evaluation of Disability in Children.
Drug Addicts and Alcoholics
We have also made excellent progress in implementing the provisions of the 1994 legislation placing restrictions on the payment of benefits to drug addicts and alcoholics. For instance, we developed and published regulations necessary to implement the new law despite a 6-month timeframe and the complex nature of the issues addressed in the regulations. We also issued notices to DA&A beneficiaries explaining the new provisions and advising that they are subject to them. Additionally, we now have referral and monitoring contracts or agreements in place for treatment purposes for the District of Columbia and all states except one. (We expect to have a contract in that State by the end of the year.)
Mr. Chairman, in addition to the efforts we are directing to specific populations of beneficiaries, we have a number of safeguards in place to ensure the integrity of the disability programs overall. For example, we review a statistically reliable sample of decisions to assess the accuracy of all aspects of disability claim processing.
Moreover, we established sunset provisions on our regulations involving disability criteria to ensure that they reflect up-to date medical knowledge and that our rules are being applied accurately. We will be aggressively reviewing these rules as they sunset.
Continuing Disability Reviews
Let me now focus on the two activities I mentioned earlier which can affect the number of terminations: continuing disability reviews, or CDRs, and employment strategies. Once beneficiaries are on the rolls, Mr.Chairman, CDRs ensure that only those beneficiaries who continue to be disabled remain on the rolls. The upsurge in initial disability applications required that difficult decisions be made about the prudent use of limited administrative resources. Accordingly, in recent years, decisions were made to give highest priority to processing initial claims in order to e.ure that eligible applicants with disabilities receive their benefits as quickly as possible, because these benefits are often the only means of support for the disabled and their families.
Nevertheless, to help preserve the integrity of the disability programs, we recognized that we need to strike a better balance between addressing the growing wcrkloads in initial disability claims and conducting CDRs. However, the increasing pressure of other major workloads would not allow continued use of the traditional lengthy, labor-intensive CDR process. Thus, in 1993 SSA implemented a more efficient CDR process through the use of a mailer and statistical profiles.
This new process is twice as cost effective as our previous process and has increased the number of people we identify as medically improved. We are further refining this process to develop mailers that are specifically related to the beneficiary's impairments, and to evaluate the use of additional information to determine the likelihood of medical improvement, such as Medicare utilization data.
Although we continue to be faced with resource constraints, I want to assure you that I am determined to increase the number of CDRs we conduct. In fact, the Administration's FY 1996 budget includes a request for funds to increase the number of CDRs we conduct in FY 1996 to 431,000--a threefold increase over FY 1994.
Mr. Chairman, let me now focus on employment strategies, which is our other initiative related to terminations. Employment strategies are designed to help individuals with disabilities enter the workforce. This is a crucial effort since, historically, less than one-half of 1 percent of the individuals who receive SSDI benefits ever leave the rolls to return to work. I would add, Mr. Chairman, that the trends I mentioned earlier- that beneficiaries are younger on average, live longer, and are less likely to leave the rolls--underscore the importance of initiatives designed to encourage persons with disabilities to receive rehabilitation services and enter the workforce.
Most individuals with disabilities have a strong desire to work, and we want to make sure they have the opportunity to do so. That is why we are intensifying our effort to assist beneficiaries and applicants in making the transition from dependence to independence.
I have established a proactive strategy team to develop approachs to increase the employment of current anpotential disability beneficiaries, thereby promoting economic self sufficiency and reducing their dependence on disability benefits. This team is headed by our Associate Commissioner for Disability, Dr. Susan Daniels. Dr. Daniels' team has been obtaining information from Federal agency partners, members of the disability community and outside experts to obtain broad input on the problems and barriers individuals with disabilities face.
In the near future, we will make decisions about how best to implement employment strategies. I am optimistic that we can help many of our beneficiaries achieve a more rewarding life, while at the same time reducing disability program costs.
Action Plan For The Future
Given the recent growth in the SSDI and SSI disability programs, Mr. Chairman, it seems clear that we may need to take steps to control future program growth particularly since as, I have indicated, demographics will continue to be a source of growth in the future.
I have already outlined a number of actions we are taking to ensure that only those who are disabled actually receive benefits. We are also working to help those who remain disabled enter the workforce.
For example, within the next few months, we will have the results of important reports that will help us better understand the reasons for the growth in the prngram and the best ways to deal with that growth. For instance, I have already mentioned the work being done by the commission on the Evaluation of Disability in Children. Also, at the request of the House Committee on Ways and Means, the National Academy of Social Insurance has convened a Disability Policy Panel which is currently examining the interrelationship of income support policy and employment of people with disabilities. More specifically, the panel has been asked to review the definition of disability and its effect on employment and receipt of benefits.
I believe we need to have the information all of these groups will provide in order to make informed decisions about the future of the disability programs. For, when we talk about changes in the SSDI and SSI programs, we must consider the importance of those programs to millions of Americans, and to American society as a whole--nearly a million beneficiaries receive SSDI and SSI benefits each year.
Therefore, it is critical that we maintain appropriate support for children with disabilities and move cautiously in recommending changes to the SSDI and SSI programs, so we do not hurt the programs and the millions of Americans who depend upon them.
In closing, Mr. Chairman, let me stress that, while there are indications that the situation may be improving somewhat, the Administration remains concerned about the growth in the disability programs. That is one reason we have undertaken major initiatives to improve the CDR process, and to help disabled individuals become productive members of the workforce. We are, of course, also working hard to implement new rules for drug addicts and alcoholics, as required by legislation enacted last year.
One of the most fundamental requirements in controlling program growth is to have an understanding of the factors underlying that growth. To that end, the Lewin-VHI research project begun in 1993--which will be completed a few months from now--will help us better identify and quantify those factors. Moreover, it should help us determine whether this recent growth represents a temporary phenomenon, or a longer-term trend.
We look forward to working with you, Mr.Chairman, to determine what changes need to be made in the SSDI and SSI disability programs.