[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]
BARRIERS PREVENTING SOCIAL SECURITY DISABILITY RECIPIENTS FROM
RETURNING TO WORK
=======================================================================
HEARINGS
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
JULY 23 AND 24, 1997
__________
Serial 105-61
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
55-046 CC WASHINGTON : 1997
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
JIM BUNNING, Kentucky, Chairman
SAM JOHNSON, Texas BARBARA B. KENNELLY, Connecticut
MAC COLLINS, Georgia RICHARD E. NEAL, Massachusetts
ROB PORTMAN, Ohio SANDER M. LEVIN, Michigan
JON CHRISTENSEN, Nebraska JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona XAVIER BECERRA, California
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisories announcing the hearings............................... 2
WITNESSES
Social Security Administration, Hon. John J. Callahan, Acting
Commissioner; Accompanied by Susan Daniels, Associate
Commissioner, Office of Disability............................. 8
U.S. Department of Education, Judith E. Heumann, Assistant
Secretary, Office of Special Education and Rehabilitative
Services; Accompanied by Mark Shoob, Deputy Assistant Secretary 13
U.S. General Accounting Office, Jane L. Ross, Director, Income
Security Issues, Health, Education, and Human Services
Division; Accompanied by Cynthia Bascetta, Assistant Director.. 33
______
Abilitech, Suzanne Erb........................................... 106
American Rehabilitation Association, Mary Gennaro................ 153
Arc of the United States, Lorraine Sheehan....................... 98
Arizona Bridge to Independent Living, Susan Webb................ 80
Arthritis Foundation, Brenda Crabbs.............................. 102
Baron, Richard C., Matrix Research Institute, and International
Association of Psychosocial Rehabilitation Services............ 54
Berkowitz, Monroe, Rutgers University............................ 44
Christman, Rick, Metro Industries, and Kentucky Association of
Community Employment Services; as presented by Mary Gennaro,
American Rehabilitation Association............................ 153
Connecticut Bureau of Rehabilitation Services, John Halliday..... 124
Consortium for Citizens with Disabilities Vocational Working
Group, Tony Young.............................................. 88
Council of State Administrators of Vocational Rehabilitation,
John Halliday.................................................. 124
Crabbs, Brenda, Arthritis Foundation............................ 102
Erb, Suzanne, Abilitech.......................................... 106
Gennaro, Mary, American Rehabilitation Association; presenting
statement of Rick Christman, Metro Industries, and Kentucky
Association of Community Employment Services................... 153
Growick, Bruce, Ohio State University........................... 41
Halliday, John, Connecticut Bureau of Rehabilitation Services;
and Council of State Administrators of Vocational
Rehabilitation................................................. 124
Hessellund, Thorv A., National Association of Rehabilitation
Professionals in the Private Sector............................ 157
International Association of Psychosocial Rehabilitation
Services, Richard C. Baron..................................... 54
Kentucky Association of Community Employment Services, Rick
Christman...................................................... 153
Kregel, John, Virginia Commonwealth University.................. 51
Matheson, Leonard N., Washington University School of Medicine.. 57
Matrix Research Institute, Richard C. Baron...................... 54
Metro Industries, Rick Christman................................. 153
National Academy of Social Insurance, Virginia P. Reno........... 44
National Association of Rehabilitation Professionals in the
Private Sector, Thorv A. Hessellund............................ 157
National Council on Disability, Bonnie O'Day..................... 86
National Council on Independent Living, Susan Webb............... 80
O'Day, Bonnie, National Council on Disability.................... 86
Ramstad, Hon. Jim, a Representative in Congress from the State of
Minnesota...................................................... 5
Reno, Virginia P., National Academy of Social Insurance......... 44
Return-to-Work Group, Stephen L. Start........................... 164
Sheehan, Lorraine, Arc of the United States...................... 98
S.L. Start & Associates, Inc., Stephen L. Start.................. 164
Southwest Business Industry and Rehabilitation Association, Fred
E. Tenney...................................................... 161
Start, Stephen L., S.L. Start & Associates, Inc., and Return-to-
Work Group..................................................... 164
Tenney, Fred E., Southwest Business Industry and Rehabilitation
Association.................................................... 161
United Cerebral Palsy Associations, Inc., Tony Young............. 88
Webb, Susan, Arizona Bridge to Independent Living; and National
Council on Independent Living.................................. 80
Young, Tony, United Cerebral Palsy Associations, Inc.; and
Consortium for Citizens with Disabilities Vocational Working
Group.......................................................... 88
SUBMISSIONS FOR THE RECORD
American Occupational Therapy Association, Inc., Bethesda, MD,
statement and attachments...................................... 205
Association for Persons in Supported Employment, Richmond, VA,
Celane M. McWhorter, letter.................................... 215
Becklund Home Health Care, Inc., Golden Valley, MN, T. Jeff
Bangsberg, and Courage Center, Golden Valley, MN, Anita
Boucher, joint letter and attachments.......................... 220
Center for Career Evaluations, Inc., Oakland, CA, Thomas P.
Yankowski, statement........................................... 224
Corp, Elizabeth A., Metropolitan Life Insurance Co., Met
DisAbility Division, statement................................. 242
Courage Center, Golden Valley, MN, Anita Boucher, and Becklund
Home Health Care, Inc., Golden Valley, MN, T. Jeff Bangsberg,
joint letter and attachments................................... 220
EXCEL! Networking Group, Inc., Merrifield, VA, Robert Rudney,
statement...................................................... 228
Hurt, Jerald L., NovaCare, Inc., King of Prussia, PA, statement.. 255
Isernhagen and Associates, Duluth, MN, Susan J. Isernhagen,
statement and attachments...................................... 230
Kalix Group, L.L.C., Pasadena, CA, Robert L. Sniderman, statement 240
McWhorter, Celane M., Association for Persons in Supported
Employment, Richmond, VA, letter............................... 215
Metropolitan Life Insurance Co., Met DisAbility Division,
Elizabeth A. Corp, statement................................... 242
National Alliance for the Mentally Ill, Arlington, VA, Annie V.
Saylor, statement.............................................. 249
NovaCare, Inc., King of Prussia, PA, Jerald L. Hurt, statement... 255
Rudney, Robert, EXCEL! Networking Group, Inc., Merrifield, VA,
statement...................................................... 228
Saylor, Annie V., National Alliance for the Mentally Ill,
Arlington, VA, statement....................................... 249
Sniderman, Robert L., Kalix Group, L.L.C., Pasadena, CA,
statement...................................................... 240
Yankowski, Thomas P., Center for Career Evaluations, Inc.,
Oakland, CA, statement......................................... 224
BARRIERS PREVENTING SOCIAL SECURITY DISABILITY RECIPIENTS FROM
RETURNING TO WORK
----------
WEDNESDAY, JULY 23, 1997
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:16 a.m., in
room 1100, Longworth House Office Building, Hon. Jim Bunning
(Chairman of the Subcommittee) presiding.
[The advisories announcing the hearings follow:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
FOR IMMEDIATE RELEASE CONTACT: (202) 225-9263
July 15, 1997
No. SS-8
Bunning Announces Hearing on
Barriers Preventing Social Security Disability
Recipients From Returning to Work
Congressman Jim Bunning (R-KY), Chairman, Subcommittee on Social
Security of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on barriers preventing Social Security
disability recipients from returning to work. The hearing will take
place on Wednesday, July 23, 1997, in the main Committee hearing room,
1100 Longworth House Office Building, beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
Between 1985 and 1994, the number of working-age recipients on the
Social Security and Supplemental Security Income disability rolls
increased 59 percent. In addition, disabled recipients are staying on
the rolls longer than in the past because of increased life expectancy,
a lower average age of disability recipients due to the baby boom
cohort, and an increase of awardees with disabling mental impairments
who tend to be younger and physically healthier.
In 1996, fewer than 6 percent of new disability recipients were
referred to State vocational rehabilitation agencies for services, and
historically, less than of 1 percent of disabled recipients leave the
rolls because of successful rehabilitation. These facts underscore the
need for initiatives designed to encourage disabled recipients to
receive rehabilitation services and to enter the workforce.
To help Social Security and Supplemental Security Income disability
recipients who want to return to a life of financial independence and
self sufficiency, Chairman Bunning introduced H.R. 4230, the
Rehabilitation and Return to Work Opportunity Act of 1996, last
Congress. Since then, similar legislation (H.R. 534, Transition to Work
Act of 1997) has been introduced by ranking member Rep. Barbara
Kennelly (D-CT), and the Administration has included a related proposal
in the President's fiscal year 1998 budget.
In announcing the hearing, Chairman Bunning stated: ``Social
Security disability recipients are not getting the rehabilitation
services they deserve. It isn't fair for anyone to face a life of
dependency and denied opportunities unnecessarily. It's time to remove
the barriers and provide real rehabilitation assistance for those who
want to return to work.''
FOCUS OF THE HEARING:
During the hearing, the Subcommittee will receive the views of
various agencies, experts, consumers, and providers regarding the
barriers which prevent Social Security disability recipients from
returning to work, and will hear recommendations on what changes in the
law are needed to remove those barriers.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit at least six (6)
single-space legal-size copies of their statement, along with an IBM
compatible 3.5-inch diskette in ASCII DOS Text format only, with their
name, address, and hearing date noted on a label, by the close of
business, Wednesday, August 6, 1997, to A.L. Singleton, Chief of Staff,
Committee on Ways and Means, U.S. House of Representatives, 1102
Longworth House Office Building, Washington, D.C. 20515. If those
filing written statements wish to have their statements distributed to
the press and interested public at the hearing, they may deliver 200
additional copies for this purpose to the Subcommittee on Social
Security office, room B-316 Rayburn House Office Building, at least one
hour before the hearing begins.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
be typed in single space on legal-size paper and may not exceed a total
of 10 pages including attachments. At the same time written statements
are submitted to the Committee, witnesses are now requested to submit
their statements on an IBM compatible 3.5-inch diskette in ASCII DOS
Text format.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
comments in response to a published request for comments by the
Committee, must include on his statement or submission a list of all
clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the
name, full address, a telephone number where the witness or the
designated representative may be reached and a topical outline or
summary of the comments and recommendations in the full statement. This
supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being
submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202/225-1721 or 202/226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
FOR IMMEDIATE RELEASE CONTACT: (202) 225-9263
July 16, 1997
No. SS-9
Bunning Announces Continuation of Hearing on
Barriers Preventing Social Security Disability
Recipients From Returning to Work
Congressman Jim Bunning (R-KY), Chairman, Subcommittee on Social
Security of the Committee on Ways and Means, today announced that the
Subcommittee's hearing on barriers preventing Social Security
disability recipients from returning to work will be continued on
Thursday, July 24, 1997. The second day of the hearing will begin at
1:00 p.m. in room B-318 Rayburn House Office Building.
On July 23, the Subcommittee will receive testimony from various
agencies and rehabilitation experts, and on July 24, will receive the
views of consumers and providers regarding the barriers which prevent
Social Security disability recipients from returning to work, and will
hear recommendations on what changes in the law are needed to remove
those barriers.
(For further details see Subcommittee press release No. SS-8, dated
July 15, 1997.)
Chairman Bunning. The Subcommittee will come to order. I
thank the Members for being here.
This morning we begin the first day of a 2-day hearing
about the barriers preventing disabled Social Security
recipients from returning to work. We will also hear
recommendations on what changes in the law are needed to remove
those barriers.
We are all too familiar with the huge increases in the
Social Security disability and the Supplemental Security Income
disability rolls. There seems to be no end in sight to this
alarming trend. In fact, new disability awardees are, on
average, coming on the rolls at a younger age and staying on
the rolls longer than in the past. This means recipients will
spend more of their lives dependent on Social Security or SSI
benefits.
In 1996, fewer than 6 percent of new disability recipients
were even referred to State vocational rehabilitation agencies
for service. And historically, fewer than one-half of 1 percent
of disabled recipients leave the rolls because of successful
rehabilitation. Social Security and disability recipients are
just not getting rehabilitative services they need. This isn't
right, and it certainly isn't fair.
Congress must give recipients with disabilities the
opportunity to obtain the tools and training they need to
return to productive and self-sufficient lives. That is why in
the last Congress I introduced H.R. 4230, the Rehabilitation
and Return to Work Opportunity Act of 1996. I am happy to say
that since then, Ranking Member Kennelly has introduced similar
legislation, and the administration has included a related
proposal in the President's 1998 budget.
Today we will hear the views of one of our own colleagues,
Jim Ramstad, from Minnesota, followed by the Social Security
Administration, and the Department of Education, and then we
will hear from GAO and experts in the field of rehabilitation.
I am very pleased that tomorrow we will hear from
consumers, those individuals who are closest to the issues
surrounding return to work. I believe that they will give us
valuable insight into what is working, what isn't working, and
offer suggestions for improvement.
Finally, we will hear the views of those who work day to
day providing rehabilitation services. As we will hear over the
next 2 days, these issues are complex, and finding real answers
will not be easy. Still, I remain optimistic that Mrs. Kennelly
and I, along with the Subcommittee Members and the
administration, can work together to craft legislation that
provides real opportunities to people with disabilities.
In the interest of time, it is our practice to dispense
with opening statements, except for the Ranking Democratic
Member, and we will allow her to put her statement in the
record when she arrives.
I would like to begin with our testimony today from our
Ways and Means colleague Congressman Jim Ramstad from
Minnesota.
STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MINNESOTA
Mr. Ramstad. Thank you, Mr. Chairman and colleagues. I am
here today to thank you and the Subcommittee for your important
efforts on return to work issues for people with disabilities.
I applaud you for calling this hearing to discuss those
barriers which deter eager, hardworking, productive people with
disabilities from working.
When I first came to Congress in 1991, Mr. Chairman, I was
very surprised to learn that among the multitude of caucuses
and task forces in Congress, there was no group specifically
focused on issues affecting people with disabilities. That is
why I started our Conference Task Force on Disabilities.
Under the purview of the task force, I held a field hearing
in Minnesota on the work disincentives in those Federal
programs, particularly SSI and SSDI, to which the Chairman
alluded, which are supposed to assist people with disabilities.
I continue to work in Minnesota with my own Disabilities
Advisory Committee on these and many other issues affecting
people with disabilities. Virtually every member of that task
force, were they here today, would cite the work disincentive
issue as a top priority.
I have witnessed firsthand countless stories of frustrated
individuals who desperately want to work and contribute to
society, but are literally prohibited from doing so because of
confusing Federal programs and rules which make working too
difficult or expensive. Of course, we must take steps to
prevent abuses in the system, but in doing so, we must make
sure our efforts do not prohibit Americans with disabilities
from living up to their full potential. We should not have a
system of laws that provide a built-in disincentive to people
from working.
Mr. Chairman, preventing people from working runs counter
to the American spirit, a spirit that thrives on individual
achievements and societal contributions. In addition,
discouraging people with disabilities from working, earning a
regular paycheck, paying taxes and moving off public assistance
of course results in reduced Federal revenues.
Creating incentives for people with disabilities is not
just humane public policy, it is sound fiscal policy.
Eliminating the current barriers to work that so many people
face is not just a smart thing to do, Mr. Chairman, it is the
right thing to do.
Let me give you one example. A good friend, since 1981, his
name is Tom Haben. I met him when he was president that year of
the Metropolitan Handicapped Coalition in the Twin Cities of
Minnesota. Tom happens to be a person with quadriplegia; very
bright, hard working, productive, just a great guy, and as I
said, one of my best personal friends.
Tom went to work, in fact, went to work for me, but it
became counterproductive for him to work. We couldn't pay him
what he was worth. He couldn't take that because he would start
losing his benefits. Therein lies the problem. He had a
disincentive to work. Ultimately, he left the office and has
not been employed in the marketplace since because he can't
afford to lose those benefits at the pay level he was being
paid.
As you know, Mr. Chairman, in 1993, I worked with our
colleague, Representative Stark, on legislation to address the
disincentives people with disabilities face in Federal
programs. We weren't successful in the 103d Congress to pass
the legislation to help get people back to work, but I
appreciate so much your commitment and other Members of the
Subcommittee, and I am confident that we can untangle this
complicated web and get something done soon.
Your leadership, Mr. Chairman, in this area deserves high
praise. I followed with great interest the hearings the
Subcommittee held last session on these issues and appreciate
your efforts to deal with this in a comprehensive way very
much.
I see that my time has elapsed, and I don't want to violate
anyone's time. I know we have many other people here to testify
today, but I ask unanimous consent that the rest of my
testimony be entered into the record.
Again, I want to thank you and the Subcommittee staff. You
have been very helpful and very sensitive to the needs of
people with disabilities. Working together, I am absolutely
confident that we can untangle this web, this maze of Federal
laws that provide a built-in disincentive to people with
disabilities from working. We can change the system so the
people can be gainfully employed and truly enjoy the dignity of
independent living which they so deserve.
Thank you, Mr. Chairman.
Chairman Bunning. We will allow your complete statement to
be put into the record.
[The prepared statement follows:]
Statement of Hon. Jim Ramstad, a Representative in Congress from the
State of Minnesota
Mr. Chairman, I am here today to thank you and the
Subcommittee for your important efforts on ``return to work''
issues for people with disabilities. I applaud you for calling
this hearing to discuss those barriers which prevent eager,
hard-working intelligent people with disabilities from working.
When I came to Congress in 1991, I was surprised to find
that among all the caucuses and task forces on the Hill, there
was no group specifically focused on issues affecting people
with disabilities. That's why I started the Republican Task
Force on Disabilities.
Under the purview of the task force, I held a field hearing
in Minnesota on the work disincentives in those federal
programs--particularly SSI and SSDI--which are supposed to
assist people with disabilities. I continue to work with my own
Disabilities Advisory Committee back in Minnesota on these and
many other issues facing people with disabilities.
I have heard countless stories of frustrated individuals
who desperately want to work and contribute to society but are
literally prohibited from doing so because confusing federal
programs and rules make working too difficult or expensive. Of
course, we must take steps to prevent abuse of the system, but
in doing so, we must make sure that our efforts do not prohibit
Americans with disabilities from living up to their full
potential.
Mr. Chairman, preventing people from working runs counter
to the American spirit--a spirit that thrives on individual
achievements and societal contributions. In addition,
discouraging people with disabilities from working, earning a
regular paycheck, paying taxes and moving off public assistance
results in reduced federal revenues.
Creating work incentives for people with disabilities is
not just humane public policy, it is sound fiscal policy.
Eliminating the current barriers to work that so many
individuals face is not just the smart thing to do, it is the
right thing to do.
As you know, in 1993 I worked with our esteemed colleague
on the Ways and Means Committee, Representative Stark, on
legislation to address the disincentives people with
disabilities face in federal programs. While we were not
successful in the 103rd Congress to pass legislation to help
people get back to work, I remain hopeful that we will get
something done soon.
Your leadership in this area deserves high praise. I
followed with great interest the hearings this Subcommittee
held last session on these issues and was very interested in
the legislation you introduced last year. I realize that some
of the elements of comprehensive reform in these areas fall
outside the jurisdiction of this Subcommittee, but I want to
publicly and personally thank you for looking at those issues
within your jurisdiction.
Specifically, when I hear that in 1996, fewer than 6% of
new disability recipients were referred to state vocational
rehabilitation agencies for services and less than \1/2\ of 1%
of disabled recipients leave the rolls because of successful
rehabilitation, I know something must be done to open up the
vocational rehabilitation process.
In my home state of Minnesota, the State Vocational
Rehabilitation Program administrators do a good job in meeting
the needs of many Minnesotans, but I am also aware of
experienced, successful private groups in Minnesota that can
also provide these services. Many private rehabilitation groups
in Minnesota have been involved in SSA demonstration programs
and can greatly contribute to the efforts of the state VR and
help even more people get back to work. In addition, people
with disabilities should have the ability to seek
rehabilitation and choose the provider they feel will best help
them achieve their goal of employment.
Like everyone else, people with disabilities have to make
decisions based on financial reality. Should they consider
returning to work or even make it through vocational
rehabilitation, the risk of losing vital federal health
benefits often becomes too threatening to future financial
stability. As a result, they are compelled not to work. Given
the sorry state of present law, that's generally a reasonable
and rational calculated decision.
I appreciate the attention in your legislation to Medicare
coverage for those who work. It is my sincere hope that the
Commerce Committee will also consider proposals to allow
individuals with disabilities who return to work access to
Medicaid.
I am currently seeking Medicaid proposals from my state
Department of Human Resources and others that will hopefully
compliment any legislation you introduce this year so we can
comprehensively knock down all the barriers preventing people
from working.
Mr. Chairman, thanks again for your leadership on these
important issues and for letting me come before the Committee
today. Your Subcommittee staff has been very gracious in
allowing me and my staff to work with you on these important
issues and I look forward to continuing to work with you on our
shared goal of helping people with disabilities return to work.
Chairman Bunning. And Mr. Collins, do you have any
questions?
Mr. Collins. I have no questions.
Chairman Bunning. We thank you, Jim, for your interest, and
your determination to do something about this, and we
appreciate your testimony.
Mr. Ramstad. Thank you, Mr. Chairman.
Chairman Bunning. If the next panel will come forward.
Acting Commissioner of Social Security, Hon. John Callahan,
accompanied by Susan Daniels, Associate Commissioner at the SSA
Office of Disability. Testifying on behalf of the U.S.
Department of Education is Judith Heumann, Assistant Secretary
for Special Education and Rehabilitative Services.
Dr. Callahan, if you would begin, we would appreciate it.
STATEMENT OF HON. JOHN J. CALLAHAN, ACTING COMMISSIONER, SOCIAL
SECURITY ADMINISTRATION; ACCOMPANIED BY SUSAN DANIELS,
ASSOCIATE COMMISSIONER, OFFICE OF DISABILITY
Mr. Callahan. Thank you very much, Mr. Chairman, for
inviting us here today. We would like to commend you and
Congresswoman Kennelly and other Members of the Subcommittee
for holding these hearings. They are very, very important
hearings, and I think we are all starting down this road of
dismantling barriers for return to work. So my commendation to
you and the Ranking Member.
Today, too few of our approximately 8 million Social
Security and Supplemental Security Income recipients leave the
disability rolls each year to work. Many more of our customers
with disabilities tell us they want to work, and they will do
so, if the incentives are right and the services they need are
available. We look forward to working with this Subcommittee to
turn their dreams of economic independence into a reality.
I am enthusiastic about the possibilities for the future,
particularly the President's Ticket to Independence Proposal,
which we have sent forward to the Congress. The Ticket to
Independence is a good public-private partnership. The
partnership would give people receiving disability payments
what they want and what they need: The control and flexibility
to secure services tailored to their individual requirements,
from their choice of providers. The Ticket Program is also, I
would add, fiscally responsible, since providers would only be
paid for results, that is, placing individuals in a job and
eliminating Federal cash assistance.
The Ticket to Independence is grounded on four principles.
The first is customer choice. SSA's customers desire and need
maximum flexibility and choice in pursuing services that will
help them become gainfully employed. Beneficiaries with
disabilities will receive this Ticket to Independence to use
with a participating public or private employment or
rehabilitation provider of their choice.
The second principle is innovation. The employment strategy
in our proposed legislation encourages widespread innovations
in the public and private sectors by providing opportunities
for State agencies, local nonprofit and for-profit providers
and employers to work with willing beneficiaries.
Third, paying for results. This is very important. The
focus on outcomes, we believe, is best achieved by linking it
to financial rewards. The provider will be paid only when the
beneficiary's earnings from work result in benefit savings.
And finally, health care incentives. We all know that one
of the key barriers to returning to work is fear of losing
health care. Opportunities to obtain employment should be as
health-care-neutral as possible.
The Senate reconciliation bill does contain a proposal
similar to that proposed by the President that would allow
workers with disabilities to buy into Medicaid. We urge the
conferees to adopt the President's proposal in that regard. The
President's proposal for a 4-year demonstration to extend
premium-free part A Medicare benefits beyond the current period
of Medicare eligibility is not included in reconciliation. We
believe that is still important and would want to pursue that
demonstration authority in the future.
Very quickly, this is how the ticket will work. After SSA
determines that individuals are eligible for benefits, it will
issue them tickets. A beneficiary may give the ticket to his or
her provider of choice in exchange for rehabilitation and
employment services. We expect to select between 5 and 10
States to begin our pilot. Tickets will be issued and providers
will be solicited for participation. State vocational
rehabilitation agencies and alternate participants will also
have an option to participate in either the Ticket Program or
the current program.
Providers must satisfy certain criteria to be enrolled and
be eligible to receive payments from SSA: They must be able to
conduct business in the State where they enroll by whatever
criteria are used in that State.
Very quickly, I see the light is running here, the
beneficiary may have a ticket for up to 2 years. They may be
able to renew it for another 2 years. Payments will be made to
providers once these individuals terminate their cash benefits
and become permanently employed.
We feel as a starting payment point that we will be
prepared to pay 50 percent of the cash benefit, up to 5 years
of gainful employment. We will select a contract administrator
to administer this program, and we will report back to Congress
on the 3d, 5th, 7th and 10th year of the pilot.
In conclusion, the Ticket to Independence is a very
frugally designed, results-oriented innovation that can, first
of all, create a public-private partnership between us and
public and private providers, obtain significant savings to the
SSA Trust Funds, give beneficiaries what they want, which is a
choice to find a willing provider and minimize bureaucracy in
the administration of this program.
We believe these hearings are a starting point on a long
road to fashioning constructive legislation, and we are
committed to working with the Subcommittee and the
administration to get legislation that will remove the
disincentives to go back to work.
[The prepared statement follows:]
Statement of Hon. John J. Callahan, Acting Commissioner, Social
Security Administration
Mr. Chairman and Members of the Subcommittee:
A large and growing number of people with disabilities can
work, and want to work. With the Americans With Disabilities
Act, changes in societal attitudes, and advances in technology,
it is clearer than ever that being disabled does not mean that
you can't contribute to our nation's economy. However, people
with disabilities face a variety of complex barriers to work.
Now is the right time to launch new initiatives to help break
these barriers.
Today, too few of our approximately 8 million Social
Security and Supplemental Security Income (SSI) disability
recipients leave the disability rolls each year because of
work. In fiscal year 1996, SSA paid State vocational
rehabilitation (VR) agencies about $65.5 million for their
services provided to approximately 6,000 beneficiaries with
disabilities who worked at least 9 months earning more than
$500 per month. However, many State VR agencies have waiting
lists for services, and many more of our customers with
disabilities tell us they want to work and will do so if the
incentives are right and the services they need are available.
We look forward to working with Congress, the Rehabilitation
Services Administration, and other Federal agencies to turn our
customers' dreams of economic independence into reality. I am
enthusiastic about the possibilities for the future,
particularly the President's ``Ticket to Independence''
proposal.
This plan creates new ways to help people find work and
achieve their goals. The Administration looks forward to
working with the Hill to enact these proposals. Since there are
members of Congress from both sides of the aisle who are also
working to solve this problem, we are looking forward to a
constructive dialogue with you on this issue that will lead to
the enactment of legislation, and we believe that our proposal
merits your support.
The ``Ticket to Independence'' is a public-private
partnership designed to expand opportunities for individuals
with disabilities, including individuals who are blind. This
partnership would give people receiving disability payments
what they want and need--the control and flexibility to secure
services tailored to their individual requirements from their
choice of providers. The Ticket is fiscally responsible, since
providers would be paid only for results, i.e., placing
individuals in jobs and eliminating Federal cash assistance.
Some have been critical of the current system for not
improving the work capacity of our beneficiaries. We know that
many highly skilled, outcome-focused agencies and professionals
could be successful in assisting our diverse beneficiaries to
return to work and that individualized planning and support is
essential to successful work re-entry. The President's proposal
builds on this knowledge.
We believe that the ``Ticket to Independence'' proposal
will result in more opportunities for our beneficiaries to
receive the services they need in order to work. We must keep
in mind, however, that many of our beneficiaries have
disabilities so severe and permanent that they will be unable
to work even with the best VR services.
The ``Ticket to Independence'' Proposal
Included in the President's fiscal year 1998 budget is a
historic proposal to help more beneficiaries achieve their
goals of obtaining a job and leaving the benefit rolls. This is
the first time that a President has submitted a proposal to
significantly expand return to work efforts. The ``Ticket to
Independence'' is grounded in a four part vision.
Customer Choice: SSA's customers desire and need
maximum flexibility and choice in pursuing services which will
help them to become gainfully employed. Beneficiaries with
disabilities will receive a ``Ticket to Independence'' to use
with a participating public or private employment or
rehabilitation provider of their choice. Our experience
indicates that customer choice is a key element in their
decision to seek services.
Encouraging Innovation: The Administration's
proposal seeks to encourage widespread innovations in the
private and public sectors by creating opportunities for
Federal and State agencies, local non-profit and for-profit
providers, employers, and beneficiaries to work together.
Paying for Results: Beneficiaries and providers
alike should focus on the goal of stable employment. The
provider will be paid only when the beneficiary's earnings from
work result in benefit savings. The ``Ticket to Independence''
rewards success and frugally uses public funds in an
accountable and targeted way. And, since stable employment is
the only goal that reaps a financial return, fewer resources
are needed to monitor methods, expenditures, case files, etc.
Health Care Incentives: Health care security is
viewed by beneficiaries as an essential factor in deciding
whether or not to try to work. Opportunities to obtain
employment should be as health-care neutral as possible for
individuals with disabilities. As you know, the President's
Budget proposal included two new approaches to removing
disincentives to returning to work.
We are pleased that the Senate Reconciliation bill includes
a proposal similar to that proposed by the President that would
permit states to allow workers with disabilities to buy into
Medicaid. The Administration has urged the Conferees to adopt
the President's version which would not limit eligibility for
this program to people whose earnings are below 250 percent of
poverty.
Unfortunately, the Administration's proposal for a 4-year
demonstration to extend premium-free Part A Medicare
eligibility for beneficiaries who leave the cash benefit rolls
and continue working beyond the current period of Medicare
eligibility (39 months) was not included in Reconciliation. The
Administration continues to believe--that such a demonstration,
coupled with the ``Ticket to Independence,'' is good policy and
continues to support changes in Medicare to reduce
disincentives to return to work.
How the Ticket Will Work
After SSA determines that individuals are eligible for
benefits, we will issue them tickets. The beneficiary may still
apply to the State VR agency for services regardless of whether
it is participating in this program, or give the ticket to
another participating provider of his/her choice in exchange
for rehabilitation and employment services. If the beneficiary
returns to work and benefits cease due to earnings, the
provider holding the ticket will receive a portion of the
savings for a fixed period of time.
Phased Roll-Out
SSA will select 5-10 States to begin. Tickets will be
issued and providers will be solicited for participation. State
VR agencies will have the option to participate in either the
``Ticket to Independence'' or the current SSA VR Reimbursement
Program.
For State VR agencies or alternate providers which choose
to participate in the pilot, claims filed under the current
program prior to the start of the pilot will continue to be
processed under that program. Also, the State VR agencies in
pilot States will not have first priority access to referrals
of beneficiaries who have tickets.
Eligibility
All disability beneficiaries in roll-out States, except
those whose medical conditions are expected to improve, will be
eligible to receive a ticket. Beneficiaries who are expected to
improve will be eligible for a ticket if their benefits are
continued as a result of a continuing disability review.
Providers
Providers must satisfy certain criteria to be enrolled and
eligible to receive payments from SSA. Providers must be
eligible to conduct business in the State where they enroll by
whatever criteria are used in that State. SSA will not certify,
license or regulate organizations or businesses.
Using the Ticket
A beneficiary may activate a ticket at any time by giving
it to an enrolled provider, who then registers it for 1 or 2
years, at the beneficiary's discretion. The ticket can be
transferred to another provider only if the original ticket
holder agrees (except in situations where disputes between a
beneficiary and a provider are resolved by withdrawing the
ticket). The terms of transfer of the ticket from one approved
provider to another, with the beneficiary's consent, are
entirely up to the respective parties. Providers receiving
tickets from other providers must notify SSA of the change to
be eligible for payment. At the end of the period of
registration, if no provider is being paid under the expired
ticket, the beneficiary may request a renewed ticket and that
ticket may be registered for 1 or 2 years with the same or a
different provider. Only one ticket will be issued to a
beneficiary at a time and only one provider may hold a
beneficiary's ticket at a time.
Paying the Provider
When SSDI benefits or an SSI beneficiary's federally
administered benefits stop due to earnings, the provider is
paid a portion of each monthly benefit not paid to the
beneficiary during a specified continuous period.
The provider payments begin with the first month that
Social Security disability insurance benefits or Federally
administered SSI payments are reduced to zero, due to earnings,
after the ticket is registered.
Administering the Ticket
SSA will award a contract to an administrator to manage the
enrollment of providers, the system of referrals, ticket
registration, and to assist in paying providers. The
administrator will also develop a data collection system
incorporating information required for management reports, a
beneficiary tracking system, and the evaluation of the impact
of the ``Ticket to Independence.''
Evaluation and Expansion
The Commissioner of Social Security will report to the
Congress on the operations of the ``Ticket to Independence''
Program. At the end of the 3rd, 5th, 7th, and 10th year of the
pilot, the Commissioner will evaluate and report on the impact
of the program and work activity of beneficiaries with
disabilities. Based on the results of the evaluation, the
Commissioner will determine whether to continue and expand to
other States (if the ticket system has been sufficiently
successful), to modify aspects of the models to gain better
results (such as the payment formula or the length of the
payment period), or to discontinue the project.
Protection and Advocacy
SSA will supplement the funding of the existing State
Protection and Advocacy (P&A) system with funds specifically
designated for assisting SSA beneficiaries when disputes with
providers occur. The State P&A System is a long established
federally mandated system operating in each State and territory
that investigates, negotiates and mediates solutions to
problems that certain persons with disabilities cannot resolve
on their own.
Conclusion
The ``Ticket to Independence'' is a cost effective, results
oriented innovation that can:
Create a public-private partnership between Social
Security and public and private providers with the goal of
supporting beneficiaries who want to work.
Offer potentially significant savings to the SSA
trust funds by helping persons with disabilities to work.
Give beneficiaries the control and flexibility
they need in securing services they want.
Minimize bureaucratic involvement.
Mr. Chairman, let me reiterate. We want to work with you to
design new programs that can result in jobs for persons with
disabilities who would otherwise remain dependent upon
disability benefits. We believe the President's ``Ticket to
Independence'' begins a deliberate process to roll out a
federal initiative to achieve that end. I thank you for your
attention and would be happy to answer any questions.
Chairman Bunning. Thank you, Dr. Callahan.
Testifying on behalf of the U.S. Department of Education is
Judith Heumann. If you will begin, please.
STATEMENT OF JUDITH E. HEUMANN, ASSISTANT SECRETARY, OFFICE OF
SPECIAL EDUCATION AND REHABILITATIVE SERVICES, U.S. DEPARTMENT
OF EDUCATION; ACCOMPANIED BY MARK SHOOB, DEPUTY ASSISTANT
SECRETARY
Ms. Heumann. Thank you, Mr. Chairman, Mrs. Kennelly and
other Members of the Subcommittee. Thank you very much for
inviting us to speak with you on the issue of barriers that
prevent disabled Social Security, disabled insurance and
Supplemental Security Income beneficiaries from engaging in or
returning to work.
As the Department of Education's Assistant Secretary for
the Office of Special Education and Rehabilitative Services, I
am responsible for providing leadership to the Rehabilitation
Services Administration, the Federal agency that provides
support to State vocational rehabilitation agencies and other
service providers to assist individuals with disabilities to
achieve employment and to live independently. Since my
childhood, we as a country have made significant strides in
improving educational and employment opportunities for
individuals with disabilities. The Congress' recent bipartisan
reauthorization, strengthening the Individuals with
Disabilities Education Act, and the coming reauthorization of
the Rehabilitation Act, will lead to significant progress in
furthering opportunities for education, employment, and
independent living.
It is estimated that approximately 800,000 individuals with
disabilities are now working because of the antidiscrimination
protections provided by the 1990 Americans with Disabilities
Act. But significant barriers remain to achieving the goals of
independence, inclusion and empowerment for all individuals
with disabilities. Federal policy aimed at assisting
individuals with disabilities has created disincentives for
many with disabilities.
For example, the potential loss of health care coverage
represents a significant barrier to employment for SSDI and SSI
recipients. In order to address this disincentive, the
President's budget proposes to help people with disabilities
work without losing their health care coverage.
Federal income policy regarding disability payments may
also create disincentives through employment. Our data suggests
many beneficiaries are well aware of the substantial gainful
activity threshold and earnings limits and, as they approach
them, tend to limit their hours of work or earnings so as to
remain eligible. Ultimately these barriers must be addressed if
we were to achieve successful employment outcomes for many more
individuals with significant disabilities.
The programs I administer at the Department of Education
have played a significant role in our overall efforts to help
individuals to be prepared for and engage in gainful employment
and must continue to be part of a comprehensive strategy. The
Vocational Rehabilitation State Grants Program provides $2.2
billion in formula grant assistance to 82 State-operated VR
service programs. These programs provide consumers with choices
among a wide range of specialized services that include, but
are not limited to, job development, job training and
placement, counseling and guidance, assisted technology,
personal assistance services, physical and mental restoration
services, reader services, interpreter services, supported
employment services and school-to-work transition services.
The essence of the VR Program is to provide services that
meet the aspirations, needs, abilities and priorities of each
individual, consistent with the individual's informed choice. A
VR counselor works as a partner with a person with disability
to design a rehabilitation program that matches the
individual's strengths and interests to a vocational outcome,
and they jointly develop an employment plan. In fiscal year
1996, 213,500 individuals who exited the VR system after
receiving services achieved an employment outcome and showed
notable gains in their economic status.
The State VR agencies and the Social Security
Administration have a long history dating back to 1954 of
working together to assist SSDI and SSI beneficiaries to return
to work. In order to examine the success of the VR Program in
assisting individuals with disabilities to achieve sustainable
improvement in employment, earnings and independence, the
Department is currently conducting a major longitudinal study.
The study which is being conducted by Research Triangle
Institute follows approximately 8,000 current and former VR
consumers over a 3-year period and examines services and post-
VR earnings, employment and community integration of VR
consumers. Information obtained from this study will enable the
Department to conduct specific analysis relative to SSDI and
SSI beneficiaries receiving VR services.
Some of the preliminary data regarding the rehabilitation
of SSI and SSDI beneficiaries may be of interest to you. This
data shows 28 percent of all active VR clients are, in fact,
SSDI and SSI beneficiaries who have been receiving benefits for
an average of 55 months. SSI/DI beneficiaries referred to the
VR Program directly by SSA or SSA's Disability Determination
Service represent only 3.6 percent of all beneficiaries who, in
fact, are applying for services. Beneficiaries enter the VR
system far more often through self-referral, community health
and rehabilitation programs and schools, after a period of
receiving SSA benefits.
SSA beneficiaries tend to have higher percentages of some
significant disabilities. These include higher percentages of
visual disabilities, significant mental disabilities, mental
retardation and prelingual deafness.
Chairman Bunning. Are you close to being finished?
Ms. Heumann. Yes.
The Department is committed to closely monitoring program
outcomes, improving performance and developing evaluation
standards and performance indicators for the VR Program in
order to improve program performance. We recognize that
Education's Vocational Rehabilitation Programs are only part of
the solution to the unemployment of individuals with
disabilities, and we support other options to maximizing return
to work opportunities, including the Social Security's Ticket
to Independence. We must continue to explore ways to address
the broad range of factors contributing to the high
unemployment of individuals, and we are committed to working
with you on this process. Thank you.
[The prepared statement follows:]
Statement of Judith E. Heumann, Assistant Secretary, Office of Special
Education and Rehabilitative Services, U.S. Department of Education
Chairman Bunning and members of the Subcommittee, thank you
very much for inviting me to speak with you on the issue of
barriers that prevent disabled Social Security Disability
Insurance (SSDI) and Supplemental Security Income (SSI)
beneficiaries from engaging in or returning to work.
As the Department of Education's Assistant Secretary for
the Office of Special Education and Rehabilitative Services
(OSERS), I am responsible for providing leadership to the
Rehabilitation Services Administration (RSA), the Federal
agency that provides support to State vocational rehabilitation
(VR) agencies and other service providers to assist individuals
with disabilities to achieve employment and to live
independently. My leadership also extends to the National
Institute on Disability and Rehabilitation Research which--
through research, demonstration, and dissemination and
utilization programs--identifies those best practices in
technology, rehabilitation, and independent living that result
in greater independence and productivity of individuals with
disabilities.
My appointment as Assistant Secretary and my ability to
live independently would not have been possible without the
broad array of rehabilitation and independent living services
from which I have benefited along with my personal
determination and family's support.
When I was one and a half years old, I developed polio.
When I was five, the public school officials would not allow me
to enroll. They told my mother that because of my wheelchair, I
was a fire hazard. Instead, the school system sent a tutor to
my house. When I was nine, I finally got to go to school, but I
was placed with other disabled kids in a room hidden in the
school basement.
I was the first student in my class to go on to high
school--but not until my mom and dad fought for this right.
After graduating from high school, I went to college. I
wanted to become a teacher, but the agency financing my
education believed that people who use wheelchairs could not
teach, so they refused to let me major in education. But I did
manage to minor in it.
When I graduated, I applied for a teaching license in the
New York City school system. I passed the written test and the
spoken test. But I failed the medical test because I used a
wheelchair. The school officials would not give me a license to
teach. But I knew I could be a good teacher. With the support
of my parents, I challenged the school system, obtained my
license, and finally got a job teaching.
During this time, I became aware that other disabled people
from all over the nation--in fact, from around the world--were
also advocating for equal rights. These people, and many other
disabled people and their families, became part of the growing
movement for the rights of the disabled.
This broader movement enabled me to go on to graduate
school, and to be a leader in the then new independent living
movement. I helped found the first Center for Independent
Living in Berkeley, California.
Since my childhood, we, as a country, have made significant
strides in improving educational opportunities for individuals
with disabilities, particularly with the enactment of the
Individuals with Disabilities Education Act (IDEA) in 1975. In
addition to Congress' recent bipartisan reauthorization that
further strengthened IDEA, we have also made significant
progress in furthering opportunities for employment and
independent living for individuals with disabilities through a
broad range of programs that support both rehabilitation and
independent living services and research and demonstrations and
programs that protect the rights of individuals of disabilities
from discrimination in employment, housing, and transportation.
It is estimated that approximately 800,000 individuals with
disabilities are now working because of the anti-discrimination
protections provided by the Americans with Disabilities Act.
But significant barriers remain to achieving the goals of
independence, inclusion, and empowerment for all individuals
with disabilities. Despite the opportunities afforded by the
Individuals with Disabilities Education Act, the Rehabilitation
Act, and the Americans with Disabilities Act, nearly half of
working-age persons with disabilities are unemployed.
These barriers include environmental barriers such as the
lack of transportation and lack of affordable and accessible
housing. Individuals like myself need access to personal
assistance services in order to work. Many individuals need
accommodations on the job such as assistive technology to
perform effectively in the workplace. Despite the promise of
the ADA, negative employer and individual attitudes regarding
the employability of individuals with disabilities persist.
Notably, federal policy aimed at assisting individuals with
disabilities is also creating disincentives to work for many
individuals with disabilities. For example, the potential loss
of health care coverage represents a significant barrier to
employment for SSDI and SSI recipients. Medicare for disabled
SSDI beneficiaries and Medicaid for SSI recipients provide the
majority of health care coverage for these groups. While there
are provisions that extend these benefits once an individual
returns to work, Medicare coverage is time limited and SSI
recipients who go to work lose Medicaid if their earnings
exceed caps that vary by State. As a result, it's possible that
people who are eligible for SSI ``mangage'' their income to
ensure that they keep Medicaid--by stopping work when they hit
the caps, or even turning down promotions. In addition to
primary health care services, the Medicaid program also offers
a variety of optional services essential to the needs of
severely disabled individuals that are both costly and
difficult to obtain even if traditional employer-based health
care coverage can be secured.
In order to address this disincentive, the President's
budget proposes to help people with disabilities work without
losing their health care coverage. The President's proposal
would create a new State option that would allow SSI
beneficiaries with disabilities who earn more than those State
caps to keep Medicaid by contributing to the cost of their
coverage as their income rises. The President's budget also
includes a proposal for a 4 year demonstration project to
extend Medicare coverage for SSDI recipient who return to work.
Federal income policy regarding disability payments may
also create disincentives to employment. SSDI benefits can
continue for up to nine months after an individual attempts to
return to work. At that point, SSA must determine if the SSDI
beneficiary has achieved substantial gainful activity (SGA),
which is a trigger for termination of cash benefits. SSI
recipients can continue to receive their SSI checks while they
work. As long as they remain disabled, they will continue to
receive their SSI check until they reach a certain level of
earnings. Our data suggest that many beneficiaries are well
aware of the SGA threshold and earnings, and, as they approach
them, tend to limit their hours of work or earnings.
Ultimately, these barriers must be addressed if we are to
achieve successful employment outcomes for many more
individuals with disabilities.
The programs I administer at the Department of Education
have played a significant role in our overall efforts to help
individuals to be prepared for and engage in gainful employment
and must continue to be part of a comprehensive strategy. One
of the biggest programs is the Vocational Rehabilitation State
Grants programs, which provides $2.2 billion in formula grant
assistance to 82 State-operated VR service programs. These
programs provide consumers with a wide range of specialized
services that include, but are not limited to, job development,
job training and placement, counseling and guidance, assistive
technology, personal assistance services, physical and mental
restoration services, reader services, interpreter services,
supported employment services, and school-to-work transition
services. The essence of the VR program is to provide services
that meet the aspirations, needs, abilities and priorities of
each individual, consistent with the individual's informed
choice. A VR counselor works as a partner with an individual
with a disability to design a rehabilitation program that
matches the individual's strengths and interests to a
vocational outcome, and they jointly develop an employment
plan.
Since its creation seventy-seven years ago by the Smith-
Fess Act, the VR State Grants program has assisted some nine
million individuals with disabilities to achieve gainful
employment. Presently, there are over 1.25 million eligible
individuals receiving VR services, 77.5 percent of whom have
significant disabilities. In FY 1996, 213,500 individuals who
exited the VR system after receiving services achieved an
employment outcome and showed notable gains in their economic
status.
The State VR agencies and the Social Security
Administration have a long history, dating back to 1954, of
working together to assist SSDI and SSI beneficiaries to return
to work. The Social Security Amendments of 1965 authorized the
use of Social Security trust funds to pay for VR services for
beneficiaries. The goal of the Beneficiary Rehabilitation
Program is to return the maximum number of disabled
beneficiaries to work so that savings in reduced benefit
payments and the Social Security contributions of the
rehabilitated beneficiaries would equal or exceed the amount
paid for rehabilitation services.
Since 1983, VR agencies have been reimbursed by SSA only
for beneficiaries who are terminated from benefits following a
determination that the beneficiary has achieved substantial
gainful activity. Payment is made to the VR agency only when
savings to the trust fund are anticipated.
In order to examine the success of the VR program in
assisting individuals with disabilities to achieve sustainable
improvement in employment, earnings, and independence, the
Department is currently conducting a major longitudinal study.
The study, which is being conducted by Research Triangle
Institute, includes a sample of approximately 8,000 current and
former VR consumers at 37 VR offices over a three-year period.
The time frame permits tracking of services and post-VR
earnings, employment, and community integration of VR
consumers.
Specifically, the study investigates:
short and long-term outcomes achieved by VR
consumers;
characteristics of consumers that affect access
and receipt of services and outcomes;
how receipt of specific services contributes to
successful outcomes;
how local environmental factors influence services
and outcomes;
what about the VR agency influences services and
outcomes; and
the extent of return on the VR program's
investment.
Information obtained from this study will also enable the
Department to conduct specific analysis relative to SSDI and
SSI beneficiaries. Some of the preliminary data regarding the
rehabilitation of SSI and SSDI beneficiaries may be of interest
to you. These data show that 28 percent of all active VR
clients are SSDI and SSI beneficiaries who have been receiving
benefits for an average of 55 months and include recipients who
have initiated contact with the VR program or who have self-
referred. SSI/DI beneficiaries referred to the VR program
directly by SSA or SSA's Disability Determination Service
represent only 3.6 percent of all beneficiaries who apply for
services because these referrals are made much earlier in the
process, e.g., when they first start to receive benefits and
are not yet ready to return to work. Beneficiaries entered the
VR system far more often through self-referral, community
health and rehabilitation programs, and schools. One
implication of these data is that a majority of beneficiaries
who elect to enter the vocational rehabilitation system do so
after a period of receiving SSA benefits, rather than
concurrent with the initiation of the receipt of benefits.
The data also show some significant differences between the
SSA beneficiary population and the general population served by
the VR program. Beneficiaries tend to have higher percentages
of some severe disabilities. These include higher percentages
of visual disabilities, severe mental illness, mental
retardation, and prelingual deafness. One result of the more
severe disability mix is higher cost of services. For example,
in 1995, the average cost of purchased services for
beneficiaries was 49 percent higher than for non-beneficiaries
($4,724 compared to $3,168).
The Department is committed to closely monitoring program
outcomes to improve performance and is also in the process of
developing evaluation standards and performance indicators for
the VR program in order to improve program performance.
The 1992 amendments to the Rehabilitation Act made a number
of important changes to the VR State Grants program that will
enhance employment opportunities for individuals with
disabilities. For example, the amendments modified the criteria
for determining eligibility for services to streamline the
process and set forth the policy that individuals with
disabilities are to be active participants in their own
rehabilitation programs.
In preparing for the pending reauthorization of the
Rehabilitation Act, we have invited input from a broad range of
groups and individuals to get their ideas for further improving
the Act, and we are prepared to make a number of specific
recommendations for changes that are aimed at improving results
for individuals with disabilities in the areas of employment
and independent living. These include further streamlining the
eligibility determination process to establish presumptive
eligibility for VR services for recipients of disability
benefits under Titles II and XVI of the Social Security Act,
and streamlining the Individualized Written Rehabilitation Plan
(renamed the Individualized Employment Plan) to eliminate
unnecessary process requirements and give consumers who want to
take responsibility for developing their plan the option of
doing so. We also support an amendment that clarifies that
consumers have the right to choice in regard to the selection
of their employment goal, the services needed to reach their
goal, the providers of such services, and the methods to be
used to procure the services.
At the same time, we recognize that vocational
rehabilitation is only part of the solution to the unemployment
of individuals with disabilities, and we support other options
to maximize return-to-work opportunities. For example, the
Social Security Administration has recently transmitted its
Ticket to Independence proposal, which would authorize a new
public-private partnership to assist individuals who receive
SSDI or SSI benefits on the basis of disability to return to
work. We look forward to working with the Social Security
Administration on this effort.
We must continue to explore ways to address the broad range
of factors contributing to the high unemployment of individuals
with disabilities. I am convinced that by working together, the
Administration, Congress, individuals with disabilities and
their advocates, service providers, and employers can turn the
wasted talents of disabled people into an important resource
for securing our nation's future.
I want to assure the Subcommittee of my sincere desire to
work with you and our partners at SSA to achieve our common
goal of assisting individuals with disabilities to achieve
gainful employment and to become contributing members of our
society.
Chairman Bunning. Thank you.
Let me start the questioning with Dr. Callahan. The
legislative language for the Ticket to Independence Proposal is
somewhat vague regarding payment to providers. Please describe
your proposal payment system.
Mr. Callahan. The proposal payment system--I would like to
answer this question, and Associate Commissioner Daniels may
want to amplify--we would first of all seek to pick 5 to 10
States to pilot this program.
Chairman Bunning. Five pilot States.
Mr. Callahan. Five to ten pilot States. We would make sure
the States were a diverse group of States throughout the
country, large, small, with various characteristics. Right now,
we have 65 alternate providers nationwide that would be ready
to serve current beneficiaries. We expect more providers to
come online. The disabled individuals in those States would be
given tickets, and they would be able to take those tickets to
any provider that was willing to provide Ticket to Independence
services. They would register with those providers for up to 1
or 2 years, which could be renewable for an additional 1 or 2
years. We expect during that process that the provider would
help them obtain stable employment. Once they go into stable
employment and their cash assistance ends, the provider of
those services would receive up to 50 percent of the estimated
cash benefit, possibly up to 5 years.
Chairman Bunning. In their report of March 1997, GAO
suggests that SSA compare the results of the proposed results-
based payment system with those of alternate systems. Does SSA
intend to pilot more than one payment system? If not, why not;
if so, would you please describe it?
Mr. Callahan. Let me ask Associate Commissioner Daniels to
comment on that, if I may.
Ms. Daniels. Our original plan is to start with one payment
system, as Mr. Callahan has described. Fifty percent of the
benefit for every month the individual is not in cash status
for 5 years. However, the language is flexible enough to allow
us to determine if that needs to be adjusted in any way, and we
will be collecting data to see if any particular group of
beneficiaries are not being served and take a look at maybe
changing or modifying that formula.
Chairman Bunning. Would SSA administer payments to
providers directly or use a contractor?
Mr. Callahan. We would use a contractor, sir.
Chairman Bunning. I understand SSA's proposal only pays
providers when the recipient comes off of the rolls; is that
correct?
Mr. Callahan. Yes, that is correct.
Chairman Bunning. How would smaller providers, who may have
limited capital, be able to participate in the program then?
Mr. Callahan. Let me say, our assessment is that the
alternate providers, which have come to us to seek to provide
vocational rehabilitation services, range from large to small
enterprises. We think there are a lot of innovative small
enterprises that would be willing to participate in this
program.
One of the things I think you allude to is the issue of
paying for milestones. One of the things we have to be----
Chairman Bunning. I am alluding to the fact that a small
provider couldn't carry this program very long.
Mr. Callahan. The providers will assess their own internal
capacities, and they will look at the various beneficiaries
that are out there, and----
Chairman Bunning. What I am alluding to is the fact that
some of the younger, smaller and best providers may have the
best ideas on how to do it, and we may miss those ideas if we
are only contracting with larger providers.
Mr. Callahan. Well, you are presuming when we put the
ticket stick out that no smaller providers will come forward.
Chairman Bunning. No, I am worried about their financial
ability to carry it.
Mr. Callahan. Well, I think it is like everything else, Mr.
Chairman. Individuals and enterprises with good ideas and good
innovation oftentimes can get capital from a variety of
sources. So we believe that they would be able to do that and
that the better ones would enter into the process.
Chairman Bunning. My time has expired, and I want to
question the next witness, but I will yield to Mrs. Kennelly.
Mrs. Kennelly. I thank the panel for being with us this
morning.
I have introduced legislation on the issue we are talking
about this morning, and I have to say to you there was a
certain amount of skepticism when I was putting my legislation
together that, in fact, it would increase the number of people
taken off the disability rolls. So what I would ask you, Dr.
Callahan, considering only 1 percent or less are leaving the
rolls, is there anything we can do to increase that number?
Have you got numbers you can give us on how this proposal would
increase the numbers going off disability?
Mr. Callahan. Obviously we would shoot for at least
initially a 30-percent increase of people going off the rolls
in the pilot States. One of the things we are encouraged about
is that by paying providers for results, we will increase the
capacity of public and private providers to provide the
appropriate services. So we would hope to increase it at least
initially by 30 percent.
Mrs. Kennelly. That would be wonderful, and I think it is
going to take a great deal of work.
Mr. Callahan. That is right.
Mrs. Kennelly. We are talking about people who get off
disability and enter into a situation where they have a
provider. How does that save the trust fund money if we are
only talking about those who are already off, and we know so
few go off? When you put forth your proposals, what are the
savings?
Mr. Callahan. Well, as you probably know, there are at
least three cost estimates of this proposal. SSA's actuaries
have costed it out, OMB has costed it out, and CBO has costed
it out. All three components indicate a fair amount of cost
neutrality in the first stages; that is, savings. We indicate
that we will have savings over the full 10 years of the pilot,
the OMB indicates less savings in the last 5 years, and CBO has
a different alternative.
I think one thing to be aware of is that some people say we
will just be paying for people who are going back to work
anyway. I think that is something that has to be looked at and
studied, but the key thing here is to increase the capacity of
the overall system to provide these services, bring more
providers online, and provide the best incentive we know, which
is paying for results.
Mrs. Kennelly. Well, that is something that both the
Chairman and I are concerned about.
Mr. Callahan. Let me add one point, if I may. I understand
the desire for cost savings for the trust funds, but we also
are looking at a goal of putting disabled individuals back to
work. I mean, we shouldn't forget that goal. That is a very
important goal.
This Subcommittee has a difficult task. You have to look at
all the issues that affect disabled workers. It is not just
Social Security, it is Medicare, Medicaid, sometimes assisted
housing, transportation services, and so forth, and I think
this will be a benefit to us as you look to that as well.
Mrs. Kennelly. But, Doctor, with less than 1 percent going
back to work, we are all going in the same direction on that,
we have to increase that number, and to take that one step
further, Ms. Heumann, everything I read tells me early
intervention is the key. What does this proposal do to get the
intervention earlier than it is now?
Mr. Callahan. That is already on a separate track. You
passed legislation here, I believe it is H.R. 1048. It is
pending in the Senate. We would support getting that enacted
into law as soon as possible, rather than tying that back to
this particular proposal. So in one sense, you are already
ahead of the game on early intervention with your other
legislation.
Mrs. Kennelly. A proposal this size, we have to all be on
the same track.
Ms. Heumann.
Ms. Heumann. I was just going to say, some of the State
rehabilitation agencies have already been working in a
proactive way with employers, so as individuals are becoming
injured on the job, they can come in and try to maintain people
on the work force, which we believe is critically important.
In addition to that, as I was discussing in my
presentation, the study being done by Research Triangle is, in
fact, showing that one of the difficulties is that individuals
are being given determinations of disability and at the same
time are being told about their ability to go get jobs. The
data are showing people enter into the system as much as 40 to
55 months after they have been on benefits, so it does seem to
say a number of things. For some individuals, capturing them
early, if their disability is not necessarily significant
enough, may be able to keep them in the work force. Changing
employers' attitudes so employers welcome workers and to keep
them in the work force is something we also know is positive.
But I think what everyone has been saying this morning is
people have more significant disabilities. There is a time
period for some in which they are going to have to adjust to
their disabilities, as well as the other issues we laid out
around health care benefits, which is a very big issue.
Congressman Ramstad raised that issue earlier with his former
employee who was a quadriplegic who couldn't maintain
employment. I assume because he was at risk of not only losing
his Medicaid, but in the State of Minnesota, they have good
programs for personal assistance services.
This is a complex issue. We agree with you that early
interventions are critically important for some, and then a
collaborative approach of services that come from Social
Security, rehabilitation agencies and many other programs can
also potentially help move people back into work; plus the
removal of the disincentives, which we all believe is one of
the biggest problems of getting people back into the work
force.
Mrs. Kennelly. Thank you for that excellent answer.
Chairman Bunning. Thank you.
Mr. Collins will inquire.
Mr. Collins. Thank you, Mr. Chairman.
Mr. Callahan, I want to kind of clear up this 30 percent.
You say you are hoping to increase by 30 percent the number who
leave the rolls of disabled back into the workplace.
Mr. Callahan. Over the current baseline, yes, sir.
Mr. Collins. Not 30 percent of a half percent, then, that
Mrs. Kennelly spoke of, is now currently leaving the rolls,
because that wouldn't be much of an increase, would it? That
would get us up to about two-thirds of 1 percent.
Mr. Callahan. State vocational rehabilitation agencies are
our primary provider of services right now. We referred last
year 60,000 individuals to State vocational rehabilitation
agencies for services.
Mr. Collins. According to our numbers, that was about 6
percent.
Mr. Callahan. Right. But let me, if I could, just pursue
this for 1 minute. Of the 60,000 we referred, we reimbursed the
States for their services to 6,000 disability beneficiaries;
that is, those who were substantially gainfully employed for 9
months or more.
Now obviously, we would like to increase the number. First
of all, we would like to get more of those 60,000 beneficiaries
we referred for services back to work. Additionally, we would
like to get more beneficiaries referred for services. The
Ticket to Independence, at the very least, will enable us to
list more individuals on the electronic billboard, that is,
advise all the providers participating in the Ticket Program
that these individuals have tickets, and to marry the
individuals with a provider of services, whether that be a
State VR agency if they choose to participate in the Ticket
Program, or some other public or private service provider. So
it is in essence trying to achieve a market solution, if you
will; that is, marry the individuals with the service providers
and get them back into the work force.
Mr. Collins. Well, good. You know, I think the best place
for rehabilitation is the workplace, and you suggested that,
hopefully, you think there are people in the private
enterprise, small business area that would be willing to take
this task on and hire people with disabilities, and I agree
with that. I think they will, too. But you say you think they
are. Have you actually inquired with small business people,
entrepreneurs, employers as to where the stumbling blocks are
in hiring people with a disability, because there are some
there. I am a small business person, and I know where they are,
and I know where the disincentives are because of a long-range
liability that that employer is going to pick up. Have you been
to the workplace and talked to people about it?
Mr. Callahan. If I may, Congressman, let me defer to
Associate Commissioner Daniels, who has dealt with that in more
detail than I have.
Ms. Daniels. As we were developing the proposal, we had an
opportunity to talk with employers, some of them large, some of
them small. One of the things they indicated to us is they are
in the business of their business, and that when it comes to
hiring people with disabilities, they are generally willing to
hire people who can help them do their business. They need help
sometimes in figuring how to make the best accommodations or
how to provide the best workplace, but they don't want,
themselves, to become experts in that. We believe that the
providers who take our tickets will be willing to work with
employers to make those kinds of transitions happen for our
beneficiaries, without asking the employer to become an expert
in rehabilitation or workplace accommodations.
Mr. Collins. Well, the incentive to me to hire anyone is
productivity, and the disability should not be a question as to
whether they are productive or not, unless it is a job where
they just actually physically can't handle it.
But there are some problems in the area of insurance,
problems in the area of workers' compensation, and problems in
the area of entrance to the facility, and all of these things
are regulated very heavily by the Federal Government that puts
the roadblock up that I don't want to deal with. But I would
deal with them if I were not afraid of the punishment that I
might receive of attempting to try to deal with it. I think you
need to go to the marketplace and talk to people and talk to
them in a real sense, not a bureaucratic sense.
Thank you, and thank you, Mr. Chairman.
Ms. Heumann. Mr. Collins, could I just say one thing?
Mr. Bunning. Mr. Christensen.
Mr. Christensen. Thank you, Mr. Chairman.
Since I was a junior in high school, Dr. Callahan, you have
been testing a pilot program and going through a demonstration
project. I believe it has been about 17 years. From that pilot
program, since I was a junior in high school, what have you
learned that you incorporated into the Ticket to Independence
Program?
Mr. Callahan. Well, I will defer to Associate Commissioner
Daniels on this because she has worked on it for the past
several years, but I will say we also have a study, called
Project Network, for which we expect an evaluation report by
the end of this year. We are going to fully report to the
Subcommittee, which will shed light on this. But, I think what
we have learned is that a disabled individual wants to go back
to work. I think the testimony from all the panelists today
suggests there are a lot of disabled people who want to go back
to work, but are concerned about disincentives, and finding a
willing provider of services that tailors the program with the
disabled individual, and provides the various things that are
helpful to that individual in order to return to work.
I mean, my colleague here, says we have had 800,000 people
go back into the workplace since the ADA was passed. We find
that our customers tell us they want to go back to work. We are
seeking here, as a result of that, to put providers together
with the disabled individuals and try to get them back to work.
It is a very complex and a time-consuming process.
Mr. Christensen. I guess what I question is the fact that
after 17 years of a pilot program, roughly $30 million in
taxpayers' money, the Ticket to Independence Program that you
are rolling out is still yet another pilot program; that after
17 years of studies and pilot programs and demonstration
projects, you don't have enough confidence in the program to
roll it out as a permanent program rather than another pilot
program which will last, I think, 10 years.
Ms. Daniels. Let me say that many of the previous
demonstrations have given us a lot of useful information. They
were not wasted. One of the most important things----
Mr. Christensen. I have never heard of a government program
that wasted money.
Ms. Daniels. One of the most important things we learned,
and you probably will learn from some of our colleagues on the
other panel, is we found that there is a broad network of very
able, highly skilled, results-oriented professionals out there
who are willing to work with our beneficiaries. We structured
the Ticket to Independence, as you see, to start slowly, 5 to
10 States, but it gives us the flexibility, if the program is
successful, to continue to roll it out even faster, to
encompass as many States as possible as our capacity increases
to manage the program and as it remains successful.
So I would think this is not as limiting a rollout pilot as
you might be thinking. It starts small, but it can grow rapidly
if it is successful.
Mr. Callahan. If it works, we are probably going to come
back and ask for permanent legislation. If it doesn't, we will
come back and tell you why it didn't work.
Mr. Christensen. When do you think it will come back?
Mr. Callahan. The legislation provides that I am supposed
to report back to the Congress within 3, 5, 7 and 10 years--I
am sure I will be reporting back before then--so we will be
reporting back as quickly as we can on this, but we don't want
to start a permanent program that doesn't have a chance of
success.
Mr. Christensen. Thank you, Mr. Chairman.
Mr. Hulshof. Mr. Christensen, I can't wait to see the
headline back in your hometown paper that you have never heard
of a government program that wasted money.
Ms. Heumann, I wanted to give you the opportunity to
respond to Mr. Collins' question, but I think you did want to
share with us some opinions.
Ms. Heumann. I just would like to put a face on the people
we are talking about, and I think the issue Mr. Collins raised
is very important, the need for agency--Social Security and
rehabilitation agencies and others to be working face to face
with employers to understand those programs. I think really the
reforms that have been going on in programs around the United
States in the last 8 to 10 years have definitely been linking
rehabilitation agencies with employers to understand their real
needs.
I also think we can't avoid the discussion which deals with
the disincentives, because just improving employers'
opportunities to bring disabled people in will not address the
issues of individuals who have significant disabilities. I
mean, people like myself, that are right now spending $3,500 a
month for rent and attendant services; the person that
Congressman Ramstad spoke about earlier, who I am sure has a
comparable level of expense. So we have to, as we all work
forward with the mutual goal of getting disabled people to
work, which is what we want to do, we have to realize that we
have to make some of these systemic changes if we are going to
allow people opportunities.
The approach Social Security is taking is one more approach
to assist disabled people to moving into the work force, but if
we don't seriously address these other issues, we are not going
to be able to move the number of people who could move into the
work force into the work force.
Mr. Hulshof. Let me ask you about the SSA Ticket Proposal.
Specifically, Ms. Heumann, let me ask you to comment on right
of first refusal, because as I understand, the Ticket Proposal
allows the State VR agencies to opt into the Ticket Program in
the States participating in the pilot, but then the State VR
agencies in the States would then no longer enjoy the right of
first refusal as currently provided for in current law. Would
you expect States to opt into this program? And what is the
Department of Education's view about losing right of first
refusal?
Ms. Heumann. We anticipate some States would participate in
the program. What our hope is, and we have obviously been
working very closely with Social Security, is as the program
moves forward, individuals with disabilities are given
significant information so they understand what the ticket is
going to mean. They have a better understanding of the various
providers that are going to be there, the kinds of services
that rehabilitation is legally required to offer people versus
the services that agencies that make--become ticketholders are
not obligated to provide people, and that individuals also are
aware of what protections they have, if there are differences
in the beliefs of the purchaser, as the disabled individual,
and the provider.
I think those are criteria we think are critically
important as the program moves forward.
Mr. Hulshof. You mentioned information about the new pilot
program, and, Dr. Callahan, as you know, we have split this
hearing up into two sessions. Tomorrow we are going to hear
from many in the disabled community; also some from the
consumer panel tomorrow. And maybe it is unfair of me to ask
you to comment, but, for instance, I think Mr. Halliday is
testifying tomorrow on behalf of the Council of the VR--State
VR Administrators. He talks about the lack of understandable
information on what would happen to cash benefits and medical
coverage when a person attempts to work, and he calls it; the
Twilight Zone, I think, in his testimony.
In addition to the pilot program, what is SSA doing to
educate those presently trying to move into the work force?
Mr. Callahan. We have a number of initiatives underway that
Dr. Daniels has spearheaded, and I think she would like to
comment.
Ms. Daniels. We realize the work incentives are very
complex and, in fact, we have become students of some
colleagues from the Virginia Commonwealth University who have
created a computer program to show us and others what happens
to income and net income when individuals work, and how it
affects their benefits. I think you may have a chance to hear
from those individuals. We have invested heavily in that
program, and we think it holds promise of being available to
our beneficiaries to help them and their providers figure out
the real impact of the work incentives.
Additionally, we developed a package for young people
called, ``Graduating to Independence,'' that focuses on
families and young people. Counselors teach them about work
incentives and teach them how to prepare for a transition to
work. We have publications that we deliver, and we have a
continuing and ongoing dialog with our customers about what
makes sense and how we can best administer the work incentives.
All of the things are leading us in a good direction, we hope.
Chairman Bunning. The gentleman's time has expired.
Mr. Johnson.
Mr. Johnson. Thank you, Kenny. Thank you, Mr. Chairman.
Dr. Callahan, the National Council on Disability appointed
by the President has some recommendations in it to improve the
Social Security's ability to return disabled to work, and some
of our witnesses will be reviewing those details, but one of
the recommendations is to reduce the monthly SSDI benefits $1
for every $2 of earnings over $500 a month, similar to the SSI
Program. What are your views on that, and isn't that a
possibility, and why aren't those two programs the same anyway?
Mr. Callahan. I haven't seen that proposal in all its
detail. We would obviously have to understand the cost
ramifications of it. Clearly, we would like to see some
comparability among all our programs, but, Mr. Johnson, what I
would like to do is provide our answer for you on that one for
the record because I would like to take the time to study the
National Council on Disability's recommendations.
[The following was subsequently received:]
[GRAPHIC] [TIFF OMITTED] T5046.001
Mr. Johnson. You haven't looked at the President's
recommendations then?
Mr. Callahan. I don't have that right in front of me, sir,
no, I don't.
Mr. Johnson. One other question. When people get out of
disability, they lose Medicare; is that true?
Mr. Callahan. I am sorry?
Mr. Johnson. They lose Medicare--or Medicaid, maybe.
Mr. Callahan. It depends. They can lose it to some degree
or another. Let me ask Ms. Daniels.
Ms. Daniels. The Social Security Disability Insurance
Program allows beneficiaries to keep their Medicare part A
premium free for their trial work period, which is 9 months,
and then to continue to keep that premium free for the extended
period of eligibility, which is another approximate 3 years,
and at the end of that period the beneficiary may purchase part
A, with a premium. It is a little over $300 a month.
So there are transitions currently in the Disability
Insurance Program that allow the beneficiary to keep the
Medicare that they have while they are beginning to work and
get stabilized, and, at the end of that, to purchase it.
Mr. Johnson. So that is not an obstacle to them getting
work then, is it?
Ms. Daniels. Some of our beneficiaries say that the premium
itself, at a little over $300 a month, is a substantial
premium, given their ability to earn after they have become
disabled.
Mr. Johnson. But you said they get it for 9 months, in the
interim, free.
Ms. Daniels. That is right, part A.
Mr. Johnson. I understand.
Well, is it working or not?
Ms. Daniels. Certainly for people on their trial work
periods or in their extended period of eligibility, it is a
fabulous coverage for them to have and something for them to
depend upon. Whether or not they can afford to keep it after
they finish that period is really uncertain. We have only had
approximately 600 people since this provision was put in law to
ever use it; in other words, purchase their Medicare part A.
Mr. Johnson. Six hundred out of how many?
Ms. Daniels. Out of several thousand. I would have to look
at my book here, but several thousands of people have left the
rolls over the years, and very, very few people have ever
bought Medicare.
Mr. Johnson. Thank you very much.
Thank you, Mr. Chairman. I yield back to you.
Chairman Bunning. I would like to ask Ms. Heumann your
comments on the Council, National Council on Disability,
employment recommendations, if you know about them.
Ms. Heumann. I am sorry, I haven't seen them in detail
either.
Chairman Bunning. You don't have any idea whether you agree
or disagree with the recommendations?
Ms. Heumann. I think the thrust of the Council's
recommendations we support because it is the same thrust we are
all discussing. What they have been doing is convening meetings
around the country and bringing together disabled experts who
are both knowledgeable about disability from a personal
perspective and knowledgeable about the laws.
Chairman Bunning. I want to assure all of the witnesses
that I am going to submit questions in writing to you for
answers for the record.
Mr. Callahan. Yes, sir.
Chairman Bunning. Ms. Heumann, in your testimony you state
the Department of Education supports consumers' choice in the
selection of their employment goals. Would you like to expand
on that for me?
Ms. Heumann. Well, we believe it is important for anyone in
this country to be able to have the opportunity to talk about
what their work objectives are, not for someone to say that
this is the job you should do. Historically, and if I could
just talk personally, when I was in high school, what my
disabled friends told me in high school was when you went to
rehabilitation many years ago, you could only tell them you
wanted to do a job where you could demonstrate that another
disabled person had a job like that. So when I was interested
in becoming a teacher, I knew not to tell anybody I wanted to
be a teacher because they would not help me go to school to
become a teacher. So I said instead I wanted to be a speech
pathologist, which I never really wanted to be.
Today, because of many of the pieces of legislation that
are out there, disabled individuals have options like other
people, but we need to make sure that no one is saying to any
disabled person, you should do x job when, in fact, they want
to do y job. So choice means that we have to be able to sit
down with the disabled individual and allow the person to say
what they are interested in, what kind of adaptations they need
for the job, types of technology they may need, where they may
have to live in order to get to and from the job, to look at
other disability-related issues as they make their
determinations.
Chairman Bunning. I don't want to interrupt you. Mr.
Collins brought up some of the barriers that exist for industry
and small businesses when trying to hire people with
disabilities. Disincentives include health care and liability
insurance and more. So is that in an educational process being
brought up to those that are seeking to hire the disabled?
Ms. Heumann. Well, what we would be talking to a disabled
person about is if they are interested in certain types of jobs
where there are risks in the jobs, what kind of accommodations
could be provided for the individual to remedy the risk issue.
Chairman Bunning. Well, that is very important, obviously,
for the disabled person to be able to choose any job they want.
The reality is that there are barriers that prevent employment.
We are seeking to get a handle on the big picture. We can't
write a bill to handle SSDI and SSI without the complete
picture on subsidized housing, on all the other things that go
with it.
Ms. Heumann. Mr. Chairman, I think it is important to give
that information to disabled individuals, but I also think we
need to do a continued job at working with employers, because
there are still employers--and I am not talking about Mr.
Collins--who are unaware of what disabled people can do. And so
I think we need to have a partnership with the provider, with
the disabled individual and with the potential employer to be
able to look at what they perceive as barriers to see if, in
fact, the barriers can be removed. We don't want to limit
disabled individuals' options in the world of work based on
their disability.
Chairman Bunning. We want to make sure they have an
opportunity to do a better job at rehabilitating more than 1
percent of those on SSDI. That is our job and what we are
trying to accomplish in any kind of legislation we would
propose.
Ken, do you have any other questions?
Mr. Hulshof. No.
Chairman Bunning. I would like to thank the panel for their
testimony, and we will be submitting questions to you. Thank
you.
[The following was subsequently received:]
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Hon. John J. Callahan, Acting Commissioner of Social Security
1. You indicated that, under the Administration's Ticket to
Independence proposal, providers are not paid for services
until the recipient no longer receives benefits. What about an
individual who is only able to work part-time? Is there nothing
that can be done, in your view, to reward this progress?
First, we would like to emphasize that the Ticket to
Independence Program (TIP) is intended to be a voluntary
addition to all the VR programs currently available to SSA's
beneficiaries. As such, a beneficiary can get services from the
State VR agencies in their respective States. Second, the
essence of the TIP is that savings to the SSDI Trust Fund or
the general revenues is a prerequisite for payment to a
provider. One could make milestone payments, but that would not
be consistent with the approach we have proposed. The TIP (and
any savings-based payment system) is designed to encourage
aggressive pursuit of employment outcomes for as many
beneficiaries as can be efficiently returned to work. Other
beneficiaries, who need more extensive services in order to
return to work full time, will be served by existing systems
such as the State VR agencies.
2. In your testimony, you mention the Administration's proposal
for a four-year demonstration to extend premium-free Medicare
health insurance for recipients who leave the cash benefit
rolls because of work. You also state that the Administration
believes such a demonstration, along with the ``Ticket to
Independence,'' is good policy and constitutes an incentive to
return to work. Why, then, did the Administration not include
this proposal in its 1998 budget?
The President's 1998 budget did include a proposal for a
demonstration which would have permitted certain title II
disability beneficiaries to have their Medicare coverage
continued, premium-free, for an extra 4 years after their
Medicare coverage would have terminated under present law.
While the President's proposal was, unfortunately, not included
in the Balanced Budget Act of 1997, the Administration plans to
continue to pursue such demonstration authority.
3. All disability recipients, except those whose medical
conditions are expected to improve, will be eligible to receive
a ticket. Recipients who are expected to improve will be
eligible for a ticket after their benefits are continued as a
result of a CDR. Since an extensive CDR backlog still exists,
why not issue a ticket to those whose medical conditions are
likely to improve, as it seems that those recipients would
benefit from rehabilitation services early in the process?
We intend to issue tickets at the time of award to new
beneficiaries who are not considered ``high profile'' in SSA's
CDR profile system. Those considered high profile would be
eligible for a ticket after a CDR results in a finding that
their disability condition has not improved. All beneficiaries
currently on the rolls who are not classified as ``high
profile'' cases will also be eligible to receive tickets.
Initially, it may be necessary to phase in the profile system,
if it appears that too many beneficiaries would be excluded
from receiving a ticket or phase in the beneficiaries on the
rolls, if the workload appears too large in the first year. In
addition, we will evaluate the CDR backlogs at the time
legislation is enacted and reassess our position, if necessary,
at that time.
4. Basically, under your proposal most new recipients and
individuals who are continued benefits after a CDR are issued a
ticket. Is their use of a ticket mandatory?
The Social Security Administration has a duty, obligation,
and responsibility to protect the Social Security trust funds
and the general funds of the treasury from being used to pay
benefits to individuals who are not entitled to them.
Therefore, the ``Ticket to Independence'' proposal provides
that the benefits of beneficiaries who (1) either do not
cooperate in a rehabilitation program designed by the provider
to which they assigned their ticket, to get them off the
disability rolls, or (2) refuse to assign their ticket to a
provider which has developed a rehabilitation program which is
likely to get them off the disability rolls, may be withheld or
terminated. These sanctions are consistent with long-standing
Social Security policy.
5. Social Security law requires suspension of benefits for
those SSDI and SSI recipients who refuse to accept vocational
rehabilitation services. How many SSDI and SSI recipients have
had their benefits suspended because they refused to accept
services?
Benefit suspension can occur when an individual, without
good cause, refuses to continue to accept VR services or fails
to cooperate in such a manner as to preclude their successful
rehabilitation. Before a suspension occurs, SSA and the State
VR agency make every possible effort to encourage the
individual to participate in their program of VR services.
Additionally, SSA independently evaluates if good cause exists
in those cases where nonparticipation is reported. During the
last three years, SSA has reimbursed a State VR agency in fewer
than 10 cases where benefit suspension was linked to a refusal
situation.
6. State VR agencies are reimbursed by SSA for services when
SSA recipients engage in substantial gainful employment for
nine months. In 1996, SSA reimbursed State VR agencies for
about 6,000 recipients. How many recipients actually left SSA
disability rolls because of VR services?
To assess the effectiveness of successful State
rehabilitations, SSA periodically evaluates the number of
months successfully rehabilitated individuals stay off the
disability rolls. Although we do not presently have
longitudinal data on 1996 successful rehabilitations, prior
analyses indicate that over a 5 year (60 month) period,
successfully rehabilitated SSDI beneficiaries will be out of
benefit status for an average of 46 months (i.e., collect
checks in only 14 months in 5 years following successful
rehabilitation).
The months an individual is in benefit status include all
60 months for the few individuals who never leave the rolls,
any new reentitlements based on new applications within the
following 5 year period, and any months during the extended
period of eligibility an individual received benefits because
their earnings fell below the substantial gainful activity
level. This information confirms that, on average, SSA is
getting a good payoff from successful rehabilitations. As it is
not currently available, we will provide the number requested
under separate cover.
7. Most of the return-to-work proposals focus on the back end
of the disability program, in other words, once individuals are
allowed benefits. However, many people think the front end of
the disability program needs to be brought up to date. Do you
believe that the current law definition of disability is still
appropriate for the program? Should it be changed?
Many people, both in government and the private sector have
mixed opinions about this issue. It is true that the current
implementation of the definition of disability, which is
defined in broad terms in the Social Security Act, was written
into regulation and established in State agencies across the
country nearly 40 years ago. Much has changed since then.
However, fundamental changes to that process would have far-
reaching consequences for current beneficiaries and individuals
who are insured for disability, for disability advocates, for
the larger disability and health insurance systems in America,
and for the federal government. We are willing to work with the
Congress to identify changes that all agree would be desirable
and to test those changes, to the extent possible, in
controlled field experiments before attempting to implement a
different definition nationwide.
As you know, we have a review of the entire disability
decision process on-going under the Disability Process Redesign
Project. Part of that redesign effort includes research into
alternate ways to implement the functional evaluation of the
severity and consequences of physical or mental impairments. We
plan to field-test any feasible alternate processes which are
identified by the research. Any of these alternate processes
would have to be proven to be cost-effective in terms of
decision accuracy and administrative efficiency. It is not
clear that the current system would turn out to be less
effective than any proposed alternative.
8. Why are so few disabled recipients (6%) referred to State VR
agencies for services?
We too are concerned that relatively few beneficiaries are
referred for VR services. While the national rate of referral
is below 10 percent, the rate does show a wide variance from
State-to-State. Some factors influencing this variance are the
individual States' use of local criteria for selecting
referrals and the fact that some beneficiaries are already VR
clients (due to a referral from another source) before the SSA
medical determination is completed.
To help address the overall rate of referrals and wide
State-to-State variance, we are working with both the Council
of State Administrators of Vocational Rehabilitation and the
Rehabilitation Services Administration. Through this joint
effort, we are seeking ways to implement a more uniform and
broader selection of quality referrals.
9. In March 1994, SSA issued regulations allowing public and
private providers to provide services to SSA's disabled
recipients who are not served by the State VR agencies.
Currently, how many recipients are actually receiving services
from alternate providers? Why has it taken so long to get this
program up and running?
Developing a process within SSA for working with alternate
providers of VR services has never before been done. The
process required considerable original and imaginative work to
establish. Over 4,000 separate public and private VR providers
expressed an interest in the new process and received the
agency's solicitation for a proposal. Over 500 actually
submitted proposals to become alternate participants. The first
contract was awarded in the Spring of 1997. Since then, nearly
100 additional contracts have been negotiated and awarded. More
are expected from those for whom additional information has
been requested.
Several of those awarded contracts are already accessing
our listings of available beneficiaries. The contractors are
free to choose which beneficiaries are contacted and to
independently negotiate a plan of services with a beneficiary.
We are very early in the period where alternate participants
have begun outreaching to available beneficiaries. Therefore,
the results are limited. We do know, however, that some
services are being provided and at least one individual has
begun workibg.
10. One of the SSI program's work incentive is the PASS
program. We are hearing from many consumers, including
panelists who testified in Day 2 of this hearing, regarding
their concerns over SSA's administration of the PASS program.
Since many SSI recipients also receive SSDI benefits, please
explain what SSA is doing to ensure that the PASS program is
being effectively administered.
PASS allows the Social Security Administration, in
determining eligibility and payment amount for SSI, to exclude
income and resources an individual sets aside in order to
pursue an occupational goal. The purpose of this provision is
to help disabled and blind individuals who want to work obtain
items or education that will help them to work. For example,
funds set aside under a PASS can be used for tuition, training,
transportation, supplies, and computers.
We feel strongly that PASS is an important work incentive
for highly motivated disabled SSI recipients. However, recent
evaluations of the provision by us and by the General
Accounting Office (GAO) revealed that there are some aspects of
the PASS that are vulnerable to misuse. We want to make sure
that PASS continues to be available for moving individuals from
dependency to independence. Our goal in recent months has been
to improve management of the provision while reducing
opportunities for misuse.
To improve adjudication accuracy, and to achieve
consistency in decisionmaking, we recently centralized the
processing of all PASS applications. We are currently
evaluating options for achieving further improvements in the
adjudication of this sensitive and important workload.
SSA instituted a comprehensive review of policies for the
PASS provision. Our review began this past spring in keeping
with commitments we had made to study the first year impact of
changes in the way PASS requests are processed.
We cannot at this point specify the precise nature of any
future proposals for PASS changes resulting from our review.
Question received from Hon. Jim Bunning, and Subsequent Response from
Judith Heumann
Question: State VR agencies are reimbursed for services when an
SSA recipient engages in substantial gainful activity for nine
consecutive months. State VR agencies were reimbursed for only
about 6,000 SSA beneficiaries last year. Why are so few SSA
recipients served by State VR agencies?
Answer: In FY 1995, SSA reimbursed State vocational
rehabilitation (VR) agencies a total of $65,480,627.30 for the
rehabilitation of 6,026 SSDI and SSI beneficiaries. While this
figure represents only a small percentage of individuals on the
disability rolls, it also reflects only a small number of
beneficiaries who requested, and were provided, VR services
from the State VR program.
In FY 1995, 607,195 individuals requested services from
State VR agencies. Of these, 143,298, or about 28%, were SSDI
or SSI beneficiaries. 130,343 were accepted for VR services,
97,363 received services under an Individualized Written
Rehabilitation Program (IWRP), and 53,877 exited the VR system,
having met the programs criteria for an employment outcome.
It is important to point out that the criteria under which
SSA reimburses VR agencies for their services differs
considerably from the standards by which the VR program
determines a successful employment outcome. In order for VR
agencies to be reimbursed by SSA, it must be established that a
beneficiary has engaged in substantial gainful activity (SGA)
for nine months. The SGA earnings level is set at $500 per
month for disabled non-blind beneficiaries, and $1,000 per
month for blind beneficiaries.
Criteria established by the Rehabilitation Act of 1973, as
amended, require that in order for a State VR agency to claim
an employment outcome, it must be determined that: VR services
have contributed to the employment outcome; the employment
outcome is consistent with the individual's strengths,
resources, priorities, concerns, abilities, capabilities,
interests, and informed choice; the employment be in the most
integrated setting possible; the employment must have been at
least 90 days in duration; and, the individual and VR counselor
agree that the employment is satisfactory and progressing well.
While VR agencies strive to assist individuals in obtaining the
best paying jobs possible, as long as these criteria are met,
it is acceptable, and appropriate, for the individual to be
``rehabilitated'' in employment that may be part-time
employment, supported employment, or employment at earnings
less then SGA. In FY 1995, 38,629, or 71.1% of all SSA
beneficiaries closed after achieving an employment outcome,
were working in the competitive labor market. Preliminary data
suggest that this percentage increased to about 84% in FY 1996.
Data, obtained from the Rehabilitation Services
Administration's (RSA) Case Service Report System (RSA-911),
indicate that when SSA beneficiaries choose to apply for VR
services, they are more likely than non-beneficiaries to be
accepted by the program. In FY 1995, 90.1% of beneficiaries who
applied for VR were accepted, compared with 76% of non-
beneficiaries. Preliminary FY 1996 data are similar, but with
decreases in the percentage of non-beneficiary acceptances
(90.4% of beneficiaries compared to 72% of non-beneficiaries).
SSA beneficiaries have ample opportunity to access the VR
system. Current law requires, that upon initial adjudication
for benefits, they be referred to the VR program. There are
strong indications that this may not be the most appropriate
time for such a referral, as most beneficiaries who participate
in VR services have been on the benefit rolls for several years
(40-55 months). Further, the 1995 data show that a large
percentage, over 24%, have accessed VR through self-referral.
Currently, SSA, OSERS(through RSA), and State VR agencies are
working cooperatively to improve the referral system.
It is clear from the information presented above that SSA
beneficiaries represent a significant percentage of the VR
caseload. Further, many beneficiaries do enter employment in
the competitive labor market. However, what is also clear is
that many beneficiaries who attempt work do not earn enough to
be terminated from benefits. Disincentives inherent in the
present benefit structure, have been cited as reasons why more
beneficiaries do not attempt work. These include: loss of
essential medical coverage, fear that earnings alone will not
be sufficient for self-support, and difficulties associated
with re-entry into the benefit system.
Finally, it appears that in FY 1996, State VR agencies will
be reimbursed over $90 million for their services to SSA
beneficiaries. As of July 31, 1997, SSA reported that over
6,700 cases have been processed for reimbursement. State VR
agencies consider these reimbursements to be a valuable source
of program income and are working cooperatively with SSA and
RSA to improve the reimbursement system.
The vocational rehabilitation of individuals with
significant disabilities is a priority of the Rehabilitation
Act. SSA beneficiaries, almost without exception, are included
in this group, and VR agencies are committed to working with
them towards achievement of meaningful employment outcomes.
Chairman Bunning. Panel number two, if they will come
forward, we will hear from Jane Ross, Director, accompanied by
Cynthia Bascetta, Assistant Director of Income Security Issues
at the Health, Education, and Human Services Division of the
U.S. General Accounting Service; Dr. Bruce Growick, professor
of rehabilitation services at Ohio State University; Dr. Monroe
Berkowitz, professor of economics at Rutgers University,
accompanied by Virginia Reno, director of research at the
National Academy of Social Insurance; John Kregel, research
director at the Rehabilitation Research Training Center at
Virginia Commonwealth University; Richard Baron, director of
the Matrix Research Institute in Philadelphia; and Dr. Leonard
Matheson, director of the Work Performance Laboratory and
section chief of the Occupational Competence and Ergonomics
Section at the Washington University School of Medicine Program
in Occupational Therapy in St. Louis, Missouri.
Chairman Bunning. Ms. Ross, when you are ready, you can
begin with your testimony
STATEMENT OF JANE L. ROSS, DIRECTOR, INCOME SECURITY ISSUES,
HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S. GENERAL
ACCOUNTING OFFICE; ACCOMPANIED BY CYNTHIA BASCETTA, ASSISTANT
DIRECTOR
Ms. Ross. Mr. Chairman, thank you for inviting me to
testify on issues facing Social Security as it tries to
increase the work effort of disabled people.
As you know, we have recommended that SSA place much
greater priority on improving its return to work efforts. With
cash payments now exceeding $1 billion a week, SSA has a
powerful incentive to take such actions as the ones they have
just described.
Experts have told us that effective strategies to encourage
disabled people to work must include three types of
initiatives. Thus, we believe that SSA should develop a
strategy that includes intervening earlier in a person's
disability experience, providing vocational rehabilitation
services to help applicants and beneficiaries become ready for
employment, and encouraging work by guaranteeing medical
coverage or assuring increased income as a result of working.
Today I would like to emphasize two points. First, although
preparing people for work is important, beneficiaries are
likely to return to work only if they perceive they will be
better off financially. Second, although no one knows which
strategies might yield the best results, the high opportunity
costs of both inaction and choosing options that may not work
well strongly indicate that testing more than one approach is
appropriate.
On the first point, while the administration has proposed
the Ticket to Independence Program, they haven't yet made a
proposal to ensure people will be better off financially if
they return to work. SSA should test work incentive reforms
that address the risks that beneficiaries face when they give
up benefits and medical coverage for the uncertainties of
employment.
The two charts that I have with me today over here show the
financial risks that face DI beneficiaries when they work. The
white bars on each chart show how the current law works. You
can see that the individual's net income is at $1,000 when he
or she has about $500 of earnings. Well, when the benefits are
terminated, he or she doesn't get back to the same net income
level until earnings are almost $1,800. So when a beneficiary
considers his options about returning to work, he has to assess
how long it is going to take to get back to the same income
position as when he was receiving benefits.
These two charts also show how a tax credit and a gradual
benefit reduction proposal could cushion the drop in an
individual's income when benefits stop. The tax credit would
provide additional income through a refundable income tax
credit and would be linked to the amount a person earned. The
gradual benefit reduction could cut benefits by, say, 50 cents
for every dollar of earnings.
While the choices that an individual faces are illustrated
in charts like this and could be individualized for any
particular person, the total costs of proposals like these are
uncertain, because we don't have sufficient information on how
individuals will change their work effort in response to
program changes; For people that are already on the program,
will they respond to the earnings benefit decision by
increasing their earnings or not? Also, allowing people to keep
more of their earnings may cause people who are currently not
on the program to apply for benefits.
We believe that SSA should test and evaluate at least a few
work incentive options. Also, while we agree in principle for
paying for vocational rehabilitation based on outcomes, as SSA
has proposed, we believe SSA should test and evaluate other
reimbursement mechanisms for vocational rehabilitation, such as
a milestone-based reimbursement system.
Before I summarize, I want to point out that most of the
proposals under discussion would affect beneficiaries who are
already on the rolls. But, we have also urged SSA to work with
other agencies on strategies to intervene before people with
disabilities even apply for benefits. By not offering
vocational rehabilitation earlier, we could be missing a chance
to help people stay off the DI rolls. With about 2 million
people applying for benefits each year, this fundamental
redirection could be even more fruitful than trying to help
beneficiaries reduce their reliance on benefits once it has
begun.
Just to summarize, we know that intervening earlier,
vocational rehabilitation, and cash and medical work incentives
are all important parts of a strategy to ease the transition
back to work. However, it is not clear how to package all these
components so they work in concert, and make work more
financially attractive without increasing caseloads or program
costs. We have a lot to learn about the work responses of
people with disabilities to changes in the programs. We owe it
to the beneficiaries and taxpayers alike to move forward
expeditiously and judiciously in reforming the programs.
Thank you, Mr. Chairman.
[The prepared statement follows:]
Statement of Jane L. Ross, Director, Income Security Issues, Health,
Education, and Human Services Division, U.S. General Accounting Office
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting me to testify on return-to-work
issues facing the Disability Insurance (DI) and Supplemental
Security Income (SSI) programs and to discuss various
alternatives the Social Security Administration (SSA) could use
in developing strategies to help more people with disabilities
to work. Each week, SSA pays over $1 billion in cash payments
to DI and SSI beneficiaries. While providing a measure of
income security, these payments, for the most part, do little
to enhance work capacities and promote beneficiaries' economic
independence. Yet, as embodied in the Americans With
Disabilities Act (ADA), societal attitudes have shifted toward
goals of economic self-sufficiency and the right of people with
disabilities to full participation in society. Moreover,
medical advances and new technologies now provide more
opportunities than ever before for people with disabilities to
work.
The DI and SSI programs, however, have not kept pace with
the trend toward returning people with disabilities to the work
place: Fewer than 1 percent of DI beneficiaries, and few SSI
beneficiaries, leave the rolls to return to work each year.
Yet, even relatively small improvements in return-to-work
outcomes offer the potential for significant savings in program
outlays. For example, if an additional 1 percent of the 6.6
million working-age SSI and DI beneficiaries were to leave
SSA's disability rolls by returning to work, lifetime cash
benefits would be reduced by an estimated $3 billion.\1\
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\1\ The estimated reductions are based on fiscal year 1995 data
provided by SSA's actuarial staff and represent the discounted present
value of the cash benefits that would have been paid over a lifetime if
the individual had not left the disability rolls by returning to work.
These reductions, however, would be offset, at least in part, by
rehabilitation and other costs that might be necessary to return to a
person with disabilities.
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Because the current structure of DI and SSI does not
encourage return to work, many proposals are being discussed to
address this problem. Over the past few years, we have issued a
series of reports that have recommended that SSA place much
greater priority on helping DI and SSI beneficiaries maximize
their work potential--whether part- or full-time--and we
continue to urge SSA to act expeditiously in developing an
integrated and comprehensive strategy to do so. Our work has
demonstrated that SSA's success in redesigning the disability
programs is likely to require a multifaceted approach,
including earlier intervention, providing return-to-work
supports and assistance, and structuring benefits to encourage
work.
At the same time, we recognize the dearth of empirical
analysis with which to predict outcomes of possible
interventions. In particular, because measures of work
responses to changes in work incentives and other return-to-
work measures are unknown, any estimates of the net effect on
caseloads and taxpayer costs are likely to involve a high
degree of uncertainty. Moreover, our analysis of some of the
proposed changes to the work incentives illustrates the
difficult trade-offs that will be involved in any attempt to
change the work incentives. With this in mind, today, I would
like to discuss the challenges and trade-offs faced in
redesigning the disability programs. We strongly encourage
testing and evaluating alternatives to determine what
strategies can best tap the work potential of beneficiaries
without jeopardizing the availability of benefits for those who
cannot work. My testimony is based on our published reports and
prior testimonies and our recent analysis of work incentives
conducted for Representative Kennelly. (A list of related GAO
products appears at the end of this statement.)
Background
DI and SSI--the two largest federal programs providing cash
and medical assistance to people with disabilities--have grown
rapidly between 1985 and 1995, with the size of the working-age
beneficiary population increasing from 4.0 to 6.6 million.
Administered by SSA and state disability determination service
(DDS) offices, DI and SSI paid cash benefits approaching $60
billion in 1995. To be considered disabled by either program,
an adult must be unable to engage in any substantial gainful
activity because of any medically determinable physical or
mental impairment that can be expected to result in death or
that has lasted or can be expected to last at least 1 year.
Moreover, the impairment must be of such severity that a person
not only is unable to do his or her previous work but,
considering his or her age, education, and work experience, is
unable to do any other kind of substantial work that exists in
the national economy.
Established in 1956, DI is an insurance program funded by
Social Security payroll taxes. The program is for workers who,
having worked long enough and recently enough to become insured
under DI, have lost their ability to work--and, hence, their
income--because of disability. Medicare coverage is provided to
DI beneficiaries after they have received cash benefits for 24
months. About 4.2 million working-age people (aged 18 to 64)
received about $36.6 billion in DI cash benefits in 1995.\2\
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\2\ Included among the 4.2 million DI beneficiaries are about
694,000 beneficiaries who were dually eligible for SSI disability
benefits because of the low level of their income and resources.
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In contrast, SSI is a means-tested income assistance
program for disabled, blind, or aged individuals regardless of
their prior participation in the labor force.\3\ Established in
1972 for individuals with low income and limited resources, SSI
is financed from general revenues. In most states, SSI
entitlement ensures an individual's eligibility for Medicaid
benefits.\4\ In 1995, about 2.4 million working-age people with
disabilities received SSI benefits; federal SSI cash benefits
paid to these and other beneficiaries amounted to $20.6
billion.\5\
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\3\ References to the SSI program throughout the remainder of this
testimony address blind or disabled, not aged, recipients.
\4\ States can opt to use the financial standards and definitions
for disability they had in effect in Jauary 1972 to determine Medicaid
eligibility for their aged, blind, and disabled residents, rather than
making all SSI recipients automatically eligible for Medicaid. Often,
the Medicaid financial standards used by states are more restrictive
than SSI's.
\5\ The 2.4 million SSI beneficiaries do not include individuals
who were dually eligible for SSI and DI benefits. The $20.6 billion
represents payments to all SSI blind and disabled beneficiaries
regardless of age.
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The Social Security Act states that people applying for
disability benefits should be promptly referred to state
vocational rehabilitation (VR) agencies for services in order
to maximize the number of such individuals who can return to
productive activity.\6\ Furthermore, to reduce the risk a
beneficiary faces in trading guaranteed monthly income and
subsidized health coverage for the uncertainties of employment,
the Congress has established various work incentives intended
to safeguard cash and health benefits while a beneficiary tries
to return to work.
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\6\ State VR agencies also provide rehabilitation services to
people not involved with the DI and SSI programs.
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Current Program Structure Does Not Encourage Work
In a series of reports, we have discussed how the DI and
SSI programs' design and operational weaknesses do not
encourage beneficiaries to maximize their work potential.\7\
The lengthy disability determination process, which presumes
that certain medical impairments preclude employment, requires
applicants to emphasize their work incapacities. To address the
erosion in motivation to work that could result from applying
for benefits, we have recommended that SSA develop strategies
to intervene earlier in the application process. For example,
before awarding benefits, SSA could help applicants assess
their work capacity and, in turn, their ability to maintain
economic independence or delay their application for benefits.
This would likely involve SSA's collaboration with other
federal agencies, such as the Departments of Labor and
Education. Significant savings could be achieved by reducing
the need for people with disabilities to rely on DI and SSI.
Although full-time work may not be achievable, even part-time
work could reduce their reliance on benefits.
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\7\ SSA Disability: Program Redesign Necessary to Encourage Return
to Work (GAO/HEHS-96-62, Apr. 25, 1996); SSA Disablity: Return-to-Work
Strategies From Other Systems May Improve Federal Programs (GAO/HEHS-
96-133, July 11, 1996); and Social Security: Disability Programs Lag in
Promoting Return to Work (GAO/HEHS-97-46, Mar. 17, 1997).
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Regarding those people currently on the rolls, we have also
reported that SSA has done little to promote return-to-work
measures, such as VR and economic incentives to work. VR
services include, for example, guidance, counseling, and job
training and placement. VR can help beneficiaries return to
work by improving their skills and making them more marketable
and competitive. A beneficiary who engages in work encounters
additional challenges, however. By returning to work, a
beneficiary trades guaranteed monthly income and premium-free
medical coverage for the uncertainties of employment. Work
incentives, such as access to medical coverage or retention of
a portion of their cash benefits while working, are intended to
encourage beneficiaries to return to work--and, possibly, leave
the rolls--by making work more financially attractive.
In the last couple of years, numerous changes to the work
incentives and to the delivery of and payment for VR services
have been proposed in legislation and by various interest
groups. Most recently, SSA has proposed a VR system emphasizing
provider choice. Beneficiaries would get a voucher, usually
referred to as a ``ticket,'' which they could use to obtain
services from public or private VR providers and which would be
reimbursed on the basis of outcomes. In our March 1997 report,
we advocated the critical importance of testing and evaluating
new measures to return beneficiaries to work. We also cautioned
against focusing on one option to the exclusion of alternative
measures. We noted, for example, that if SSA tests only one
type of VR service delivery system, the agency will forgo the
opportunity to compare the results of the proposed outcome-
based payment system with those of alternative plans, such as
combining outcome-based payments with reimbursements to
providers on the basis of milestones reached before the
beneficiary leaves the rolls.
In addition, others have proposed changes to financial
incentives, including making DI similar to SSI by reducing
benefits $1 for every $2 in earnings and revising the deduction
of impairment-related expenses. New tax incentives have also
been proposed, including tax credits to individuals--making
work more financially attractive--and tax credits to
employers--encouraging them to hire people with disabilities.
Proposed changes to medical benefits include extending premium-
free Medicare coverage, scaling Medicare buy-in premiums to
earnings, expanding Medicare and Medicaid eligibility, and
creating a Medicaid buy-in.
Our work has called for SSA to develop a comprehensive,
integrated return-to-work strategy that includes (1)
intervening earlier, (2) providing return-to-work supports and
assistance, and (3) structuring benefits to encourage work. SSA
has agreed that compelling reasons exist to try new return-to-
work approaches and, as mentioned, has proposed the creation of
a VR ticket to expand beneficiaries' access to VR providers. We
believe a successful strategy would incorporate all three
components, working in concert, and that beneficiaries are
likely to return to work only if it is financially advantageous
for them to do so. The remainder of this testimony focuses on
the work incentives, the proposed changes to them, and the
difficulties and trade-offs involved in their reform.
DI and SSI Work Incentives Provide Different Benefit Protections
The work incentive provisions of the two programs differ
significantly, providing very different levels of benefit
protection for DI and SSI beneficiaries. One significant
difference is that a DI beneficiary's cash benefit stops
completely after a period of time, if earnings exceed a
specified level, while an SSI recipient's cash benefit is
gradually reduced to ease the transition back to work. The
gradual reduction in SSI cash benefits yields savings to the
government, even if recipients work part time. In contrast, DI
beneficiaries who work yield no program savings unless they
leave the rolls, because their benefits are not offset. Another
difference is that a DI beneficiary can purchase Medicare
coverage after premium-free coverage ends (although lower-wage
earners may find it too expensive to do so), but an SSI
recipient loses Medicaid and is unable to purchase further
coverage once he or she exceeds a certain income level. Table 1
highlights each program's work incentive provisions.
Work Incentives are Insufficient and Difficult To Understand
Despite providing some financial protection for those who
want to work, the DI work incentives do not appear to be
sufficient to overcome the prospect of a drop in income for
those facing low-wage work. Moreover, the work incentives do
not allay DI or SSI beneficiaries' fear of losing medical or
other benefits, which could accompany return to work. In
addition, the current package of work incentive provisions is
complex and difficult to understand, which further discourages
work effort. This difficulty in understanding the work
incentives is heightened for the 694,000 beneficiaries (11
percent of the beneficiary population) who are dually eligible
for DI and SSI. For these concurrent beneficiaries, SSI work
incentive provisions apply to the SSI portion of their cash
benefit and DI provisions apply to the DI portion of their cash
benefit. This adds administrative complexities to the system
because earnings must be reported to both programs, each of
which has its own reporting requirements and processes. Because
SSA does not promote the work incentives extensively, few
beneficiaries are even aware that these provisions exist.
Work Incentives Illustrate Difficult Trade-Offs in Disability Reform
Some work incentive changes may help some beneficiaries, or
some groups of beneficiaries, more than others. Data from
Virginia Commonwealth University's Employment Support Institute
illustrate this point.\8\ For example, figure 1 shows that
under current law, a DI beneficiary's net income may drop at
two points, even as gross earnings increase. The first ``income
cliff'' occurs when a person loses all of his or her cash
benefits because countable earnings are above $500 a month and
the trial work and grace periods have ended. A second income
cliff may occur if Medicare is purchased when premium-free
Medicare benefits are exhausted. Figure 1 also illustrates what
happens to net income when a tax credit is combined with a
Medicare buy-in that scales premiums to earnings. In this
particular example, although the tax credit may cushion the
impact of the drop in net income caused by loss of benefits, it
does not eliminate the entire drop. However, as figure 2 shows,
this income cliff is eliminated when benefits are reduced $1
for every $2 of earnings above SGA.
---------------------------------------------------------------------------
\8\ The Employment Support Institute at Virginia Commonwealth
University developed WorkWORLD software, which allows one to compare
what happens to an individual's net income (defined as an individual's
gross income plus noncash subsidies minus taxes and medical and work
expenses) as earnings levels change under current law and when work
incentives are changed.
Table 1: Highlights of DI and SSI Work Incentive Provisions
------------------------------------------------------------------------
Program Provision
------------------------------------------------------------------------
Income safeguards
DI.................................... Trial work period: Allows
beneficiaries to work for 9
months (not necessarily
consecutively) within a 60-
month rolling period during
which they may earn any
amount without affecting
benefits. After the trial
work period, cash benefits
continue for 3 months and
then stop if countable
earnings are greater than
$500 a month.
Extended period of
eligibility: Allows for a
consecutive 36-month period
after the trial work period
in which cash benefits are
reinstated for any month
countable earnings are $500
or less. This period begins
the month following the end
of the trial work period.
SSI................................... Earned income exclusion:
Allows recipients to
exclude more than half of
earned income when
determining the SSI payment
amount.
Section 1619 (a): Allows
recipients to continue to
receive SSI cash payments
even when earnings exceed
$500 a month. However, as
earnings increase the
payment decreases.
Plan for Achieving Self-
Support (PASS): Allows
recipients to exclude from
their SSI eligibility and
benefit calculation any
income or resources used to
achieve a work goal.
DI and SSI............................ Impairment-related work
expenses: Allows the costs
of certain impairment-
related items and services
needed to work to be
deducted from gross
earnings in figuring
substantial gainful
activity (SGA) and the cash
payment amount. For
example, attendant care
services received in the
work setting are
deductible, while nonwork-
related attendant care
services performed at home
are not.
Subsidies: Allows the value
of the support a person
receives on the job to be
deducted from earnings to
determine SGA.
Medical coverage safeguards
DI.................................... Continued Medicare coverage:
Allows for continued
Medicare coverage for at
least 39 months following a
trial work period as long
as medical disability
continues.
Medicare buy-in: Allows
beneficiaries to purchase
Medicare coverage after the
39-month premium-free
coverage ends.
Beneficiaries pay the same
monthly cost as uninsured
retired beneficiaries pay.
SSI................................... Section 1619 (b): Allows
recipients to continue
receiving Medicaid coverage
when earnings become too
high to allow a cash
benefit. Coverage continues
until earnings reach a
threshold amount, which
varies in every state.
Eligibility safeguards
DI.................................... Reentitlement to cash
benefits and Medicare:
After a period of
disability ends, allows
beneficiaries who become
disabled again within 5
years (7 years for
widow(ers) and disabled
adult children) to be
reentitled to cash and
medical benefits without
another 5-month waiting
period.
SSI................................... Property essential to self-
support: Allows recipients
to exclude from
consideration in
determining SSI eligibility
the value of property that
is used in a trade or
business or for work.
Examples include the value
of tools or equipment.
DI and SSI............................ Continued benefit while in
an approved VR program:
Allows a person actively
participating in a VR
program to remain eligible
for cash and medical
benefits even if he or she
medically improves and is
no longer considered
disabled by SSA.
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] T5046.002
[GRAPHIC] [TIFF OMITTED] T5046.003
Net Effect of Proposals on Work Effort and Program Costs Is Unknown
Because there are complex interactions between earnings and
benefits, changing the work incentives may or may not increase
the work effort of current beneficiaries, depending on their
behavior in response to the type of change and their capacity
for work and earnings. But, even if the changes in the work
incentives increase the work effort of the current
beneficiaries, a net increase in work effort may not be
achieved. This point is emphasized by economists who have noted
that improving the work incentives may make the program
attractive to those not currently in it.\9\ Allowing people to
keep more of their earnings would make the program more
generous and could cause people who are currently not in the
program to enter it. Such an entry effect could reduce overall
work effort because those individuals not in the program could
reduce their work effort in order to become eligible for
benefits. Moreover, improving the work incentives could also
keep some in the program who might otherwise have left.
Allowing people to keep more of their earnings would also mean
that they would not leave the program, as they once did, for a
given level of earnings. Such a decrease in this exit rate
could reduce overall work effort because people on the
disability rolls tend to work less than people off the rolls.
The extent to which increased entry occurs and decreased exit
occurs will affect how expensive these changes could be in
terms of program costs.
---------------------------------------------------------------------------
\9\ See Hillary Williamson Hoynes and Robert Moffitt, ``The
Effectiveness of Financial Work Incentives in Social Security
Disability Insurance and Supplemental Security Income: Lessons from
Other Transfer Programs,'' in Disability, Work, and Cash Benefits,
edited by Jerry L. Mashaw, Virginia Reno, Richard V. Burkhauser, and
Monroe Berkowitz (Kalamazoo, Michigan: W.E. Upjohn Institute for
Employment Research, 1996) and Hillary Williamson Hoynes and Robert
Moffitt, ``Tax Rates and Work Incentives in the Social Security
Disability Insurance Program: Current Law and Alternative Reforms,''
May 1997, unpublished.
---------------------------------------------------------------------------
However, determining the effectiveness of any of these
proposed policies in increasing work effort and reducing
caseloads requires that major gaps in research be filled. The
economists considered entry and exit effects in their analysis
by using economic theory and numerical simulations of how net
income (earnings plus benefits plus earnings subsidies) is
affected when individuals work for different numbers of hours
at different wage rates. But the economists were not able to
simulate changes in work effort in response to program changes
because that would require information that is not currently
available from the literature. Such information would measure
how beneficiaries' work efforts change in response to changes
in income, including the value of noncash benefits, resulting
from program changes.
The costs of the proposed reforms are difficult to estimate
with certainty because of the lack of information on entry and
exit effects. SSA has tried to account for potential entry and
exit effects when estimating the cost of various proposed
reforms. But the agency has noted that such estimates are
subject to significant uncertainty because of the lack of
information on changes in work effort.
Mr. Chairman, this concludes my prepared statement. At this
time, I will be happy to answer any questions you or the other
Subcommittee Members may have.
Related GAO Products
Social Security: Disability Programs Lag in Promoting Return to
Work (GAO/HEHS-97-46, Mar. 17, 1997).
People With Disabilities: Federal Programs Could Work Together More
Efficiently to Promote Employment (GAO/HEHS-96-126, Sept. 3, 1996).
SSA Disability: Return-to-Work Strategies From Other Systems May
Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996).
Social Security: Disability Programs Lag in Promoting Return to
Work (GAO/T-HEHS-96-147, June 5, 1996).
SSA Disability: Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr. 24, 1996).
PASS Program: SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb. 28, 1996).
Social Security Disability: Management Action and Program Redesign
Needed to Address Long-Standing Problems (GAO/T-HEHS-95-233, Aug. 3,
1995).
Supplemental Security Income: Growth and Changes in Recipient
Population Call for Reexamining Program (GAO/HEHS-95-137, July 7,
1995).
Disability Insurance: Broader Management Focus Needed to Better
Control Caseload (GAO/T-HEHS-95-164, May 23, 1995).
Social Security: Federal Disability Programs Face Major Issues
(GAO/T-HEHS-95-97, Mar. 2, 1995).
Social Security: Disability Rolls Keep Growing, While Explanations
Remain Elusive (GAO/HEHS-94-34, Feb. 8, 1994).
Vocational Rehabilitation: Evidence for Federal Program's
Effectiveness Is Mixed (GAO/PEMD-93-19, Aug. 27, 1993).
Chairman Bunning. Thank you very much.
Dr. Growick.
STATEMENT OF BRUCE GROWICK, PH.D., ASSOCIATE PROFESSOR,
REHABILITATION SERVICES PROGRAM, COLLEGE OF EDUCATION, OHIO
STATE UNIVERSITY
Mr. Growick. Thank you. It is a pleasure to be here to
present before your Subcommittee.
My name is Bruce Growick, associate professor in the
College of Education at Ohio State University, where I teach
classes, conduct research and advise students in the discipline
of rehabilitation counseling. I am also a past president and an
active member of the National Association of Rehabilitation
Professionals in the Private Sector. On a part-time basis, I am
also a vocational expert for the Social Security
Administration, and I partake in a daily decisionmaking process
of deciding who is disabled and who is not.
Chairman Bunning. Are you a Buckeye fan though?
Mr. Growick. Of course. Ranked number 2 last year, of
course.
The training program at Ohio State has graduated over 120
students at both the doctoral and master's level since I have
been there, and Ohio State is only 1 of 70 to 80 rehabilitation
training programs nationally. An interesting trend has emerged
over the last few years. More and more of our graduates are
obtaining employment in the private sector of rehabilitation,
rather than the public sector, rather than the State and
Federal rehabilitation system. Many graduates are employed by
private, nonprofit and for-profit agencies and companies,
helping individuals with disabilities either enter or return to
employment. Most of these entities in the private sector
counsel individuals who are covered by personal injury,
workers' compensation or Social Security insurance.
In the area of private sector rehabilitation, counselors
who can help people obtain work are valuable because they
remove an outstanding portion of liabilities that are covered
by the insurance policy. The insurance industry has discovered
it is cheaper and better to help beneficiaries return to work
than it is to pay off a claim. This is especially true in
workers' compensation where employers are clearly liable for
wages lost by individuals who are injured on the job.
Many of our graduates prefer this kind of work in the
private sector because they are unencumbered by unnecessary
paperwork. They often feel they can help people quicker and
more easily, and their beginning salary is higher.
In contrast to the public sector of rehabilitation, the
world of private sector rehabilitation is relatively new, but
has been growing rapidly over the last several years. As with
most services starting in the public sector, like health care
and education, rehabilitation has seen a transformation from
the monopolistic domination of the public sector to the healthy
addition of the private sector and competition. Nothing
improves on the delivery of a service or development of a
product like competition, and the United States is a
competitive society, and policies that spur competition are
clearly healthy and good.
During a 2-year leave of absence from Ohio State, I also
had the opportunity and honor of being director of the
rehabilitation division of the Bureau of Workers' Compensation.
That bureau is quite similar to the State/Federal
rehabilitation system.
Ohio, under Governor Voinovich, has undergone a
transformation over the last couple years in moving
rehabilitation services from the public sector to the private
sector, and an analogy may be appropriate here that the State/
Federal system of rehabilitation services might be more
efficient and effective if it were not the sole provider of
rehabilitation services to the beneficiaries of Social
Security.
A critical component of any new legislation should be
provisions for informed choice throughout the rehabilitation
process. In addition to consumers having the right to select an
employment goal and their choice and services; they should no
longer be limited to just a State/Federal rehabilitation
system. Individual choice, by competition, simply increases
involvement in the quality of services provided. The Social
Security Subcommittee should codify the need for and value of
allowing private sector rehabilitation professionals to compete
in the area of rehabilitating Americans with disabilities,
based on cost, quality, and outcome.
There have been many successful cooperative partnerships
between State governments, Federal Governments and the private
sector in the areas of welfare, workers' compensation and
unemployment. The role of government should be to assist and
encourage persons with disabilities toward employment, but by
the same token, the system should include the private sector as
an expanded and successfully proven option. A good mechanism
for referral of Social Security beneficiaries to the private
sector needs to be developed as soon as possible.
In conclusion, I would like to say more and more of my
students have been taking advantages of the benefits of
employment and private sector rehabilitation. Now it is time to
give Social Security beneficiaries the same choice. The private
sector has a proven history of providing cost-effective and
successful return to work outcomes for the insurance industry,
and Social Security should be the same. In fact, return on
investment in private sector rehabilitation is so good that our
industry continues to grow, and in private sector
rehabilitation, we like to say we operate under earned dollars
rather than appropriated dollars. If we are to reduce the
disability rolls, we must provide true consumers with their
choice, and that choice needs to include private sector
rehabilitation.
Thank you, your Honor.
[The prepared statement follows:]
Statement of Bruce Growick, Ph.D., Associate Professor, Rehabilitation
Services Program, College of Education, Ohio State University
Chairman Bunning and members of the Subcommittee, thank you
very much for this opportunity to share with you both my
professional experiences in the field of vocational
rehabilitation, and my personal suggestions and recommendations
for improving on the delivery of rehabilitation services in
America.
My name is Bruce Growick, and I am an Associate Professor
in the College of Education at The Ohio State University (OSU)
where I teach classes, conduct research, and advise students in
the Rehabilitation Services program. I am also a past-president
and active member of the National Association of Rehabilitation
Professionals in the Private Sector (NARPPS). However, I am
here today in my capacity as an Associate Professor of
rehabilitation.
The training program at OSU has graduated over 120 students
at both the master's and doctoral level over the last fifteen
years. Many, if not most, of these graduates have obtained
employment in our field, and are contributing to the
rehabilitation of individuals with disabilities. In addition,
we at OSU have also conducted federally-funded research on
different aspects of the rehabilitation system including
predictors of rehabilitation success, counselor satisfaction
and performance, and the Americans with Disabilities Act.
An interesting trend has emerged over the last few years.
More and more of our graduates are obtaining employment in the
private-sector of rehabilitation rather than the public-sector.
Many of our graduates are now employed by private, non-profit
and for-profit, agencies and companies helping individuals with
disabilities either enter or return to employment. Most of
these entities in the private-sector counsel individuals who
are covered by personal injury, workers' compensation, and/or
Social Security insurance. In the area of private-sector
rehabilitation, counselors who can help individuals obtain work
are valuable because they remove an outstanding portion of the
liability that is covered by the insurance policy. The
insurance industry has discovered that it is cheaper and better
to help their beneficiaries return to work than it is to pay
off a claim. This is especially true in workers' compensation
cases where employers are clearly liable for wages lost by
individuals who are injured on the job.
Many of our graduates prefer this kind of work because,
unlike the public state/federal rehabilitation system, they are
unencumbered by unnecessary paperwork, they often feel they can
help people quicker and more easily, and their salary is
higher. In contrast to the public-sector, the world of private-
sector rehabilitation is relatively new, but has been growing
tremendously over the last ten years. As with most services
which start in the public-sector like health care and
education, the field of rehabilitation has seen a
transformation from the monopolistic domination of the public-
sector to the healthy addition of the private-sector and
competition. Nothing improves on the delivery of a service or
the development of a product like competition. The United
States is a competitive society and policies that spur
competition are healthy and good.
During a two-year leave of absence from The Ohio State
University (1989-1990), I also had the honor of being the
Director of Rehabilitation for the Ohio Bureau of Workers'
Compensation. As Director, I had responsibility for twelve
field offices located throughout the State of Ohio, two
rehabilitation Centers (Columbus and Cleveland), and over 400
employees with an annual budget of $48 million dollars. During
1990, the Rehabilitation Division of the Ohio Bureau of
Workers' Compensation returned to work over two thousand
injured workers. Ohio is somewhat unique in that it offers
industrial rehabilitation services directly to injured workers
by a separate state agency. As you can see, this agency is
quite similar to the public rehabilitation system.
Over the last five years in Ohio, more and more of the
delivery of industrial rehabilitation services have been
provided by the private-sector. Our state agency is no longer
both the regulator and the sole provider of rehabilitation
services. An analogy may be appropriate here that the state/
federal system of rehabilitation services might be more
efficient and effective if it were not the sole provider of
services to beneficiaries of Social Security. A critical
component of any new legislation should be provisions for
informed choice throughout the rehabilitation process. In
addition to consumers having the right to select an employment
goal, and a choice in services needed to reach their goal,
consumers should be able to choose from whom they would like to
receive services, no longer being limited to just state
Vocational Rehabilitation agencies. Individual choice simply
increases involvement and the quality of services provided. The
Social Security Subcommittee should codify the need for and
value of allowing the private-sector to compete in the area of
rehabilitating Americans with disabilities based on cost,
quality, and outcome.
Changes are necessary in the way in which beneficiaries of
Social Security can receive rehabilitation services and return
to work. The current climate represents a historic opportunity
to instill needed change into a system that has, to date, been
inefficient and insufficient in its provision of vocational
rehabilitation to persons with disabilities. A recent GAO study
documented the unacceptable return to work rate of the state/
federal system. In contrast, the private-sector has a proven
history of providing cost-effective and successful return to
work outcomes within the insurance industry. In fact, the
private sector continues to exist and prosper specifically
because of its ability to return individuals with disabling
conditions to gainful employment for a sustained period of time
and resolve outstanding liabilities.
There have also been many successful cooperative
partnerships between state governments and the private sector
in the areas of welfare, workers' compensation, unemployment,
etc. The role of government should be to assist and encourage
persons with disabilities towards employment, but by the same
token, the system should include the private sector as an
expanded and successfully proven option. A good mechanism for
the referral of SSA beneficiaries to the private sector needs
to be developed as soon as possible.
In conclusion, more of my students have been taking
advantage of the benefits of the private-sector. Now it is time
to give SSA beneficiaries that same choice. The private sector
has a long and proven history of providing cost effective and
successful return-to-work outcomes within the insurance
industry. In fact, return on investment in private-sector
rehabilitation is so good that our industry continues to grow.
In the private-sector, rehabilitation providers operate under
earned dollars, not appropriated dollars. If we are to reduce
the disability rolls than we must provide true consumer choice
for SSA beneficiaries, and that choice needs to include
private-sector rehabilitation services.
I respectfully offer the following five recommendations as
you consider new legislation in this area:
Reduce the disincentives for return-to-work for
SSA beneficiaries by providing a means to continue medical
coverage upon return to work.
Include choice of the private-sector for return-
to-work services with a payment model for providers that is
viable and realistic.
Avoid increasing the work load of SSA; this new
return-to-work system should be as streamlined and efficient as
possible.
Develop an incentive for employers to hire SSA
beneficiaries, such as a FICA Tax Credit.
And that you and your staff feel free to call on
me as a valuable tool in your efforts to improve the state/
federal vocational rehabilitation system.
Again, Mr. Chairman, thank you for the opportunity to
present today before the Subcommittee, and I am happy to answer
any questions that the Subcommittee might have.
Chairman Bunning. Thank you very much.
Dr. Berkowitz.
STATEMENT OF MONROE BERKOWITZ, PROFESSOR OF ECONOMICS EMERITUS,
RUTGERS UNIVERSITY, NEW BRUNSWICK, NEW JERSEY; ACCOMPANIED BY
VIRGINIA P. RENO, DIRECTOR OF RESEARCH, NATIONAL ACADEMY OF
SOCIAL INSURANCE
Mr. Berkowitz. With your permission, may I ask for Ms. Reno
from the National Academy of Social Insurance to say a word of
introduction?
Chairman Bunning. Without objection. Go right ahead, Ms.
Reno.
Ms. Reno. Thank you, Mr. Chairman. We commend you and Mrs.
Kennelly on the leadership you have given in this very
important area of return to work and barriers to work. Our
academy completed a study recently that we began over 3 years
ago to look at the Social Security Program and barriers to
work. Our expert panel came out with both findings and
recommendations. Professor Berkowitz was a member of the panel,
and he will speak about our most innovative recommendation.
In brief, when the panel looked at the Social Security
Program in comparison with private disability insurance and
with foreign disability programs, it had several findings.
First, the test of disability in these programs is among the
strictest found anywhere. Second, by these comparisons, the
benefits are modest. The benefits alone are not a strong
deterrent to work, in the panel's view, but lack of health care
coverage can be.
The panel had five recommendations: First, a better
Medicare buy-in for those who return to work, and similar
provisions in Medicaid; second, a tax credit to make work pay;
third, better implementation of existing work incentives to get
the best we can out of current law; fourth, a personal
assistance tax credit for people with extraordinary work
expenses; and finally, a return to work ticket.
Professor Berkowitz designed the Ticket Proposal, and he is
an expert on the thinking behind it. It rests on a few very
simple ideas of consumer choice, innovation through voluntary
market-based arrangements, and, finally, paying for the result
you want, which, out of Social Security funds, means the person
back at work and off the Social Security rolls.
[The prepared statement follows:]
Statement of Virginia P. Reno, Director of Research, National Academy
of Social Insurance
Mr. Chairman, we commend you and Representative Kennelly
for your leadership on the important issue of Social Security
and return to work. We appreciate the opportunity to report to
you on key findings and recommendations of the Academy's
Disability Policy Panel. With me today is Monroe Berkowitz,
Professor of Economics, Emeritus of Rutgers University who
served on the Panel.
I will briefly summarize the Panel's findings and
recommendations. Professor Berkowitz will spend most of our
time discussing the return-to-work ticket proposal. Summaries
of the Panel's report, Balancing Security and Opportunity: The
Challenge of Disability Income Policy, are available here
today.
The Academy is a nonprofit, nonpartisan organization made
up of many of the Nation's leading scholars on social
insurance. Its purpose is to promote research and to be a forum
for exchange of new ideas in social insurance.
The Academy convened a panel of 18 of the Nation's leading
experts on varied aspects of disability policy to conduct its
analysis. The list of panel members is on page 2.
The findings and recommendations we are presenting are
those of the Panel. They do not represent an official position
of the National Academy of Social Insurance, which does not
take positions on legislation.\1\
---------------------------------------------------------------------------
\1\ The Disability Policy Panel's work was funded from private
sources--The Pew Charitable Trusts, the Robert Wood Foundation, and by
corporate members of the Health Insurance Association of America that
offer long term disability insurance. It also received an in-kind
contribution from the Social Security Administration in the loan of an
employee under an Intergovernmental Personnel Act (IPA) assignment.
---------------------------------------------------------------------------
The Disability Policy Panel, National Academy of Social Insurance
Jerry L. Mashaw, Chair, Sterling Professor of Law, Institute of Social
and Policy Studies, Yale University Law School, New Haven, CT
Monroe Berkowitz, Professor of Economics, Emeritus, Rutgers University,
New Brunswick, NJ
Richard V. Burkhauser, Director, Center for Policy Research, Maxwell
School, Syracuse University, Syracuse, NY
Gerben DeJong, Director, National Rehabilitation Hospital-Research
Center, Washington, D.C.
James N. Ellenberger, Assistant Director, Department of Occupational
Safety and Health, AFL-CIO, Washington, D.C.
Lex Frieden, Senior Vice President, The Institute for Rehabilitation
and Research, Houston, TX
Howard H. Goldman, M.D., Professor of Psychiatry, University of
Maryland School of Medicine, Baltimore, MD
Arthur E. Hess, Consultant, Former Deputy Commissioner of Social
Security, Charlottesville, VA
Thomas C. Joe, Director, Center for the Study of Social Policy,
Washington, D.C.
Mitchell P. LaPlante, Associate Adjunct Professor, Institute for Health
and Aging, University of California, San Francisco
Douglas A. Martin, Special Assistant to the Chancellor, University of
California, Los Angeles
David Mechanic, Director, Institute for Health, Health Care Policy and
Aging Research, Rutgers University, New Brunswick, NJ
Patricia M. Owens, President, Integrated Disability Management UNUM
America, Brooklyn, NY
James M. Perrin, M.D., Associate Professor of Pediatrics, Harvard
Medical School, Massachusetts General Hospital, Boston, MA
Donald L. Shumway, Co-director, RWJ Project on Developmental
Disabilities, Institute on Disabilities, University of New Hampshire,
Concord, NH
Susan S. Suter, President, World Institute on Disability, Oakland, CA
Eileen P. Sweeney, Director of Government Affairs, Children's Defense
Fund, Washington, D.C.
Jerry Thomas, President, National Council of Disability Determination
Directors, Decatur, GA
The Panel was asked to answer to three basic questions.
(1) Do disability cash benefits provide a strong deterrent to work?
(2) Can an emphasis on rehabilitation be built into the Social
Security disability insurance (DI) program without greatly expanding
costs or weakening the right to benefits?
(3) Are there ways to restructure disability income policy to
better promote work?
The short answers are no, yes, and yes. The reasons for these
answers and the Panel's recommendations follow.
Benefits and Work
First, the Panel concluded that current benefits are not a
strong deterrent to work.\2\ That conclusion is based on the
Panel's review of the strict and frugal design of the DI and
Supplemental Security Income (SSI) programs, the attributes of
beneficiaries, and a comparison of U.S. disability spending
with that in other Western countries.
---------------------------------------------------------------------------
\2\ In reading this conclusion,t he Panel recognized that any
income support can, to some degree, be viewed as a work disincentive.
This is because the purpose of income support is to provideincome to
substitute for earnings when that is warranted.
---------------------------------------------------------------------------
The strict and frugal design of DI and SSI is evident in
three ways: First, the test of disability is among the
strictest used in any disability program in the United States,
public or private. And it is stricter than in most European
countries.
Second, there is a 5-month waiting period after the onset
of disability before DI benefits are paid and another 24-month
waiting period before Medicare coverage begins. Virtually all
private systems, and most foreign systems, assure short-term
benefits before long-term benefits are paid. And virtually all
are accompanied by secure health care coverage before and after
disability.
Third, the benefits are modest. Replacement rates in DI are
lower than those provided by U.S. private disability insurance
or in the public systems in other countries. Those systems
typically pay between 50 and 70 percent replacement rates. DI
in contrast, pays replacement rates ranging from 43 percent for
a person earning $25,000 to about 26 percent for one earning
$60,000.\3\ At lower earnings levels, say $15,000, benefits
replace half the worker's prior earnings, but are nonetheless
below the poverty threshold.
---------------------------------------------------------------------------
\3\ Replacement rates can be up to 50 percent higher for the 1 in 5
beneficiaries who receive an allowance for dependents.
---------------------------------------------------------------------------
The modest replacement rates from Social Security reflect
an expectation that benefits will be supplemented by pensions
or savings. When compared with retirees, disabled workers had
lower incomes and less often had pensions, insurance or savings
to supplement their Social Security. Their vastly smaller asset
holdings is particularly striking. Their modest savings no
doubt reflect the fact that disability occurs unexpectedly,
before they have completed saving for retirement; and the
unexpected costs of disability eroded their savings.
SSI benefits are more modest. They are paid subject to the
same strict test of disability and a strict test of means. In
1997, the maximum federal SSI benefit is $484 a month. While
some states supplement the federal benefits, the federal
guarantee, alone, amounts to about 70 percent of the poverty
threshold. These benefits, too, are an unappealing alternative
to work for those who can earn a living wage.
Foreign Comparisons.
When the Panel compared U.S. disability spending with that
in other countries, it found that U.S. spending is relatively
low. U.S. spending for DI and SSI combined amounted to 0.7
percent of our gross domestic product (GDP) in 1991, less than
half the share spent in the United Kingdom (1.9 percent) and
less than a fourth of the spending in Sweden (3.3 percent of
GDP).
Even Germany spends far more than the United States on
long-term disability benefits (2.0 percent). This is despite
the Germans' emphasis on ``rehabilitation before pensions'' and
provisions for quotas, tax penalties and subsidies for job
accommodations to encourage private employers to hire disabled
workers.
Our conclusion, therefore, is that U.S. cash benefits
programs for disabled workers are strictly and frugally
designed and do not provide a strong deterrent to work.
Health Care Coverage and Work
While neither DI nor SSI, in and of themselves, pose strong
incentives to claim benefits in lieu of working, the Panel
concluded that constraints on access to health care can be a
significant barrier to employment.
Persons with chronic health conditions, are at risk of very
high health care costs. They often cannot gain coverage in the
private insurance market, and even when they do have private
coverage, it often does not cover the range of services and
long-term supports they may need in order to live
independently. Medicare or Medicaid, therefore, are crucial
supports.
Furthermore, health care coverage has declined in recent
years and the number of uninsured has grown among the entire
working-aged population and among those with disabilities.
Between 1988 and 1993, the number of persons with work
disabilities who lacked health coverage from either private
insurance or public programs grew from 2.3 million to 2.9
million.\4\
---------------------------------------------------------------------------
\4\ Tabulations of the March 1994 Current Population Survey
provided by the Employee Benefit Research Institute, Washington, D.C.
---------------------------------------------------------------------------
The Panel recommended a way to make Medicare coverage more
affordable and secure for DI beneficiaries who leave the rolls
because of work. It also urged States to adopt similar
arrangements in their Medicaid programs.
Return to Work Tickets
On the question of linking beneficiaries with
rehabilitation services, the Panel recommended a radical new
approach. Beneficiaries would receive a return to work (RTW)
ticket, that they could use to shop among providers of
rehabilitation or RTW services in either the public or private
sector. Once a beneficiary deposited the ticket with a service
provider, the Social Security Administration would have an
obligation to pay the provider, but only after the beneficiary
returned to work and left the benefit rolls. A provider whose
client successfully returned to work would, each year, receive
in payment a fraction of the benefit savings that accrue to the
Social Security trust funds because their customer--the former
beneficiary--is at work and not receiving benefits.
This market approach rests on a few basic principles:
Beneficiary choice. For the market approach to
work, the beneficiary's choice to use the ticket has to be
voluntary. And the provider's choice to accept the ticket has
to be voluntary.
Innovation. Beneficiaries and providers would
decide on a case-by-case basis, the approach that will work to
get the desired result.
Paying for the result you want--beneficiaries in
long-term jobs and off the benefit rolls.
The Panel concluded that each of these principles is
essential to the overall effectiveness of the proposal. And,
with these features, it can be effectively administered by the
Social Security Administration. To deviate from these basic
principles--choice, innovation and paying for results--means a
much greater role of government in decisions that the Panel
believes are most effectively made directly between customers
and providers. If choices are not made voluntarily, the
government inevitably must be involved in deciding who is
obligated to do what for whom; who has ``good cause'' for not
doing what the other party wants; and so forth. Professor
Berkowitz will elaborate on the Return-to-Work ticket developed
by the Panel.
Other Policies to Promote Work
In response to the question about changes in cash benefit
policies that would promote work the Panel recommended a wage
subsidy, a tax credit for personal assistance services, and
improvements in the implementation of existing work incentives.
Wage Subsidy for Low-Income Workers with Disabilities.
The disabled worker tax credit (DWTC) the Panel recommended
would be separate from the Social Security system. It would be
paid to low-income persons, not because they are unable to
work, but because they work despite their impairments.
Patterned after the earned income tax credit, it would reward
work for low earners with disabilities without increasing
reliance on disability benefit programs that are designed
primarily for persons who are unable to work. It is designed
for three groups in particular.
Older workers who experience a decline in hours of
work or wage rates due to progressive impairments.
Young people with developmental disabilities who
are entering the work force for the first time.
People who leave the DI or SSI rolls because they
return to work. The wage subsidy would ease the income
``cliff'' that DI beneficiaries now face.
Personal Assistance Tax Credit.
The Panel recommended a personal assistance tax credit to
compensate working people for part of the cost of personal
assistance services they need in order to work. Some people who
require personal assistance services are able to work in the
competitive labor market. But they face a dilemma. If they work
successfully, their income may disqualify them from receiving
publicly-financed services, yet they do not earn enough to pay
for the services on their own. The Panel recommended a tax
credit to compensate working people for part of the cost of
personal assistance services people need and pay for in order
to work.
Administering DI and SSI Work Incentives.
The Panel believes that the most important enhancement
needed in existing work incentives in DI and SSI is to improve
the way in which they are implemented. Such improvements would
involve both service providers who assist beneficiaries and the
Social Security Administration. After in-depth analysis and
extensive field research, the Panel concluded that:
Work incentive provisions are inherently complex.
Efforts to simplify them by redesigning them are not
particularly promising. Therefore, beneficiaries need help to
understand the rules and comply with them when they work.
Some kinds of help could be offered by service
providers who assist beneficiaries in returning to work--such
as those who accept the RTW tickets the Panel recommends. They
would need to understand the rules and consider it part of
their job to assist their clients in complying with them.
Some tasks can only be performed by the Social
Security Administration or an entity it employs. These include
prompt processing of earnings reports so that benefits are
adjusted promptly as beneficiaries' circumstances change. If
return to work is a priority, personnel and systems support for
these functions are essential.
Conclusions
In closing, I want to the emphasize two themes of the
Panel's report. First, many of the barriers to employment for
persons with disabilities lie outside cash benefit programs.
Consequently, many of the promising interventions also lie
outside of cash these programs--in health care, the structure
of jobs, education and training. The Panel focused its
recommendations only on federal benefit and tax policy.
Finally, as indicated in the title of their report,
Balancing Security and Opportunity, the Panel concluded that
disability income policy must strive for balance--between
providing secure and dignified income benefits to benefits to
those who are unable to work, on the one hand, while providing
realistic opportunities and supports for those who have the
capacity to work, on the other. In the final analysis, our
nation's disability policies will be judged by how well they
achieve this balance.
Ms. Reno. Professor Berkowitz.
Mr. Berkowitz. Let me just say that the views I express
here are mine and not necessarily endorsed by the panel, and
certainly not by the Social Security Administration.
I would heartily endorse a simple return to work program
for persons on Social Security rolls for the following reasons:
First, the system is broke, and if it is broke, it needs
fixing. Once on the rolls, people leave only as they die or
they transfer to the old-age system, and we have already had
testimony about the number, the pitifully small number of
people that go to work.
Second, persons on the roll are a diverse lot. Some are
mature persons with work experience who can no longer carry on.
Others have never worked and are now preparing themselves for a
life of benefits. This heterogeneous population needs a variety
of services, and it clearly is not a case of one size fits all.
Third, how we can get more people back to work. This is the
narrow issue with which we are concerned. I don't want to
reform the system, I don't want to make things better for
everyone. I want to find a way to get people off disability
rolls and back at good competitive jobs. The Social Security
Administration can't do the job. We made that decision way back
in 1956. We decided that the SSA ought not get into the
rehabilitation business. The joint Federal/State Vocational
Rehabilitation Program is doing a fine job addressing the
priorities Congress assigned to them. They may have a role to
play here; they may not. They ought to be given a chance.
Fourth, we are fortunate, as Dr. Growick just said, in
having in this country a thriving private sector rehabilitation
industry. It is flexible and adaptive. I don't think we have
gone far enough in involving the private sector providers.
How can we bring the energies of those people into this
business? To go down the road of having the Social Security
Administration negotiate fee schedules, utilization protocols
and other rules would provide jobs for the Federal bureaucracy,
but very few for persons on the disability rolls.
The conviction that there has to be a better way led to
this ticket plan. Here is simplicity itself. Here is a plan
that gives disabled persons a choice. People entering the rolls
are issued a ticket. They need not do anything with the ticket.
The system has to be voluntary. That is the essence of the
plan. However, if they choose to deposit the ticket with a
provider--and visualize, if you will, a whole wide variety of
providers to match the variety of problems, then the ticket
allows the provider to begin services.
We don't know that there is any one way to take people off
the rolls and to rehabilitate them. We don't know that there is
one way to motivate people. Let 1,000 flowers bloom here, and
allow a variety of providers to get into this act.
Once deposited with a provider, the ticket becomes a
contract with the Social Security Administration to pay the
provider a percentage of the benefits that would have been paid
once the person goes back to work and off the rolls. Nothing
gets paid until the beneficiary is back at work, and then only
after savings are realized.
We debated this proposal for many, many sessions, and all
kinds of issues arise. I do not have the time to get into them.
But let me conclude by noting that although there are many
details, the essence of the plan is contained in two essential
principles. The plan must be voluntary. Years of experience in
workers' compensation in this and other countries in the world
convinces me a compulsory plan will not work.
Second, all risks must be borne by the provider. If we pay
for milestones, we will get milestones. We will get what we pay
for. Milestones are not what we want. We want return to work,
and that is what we ought to pay for.
Pick up any newspaper and look at the ads for lawyers who
want to get people on the rolls. They receive no interim
payments, they do not get paid for milestones. They are on a
contingency-fee basis. It is the one part of Social Security
that works, unfortunate though that may be. Let's use the same
idea and the same creativity and move people into the world of
work. Thank you.
[The prepared statement follows:]
Statement of Monroe Berkowitz, Professor of Economics Emeritus, Rutgers
University, New Brunswick, New Jersey
My name is Monroe Berkowitz. I am professor of economics
emeritus at Rutgers University. For over four decades, I have
been concerned with research in the area of economics of
disability with emphasis on return to work. I am a member of
the National Academy of Social Insurance and served on its
Disability Panel. The views I express are my own and not
necessarily endorsed by the Panel. I am most grateful for the
opportunity to appear before the committee.
I heartily endorse a simple return to work program for
persons on the Social Security Disability benefit rolls for the
following reasons:
The system is broke and needs fixing. Once on the
rolls, persons leave only as they die or become old enough to
switch to old-age benefits. Less than one half of one percent
of the persons on the rolls return to work. We should be able
to improve that record.
Persons on the rolls are a diverse lot. Some are
mature persons with work experience who can no longer carry on.
Others are persons who have never worked and who are consigned
to a life of benefits. This heterogeneous population needs a
variety of services. Clearly this is not a case of one size
fits all.
How can we get more people back to work? Social
Security cannot do the job. We made the decision back in 1956,
that Social Security should not get into the rehabilitation
business. The joint federal-state vocational rehabilitation
programs are doing a fine job addressing the priorities
Congress has assigned to them. They may have a role to play in
returning beneficiaries to work, but it is increasingly evident
that they cannot do the job alone.
We are fortunate in having in this country a
thriving industry of private sector rehabilitation providers.
These are imaginative hard working people who have years of
experience in helping injured workers return to the job. They
can provide the flexible, adaptive type of services that can
return SSA beneficiaries to work.
How can we bring the energies and creativity of
the private sector to bear on this problem? It is my judgment
that Social Security cannot do a very good job of negotiating
with private providers. To go down the road of negotiating fee
schedules and utilization protocols is to end up providing jobs
for the federal bureaucracy but not for persons on the
disability rolls.
The conviction that there has to be a better way
led to the development of the ticket plan. Here is simplicity
itself that takes into account the heterogeneity of persons on
the rolls and that enlists the creativity and energies of
providers.
--Persons entering the rolls are issued a ticket. They need
not do anything with the ticket. The essence of the plan is
that it is voluntary in all of its aspects.
--They may choose to deposit the ticket with a provider.
Visualize a wide variety of providers. The variety of problems
should be matched with a variety of providers offering a medley
of approaches and services.
--Once deposited with the provider, the ticket becomes a
contract between the provider and the Social Security
Administration to pay the provider a percentage of the benefits
that would have been paid once the person goes back to work and
is off the rolls. Nothing gets paid until the beneficiary is
back at work, and then only after the savings are actually
realized.
The Panel debated the ticket proposal for many
sessions. I have had the advantage of discussing it before many
groups of persons working for the government, persons drawn
from the disability community and private and public sector
providers. In the course of these discussion, I believe we have
touched on each of the issues and the possible problem areas
and I would be happy to discuss these if there are any
questions.
Let me conclude by noting that details can differ, but the
essence of the plan is contained in these essential principles.
--The plan must be voluntary. Years of experience in
workers' compensation in this and other countries in the world
convinces me that a compulsory plan will not work.
--All risks must be borne by the providers. If we pay for
milestones, we will get milestones. That is not what we want.
We want return to work and that is what we should pay for.
Pick up any newspaper and note the ads for lawyers who are
soliciting clients to get them on the disability rolls. These
lawyers are working on a contingency fee basis and no one is
offering them interim payments. They get paid once the person
is on the disability rolls. Why cannot we enlist that same
entrepreneurial energy to get people off the rolls and back to
work?
Thank you Mr. Chairman. I appreciate the opportunity to
present my views on this important subject and will be happy to
answer any questions.
Chairman Bunning. Thank you for your testimony.
Mr. Kregel.
STATEMENT OF JOHN KREGEL, ED.D., RESEARCH DIRECTOR,
REHABILITATION RESEARCH AND TRAINING CENTER ON SUPPORTED
EMPLOYMENT, VIRGINIA COMMONWEALTH UNIVERSITY
Mr. Kregel. It is an honor for me to be with you this
morning.
The suggestions and recommendations I will share over the
next few minutes are the results of research activities
completed by the Rehabilitation Research and Training Center at
Virginia Commonwealth University in 1995 and 1996, through the
joint funding provided by NIDRR and the Social Security
Administration.
As a part of this research effort, we conducted focus
groups comprised of representatives of local provider agencies
and completed over 300 structured telephone interviews with
directors of local agencies in 40 different States. Questions
focused on the agencies' perceptions of potential effectiveness
of various provider incentive proposals.
I would like to briefly share with you recommendations in
three areas: First, the perceived need for milestone payments;
second, strategies to enhance the ability of smaller agencies
to participate in the program; and third, the need for strong
programmatic management structures, external to SSA.
First the need for milestone payments. While the notion of
paying providers for results is logically and physically sound,
in practice this approach will greatly reduce the number of
agencies that will participate in the program and limit the
overall size of the return to work initiative. Participation
will likely be limited to large, highly capitalized agencies
which receive sizable amounts of support from charitable
organizations, or which are able to generate revenue through
various enterprises.
Lack of milestone payments limit the participation of
various categories of provider agencies, including smaller
agencies, which don't have the fiscal resources to provide
resources for long periods of time without some reimbursements
for incurred cost, and programs in rural communities which are
generally small and face additional costs associated with
providing employment services in rural areas.
In addition, it should be anticipated that individuals who
are either viewed as too challenging, that is, costly, to
serve, or too poor a risk for meeting success criteria for the
program, such as individuals with persistent mental illness or
brain injuries, will have extreme difficulties locating
providers willing to assist them.
Second, strategies for promoting participation of smaller
agencies. Return to work programs should be designed so that
payments to providers are viewed as a premium resulting from
savings to the trust fund or general fund, rather than as a
cost reimbursement mechanism. Provider incentive proposals
should carefully consider dual funding arrangements as a
mechanism for encouraging the participation of small- and
medium-sized agencies.
For example, agencies should be allowed to serve as both
the employer and the provider agencies for individuals who
select them for service provision. This will allow agencies
providing employment opportunities through JWOD or other
similar programs to focus their efforts on serving individuals
participating in the return to work program.
In addition, local employment agencies should be allowed to
seek reimbursement from other funding agencies for services
provided to individuals participating in the return to work
program. For example, agencies should be able to receive
funding from a local mental health or mental retardation
authority, State rehabilitation agency or other funding entity
which would partially or fully reimburse agencies for the cost
of providing services. Payments provided to the agencies
through the return to work program would be a premium over and
above those received from other funding agencies.
Third, the need for a strong external management structure.
A strong management structure, external to SSA, is required to
resolve the numerous issues that will inevitably arise in the
implementation of the return to work program. The programs
being considered will dramatically change the relationship
between consumers and employment service agencies. While this
change is highly desirable, it cannot be assumed that numerous
implementation issues will be quickly or automatically
resolved.
Consider, for example, the following scenarios. An
individual attempts to resign from an unsatisfactory employment
situation 7 months after initially entering the job. The
provider agency, having already expended extensive resources,
places undue pressure on the individual to remain in an
unsatisfactory employment setting rather than jeopardize the
agency's potential reimbursement. Or an individual who has been
working for 5 months becomes dissatisfied with the services
delivered by the provider agency. The individual changes to a
different provider agency and remains in employment until
ultimately leaving the disability rolls. To what extent does
the first provider agency have a legitimate claim to subsequent
payments from SSA?
These are but two of a myriad of implementation issues
which will eventually arise as the return to work program
evolves. Many of the issues have only been marginally
recognized in the development of the proposed plans. Management
structures, external to SSA, are needed that would coordinate
implementation policies and guidelines across the country,
while allowing flexibility to address regional and local needs.
Thank you very much.
[The prepared statement follows:]
Statement of John Kregel, Ed.D., Research Director, Rehabilitation
Research and Training Center on Supported Employment, Virginia
Commonwealth University
It is an honor for me to be with you this morning. The
suggestions and recommendations I will share in the next few
minutes are the result of research activities completed by the
Rehabilitation Research and Training Center at Virginia
Commonwealth University in 1995-96 through joint funding
provided by NIDRR and the Social Security Administration.
As a part of this research effort, we conducted focus
groups comprised of representatives of local provider agencies
and completed over 300 structured telephone interviews with
directors of local agencies from 40 different states. Questions
focused on the agencies' perceptions of the potential
effectiveness of various provider incentive proposals.
I would like to briefly share with you recommendations
three areas: (1) the perceived need for milestone payments; (2)
strategies that will enhance the ability of smaller agencies to
participate in the program; and (3) the need for strong program
management structures external to SSA.
Need for Milestone Payments
While the notion of paying providers only for results is
logically and fiscally sound, in practice this approach will
greatly reduce the number of agencies that will participate in
the program and limit the overall size of the return to work
initiative. Participation will likely be limited to large,
highly capitalized agencies which receive sizable amounts of
support from charitable organizations, or which are able to
generate revenue through various enterprises. Lack of milestone
payments will limit the participation of various categories of
provider agencies, including:
smaller agencies which simply don't have the
fiscal resources to provide services for prolonged periods of
time without some reimbursement for incurred costs; and
programs in rural communities, which are generally
small and face additional costs associated with providing
employment services in rural areas.
In addition, it should be anticipated that individuals who
are either viewed as too challenging (i.e. costly) to serve or
too poor a risk for meeting the success criterion of the
program, such as individuals with persistent mental illness or
brain injuries, will have extreme difficulties locating
providers willing to assist them.
Strategies for Promoting the Participation of Smaller Agencies
Return to work programs should be designed so that payments
to providers are viewed as a premium resulting from savings to
the Trust Fund or General Fund, rather than as a cost
reimbursement mechanism. Provider incentive proposals should
carefully consider ``dual funding'' arrangements as a mechanism
for encouraging the participation of small and medium-sized
agencies.
For example, agencies should be allowed to serve as both
the employer and the provider agency for individuals who select
them for service provision. This will allow agencies providing
employment opportunities through JWOD or other programs to
focus their efforts on serving individuals participating in the
return to work program.
In addition, local employment agencies should be allowed to
seek reimbursement from other funding agencies for services
provided to individuals participating in the return to work
program. For example, agencies should be able to receive
funding from a local mental health/mental retardation
authority, state rehabilitation agency, or other funding entity
which would partially or fully reimburse agencies for the costs
of providing services. Payments that are provided to the agency
through the return to work program would then be a premium over
and above those received from other funding agencies.
Need for a Strong External Management Structure
A strong management structure, external to SSA, is required
to resolve the numerous issues that will inevitably arise
during the implementation of the return to work program. The
programs being considered will dramatically change the
relationship between consumers and employment service agencies.
While this change is highly desirable, it cannot be assumed
that numerous implementation issues will be quickly or
automatically resolved. Consider the following scenarios.
An individual attempts to resign from an
unsatisfactory employment situation seven months after
initially entering the job. The provider agency, having already
expended extensive resources, places undue pressure on the
individual to remain in an unsatisfactory employment setting
rather than jeopardize the agency's potential reimbursement.
An individual who has been working for five months
becomes dissatisfied with the services delivered by the
provider agency. The individual changes to a different provider
agency and remains in employment until ultimately leaving the
disability rolls. To what extent does the first provider agency
have a legitimate claim to subsequent payments from SSA?
These are but two of a myriad of implementation issues
which will eventually arise as the return to work program
evolves. Many of these issues have only marginally been
recognized in the development of the proposed plans. Management
structures external to SSA are needed that will coordinate
implementation policies and guidelines across the country while
simultaneously allowing flexibility to address regional and
local needs.
Chairman Bunning. Thank you very much.
Mr. Baron.
STATEMENT OF RICHARD C. BARON, DIRECTOR, MATRIX RESEARCH
INSTITUTE, PHILADELPHIA, PENNSYLVANIA, ON BEHALF OF
INTERNATIONAL ASSOCIATION OF PSYCHOSOCIAL REHABILITATION
SERVICES, COLUMBIA, MARYLAND
Mr. Baron. Thank you. Good morning. I want to thank the
Subcommittee for the opportunity to testify today. I am
director of Matrix Research Institute and its Research and
Training Center on Vocational Rehabilitation Services for
Persons with Mental Illness. I will be speaking today also as a
representative of the International Association of Psychosocial
Rehabilitation Services.
A staggering 90 percent of Americans who struggle with a
serious mental illness are unemployed, the vast majority of
whom rely on SSA or SSDI for cash assistance and medical
coverage. The largest group of SSA recipients are those with
mental illness, and they are the group currently most likely to
remain on the rolls for their entire adult life. Although the
symptoms of serious mental illness are considerable barriers to
job performance, a wide array of transitional and supportive
rehabilitation programs have been proven to be dramatically
effective in helping people to work, but such programs remain
in short supply.
More importantly, the barriers to employment, implicit in
our public policies, dissuade many people who should be working
to opt instead for dependency, and both the President and the
Congress are to be congratulated for the recent initiatives to
reshape the Nations's approach; however, I want to note a few
of the most critical barriers that new public policy will need
to address.
First, the longstanding public policy preoccupation with
getting people off the SSA rolls is, in my opinion, an
inappropriate goal and its own barrier. What we need instead is
legislation that encourages more people to work at their
individual capacity as frequently and as often as they can,
even if that employment is less than full time, or is only
intermittent. The vast majority of people with serious mental
illness can build substantial careers if we encourage both
part-time and full-time options, and we believe financial
savings from such policies, because of the widespread and
sustained reductions in cash assistance that will follow, will
be dramatic and far more effective than concentrating our
rehabilitation efforts on the relatively limited number of
people who can afford to escape the SSA rolls because they have
the capacity to return to full-time jobs in white collar
professions. Both groups of people deserve the attention of
this Subcommittee.
Second, any new system must address the barrier represented
by the potential loss of medical insurance for those who work,
limiting access to the very supports that make work possible in
the first place. Although I know Medicaid and Medicare
provisions are beyond the purview of this Subcommittee, because
people with serious mental illness use SSI and/or SSDI
eligibility as the portal to medical support, any program that
seeks to offer new incentives for employment must find a way to
ensure enrollees' access to Medicaid and Medicare if they need
it.
A third barrier has been a presumption that mental health
professionals or SSA personnel can accurately assess
rehabilitation potential. Any system that attempts to determine
at the outset which clients do and do not have the capacity for
employment is wrongheaded. There is no evidence that we have
the tools to make accurate prognostications of this sort, and
forcing rehabilitation professionals to pretend to do so will
only result in eliminating from potential employment all but a
few higher functioning clients. New approaches must encourage
each client to reach his or her vocational potential.
A fourth barrier has been a tendency to assume that
rehabilitation is a straight-line process. Many people will
need to be assured they can try once, fail, and then try again,
and yet again. Many of us would hate to see a ticket or voucher
program that provided only a one-point-in-time opportunity for
people to enter the working world, or one that placed arbitrary
time limits on needed support.
Fifth, delaying payment to vocational rehabilitation
agencies until the end of the process, when the client has
achieved prescribed goals--such as leaving the SSA rolls or
remaining employed consistently for 12 months--only creates new
barriers. The agencies will want to serve only those clients
who will appear, often erroneously, to be good bets. The new
system will need to offer payments at various milestones in
each client's progress, and then provide for the ongoing
occasional assistance some will need to build lifetime careers.
Sixth, the complexities of the current work incentive
provisions are considerable barriers as well. Although not
perfect, the current work incentives are quite positive, yet
they are largely unknown or unutilized by most consumers, and
are largely ignored or misunderstood by mental health,
vocational rehabilitation and Social Security staff. Any future
changes to incentives must be accompanied by a financial
commitment to provide expertise at the local level that
consumers need to manage these complicated systems.
Finally, let me say a word about the consequences of
continuing to ignore the vocational potential of persons with
serious mental illness, people who should be working because it
is in their own best interest, people who could be working
because rehabilitation programs do make it possible, and people
who would be working because work, in fact, endures as a
primary goal for the majority of those now completely dependent
on SSA. To fail to offer new opportunities and new incentives
is to risk the loss of yet another generation of disabled
people who are prepared to face the challenges of work, a loss
neither they nor the Nation can afford.
Thank you.
[The prepared statement follows:]
Statement of Richard C. Baron, Director, Matrix Research Institute,
Philadelphia, Pennsylvania, on Behalf of International Association of
Psychosocial Rehabilitation Services, Columbia, Maryland
Good morning. My name is Richard Baron, and I want to thank
the Subcommittee for the opportunity to testify today. I am the
Director of Matrix Research Institute and it's Research and
Training Center on Vocational Rehabilitation Services for
Persons with Mental Illness. I'll be speaking today also as a
representative of the International Association of Psychosocial
Rehabilitation Services.
A staggering 90% of Americans who struggle with a serious
mental illness are unemployed, the vast majority of whom rely
on SSI and SSDI both for cash assistance and medical coverage.
The largest group of SSA recipients are those with mental
illness, and they are the group currently most likely to remain
on the rolls for their entire adult lives. Although the
symptoms of serious mental illness are considerable barriers to
effective job performance, a wide array of transitional and
supported rehabilitation programs have been proven to be
dramatically effective in helping people to work, but such
programs remain in short supply.
More importantly, the barriers to employment implicit in
our public policies dissuade many people who should be working
to opt instead for dependency, and both the President and the
Congress are to be congratulated for their recent initiatives
to reshape the nation's approach; however, I want to note a few
of the most critical barriers that new public policies will
need to address.
First, the long-standing public policy pre-occupation with
``getting people off the SSA rolls'' is its own barrier. What
we need instead is legislation that encourages more people to
work at their individual capacity as frequently and as often as
they can, even if that employment is less than full-time or is
only intermittent. The vast majority of people with serious
mental illness can build substantial careers if we encourage
both part-time and full-time options, and we believe that
financial savings from such policies--because of widespread and
sustained reductions in cash assistance--will be dramatic, and
far more effective than concentrating our rehabilitation
efforts on the relatively limited number of people who can
afford to escape the SSA rolls because they have the capacity
to return to full-time jobs in white collar professions. Both
groups of people deserve the attention of this Subcommittee.
Second, any new system must address the barrier represented
by the potential loss of medical insurance for those who work,
limiting access to the very supports that make work possible in
the first place. Although I know that Medicaid and Medicare
provisions are beyond the purview of this Committee, because
people with serious mental illness use SSI and/or SSDI
eligibility as the portal to medical support, any program that
seeks to offer new incentives for employment must find a way--
as in a national health care program or the states' 1115 waiver
programs--to insure enrollees' continued access to Medicaid and
Medicare.
A third barrier to employment has been a presumption that
mental health or vocational rehabilitation professionals--or
SSA personnel--can accurately assess `rehabilitation
potential:' any system that attempts to determine at the outset
which clients do and do not have a capacity for employment is
wrong-headed: there is no evidence that we have the tools to
make accurate prognostications of this sort, and forcing
rehabilitation professionals to pretend to do so will only
result in eliminating from potential employment all but a few
higher functioning clients. New approaches must encourage each
client to reach for his or her vocational potential.
A fourth barrier has been our tendency to assume that
rehabilitation is a straight-line process; many people will
need to be assured that they can try once, fail, and then try
again, and yet again. Many of us would hate to see a `ticket'
or `voucher' program put in place a system that only offered
one-point-in-time opportunity for people to enter the working
world, or one that placed arbitrary time limits on needed
support.
Fifth, delaying payment to vocational rehabilitation
agencies until the `end' of the process--when the client has
achieved a prescribed goal such as leaving the SSA rolls or
remaining employed consistently for 12 months--only creates new
barriers: the agencies will want to serve only those clients
who will appear--often erroneously to be `good bets'. The
emerging system, to encourage agency engagement, will need to
offer payments at various milestones in each client's progress
toward employment, and then provide for the ongoing occasional
assistance some will need to build lifetime careers.
Sixth, the complexities of the current work incentive
provisions are considerable barriers as well. Although not
perfect, the current work incentives are quite positive, yet
they are largely unknown or unutilized by most consumers, and
are largely ignored or misunderstood by mental health,
vocational rehabilitation, and Social Security staff. Any
future changes to incentives must be accompanied by a financial
commitment to provide expertise, at the local level, that
consumers need to manage these complicated systems.
Finally, let me say just a word about the consequences of
continuing to ignore the vocational potential of persons with
serious mental illness, people who should be working because it
is in their own best interest, who could be working because
rehabilitation programs make it possible, and who would be
working because work endures as a primary goal for the majority
of those people now completely dependent on SSA. To fail to
offer new opportunities and new incentives is to risk the loss
of yet another generation of disabled people who are prepared
to face the challenges of work, a loss neither they nor their
nation can afford.
Chairman Bunning. Thank you very much.
Mr. Matheson.
STATEMENT OF LEONARD N. MATHESON, PH.D., CVE, DIRECTOR, WORK
PERFORMANCE LABORATORY; AND SECTION CHIEF, OCCUPATIONAL HEALTH
AND ERGONOMICS, PROGRAM IN OCCUPATIONAL THERAPY, WASHINGTON
UNIVERSITY SCHOOL OF MEDICINE, ST. LOUIS, MISSOURI
Mr. Matheson. Thank you, Mr. Chairman.
In 1970, I began to work with a young man named Paul who
was a teenager at Rancho Los Amigos Hospital; he was a client
of mine. He had a serious head injury, resulting in hemiplegia
and very bad paralysis on one side of his body. Eventually I
helped him get a job as a spray painter at a furniture plant.
Twenty years later he is still a spray painter, he is married
for the second time, he has three kids and a wife living in a
mortgaged home in southern California. He has claimed his
occupational birthright as an American, despite the fact that
he easily qualifies for SSDI benefits.
I have worked with several thousand people with
disabilities, approximately half of whom have been able to get
back to work. For all of them, functional capacity evaluation,
which we call FCE, guided rehabilitation and was a key to their
success. FCE is a systematic process of measuring and
developing an individual's ability to perform meaningful tasks
on a safe and dependable basis. It addresses functional
limitations, which is a bridge between medical impairment and
ability to work. This addresses the most important defect in
the design of SSDI, the attempt to predict disability from
impairment. In order to manage the issues that limit the
potential to work, it is necessary to move beyond impairment to
address functional limitation to address performance on job
tasks.
It was proposed in your Rehabilitation and Return to Work
Opportunity Act of 1996 that the assessment of capability for
vocational adjustment be undertaken on a broad basis. This was
well-intended but would have resulted in a wasteful application
of resources. It would be much better to evaluate the
occupational potential of a person with a disability on a
progressively constricting basis. This would allow the process
to be halted before it consumes too many resources. FCE can
provide objective information necessary to achieve effective
gatekeeping to screen out those who are not likely to benefit
while boosting the opportunities for those who can benefit
based on adherence to three indicators of success, the first
being the ability to maintain focus on meaningful work goals;
second being the ability to maintain focus on function rather
than impairment; and third, the willingness to stick with it.
This is the single most important multiplier of ability.
Rehabilitation requires 110-percent effort. In order to
take advantage of FCE strengths and not waste resources, the
process must be undertaken in steps. At each step, recipients
who do not meet criteria for success must be excused from the
program in an ever-constricting funnel that preserves resources
so that meaningful rewards in terms of rehabilitation benefits
are provided to those that persevere.
In step one, we must identify causes. In step two, we must
minimize disablement. In step three, we must identify the
person's ability factors. In step four, get into vocational
exploration to help the person identify goals, interests and
possible vocational targets. We wind up at step five with a
rehabilitation plan that has prepared the person to be an
excellent candidate for a return to work program.
The hallmarks of this process is that it is driven by
demonstrated recipient effort and guided by objective
information about work performance.
I have three policy recommendations, the first having to do
with standardization, and I ask SSA pay only for FCE services
which are provided by programs that are accredited by an
independent agency.
The second has to do with science and technology, and I
would recommend SSA only pay for services which adhere to
standards for technology development, which can be developed by
a national interdisciplinary committee of experts.
The third has to do with cost efficiency. I have cost
estimates in a supplemental report I provided this morning,
predicated on a policy in which the SSA pay only for FCE
services which address questions pertinent to that step in the
process at which the client is found.
To conclude, the successful return to work of SSDI
recipients benefits all Americans. The GAO has estimated if
only 73,000 of the 6.6 million Americans of working age who
received SSDI and SSI benefits were to return to work, $3
billion could be saved. It seems to me this is aiming far too
low, given the need and potential we find in these people.
My supplemental report looks at lifetime cost savings. I
see FCE as a gatekeeper, something that could be used as a
supplement to the Bunning bill, and would be a transition to
work program tickets, which will make it more likely that small
providers will take on these clients.
Thank you for your time.
[The prepared statement and attachment follow:]
Statement of Leonard N. Matheson, Ph.D., CVE, Director, Work
Performance Laboratory; and Section Chief, Occupational Health and
Ergonomics, Program in Occupational Therapy, Washington University
School of Medicine, St. Louis, Missouri
In 1970, I began to work with a teenager named Paul who
came to me as a client with a severe head injury at Rancho Los
Amigos Hospital in Downey, California where I worked as a pre-
vocational counselor in the pediatrics unit. I helped Paul get
a job as a spray painter in a furnitue plant. I still hear from
Paul occasionally during the Holiday season. Paul is a
grandfather, married for the second time, has three children
who live with him and his wife in a mortgaged home, and is
still employed as a spray painter. He has claimed his
occupational birthright as an American, in spite of the fact
that he easily qualifies for SSDI based on the severity of his
impairments, including a seizure disorder, complete hemiplegia
which stops him from using his left hand and causes
difficulties with standing and walking, swallowing, speech,
memory, and reading.
More than 6.6 million Americans of working age are SSDI and
SSI recipients who have impairments that limit their potential
for competitive employment. Some have functional limitations
that make work impractical while others are limited by
disabilities that can be overcome with proper identification
and management. Since I had the opportunity to work with Paul,
I have assisted more than 7,000 persons with severe
disabilities to attempt to enter the work force. Approximately
50% of these people have been successful. The patterns of
success are apparent, and stem both from characteristics of the
person served and characteristics of the services each
received.
I am here today to discuss the importance of functional
capacity evaluation (FCE) as a key service that can help the
Pauls and Paulas of this country retrieve what I believe is
every American's birthright, the opportunity to work and
demonstrate occupational competence. I will present FCE as a
process of measurement and development which can be used to
improve the Social Security Administration's disability
determination process as well as to increase the likelihood
that occupationally disabled SSDI beneficiaries will return to
work. In my testimony, I will be describing a vision of FCE
that can be used as a model of service to improve the health
and function of our citizens so that they can return to work,
resume full-fledged participation in the economy, restore
dignity to themselves and to their families, and improve the
overall financial and emotional health of the nation.
Functional Capacity Evaluation
We should begin with a definition. Functional capacity
evaluation (FCE) is a systematic process of measuring and
developing an individual's ability to perform meaningful tasks
on a safe and dependable basis (1).
Brief History
The scientific underpinnings of FCE stem in large part from
the research efforts of industrial and human factors
psychologists in World War II and thereafter, supported by
federal defense funding. The idea of matching the person to the
task was extended from this work to the Rehabilitation
community in the 1950's with early centers of excellence at the
University of Wisconsin, the University of Arizona and at
rehabilitation centers such as Rancho Los Amigos. In those
days, we assumed that persons with severe disabilities who
wanted to work probably could be assisted to work and we
developed procedures to achieve such goals. From the first, we
recognized that the evaluation of work capacity was a key to
success for people like Paul. This early experience evolved
into formal procedures for evaluating functional capacity as a
subset of work capacity and marrying that to work-oriented
treatment programs (2, 3), which will be described later. The
use of FCE in Rehabilitation has continued to develop over the
intervening years. At its present level, FCE is able to offer
assistance to American society to match a wide variety of
persons with chronic disabilities \1\ to a wide variety of
meaningful jobs. How it can accomplish this requires that we
consider FCE in more detail.
---------------------------------------------------------------------------
\1\ The word ``disabilities'' is plural because most people who are
chronically disabled have more than one cause of disablement.
---------------------------------------------------------------------------
Functional
The term ``functional'' is intended to connote performance
of a purposeful, meaningful, or useful task that has a
beginning and an end with a result which can be measured.
Several authors (4-7) have described current models of
disablement (8-10) and the rehabilitation process (11). My
testimony today references a model of rehabilitation depicted
in Figure One (below), the Stage Model of Occupational
Rehabilitation, in which functional limitations hold a
translational role between the individual's impairment and his
or her occupational disability. This key segment of the process
of the occupational rehabilitation process is the focus of FCE
(12, 13). It is important to focus on functional limitations
because they bridge between impairment which is assessed by
medical means and disability which is assessed my non-medical
means (14). More to the point, occupational disability predicts
employability better than does impairment (15-17), as Paul's
case and hundreds of others in my direct experience indicate.
This may be the single most important defect in the design of
SSDI; the attempt to predict disability from impairment. In
order to manage the issues that limit potential to work, it is
necessary to move beyond impairment and functional limitation
to address performance on job tasks. The impairment-centered
model must not continue to be used for this purpose.
Figure One. Stage Model of Occupational Rehabilitation.
----------------------------------------------------------------------------------------------------------------
Measured by or in terms Measurement
Stage Issue Addressed of ... Professionals
----------------------------------------------------------------------------------------------------------------
One.................................. Pathology.............. Cells, tissue and bone. All appropriate medical
diagnosticians.
Two.................................. Medical Impairment..... Anatomic, physiologic, All appropriate health
psychologic system care providers.
health.
Three................................ Functional Limitation.. Task performance....... FCE-trained MDs, OTs,
PTs, PhDs.
Four................................. Occupational Disability Role consequences of Occupational
functional limitations. Therapists, Vocational
Evaluators.
Five................................. Vocational Feasibility. Acceptability of the Vocational Evaluators,
evaluee as an employee. Occupational
Therapists.
Six.................................. Employability.......... Ability to become Vocational Evaluators,
employed. Rehabilitation
Counselors.
Seven................................ Vocational Handicap.... Ability to perform a Occupational
particular job. Therapists,
Ergonomists.
Eight................................ Earning Capacity....... Earned income over Economists.
expected worklife.
----------------------------------------------------------------------------------------------------------------
This model describes pathology and impairment as factors
that, taken within the context of the individual's
environmental and personal resources (12-18), are the
precursors of functional limitation. If the impairment is
sufficiently severe, functional limitations can result. If the
functional limitations are sufficiently severe and are
pertinent to role tasks, occupational disability will be the
result. Occupational disability can be thought of as the
summation of the role consequences of functional limitations
(6, 7) and recently has been the focus of governmental
attention (19). Another useful definition of occupational
disability is that it is the individual's uncompensated
shortfalls in responding to role demands (13). Figure Two
represents this definition in graphic terms.
[GRAPHIC] [TIFF OMITTED] T5046.004
Evaluation of disability is based on the measurement of the
functional consequences of impairment in tasks that are
pertinent to the particular role under consideration (6, 9).
Individuals assume several roles in society, such as spouse,
parent, neighbor, worker, team mate or customer. If the
functional consequences are significant and occur in tasks
which are critical to the performance of the job, the evaluee
can be described as having a compensible occupational
disability (COD). When the emphasis is on determining the
presence or degree of occupational disability, the focus must
be on tasks in the worker role and work environment (20). The
extent and type of the COD is dependent on the evaluee's
ability to perform these work-relevant tasks.
Capacity
The term ``capacity'' connotes the immediate potential of
the evaluee, what the person can possibly do at that point in
time. The use of the term capacity is somewhat misleading
because it rarely is measured directly unless the evaluee is
highly trained and motivated, such as when an experienced
athlete competes. Work capacity is less than ``work tolerance''
and can be inferred somewhat from evaluation of an individual's
response to exhaustive demands. However, exhaustive demands are
inappropriate when the focus of the evaluation is on a worker
(impaired or healthy). In this circumstance, the evaluation may
be concerned with the individual's ``maximum dependable
ability,'' what he or she can do on a regular basis in hallmark
tasks such as lifting and carrying. This information allows us
to identify occupations in which there are jobs the person may
be able to perform, based on the assumption that the demands of
these jobs are less than the evaluee's maximum dependable
ability. If we can, in turn, evaluate a person for a particular
job, we can focus on ability to handle that job's task demands.
Knowing the SSDI recipient's maximum dependable ability places
us in the ballpark; assignment to a particular position on the
team depends on the recipient's ability to handle the tasks
that are found in that position. A typical relationship among
these variables is described in Figure Three.
[GRAPHIC] [TIFF OMITTED] T5046.005
Evaluation Compared with Assessment
Functional capacity evaluation should be distinguished from
functional assessment (21). Although the terms sometimes are
used interchangeably and some functional assessment instruments
are used in FCE, they describe different processes. Generally,
FCE is based on performance measurement while functional
assessment is based on expert ratings from observation or on
the evaluee's self-report (22-25). FCE employs structured
performance protocols using test equipment or simulated
activities to measure functional performance while functional
assessment employs structured behavior rating scales to rate
observations of the evaluee made by trained observers or self-
perceptions made by the evaluee. Thus, FCE is much more likely
to identify work tasks that can be performed by SSDI
recipients. Additionally, FCE is much more likely to identify
problems with motivation or less than full effort performance
because it actively engages the evaluee in challenging tasks
and records the evaluee's behavioral response.
Because functional capacity evaluation involves measurement
of the evaluee's ability to perform work, it involves the
interface between both the person and the job. At this
interface are tasks that have complex physiological,
psychological, musculoskeletal and environmental bases. To
evaluate the individual without impairment and achieve a safe
and dependable match to job demands is difficult; to do so with
a person who has an impairment is more difficult; to do so with
many people who have a wide variety of impairments is daunting.
For SSDI recipients, there is often not a job to return to or a
job available to allow a focus on certain job demand factors,
further broadening the scope of FCE.
Numerous FCE Providers
Many professional disciplines provide FCE services. In
fact, all of the major disciplines involved in FCE today have
legitimate claims in that each has been interested to greater
or lesser degrees in matching the person to the task. FCE is
taught in many colleges and universities and postgraduate
seminars and is provided by a wide range of professionals:
------------------------------------------------------------------------
Estimated U.S.
Occupation Providers
------------------------------------------------------------------------
Occupational Therapists.............................. 10,000
Physical Therapists.................................. 10,000
Physicians........................................... 5,000
Psychologists........................................ 5,000
Vocational Evaluators................................ 5,000
------------------------------------------------------------------------
Each discipline has developed its own approach to FCE,
dependent on factors which differentiate one discipline from
the other. In recent years, professionals from the fields of
exercise physiology, kinesiology, nursing, chiropractic
medicine, and speech pathology have developed additional
approaches to FCE. Most SSDI recipients will require the
services of more than one discipline, both during the FCE and
once the rehabilitation plan begins in order to maximize their
potential for gainful work.
Specific Purposes of FCE
Beyond the general purpose of measuring an individual's
ability to perform meaningful tasks on a safe and dependable
basis, functional capacity evaluation as practiced in the
United States has three specific purposes:
Disability Determination
Determines the presence (and, if present, the level) of
occupational disability so that the evaluee's case can be
bureaucratically or juridically concluded (1, 26). In practice,
disability determination is the most simple of the three,
because it is only necessary to identify one factor (or a small
group of factors) to confirm that a person is disabled and to
measure the extent of disability with various rating schemes,
while many factors must be evaluated to determine whether a
person is able to fulfill an occup ational role. The efficiency
that can be obtained when a circumscribed question is posed for
FCE to answer is realized in this type of evaluation, which may
be demonstrated in the future as the SSA Disability
Determination re-engineering process continues to unfold. HR
4230, introduced in the last Congressional session, recognized
that something more was possible and held the promise of much
greater fiscal and human savings.
Rehabilitation Planning
Assists a medically impaired person to improve role
performance through identification of occupationally-relevant
functional limitations so that these decrements may be resolved
or managed (2, 13, 27). Health care professionals use this
information for many purposes, including the triage of patients
into proper treatment programs, to provide the basis for
remediation, and to measure treatment progress. Many times,
recipients have disabilities which can be eliminated through
aggressive rehabilitation or the use of technological assists.
Job Matching
Measures the individual's ability compared to task demands
to determine whether he or she will be competent in a job (10,
21). Routinely, the comparison of an individual's capacity to a
job's demands is made to diminish the risk of re-injury that is
associated with a mis-match as well as to improve the
individual's productivity. Numerous researchers (28-33) point
to the importance of properly matching the worker's capacity to
the job's demands. Shortfalls in the relationship between the
individual's resources and the environment's demands will
result in decreased performance (34) and increased risk for
injury (35, 36).
Legislative Initiatives
It was proposed in the ``Rehabilitation and Return to Work
Opportunity Act of 1996'' (HR 4230), that the assessment of
capability for vocational adjustment be undertaken on a broad
basis, with mandated assessment of work and educational
history, abilities and limitations, and interests and
aptitudes. This was well-intended but would have resulted in
wasteful application of resources. It would be much better to
evaluate the occupational potential of a person with a
disability on a progressively constricting basis. This would
allow the process to be halted before it consumes too many
resources so that the downstream benefits can be made
sufficiently supportive that success will be a likely
consequence of full-effort participation. This can be
accomplished and will result in much greater efficiency and
success. FCE can provide the information necessary to achieve
effective ``gatekeeping'' to screen out those who are not
likely to benefit while boosting the opportunities provided to
those who can truly benefit.
Context of Practice
The FCE process should have a strong therapeutic
orientation and should always have a focus on achieving
productivity that enlists the individual's goals, motivation
and attitudes toward success. This context of practice has been
described as ``work hardening,'' a treatment program which was
developed at Rancho Los Amigos Hospital in the 1970's (2, 3)
and has been shown to be effective in many settings throughout
the United States. Each step of the FCE process should be
presented within such a context. Key indicators of success in
this process include:
The ability to maintain a focus on meaningful work
goals. Goals such as improvement in fitness, decrease or
control of pain, alleviation of depression, improved sleep, and
many others which will be identified in these types of cases
must always be considered secondary to return to meaningful
work as the primary goal.
The ability to focus on function rather than
impairment. The medical impairment aspects of the case should
be handled in a way that facilitates maintaining a focus on the
development of the recipient's work behaviors. Many of these
people have not benefited from medical care; some of them can
be vocational successes in spite of their medical
circumstances. This will be most difficult and important with
regard to pain control. For the person who is disabled by pain,
this approach may greatly increase discomfort on a temporary
basis. If this temporary increase is not able to be tolerated
without strong medication, it is unlikely that the person will
be able to work in a competitive market place. However,
appropriate medical support to manage benign disabling pain can
be accomplished and should be provided.
The willingness to stick with it. At each step of
the evaluation process, the recipient must be expected to ``pay
the price of admission'' to the next step by demonstrating a
strong willingness to participate, in spite of his or her
circumstances. Less than full effort participation should be
cause for suspension or cessation of the return to work
program. Conversely, full effort participation which
demonstrates a high level of motivation must be reinforced
tangibly and recognized as the single most important multiplier
of ability.
Step-Wise Service Delivery
FCE is a developmental process (13) in which the
experiences of the recipient lead to improvement in performance
through learning, adaptation, and changes in the supporting
environment. It also can have immediate therapeutic effect (37,
38) based on development of self-efficacy as a consequence of
feedback concerning functional abilities which are uncovered or
affirmed (39). Finally, it can greatly improve the likelihood
that an SSDI recipient will benefit sufficiently from
rehabilitation to achieve a return to work. In order to take
advantage of these benefits and to maintain the highest level
of cost efficiency and not waste resources, the FCE process for
SSDI and SSI recipients must be undertaken in steps. At each
step, recipients who do not meet criteria for success must be
excused from the program in an ever-constricting funnel that
preserves resources so that meaningful rewards in terms of
rehabilitation benefits are provided to those who persevere.
Step One.--The evaluation must identify the causes of
disablement, through the active involvement of the recipient in
a simulated work environment, including the implementation of
normal work hours, work rules and procedures. The questions to
be addressed at this step center around, ``What are the
functionally limiting factors which have created this
occupational disability?'' Issues which identify good
candidates for return to work include the degree to which the
individual demonstrates a strong work ethic, is safe in the
work place, and is able to get along with fellow workers and
supervisors. Recipients will be excused for problems with
safety and interpersonal behavior. Recipients with problems
with productivity will be retained and move to Step Two.
Step Two.--The evaluation must begin to minimize
disablement by answering the question: ``For the functionally
limiting factors, are there rehabilitation services which will
be likely to improve ability to work?'' This is best addressed
within a simulated work environment to provide an appropriate
context of treatment. This is the step at which work hardening
and work conditioning occur (2, 3, 40-42). Issues which
identify good candidates for return to work include full-effort
performance, the demonstrated ability of the individual to
negotiate with disabling factors such as pain and fatigue, and
his or her effective use of work aids, modifications and
productivity enhancement strategies. Recipients will be excused
for inability to push through pain to improve function,
maintain a conditioning regimen, or participate daily. As
recipients plateau, they will move to Step Three.
Step Three.--If the recipient is to enter the work force,
we must identify his or her person-centered ability factors.
This process should be structured by a work demands taxonomy
\2\ such as that developed by Fleishman and his colleagues (44)
which can be matched to an occupational database in Step Four.
This is a broad-based approach to evaluation which will be
necessary if the full spectrum of occupationally disabling
functional limitations is to be addressed. Using a variety of
standardized procedures, the recipient's aptitudes, abilities,
and transferable skills are identified and measured. Issues
which identify good candidates for return to work include the
identification of resources which can be developed to a level
that will be valued by employers, coupled with a positive
response to the identification of these resources (45).
Recipients will be excused for levels of aptitudes or abilities
which are below a threshold for competitive employment at a
level of remuneration that is likely to make the available
benefits package unattractive. As a feasible occupational
profile is developed, recipients will move to Step Four.
---------------------------------------------------------------------------
\2\ Based on factor analysis research of the abilities requirements
of numerous jobs, Fleishman and Reilly describe 52 different abilities
that are pertinent to job tasks. Nine of these abilities involve
strength, while an additional ten are psychomotor abilities which
involve response speed and precision, and other factors involve verbal
skills, reasoning, and social skills.
---------------------------------------------------------------------------
Step Four.--The collection of work relevant ability
information will provide the recipient with information which
will be used in vocational exploration to identify goals,
interests, and possible vocational targets if a rehabilitation
program were to be undertaken. Issues which identify good
candidates for return to work include the identification of
occupations which use selected personal resources which can be
developed into salable skills, the key to sustainable
employment (46) over the next 20 years. Recipients who are
unable to identify occupations which have jobs in their
geographic area which will provide adequate remuneration will
be excused. After an acceptable occupational target is
identified, recipients will move to Step Five.
Step Five.--Finally, the evaluation will conclude with
rehabilitation plan development. If the recipient has
progressed successfully through each of the earlier steps, he
or she will be an excellent candidate for a return to work
rehabilitation program focused on a particular vocational
target, the likely outcome of which will be sustainable
employment.
The hallmarks of the FCE process described above are that
it is driven by continuing demonstration of the recipient's
effort and is guided by objective information about his or her
work performance. These are the keys to return to work for a
person with a chronic disability. The consequence of this
process should be a recipient who is ready to begin a focused
rehabilitation program that often will involve services such as
occupational therapy, rehabilitation counseling, and both
formal education and on the job vocational training. These are
services that should only be undertaken if objective data have
been used to develop information about the person with
disabilities that makes it likely that he or she will benefit
and the outcome will be sustainable employment.
Policy Recommendations
Standardization
FCE is practiced by professionals from many different
disciplines, none of which can lay sole claim. As a
consequence, FCE is not formally governed and lacks
consistency, resulting in less efficient use of resources and
less than optimal outcome for service recipients. The field
needs cross-disciplinary standards of practice. Programs in
which FCE is often found have accreditation available through
the Commission on Accreditation of Rehabilitation Facilities
(CARF),\3\ although accreditation is voluntary and often is not
pursued because of expense, inconvenience, and marginal
applicability.
---------------------------------------------------------------------------
\3\ The American Psychological Association, American Physical
Therapy Association, American Occupational Therapy Association,
American College of Physical Medicine and Rehabilitation, and most of
the other professional associations in Rehabilitation underwrite CARF
and have representation on its Board of Trustees and nominate members
of its specially-convened national standards committees.
---------------------------------------------------------------------------
Policy recommendation: Pay only for FCE services which are
provided by programs accredited by an independent agency, using
new FCE standards for service delivery which are developed by a
national interdisciplinary committee of experts.
Science and Technology
In the past 20 years, FCE technology has outstripped its
scientific underpinnings, resulting in problems with the
utility of many of the FCE applications that are in use today
(47).
Policy recommendation: Require adherence to standards for
technology development, including both test protocols and
equipment, which are developed by a national interdisciplinary
committee of experts, such as those first published by the EEOC
in 1978 (48) which guide employee selection procedures, the
American Physical Therapy Association guidelines, and those
published by the American Psychological Association (49-51)
which currently are under revision.
Cost Efficiency
This is the most subtly difficult problem. FCE easily can
be too expensive for the utility which is derived. An FCE only
has utility to the degree it assists in the resolution of a
problem and adheres to the ``evaluation factors hierarchy''
(47). To maximize cost effect, data which relate to the
likelihood of return to work should be collected using
procedures which maintain a reasonable balance among safety,
reliability, validity and practicality after developing a sharp
focus on the question, ``To what purpose will the information
be put?''
Policy recommendation: Pay only for FCE services which
address questions which are pertinent to that step in the
evaluation process at which the client is found, based on a
classification of types of services which normally are
appropriate. Such a classification scheme can be developed by a
national interdisciplinary committee of experts.
The successful return to work of SSDI recipients is a cause
for celebration because it benefits all Americans in both
tangible and spiritual ways. These people have the need and
many have been found to be amenable to rehabilitation. The
General Accounting Office has estimated that if only 73,000 of
the 6.6 million Americans who receive SSDI and SSI benefits
were to return to work, $3 billion could be saved in subsequent
years. It seems to me that this is aiming far too low, given
the need and potential that we find in these people. I have
presented an approach which will be much more effective.
We are on the verge of a great opportunity that needs only
to be captured and managed with resolve. FCE is an important
component of an effective return to work strategy which can be
implemented on a national basis. The costs of not making the
attempt have become unbearable. Responsible and innovative
leadership is required.
Thank you.
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[GRAPHIC] [TIFF OMITTED] T5046.061
Chairman Bunning. Thank you all for your testimony. I want
you to know we will submit questions for the record in writing
to you, but we want to do some individual questioning.
Ms. Ross, in your testimony, you advocate the importance of
testing and evaluating new measures to return beneficiaries to
work and caution against focusing on one option to the
exclusion of alternative measures. Do you think that return to
work legislation should authorize the testing of various
alternatives, rather than a full implementation of one measure?
Ms. Bascetta. Yes, Mr. Chairman, we do prefer testing
various alternatives. Because our analysis shows----
Chairman Bunning. Would you please bring the mike closer so
everyone can hear you.
Ms. Bascetta. We do prefer testing more than one
alternative, and the reason is that our analysis has shown
there are many interrelated problems. So we think we could
obtain richer information about what might work best if we test
at least a few ideas in a couple of areas. For instance, we
would want to know before full implementation how different
changes in work incentives might affect caseload growth and
work effort, and we would also like to know how many VR
providers might participate and who they might serve under
different reimbursement mechanisms.
Chairman Bunning. Do you have any recommendations who
should monitor return to work alternatives, given SSA's record
on managing demonstration projects?
Ms. Bascetta. We don't have a specific recommendation about
who might monitor, but we would anticipate that SSA's Office of
Research, Evaluation, and Statistics would hire specialized
expertise, you know, a nationally known researcher, or a firm
with a track record in conducting social experiments. And, we
would also strongly advocate peer review, outside peer
reviewers, particularly during the design of the study, and
also at important points during the analysis of the data.
Chairman Bunning. I think Mr. Christensen mentioned the
fact that there have been pilot programs in existence for over
the last 17 years, and we are having the administration
recommend another pilot program.
Let me ask all of the participants on this panel, if the
fear of losing a medical card or medical insurance is one of
the principal barriers to returning to work for people with
disabilities? In other words, if we could provide in a piece of
legislation the fact that they are going to be covered by
Medicaid or Medicare, and have it reasonably priced--by that I
don't mean the current $300 plus after 9 months--would that
address the main barrier right now from returning people from
the SSDI and SSI rolls to the work force?
Mr. Matheson. It is an important barrier. I think the main
barrier is motivation on the clients' parts. The most
important----
Chairman Bunning. Please repeat that. I didn't understand.
Mr. Matheson. I think the absence of a medical care card
would be a very important barrier. It is with my clients. I
think the most important barrier has to do with a person's
motivation.
Chairman Bunning. Anyone else care to respond.
Mr. Kregel. I would like to comment on that. There are
provider agencies, both public and private, in operation this
morning, in which people are meeting with the consumers with
disabilities, who are coming with them, expressing an interest
to return to work. What these professionals are doing in
collaboration with the consumer is not figuring out how they
can get off the SSDI rolls, but rather how to maximize their
earnings while retaining their SSDI eligibility, so that they
can maintain their eligibility for Medicare services.
Chairman Bunning. What if we took that factor out though?
Mr. Kregel. Then the issue becomes whether the individual
is financially better off as a result of returning to work, and
by maintaining Medicare eligibility you eliminate a major,
major factor of that cost equation for the individual, because
of the special types of expenses that they are going to have
related to their medical expenses.
Chairman Bunning. Also, in regard to the employment in the
private sector, there is the barrier that the liability assumed
by the employer is so high.
Is there someone else?
Mr. Baron.
Mr. Baron. In that regard, a number of States have begun to
experiment through the 1115 waiver program with various kinds
of sliding scale programs, as well as wraparound coverage, and
either of those, in addition to full continued coverage through
Medicaid and Medicare, are possibilities that need to be
considered. I don't think we have much evidence yet of which of
those is going to be most effective, but it is a major barrier
in terms of the culture of unemployment and the lack of
motivation that exists in the community of people I am most
familiar with.
Chairman Bunning. I think there could be a sliding scale
built in according to the amount of earnings as to how much you
might be offered in medical coverage.
Would anyone else like to comment?
Ms. Reno. If I may, Mr. Chairman, that was the thinking
behind the panel's recommendation for an affordable and
understandable Medicare buy-in. There are two problems with the
Medicare buy-in. First, it is very, very difficult to explain
to a beneficiary what the price of it is, so the price needs to
be both affordable and understandable. Scaling it to their
earnings is an idea that our panel thought would work. That is
understandable.
The second point the panel recognized is that for many
people on the disability rolls, prescription medications are
needed in order for them to function. They need it while they
are disabled and not working, they need it while they are
working, and that is not covered by Medicare, which is why
Medicaid often is very important.
Chairman Bunning. Anyone else?
Ken, go ahead.
Mr. Hulshof. Thanks.
Ms. Ross, this first one is for you. Dr. Growick, maybe you
can also comment on this particular question, but, Ms. Ross,
you mentioned that you recommended to SSA they should develop
strategies to help intervene earlier in the application
process, maybe even prior to awarding benefits, to help
applicants assess work capacities. Would SSA have to actually
advance screen for those who would somehow presume to be
disabled, and are there some problems along with that?
Ms. Ross. Well, you are certainly right in pointing out
that it is not easy to figure out how you would have a whole
set of applicants move into the vocational rehabilitation
world. There are some possibilities for something that a lot of
beneficiaries say they really would like, such as one-stop
shopping. This could happen in some SSA offices, where you
could have vocational rehabilitation people and other kinds of
employment and training facilities there. Without its being at
all involved with SSA, you could make some of these referrals
before people began applying for benefits. Maybe there is a
possibility for limited screening, that is another way to look
at it.
The major point is that we know what we have now is too
late for many people; that by the time you have had an award,
it could be at least 1 year, and sometimes many years, after
you have started to experience this physical or mental
impairment. So while the precise solution isn't obvious, it
seems like an area where we ought to grapple some more.
Mr. Hulshof. Doctor, you mentioned the insurance industry
has discovered it is cheaper and better to help beneficiaries
return to work than it is to pay off a claim. Are there any
lessons we can learn in terms of early intervention from the
insurance industry that might be included in some sort of
reform proposal?
Mr. Growick. Yes, sir. Obviously earlier rehabilitation is
better rehabilitation. The sooner you can get to an individual
before they are disenfranchised from the workplace, the better
off and research has shown that, some of my own research in
terms of prediction of outcome. Within the workers'
compensation arena, it is even paramount that that happens. The
reason is that claimants are receiving TT, temporary total
disability payments, so the clock is ticking. Rehabilitation
professionals, graduates of my training program, will go into
the private sector, work with workers' compensation claimants,
know that time is their enemy, so they have to enter the
process as soon as possible.
There is another fiat they use in that whole process in
workers' compensation rehabilitation, and that is something we
call a hierarchy of return to work, and it is codified in some
workers' compensation systems nationally, hierarchy, return to
work, meaning when you work with somebody with a disability,
especially if it is work-related, you go back to the same
employer and try to get the person back to work in the same job
with the same employer. For some reason, they don't have the
functional capabilities to do their previous work, you then
move down the hierarchy to a different job, same employer, see
what else can be done at the worksite with modifications, what
other essential functions the person can perform for that
employer. Then you could go to a different employer, same job,
down this hierarchy.
Early rehabilitation is crucial. That is part of the
problem with bureaucracy that is government run. You have to
employ the free-enterprise system, have private providers out
there who are going to respond quickly and fast, and also know
how to talk to employers and get the job opportunities that are
necessary.
Chairman Bunning. Doctor Berkowitz, you want to comment,
and let me even ask you as sort of an introductory question
because my time is limited, do you believe personally that SSA
should manage a return to work program, Dr. Berkowitz?
Mr. Berkowitz. Do I believe they should manage a return?
No, no, I don't. I recognize that the GAO recommends we ought
to intervene early. Do we really want the Social Security
Administration to pay trust fund money to persons not on
benefits? Do we want to turn SSA into a rehabilitation agency?
We are lucky SSA can pay checks on time. The Social Security
Administration is not set up to accomplish these functions.
The essence of the ticket plan is that SSA is relieved of
these functions and responsibilities.
I don't know whether any particular rehabilitation scheme
will work. The advantage of having a variety of private
providers is that each can do their own thing. Best of all
there are no risks. We pay them only if the beneficiary goes
back to work.
Why am I so against milestones? It is not that I wouldn't
love to reward providers. It is because I have no confidence in
the ability of SSA to negotiate fee schedules. The minute you
begin to pay for milestones, you are creating a new
bureaucracy, and I don't think that is necessary. I want to pay
people only for what we want. We want people back at work, in
good productive jobs. I don't think anybody around this table
knows of any one way to do that. There are just a variety of
ways to do it and the Ticket Proposal allows all of them an
opportunity to demonstrate their utility.
Chairman Bunning. The gentleman's time has expired.
Let me ask Dr. Growick, you recommended an incentive for
employees who hire SSA recipients, such as a FICA tax credit.
What data is there to support that kind of tax credit, and is
it really needed?
Mr. Growick. The data is mostly personal experience.
Chairman Bunning. No studies, just your own experience and
your own students' experiences?
Mr. Growick. Correct. In terms of working with employers,
our experience is that you need some sort of leverage when you
go to an employer to try to get them to accept individuals with
limitations because of some of the potential liabilities down
the road. Anything we can do to help the rehabilitation
industry work with employers, you know, helps the entire
process, and there is some, you know, tax credits with the
general rehabilitation field that have been tried over the
years that have been successful in terms of opening doors to
employers that otherwise might not be so receptive.
Chairman Bunning. Dr. Berkowitz, unfortunately, or
fortunately, the SSA is in the SSDI business right now. What
makes you think that the ticket model that we are talking about
will work?
Mr. Berkowitz. They are in the DI business; they pay
benefits.
Chairman Bunning. That is correct, they are in the
business--there is a law on the books right now, right now,
that requires a review of everyone on SSDI over a 3-year
period. Obviously they are not complying with the law. That is
the law. So let's move on from there, and I want to know your
opinion on why you think your Ticket Program will work.
Mr. Berkowitz. I don't know whether it will work or not.
All I am saying is it is a risk-free method of trying it. Now,
you seem to be concerned, or someone on the panel seems to be
concerned, about the fact that this is going to disenfranchise
certain providers out there.
Chairman Bunning. I am not concerned about any of that. I
am concerned about getting answers.
Mr. Berkowitz. I think this is a good way to try. Let's
unleash all of the creativity that Bruce has talked about in
regard to the Workers' Compensation Program. We know a lot of
exciting things are happening in the private sector. Now
insurance carriers are continually hiring people to aid people
to get back to work. They have no prescribed protocol. They do
it in 100 different ways. And I say here is a marvelous
opportunity to try at no cost to the U.S. Government.
Chairman Bunning. Well, you also really emphasize the fact
it has to be voluntary.
Mr. Berkowitz. I am sorry?
Chairman Bunning. That it has to be voluntary.
Mr. Berkowitz. Yes.
Chairman Bunning. That you can't mandate it. Tell me the
reason that it has to be voluntary. Why is that so important?
Mr. Berkowitz. I have looked at these programs in this
country and abroad in many different countries, and I have
never seen compulsory provisions work. We are confronted with
the atomic bomb dilemma. If the only penalty is cutting people
off the rolls, administrators are hesitant to use it. The
essence of this plan is to get the disabled person together
with a provider so that they can work together to get the
person back to work. The whole idea of compelling people, or
penalizing them, is contrary to the whole spirit and philosophy
of this plan.
Chairman Bunning. Mr. Kregel, let me ask you one question.
You mentioned in your statement that a strong management
structure, external of SSA, is needed to effectively implement
the return to work program, much like Dr. Berkowitz. Can you
elaborate on why a return to work program should be
administered outside of SSA, other than the bureaucratic maze
that we have?
Mr. Kregel. There are functions that are required, such as
expertise in the design and management and evaluation of
employment programs and return to work programs; and there is
also a function relating to consumer advocacy, consumer
assessment, and building consumer protections into the delivery
of services. Both of those are unique areas of expertise, and
it seems to me that those types of functions should be
identified outside the Social Security Administration.
Specifically, there are some issues--that were alluded to
in an earlier panel--about information that would be provided
to individuals who need to make a decision; first, should I
participate in the Ticket Program, and then second, what agency
should I select to deposit my ticket with? Now, who should
provide that information? Should it be that the provider
agencies themselves recruit and market their services to
individuals? Is that exclusively SSA's responsibility because
of what we know about prior efforts in terms of promoting work
incentives and other factors; or is there a need for a
management structure that can give information to people in the
best way that will work in their particular locale?
Mr. Hulshof. Mr. Chairman, I would be extremely remiss if I
didn't lob at least one softball to a fellow Missourian.
So, Dr. Matheson, you make some very strong points in
support of the functional capacity evaluation, and I appreciate
the supplemental, because rather than bog down with some of the
costs of it, is a functional capacity evaluation needed in
every case; and if not, in what types of circumstances would it
be most useful?
Mr. Matheson. I think it is going to be something that
could be mandated as a screening process for the subsequent
voluntary participation and the ticket. I think it is going to
bring about such great savings, identifying those people who
are good candidates, that it ought to be used widely.
Mr. Hulshof. Are there certain industries that have
utilized a similar type of evaluation that we can look to to
say that this is a good model for us to follow?
Mr. Matheson. This model began at Rancho Los Amigos
Hospital, and if you look at the large rehabilitation centers
that have the full range of capabilities, from physicians, PTs
and OTs down to rehabilitation counselors, you find this is a
stepwise model that is interdisciplinary. I think its
application on a wide basis is new and in some ways
revolutionary, but the model itself is one that is grounded in
quite a bit of experience.
Mr. Hulshof. Last question. Since I haven't had a chance to
digest some of the numbers, is there an average cost of a
functional capacity evaluation?
Mr. Matheson. The process we have projected is $5,500
before we get to something that we would say is a ticketed sort
of benefit, of vocational preparation, and that $5,500, it
would only be a $500 cost if the person only makes it through
step one. It would be an aggregate of $4,000 if the person
makes it through step three and so forth.
Mr. Hulshof. Thank you, sir.
Mr. Matheson. You're welcome.
Chairman Bunning. Ms. Reno, you mentioned one of the
panel's conclusions was that current benefits are not a strong
deterrent to work. Are current benefits, in your view, a strong
deterrent to people coming on the rolls?
Ms. Reno. The panel's conclusion was that for people who
had a choice to work or to turn to benefits, the benefits
themselves are a very poor second choice to having and
remaining in a job.
Chairman Bunning. I apologize, I have to go to the floor,
and if my colleague has no further questions, we will submit to
you in writing those questions that we have failed to ask you
today in person. Thank you for your cooperation.
[The following was subsequently received:]
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Dr. Bruce Growick
1. In your testimony, you said that a critical component of any
new legislation should be provisions for informed choice
throughout the rehabilitation process with a payment system
that is viable and realistic. What are the key components, in
your view, of a viable and realistic payment model for
providers?
The development of a payment system should focus on
providing the consumer with choice. That means developing a
system that will enable and encourage all qualified providers,
both large and small, to participate in the program. In order
for this to occur, a payment model must contain milestone
payments so that small providers can remain financially viable
during the long process of consumer job placement and
retention. Also, a larger reimbursement target must be
established to encourage providers to have a vested interest in
long-term job retention by the consumer. The most viable
reimbursement option appears to be a percentage of the savings
realized to the Social Security fund from having the individual
being self sufficient and off the roles.
2. You recommend that a new return-to-work system be as
streamlined and efficient as possible and avoid increasing
SSA's workload. Do you have any specific recommendations for
designing such a system?
The Social Security Administration (SSA) is a government
agency that was established to provide retirees, the disabled
and the poor with financial aid. The SSA is not in the business
of rehabilitating its recipients with disabilities. Therefore,
a system should be developed that allows SSA to retain
oversight over payments but establishes a governing body that
will regulate the delivery of services by taking into account
the needs of consumers and the qualifications of providers.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
John Kregel
[At the time of printing, no responses had been received
from Mr. Kregel.]
You mention that individuals viewed as too challenging to
serve, or too poor a risk for meeting the success criteria of
the program (such as individuals with persistent mental illness
or brain injury), will have extreme difficulties locating
providers willing to serve them. Can you envision any type of
incentive or special provision which might be included in
legislation to help ensure these individuals do receive
services?
SSA's proposal contains a provision for protection and advocacy
funding designed to assist SSA recipients with any disputes
with providers that may occur. What are your views regarding a
protection and advocacy system? Do providers need a system to
address disputes that they may encounter?
I understand that you are a vendor of supported employment
services for persons with severe disabilities. Could you
describe the services that you provide and the process for
placing individuals with severe disabilities into the
workplace?
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Richard Baron
Chairman Bunning's Question #1: Your testimony focused on the
unique challenges faced by individuals with mental impairments.
If a ticket-type approach isn't the best option for these
individuals, what other options do you envision working?
Response. While the `ticket approach'--which emphasizes
empowering consumers to choose their providers and rewarding
those providers on the basis of specific outcomes--is a
reasonable way in which to structure Social Security's response
to meeting the needs of persons with serious mental illness,
the development of a ticket approach must avoid a number of
operational problems that, unless addressed, will limit the
rehabilitation opportunities available to people who are often
quite eager to enter the competitive labor market. To avoid
some of the problems that can be anticipated, we would suggest
building into the `ticket approach' a number of key operational
principles. Along these lines, the `ticket approach' to insure
that the tickets are:
Accessible. Because we believe that there are no effective
means to accurately predict which SSA recipients or
beneficiaries are most likely to succeed at working in the
competitive labor market, access to the ticket should be
universal, and not involve testing and screening out possible
candidates for rehabilitation and employment programming.
Renewable. Persons with serious mental illness will often
need to be engaged in the process of rehabilitation several
times in their lives in order to establish a long-term
relationship with the labor market: for this reason, the
`ticket' system cannot be a `one-time-only' offer on the part
of the Social Security Administration.
Divisible. Rehabilitation providers will need to be
reimbursed at various milestones--on the basis of specific
achievements at points along the client's progress toward
economic independence--if the ticket approach is to avoid
encouraging agencies to work only with those most readily
employed and avoid those clients who will take longer or may
choose to drop out mid-process.
Transferable. To maximize client choice, the ticket must be
transferable, at the client's request, from provider to
provider: some clients may be dissatisfied with the services
they receive; others may choose to leave an area or a state to
make a new life for themselves elsewhere, and others may
believe better employment prospects will be in other settings.
A ticket approach that embodies these principles is far
more likely to be able to meet the needs of persons with
serious mental illness, maximizing both their choice of
providers and their choice of the type, pace, and outcomes of
the rehabilitation program they may find most helpful, at the
various points in their lives. It must be emphasized that
persons with mental illness often have a long-term disability,
and this will require a long-term commitment to provide
rehabilitation services if the nation is going to encourage
them toward long-term careers. A ticket approach can and should
respond to these unique needs.
Chairman Bunning's Question #2. Various proposals create a
system under which an SSA recipient would be given a ticket
which they could use to obtain vocational rehabilitation and
employment services from a public or private provider. In your
view, will the majority of SSA recipients be able to make
informed decisions on how best to assign their ticket? How can
consumers best make informed choices regarding provider
services?
Response. There is no question but that people with serious
mental illness and others with serious disabilities will be
able to make informed decisions on how best to assign their
ticket if they are provided with the kind of information on
which informed decisions are made. To insure that such
information is available to consumers, Social Security will
need to insure that:
--information about the operations and outcomes of provider
agencies will be accessible. SSA will need to support the
collection of both outcome data and consumer assessments of the
various provider agencies they may want to use. Much of this
information can be gathered by consumer organizations
themselves.
--`vocational case management' resources will be accessible
to help clients make choices. In addition to providing the
information, consumers will need access to guidance--from
either professional or consumer organization--to help them
determine goals, assess the offerings from various providers,
and make choices on an ongoing basis throughout the
rehabilitation process.
Finally, many consumers are likely to face very few choices
in their communities: in many parts of the country--in both
urban and rural communities--there may only be a single
provider of work oriented rehabilitation services, in which
case `choosing' between depositing their ticket with their
local Office of Vocational Rehabilitation (which will contract
with the provider for service delivery anyway) or contracting
directly with the same provider agency is really no choice at
all. Social Security--to make their reliance on `client choice'
more real--will need to explore varied means for promoting the
development of a far richer array of rehabilitation program.
Chairman Bunning's Question #3. You mentioned in your testimony
that SSA's current work incentives are largely unknown. Do you
have recommendations on ensuring that SSA recipients are
informed and knowledgeable on current or future work
incentives?
Response. The Social Security Administration will indeed
need to make a substantial commitment to ensure that
information about the work incentives are available. Two major
activities need to be undertaken. First, a much greater effort
must go toward informing the Social Security Administration's
own field staff about the usefulness and details of existing
and emerging work incentives: it is now commonplace to hear
complaints from vocational rehabilitation counselors, consumers
of disability services who are back at work, and employers that
local Claims Representatives are either unaware of or
misinformed about the work incentives within their own systems.
Second, there will need to be a comparable effort to
provide local provider agencies with similar information, so
that persons with disabilities are informed--as early as
possible and with absolute accuracy--about the impact of work
(and the work incentives) on their financial lives. The Matrix
Research Institute/University of Pennsylvania Research and
Training Center on Vocational Rehabilitation Services for
Persons with Mental Illness, supported under a grant from the
National Institute on Disability and Rehabilitation Research,
is currently exploring two different modalities in providing
such information to consumers:
--internal advocacy involves the development of `in-house'
expertise, in which each provider agency is funded to support a
half-time or full-time position to provide vocational
rehabilitation clients with information about work incentives.
Those who fill such positions will need both initial training
and ongoing support.
--external advocacy involves the establishment of a
regional center (on a statewide or citywide basis) to be used
by both rehabilitation staff and clients, where their questions
about the work incentives can be answered authoritatively--by
telephone and fax and E-mail, or in training programs and in-
person presentations--by trained full-time staff.
Again, many of these advocacy programs can be staffed and
run by consumer organizations themselves: here at MRI we have
successfully operated a Work Incentives Advocacy (WIA) program
that has been entirely consumer staffed, which has allowed the
WIA advocates both to speak with great authority and to gain
the trust of their audience...
Again, let me thank you for your interest in our views. We
would be delighted to have the opportunity to answer any
further questions on these critically important matters as the
Subcommittee on Social Security moves forward. The
Subcommittee's efforts are especially encouraging to those of
us in the field: there is a growing conviction that people with
all kinds of serious disabilities have enormous but largely
unrealized vocational potential, and that the current economic
climate offers an unparalleled chance to seek to define a new
role for people with disabilities in the competitive labor
market.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Leonard Matheson
[At the time of printing, no responses had been received
from Mr. Matheson.]
What is the difference between a functional assessment and a
functional capacity evaluation? How does a functional capacity
assessment measure motivation or less than full effort
performance?
You recommend evaluating the occupational potential of a person
with a disability on a ``progressively restrictive basis.''
What exactly does this mean and how would such an evaluation
serve as a gatekeeper to the process?
Chairman Bunning. The Subcommittee stands adjourned.
[Whereupon, at 12:09 p.m., the hearing was adjourned.]
BARRIERS PREVENTING SOCIAL SECURITY DISABILITY RECIPIENTS FROM
RETURNING TO WORK
----------
THURSDAY, JULY 24, 1997
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1 p.m., in
room B-318, Rayburn House Office Building, Hon. Jim Bunning
(Chairman of the Subcommittee) presiding.
Chairman Bunning. The Subcommittee will come to order.
Today we will continue with part II of our hearing on barriers
preventing Social Security disability recipients from returning
to work. My formal statement was made yesterday, so my remarks
this afternoon will be very short.
During part I of the hearing we heard from the Social
Security Administration, the Department of Education, the
General Accounting Office, and experts in the field of
rehabilitation.
Today I look forward to hearing from consumers, those
individuals who are closest to the issues surrounding return to
work, and from those who work day to day providing
rehabilitation services.
I am confident that each of you will provide important
insight for the Subcommittee to carefully consider. In
addition, I want to thank each of you for your tireless
advocacy and commitment.
Many of you have provided your counsel to both my staff and
Mrs. Kennelly's staff, and I want you to know how much we
appreciate your help.
In the interest of time, it is our practice to dispense
with opening statements, except from the Ranking Democratic
Member. All Members are welcome to submit statements for the
record. I yield to Mrs. Kennelly for any statement she would
like to make.
Mrs. Kennelly. Thank you, Mr. Chairman. Mr. Chairman, the
testimony we received yesterday was useful in setting out some
of the work disincentives which the disabled face in attempting
to return to work. I am sure we will find today's testimony
equally as helpful.
I am pleased the administration has now submitted to us a
plan for returning more beneficiaries to the workplace. I hope
that you and I, Mr. Chairman, together with the administration
can work on a bipartisan solution to this problem, and I look
forward to today's hearings.
Thank you.
Chairman Bunning. Thank you, Barbara.
Testifying on the first panel today are Susan Webb,
executive director of the Arizona Bridge to Independent Living
in Phoenix, and board member of the National Council on
Independent Living; Bonnie O'Day with the National Council on
Disability; Tony Young, cochair of the Consortium for Citizens
with Disabilities Vocational Working Group; Lorraine Sheehan,
chairperson of the Governmental Affairs Committee of The Arc of
the United States, accompanied by Marty Ford, assistant
director of the Governmental Affairs Office; Brenda Crabbs, a
current SSDI beneficiary testifying on behalf of the National
Arthritis Foundation; and Suzanne Erb, a former SSDI
beneficiary from Philadelphia, Pennsylvania.
Ms. Webb, if you would start the testimony please.
STATEMENT OF SUSAN WEBB, EXECUTIVE DIRECTOR, ARIZONA BRIDGE TO
INDEPENDENT LIVING; AND BOARD MEMBER, NATIONAL COUNCIL ON
INDEPENDENT LIVING
Ms. Webb. Thank you, Mr. Chairman. Members of the
Subcommittee, thank you very much for the opportunity to be
here with you today.
My name is Susan Webb. I am executive director of the
Arizona Bridge to Independent Living, and I am also a board
member of the National Council on Independent Living, or NCIL,
and I chair NCIL's Subcommittee on Social Security issues.
Representative Bunning, on the last day of the 104th
Congress, you presented a statement before the House floor that
gave a very deplorable statistic: That 1 in 1,000 people who
ever get onto SSDI voluntarily leave those rolls.
And I guess my purpose here today is I am the 1 in 1,000
who made it.
Chairman Bunning. Congratulations.
Ms. Webb. Thank you. Twenty-three years ago I fell off a
motorcycle at a company picnic. It happens. And I woke up 2
days later, having permanently and irreversibly lost the use of
60 percent of my body.
For the next 3 years I took advantage of the SSDI Program,
and it was my safety net that enabled me to live independently
in the community while I rehabilitated both physically,
medically and vocationally.
Now, at the end of that time, I used the trial work period
to return to work. I have been gainfully employed full time
without interruption for the past 20 years.
Now, as near as I can figure, the American taxpayer spent
about $29,000 on SSDI benefits to me and vocational
rehabilitation services. I am very proud to tell you today that
in 1 of those 20 years that I have been employed, I paid back
every penny of that $29,000 in taxes. Admittedly, it was a good
year.
The other 19 years I did not make quite that much, but I
figure that still as an employed person I was making a personal
investment in the greatest country in the world.
Now, you might assume that if I can do it, why are not all
the other millions of people that are receiving SSDI doing the
same thing. Well, the fact is that I was very, very lucky.
Everything fell into place for me. My medical care issue
was not a problem, because I was insured by two different
private health care coverers at the same time.
A key issue was that the Social Security Administration did
not hassle me. I went through the 5-month waiting period. I got
into the system. I did not have lengthy appeals. I did not have
to get an attorney. While I was on the system, they did not
hassle me. They did not overpay me.
And so when it was time to go back to work it was not a
fear for me. I did not fear going back to work, that the SSA
was going to come and beat up on me over it. So it seemed the
logical thing to do to try work, because I felt that if it did
not work out for whatever reason, I would still be able to use
the SSA as my safety net.
I had a car that was paid for. Transportation was not an
issue. My family was supportive. My uncle built a ramp and put
in grab bars so I did not have to go into expensive--well, I do
not know what the euphemism is, but we call them nursing homes
where I live. I was able to stay and rehabilitate in the
community.
And the fact was that my disability was not that severe.
Quite frankly, I do not need help with toileting, dressing,
bathing, meal preparation. I do not need help on the job in
terms of personal assistance services, sign language
interpreters or job coaches. People who need those kinds of
things need extra support, and those things are not available
to you today to any appreciable extent if you do in fact work.
The other factor was that jobs were available, just like
today. We are in a really good economy. This is the best time
right now for people, in a post-ADA era, in a strong economy to
return to work. We are there now to where I think we can do
some of the things that I availed myself of back in the
seventies.
Today my colleagues and I come to you with a proposal. This
proposal was developed in Houston, Texas, this year where 40
consumers from around this Nation who had lived it--had been
there--who had been on the system, got together in a room, and
answered one fundamental question: What is it going to take for
people with disabilities on SSI and SSDI to return to work?
We believe, Mr. Chairman, and Members of the Subcommittee,
we have answered that question. We believe that it is a
reasonable and it is a cost-effective proposal. But I am here
to tell you I am not an economist. I do not have a Ph.D. in
anything.
All I know is that I lived with this, and I got off the
system because the system was there for me when I needed it in
a rational way. Today it is not for most beneficiaries.
Our proposal fixes that, because it is finally the consumer
voice from people who really know what needs to be done.
I caution you that we cannot take a piecemeal approach.
This has got to be comprehensive, and I applaud your leadership
and I look forward to your leadership in taking it beyond the
jurisdiction of this Subcommittee, and taking it to a massive,
comprehensive solution.
No more studies. No more demonstration projects. No more
Band-Aids. No more delays. Millions of people are counting on
you to be an integral part of Workforce 2000.
That completes my comments, Mr. Chairman. I welcome any
questions.
[The prepared statement follows:]
Statement of Susan Webb, Executive Director, Arizona Bridge to
Independent Living; and Board Member, National Council on Independent
Living
Mr. Chairman, members of the subcommittee, thank you for
your interest in disability-related issues. Thank you for
inviting me to be with you today. My name is Susan Webb, and I
am the Executive Director of the Arizona Bridge to Independent
Living (ABIL), Board Member of the National Council on
Independent Living (NCIL), and chair of NCIL's Social Security
subcommittee.
Representative Bunning, on the last day of the 104th
Congress you delivered a statement from the House floor that
included a deplorable statistic: 1 in 1,000 SSDI beneficiaries
voluntarily leave the rolls to return to work. I am here today
is as a representative of that statistic. I am the 1 in 1,000
who did so. Twenty three years ago I fell off a motorcycle
while attending a company picnic. I woke up two days later with
60% of my body permanently and irreversibly paralyzed. After
three years of physical and vocational rehabilitation I used
the SSDI Trial Work Period to return to work. I have worked
full-time without interruption for the last 20 years.
As near as I can estimate, the American people provided me
with approximately $29,000 in SSDI and Vocational
Rehabilitation Services (allowing 20% for administrative
overhead). I am proud to say that in one year during the last
twenty (admittedly a good year!) I paid back every cent of that
$29,000 in taxes. As for the taxes I paid during the other 19
years, well, I figure that's an investment in the greatest
country in the world. Clearly, my returning to work was far
more cost-effective for our Nation than if I had not returned
to work. And, of course, my lifestyle is far closer to the
American Dream as a result.
Now, you might be inclined to assume that if I did it, so
can the millions of other SSDI recipients. Unfortunately, I am
the exception rather than the rule because I was very, very
lucky. Many components involved in my achieving this goal
happened to fall perfectly into place for me. It obviously does
not happen that way for the vast majority of SSDI
beneficiaries. For example:
1. My medical expenses were completely covered as I was
dually insured by an employer-provided healthcare policy and as
a dependent on my husband's policy. Although they did not cover
all the cost of assistive technology (formerly called durable
medical equipment), my employer had purchased short-term
disability insurance which provided me with $100 per week for
26 weeks. I used this income to purchase the additional
equipment I needed to achieve independence.
2. The Social Security Administration didn't hassle me
about eligibility for benefits. After the five-month waiting
period I began receiving cash benefits without lengthy appeals.
I received accurate information on options available to me
including the Work Incentives. I received no threats or letters
of ``overpayments.'' In short, I was not afraid to leave the
rolls as I had not had a threatening experience with the SSA to
begin with. It never occurred to me to worry about what would
happen if for some reason I found I did not have the endurance
to work successfully. I assumed the safety net of the SSA would
be there for me if I needed it.
3. I owned an automobile that was fully paid for. Having
transportation that enabled me to come and go whenever and
wherever I needed allowed much greater opportunity to continue
with outpatient therapy, attend college and ultimately return
to work.
4. State Vocational Rehabilitation was relatively new as
the Rehabilitation Act of 1973 had just been adopted. My VR
counselor was focused on counseling rather than the
professionalized, process-oriented, bureaucratic system we have
today. She was actually helpful in advice and guidance while I
made my own decisions about the direction of my life.
5. My family was supportive. I went to live with an aunt
and uncle for six months. My uncle built a ramp and installed
grab bars. They had two children living at home with
disabilities. They knew I needed time to practice independent
living skills to become completely independent and avoid
institutionalization in expensive nursing homes. I have never
been institutionalized due to the support available to me that
enabled me to adjust while living and functioning in the
community.
6. My disability is not as severe as that of many others. I
was young, healthy and strong when my accident occurred. I do
not need personal assistance for bathing, dressing, toileting,
meal preparation or housekeeping. I do not need personal
assistance on the job such as job coaches, sign language
interpreters, readers, etc. For those who need these services,
working is only possible when such services are available,
preferably on a co-pay or tax credit basis.
7. When I started back to work, the economy was good, jobs
were available. My employer, Michigan Bell, had just been
selected by the President's Committee on Employment of the
Handicapped (now the President's Committee of Employment of
People with Disabilities) as ``Handicapped Employer of the
Year.'' I had marketable skills and training. I worked for the
Bell System/AT&T for 12 years in two states. Accommodations,
when I needed them, were made willingly. I was part of the team
and considered a valuable employee.
My colleagues and I come to you today with a proposal
developed by those of us who have ``been there.'' On January 31
and February 1 of this year, 40 consumers with disabilities,
most of whom have been on SSI or SSDI, assembled in Houston,
Texas to answer one fundamental question: What will it take so
that SSI/SSDI beneficiaries can reduce our dependency on these
systems by starting or returning to work? We believe that
finally a comprehensive proposal from those of us whose very
lives depend on this system have come forward with a document
demonstrating a cost-effective, reasonable answer to that
question.
As NCIL's representative at the Houston conference, I was
one of the five steering committee members facilitating the
position development. NCIL's Board of Directors formally
adopted the position at our Board meeting in March, 1997. It is
important to note, however, that this position is
representative of people across the Nation representing a
cross-disability, cross-country, multi-cultural perspective. It
stands on its own merit as a comprehensive document that should
be used as a jumping-on point to other stakeholders as partners
in a cohesive, bipartisan movement toward successful
(re)entering the workforce for millions of Americans with
disabilities.
The National Council on Disability plans to issue a report
to you within a week that details all of the provisions of the
position. For the sake of brevity, however, I offer you the
following summary of our position:
The Problem:
Only 1 in 500 \1\ DI beneficiaries voluntarily
leave the rolls.
---------------------------------------------------------------------------
\1\ According to a General Accounting Office report submitted to
the Ways and Means Subcommittee on Social Security Disability in 1996.
Representative Bunning's statement from the House floor used a 1 in
1,000 statistic.
---------------------------------------------------------------------------
Few beneficiaries know of or use the current work
incentives.
Linkage between benefits perpetuates ``all-or-
nothing'' focus (e.g. beneficiaries lose healthcare coverage if
they leave the rolls)
State VR system is the only option for SSA
referrals for return-to-work services. VR serves only a small
percentage of these referrals.
SGA earnings cliff discourages work.
Lengthy eligibility determination, lack of
consistent information by SSA, and lack of confidence in SSA
disincents work attempts.
Guiding Principles for Proposed Solution:
System change must include incentives for all
stakeholders: beneficiaries, employers, insurers, public and
private vocational providers, taxpayers, SSA.
SSI and DI programs need to be simplified/
consolidated.
Changes must be comprehensive. Piecemeal solutions
have never worked.
Focus must be on reduction of dependency on the
system rather than whether an individual fully leaves the
rolls.
Proposed solutions must be revenue neutral or
demonstrate savings to the trust fund and/or general fund.
Systems must focus on the relationship between
beneficiaries and employers. SSA should not be gatekeeper or be
in the business of vocational services. Beneficiaries must
control and be primarily responsible for the own return-to-work
plan.
Highlights of Position:
Increase Choice in Employment Services and Providers:
Consumers/beneficiaries take responsibility for
choosing among providers of return-to-work employment services,
both public and private.
Providers of employment services are reimbursed
upon attainment of milestone outcomes, e.g., after completing
training, after job placement, after a period of time on the
job.
Streamline SSI/SSDI Work Incentives:
SSI and SSDI benefits should be reduced $1 for
every $2 earned above $500 in earned income. Reductions should
be made in $50 and $100 increments. This would allow low wage
earners or those only able to work part time to work as much or
as little as their disability allows but would still reduce
dependency on the system. The incremental offsets would reduce
the accounting burden and the historical inaccuracy of
determining benefit reductions monthly.
Eliminate existing complexities: e.g., Trial Work
Period and Extended Period of Eligibility. The offsets
described above would achieve the safety net needed to
encourage return-to-work attempts but would do so in a manner
more consistent with transitioning rather than reaching an
``earnings cliff'' associated with the existing TWP and EPE.
Eliminate Substantial Gainful Activity (SGA)
except as it relates to initial SSDI eligibility. We understand
that an earnings benchmark is needed to identify when an
individual is considered ``employed'' by the very nature of
SSDI being an income replacement program when loss due to
disability occurs. However, beyond initial eligibility, it
serves as an earnings cliff and bears no relevance on ability
or inability to work, especially if the 2:1 offset proposed
above is adopted.
Retain the Plan to Achieve Self-Support (PASS)
Program and apply it to SSI and SSDI beneficiaries. The PASS
Program has been criticized recently for being underutilized,
poorly managed by the SSA and used by beneficiaries with little
successful outcome. We believe the PASS program represents a
viable means for beneficiaries to ease back into the workforce
by setting aside earned income for pre-employment expenses,
such as specialized transportation, job coaching, sign language
interpreters, personal assistance services, assistive
technology and specialized transportation. We believe that the
lack of usage and questionable success of the PASS Program is
directly related to the fact that other barriers described in
this proposal have not been addressed simultaneously. We
believe the PASS Program would be immensely successful if
implemented as part of a comprehensive public policy around
(re)entering the workforce.
Improve SSA accountability by establishing an
independent, federally-funded oversight body that includes all
stakeholders (51% consumers) who approve employment-related
regulations and monitor their implementation. As evidenced in
recent history by such progressive endeavors as the Americans
with Disabilities Act, public policy should be shaped by the
Americans whose lives are affected. Personal accountability and
responsibility can only be achieved when those expected to be
accountable and responsible have the major voice in the
programs imposing the expectation. A consumer-controlled
oversight entity will achieve this goal.
Remove Financial Disincentives to Work:
Establish an Impairment Related Work Expense Tax
Credit for SSI/SSDI beneficiaries who work to cover 75% of the
cost of impairment related expenses up to a maximum of $15,000
per year. Phase out at an income level of $50,000 and end at
$75,000. Individuals with the most severe disabilities (e.g.
needing attendant services, sign language interpreters, job
coaches) are the most difficult to employ because these
expenses are rarely considered a ``reasonable'' accommodation
for an employer to provide. Further, expenses for assistive
devices such as motorized wheelchairs, lift-equipped vans,
prosthetic limbs, etc. that make some individuals more
employable are expensive and often not considered ``medically
necessary'' such that health insurance would pay for these
items. A tax credit would offset these expenses only when the
individual is employed, thereby providing an incentive to
actually go to work. Tax credits also apply only to actual
disability-related expenses rather than ``one-size fits all''
cash benefits that offer no incentive to work.
Current IRWE tax deductions should be extended to
include expenses related to preparation for and traveling to
and from work. The need for in-home personal assistance
services and specialized transportation are a major barrier to
employment. Tax deductions for these expenses would help offset
these costs.
Enhance Employer Incentives:
Implement a FICA exemption (50% first year, 75%
second year and 100% third year). This incentive would be
attractive to small and medium sized businesses whose fear of
hiring persons with disabilities might be willing to give it a
try in order to reap the FICA savings. The proposal assumes
that after the third year, the employee will have become an
indispensable part of the team.
Implement a tax credit for true expenses such as
increased workers' compensation costs, healthcare insurance,
worksite modifications, sign language interpreters, print
materials in alternative formats, on-the-job personal
assistance, job coaches, etc. Although numerous studies
conducted over the years by corporations such as McDonald's and
Dupont demonstrate that the cost of accommodations is minimal,
many employers still fear that one-in-a-million case where the
costs are extraordinary. This provision is to allay that fear
but still provide a safety net for the rare circumstance where
an employer is extraordinarily burdened.
Establish an insurance fund that would cover
employers' extraordinary expenses. Premiums could be taken as a
tax credit. This would be an added benefit to allay employer
fears.
Extend Medical Services:
Establish a Medicaid buy-in to allow consumers to
buy Medicaid on a sliding scale according to adjusted gross
income after deductions for Impairment Related Work Expenses.
Establish a Medicare buy-in after current coverage
ends. Premium should be 10% of adjusted gross income in excess
of $15,000. Current Medicare premiums are typically considered
too expensive by most beneficiaries, especially those unable to
work full time.
Encourage states to provide personal assistance
services to workers with disabilities on a co-pay or premium
basis similar to the Medicare buy-in.
Include a wrap-around provision in Medicare and
Medicaid to fill gaps in employer-provided health insurance.
Encourage states to provide equal access to
psychiatric services including co-pays.
We realize that at first blush these recommendations might
lead you to ask: ``After all these benefits, what would be
leftover from earnings to add to the tax base? Isn't this a
little excessive? How will this possibly save the trust fund
and/or general fund?'' We are in the process of developing a
means to cost-out this proposal. However, it is important to
recognize these proposal provisions in the context of a large
consumer base. No one consumer or employer would use all of
them. The proposal is designed to offer the widest latitude to
pick and choose those provisions that will incent a particular
individual or employer. Our goal was to develop a proposal that
would include all the flexibility needed to anticipate the
characteristics of a broad base of consumers and employers. For
example, the 2:1 offset would be attractive to a consumer who
is only able to work part time or sporadically. For a consumer
who begins work at a high wage, he/she will not be eligible for
the offset. For those consumers whose accommodation needs are
minimal, the employer would absorb the cost as a reasonable
accommodation and, therefore, the consumer would not claim a
tax credit.
By having the courage to make the massive changes
envisioned here people with disabilities will gain a
significant foothold on realizing the full promise of the
Americans with Disabilities Act of 1990 by finally achieving
equality with our non-disabled peers in achieving full economic
independence and inclusion in the mainstream of American life.
Not only will we the people with disabilities benefit but so,
too, will those who provide employment services to us, those
who employ us, those who insure us, and most importantly, the
taxpayers who unwillingly financially support us.
We recognize this is a massive undertaking. We applaud this
committee's leadership in bringing this issue to the forefront.
We ask for your continued leadership in shaping an effort that
will go beyond the jurisdiction of this committee to encompass
both sides of the aisle and both houses of Congress. Anything
less than a complete solution will only be a Band-Aid that WILL
NOT WORK. If, however, we wage a massive systems change,
millions of Americans with disabilities, hopelessly living in
poverty today, will be successful, contributing members of
Workforce 2000.
Chairman Bunning. Thank you very much for your statement.
Ms. O'Day.
STATEMENT OF BONNIE O'DAY, MEMBER, NATIONAL COUNCIL ON
DISABILITY
Ms. O'Day. Good afternoon, Mr. Chairman and Members of the
Subcommittee. My name is Bonnie O'Day, and I am a member of the
National Council on Disability. I was listed as chair in your
program. I am not chair. I am chairperson of a Subcommittee
that deals with Social Security return to work issues.
The National Council on Disability is a 15-member body
appointed by President Clinton and confirmed by the Senate to
advise Congress and the President on disability issues. We are
an independent Federal agency that offers such advice and
counsel.
And today we are here to reflect the thousands of voices of
individuals with disabilities throughout this country who want
to work. These individuals are anxious to reap the gains of the
Americans with Disabilities Act passed by Congress in 1990, and
also to increase the tax base by paying taxes because they have
returned to work.
However, we have found that individuals with disabilities
face tremendous financial barriers if they want to achieve this
goal.
We are here today as the culmination of an intensive effort
to reflect the voices and gain the input of individuals with
disabilities. This input started when we convened a summit last
year of over 400 people which culminated in a report entitled
``Achieving Independence.''
The employment recommendations from that report were the
basis of the meeting that the National Council pulled together
in Houston that Ms. Webb alluded to. These individuals were
people who had been on SSI and SSDI but had made themselves
experts in the system, and they assisted the Council by coming
up with a list of proposals which you will hear about in just a
moment.
We took those proposals out to the community to obtain some
grassroots support and input. We are subsequently going to
revise our original recommendations and would like to submit a
final report for the record as soon as it is completed--
probably sometime in August.
The primary finding from the hearings is that for many
participants it does not pay to go to work. The barriers that
individuals face are extremely complex, and a holistic, non-
Band-Aid approach solution will be needed to assist individuals
in overcoming those barriers.
There are many of those barriers for which this
Subcommittee does not have jurisdiction. However, we are asking
you, Mr. Chairman, and Members of your Subcommittee, to provide
leadership among your colleagues in the House on addressing
such issues.
As you said yesterday, health care is probably the number
one barrier for individuals with disabilities who wish to
return to work. The administration and Members of Congress are
working to try to address this issue during the budget
reconciliation discussions and we would ask for your support in
this endeavor.
Additionally, we ask your support in providing tax
incentives for employers, so that individuals with disabilities
will not face discriminatory barriers and other barriers as
they return to work.
But I would like to spend most of my time today talking
about work incentives that are within the jurisdiction of your
Subcommittee that you can help us address. First of all, with
regard to the SSDI system, when an individual goes to work,
once they earn $500, they face what we call an income-earnings
cliff.
They lose their entire benefit package as soon as they make
that first $500. According to an individual from Minnesota
named Maynard Bostrom, you either stay under $500, or you earn
enough money to make it worthwhile. According to statistics out
of Virginia Commonwealth University that's about $24,000.
Additionally, we believe that the $500 income exclusion
needs to be indexed to inflation, and that individuals should
be able to keep $50 of benefits for every $100 earned, to
provide a ramp, rather than a cliff off the system.
We believe that eliminating this work incentive will
drastically improve the number of individuals with disabilities
who can return to work. If 5 percent of individuals return to
work, this will make this a cost neutral proposal.
Additionally I would like to spend just a moment addressing
the Ticket Proposal submitted by the administration. We do
support the Ticket Proposal, but believe that individual
milestones should be considered during the payment mechanism.
We also believe that an independent evaluation needs to be
funded by a certain percentage of the Social Security Trust
Fund that allows organizations to be able to evaluate the
programs and obtain consumer input on the programs and their
services.
Chairman Bunning, thank you very much for allowing us to
testify today. We look forward very much to submitting our
final report for the record. Thank you.
[The prepared statement follows:]
Statement of Bonnie O'Day, Member, National Council on Disability
Thank you Mr. Chairman and distinguished Members of the
Subcommittee, for this opportunity to testify on barriers
preventing Social Security disability recipients from returning
to work. I am Bonnie O'Day, a member of the National Council on
Disability (NCD), a fifteen-member Council appointed by the
President and confirmed by the U.S. Senate to advise Congress
and the President on matters affecting people with
disabilities. As an independent federal agency, our purpose
here today is to reflect the voices of hundreds of consumers
around the country who wish to work. They want to fully reap
the gains made during the last several years resulting from the
Americans with Disabilities Act by contributing their talents
to the economy and paying taxes, but they face tremendous
financial barriers to realizing this goal.
NCD's Action Proposals are the culmination of an intensive
campaign to hear from beneficiaries, advocates and grassroots
leaders. We began in 1996 with a summit of approximately 300
people with disabilities, which generated Achieving
Independence, a policy roadmap for the 21st Century. The
employment recommendations from this report served as the
springboard for a 2\1/2\ day working conference of 40 consumer/
advocates, most of whom had direct experience with SSI DI, and
all of whom are very knowledgeable about disability employment
issues. The group generated a series of proposals for
overcoming those barriers. NCD subsequently took those
proposals to the community through a nationwide series of 13
public hearings, and received oral and written testimony from
people with disabilities, their advocates and service
providers.
The primary finding of the hearings is that, for many
people, it doesn't pay to work. The barriers to work are
extremely complex, and a holistic, system-wide approach is
needed to eradicate these barriers. While we realize that many
of our proposed solutions lie outside the jurisdiction of this
committee, we request that you play a leadership role in
assuring that health care coverage, SSI work incentives, tax
credits for personal disability-related expenses, and employer
tax credits, are addressed by your colleagues. Those
recommendations, along with those within your purview, are
detailed in a soon to be released report which the Council
would like to submit for the record. Today, I will address
those recommendations within the purview of this Subcommittee.
SSDI Work Incentives:
Existing SSDI work incentives themselves are a major
employment barrier, especially for part-time workers who can't
earn enough to make up for loss of their entire benefit
package. People with disabilities who earn $500 per month face
a sudden loss of benefits: a cliff. According to Maynard
Bostrom from Minnesota, ``Now, you either stay under $500 or
get a position that pays high enough to make it work it,'' over
$24,000 per year, according to the Employment Support Institute
at Virginia Commonwealth University. NCD recommends that the
current level of Substantial Gainful Activity (SGA) be indexed
to inflation, and that SSDI cash benefits be reduced $50 for
every $100 of earnings above the SGA level to provide a
``ramp'' rather than the current ``cliff'' off the benefit
rolls. Individuals eligible for the $1,000 Blind SGA amount
could choose either to remain under current rules or switch to
the $500 SGA and $50/$100 reduction. This recommendation would
eliminate the need for the nine month Trial Work Period, which
is confusing to beneficiaries, complex to administer, and
generally results in SSDI overpayments. Preliminary estimates
show that a mere five percent of DI beneficiaries must return
to work, earning more than $500 per month, for this proposal to
be cost neutral.
We further recommend that Congress ensure continued
eligibility for both SSI and DI as long as the individual
remains disabled. Beneficiaries would receive cash benefits
only when their income was low enough to qualify. This would
allow people whose disabilities permit only intermittent
employment, such as people with MS or psychiatric disabilities,
to work to their capacity, without the need to reapply for
benefits during periods of symptom exacerbation. The process of
Continuing Disability Review (CDR) should be based upon SSA's
established schedule, rather than precipitated by the
individual's attempts to work.
Choice in Rehabilitation Providers
A substantial portion of SSDI beneficiaries could work if
they had informed choices and access to training programs,
employment counseling, adaptive equipment and transportation,
or resources needed to start their own businesses. We support
the ``Ticket to Independence'' proposal, but suggest that
providers be reimbursed based upon milestones, e.g., after a
consumer has completed training, after job placement, and after
a period of employment.
To ensure success of the ticket proposal, Congress should
designate a certain percentage of the Trust Fund for a
competitive grant program for information dissemination about
return-to-work options and incentives. Independent evaluations
of rehabilitation providers should be funded, to give potential
workers consumer-based information to aid in their decision
making. The funding should also provide for advocates to assist
in resolving disputes between consumers and providers.
Congressman Bunning, thank you for the leadership that you
and your colleagues on the Subcommittee on Social Security have
shown in helping people with disabilities return to work. Your
leadership on this issue will allow thousands of citizens with
disabilities to become taxpayers, and realize the ADA's promise
of independence and full productivity. We look forward to
submitting our Barriers to Work: Action Proposals for the 105th
Congress report into the record.
Chairman Bunning. Thank you, Ms. O'Day.
Mr. Young, if you would be so kind as to testify.
STATEMENT OF TONY YOUNG, PUBLIC POLICY ASSOCIATE, UNITED
CEREBRAL PALSY ASSOCIATIONS, INC.; AND COCHAIR, CONSORTIUM FOR
CITIZENS WITH DISABILITIES VOCATIONAL WORKING GROUP
Mr. Young. I am Tony Young, public policy associate with
the United Cerebral Palsy Associations, and a former SSDI
beneficiary. Today I speak on behalf of the Consortium for
Citizens with Disabilities Vocational Working Group.
Recent reports cite five interdependent barriers to work
for SSDI beneficiaries and SSI recipients. CCD recommends
solutions that extend health benefits for working
beneficiaries, streamlines work incentives, makes work pay,
enhances consumer choice of providers, and researches ways to
increase work opportunities.
As you have heard, the all or nothing design of the SSDI
Program prevents most beneficiaries from working. Unlike the
SSI Program, where recipients who work lose $1 in cash
assistance for every $2 earned, DI beneficiaries lose all cash
assistance after $500 per month.
This working beneficiary falls off a net income cliff when
earning only $6,000 a year, and does not recover the same net
income until earnings reach $24,000 annually. An SSI
recipient's net pay increases until they hit their income cliff
as they reach their State Medicaid threshold and attempt to
purchase medical coverage.
Ironically, most beneficiaries who attempt to work find it
so costly that they cannot afford to continue. They feel they
are financially and medically supported for remaining on
benefits, yet financially and medically penalized for working.
If a work incentive similar to the SSI Program was
instituted for SSDI, including a buy-in to medical coverage,
beneficiaries would work to the maximum extent possible. This
would mean savings to the trust fund as they began to forgo all
or some of their cash assistance.
We know this solution has been determined by CBO to have
high costs. We respectfully yet strongly disagree with the
assumptions underlying these results. CCD urges the
Subcommittee to work with us to develop state-of-the-art
computer models for anticipating work efforts and the resulting
benefit savings.
Consumers must be able to choose from among all public and
private providers of employment services, paid using an
outcome-based milestone payment system. Limiting choice to
vocational rehabilitation agencies will quickly overwhelm a
system that is already struggling to serve only some of the
individuals with disabilities who request their assistance.
In addition, the range of SSDI and SSI beneficiaries in the
system now demands that we focus the full capacity of the
Nation's employment and training resources on assisting them to
work.
Implementing choice is a critical component. CCD recommends
a commission with equal representation from consumers,
providers and employers be appointed to assist SSA in this
effort. It should research, model, test and recommend the
structure of the program to SSA and the Congress by a date
certain.
Work in the information age recognizes that technology can
enhance the abilities of all workers. A work disability exists
when a person with an impairment does not have all the supports
needed to work. Medical rehabilitation, assistive technology,
and employment training when combined with work incentives that
accommodate lifelong physical or mental disabilities can open
many employment opportunities to beneficiaries.
Some of these solutions lie beyond this Subcommittee's
jurisdiction. We discussed them because a comprehensive
solution is required that engages each of the stakeholder
groups on this issue--consumers, providers, employers,
policymakers, and taxpayers--in reducing cash assistance for
beneficiaries through work.
We seek opportunity, employment and freedom, rather than
dependence. Sometimes we will attain self-sufficiency and
require only opportunity and accommodations from society. Many
times we will earn most of our support, but will need help to
ease the extraordinary expense of working with disabilities.
More than occasionally, even our maximum work effort will
require some ongoing cash assistance, and inkind support from
society. In all instances, we are highly motivated to be
working members of society, contributing what we can, and
taking only that which we need to survive and prosper.
In all instances, the opportunity exists to reduce the
dependence of beneficiaries on cash assistance, and to minimize
public expenditure on inkind support.
Thank you for your attention. I will be happy to answer any
questions you might have.
[The prepared statement follows:]
Statement of Tony Young, Public Policy Associate, United Cerebral Palsy
Associations, Inc.; and Cochair, Consortium for Citizens with
Disabilities Vocational Working Group
These Signatory Organizations Support This Statement in
Principle
Alliance for Rehabilitation Counseling (NRCA/ARCA)
American Network of Community Options and Resources
American Rehabilitation Association
American Association on Mental Retardation
Bazelon Center for Mental Health Law
Goodwill Industries International
International Association of Psycho-Social Rehabilitation Services
Inter-National Association of Business, Industry, and Labor
National Association of Developmental Disabilities Councils
National Association of Protection and Advocacy Systems
Paralyzed Veterans of America
The Arc of the United States
United Cerebral Palsy Associations, Inc.
Thank you, Mr. Chairman and distinguished Members of the
Subcommittee, for this opportunity to testify on Barriers
Preventing Social Security Disability Recipients From Returning
to Work. I am Tony Young, a Public Policy Associate with the
United Cerebral Palsy Associations, Inc., and a former SSDI
beneficiary. Today I appear before you representing the
Consortium for Citizens with Disabilities Vocational Working
Group. Reflecting the complex interrelations between Social
Security and employment, the Vocational Working Group consists
of expert members from the CCD Task Force on Social Security
and the CCD Task Force on Employment and Training. CCD is a
coalition of almost 100 national disability organizations
working together to advocate for national public policy that
ensures the self-determination, independence, empowerment,
integration and inclusion of children and adults with
disabilities into all aspects of society. The CCD Social
Security Task Force monitors federal policy that impacts upon
SSDI beneficiaries and SSI recipients. The Employment and
Training Task Force monitors federal policy that effect
employment of people with disabilities.
Recent reports from sources as varied as the General
Accounting Office (GAO), the National Academy of Social
Insurance (NASI), the National Council on Disability (NCD), the
Consortium for Citizens with Disabilities (CCD), the Employment
Support Institute at the Virginia Commonwealth University (ESI)
and the Return To Work Group (RTW) all demonstrate that there
are five principal barriers to the employment of individuals
with significant disabilities who are SSDI beneficiaries and
SSI recipients (SSDI/SSI beneficiaries).
The barriers are:
1. The loss of health benefits; 2. The complexities of
current work incentives; 3. Financial penalties of working; 4.
Lack of choice in employment services and providers; and, 5.
Inadequate work opportunities.
The solutions are:
1. Extend Health Benefits; 2. Streamline Work Incentives;
3. Make Work Pay; 4. Enhance Consumer Choice of Services and
Providers; and, 5. Help Employers to Employ Individuals with
Significant Disabilities.
It is generally agreed that all of these barriers must be
solved in order to empower individuals with significant
disabilities to go to work. We recognize that some of these
solutions lie beyond the jurisdiction of the Subcommittee on
Social Security, and even beyond that of the Committee on Ways
and Means. Nonetheless, while we will focus our testimony on
issues under the Subcommittees' jurisdiction, we chose to
discuss the full range of these solutions with this
Subcommittee for three important reasons:
1. All of these barriers must be resolved in order to
empower individuals with significant disabilities to go to
work. The major studies of the disincentives to work done by
the General Accounting Office, the National Academy of Social
Insurance, and the Employment Support Institute all agree that
to truly solve this problem, a comprehensive solution is
required.
2. It is important to note that these solutions address
issues faced by not only people with disabilities. There are
five stakeholder groups with a direct interest in this issue:
individuals with disabilities; providers of employment
services; employers; policymaker, especially the US Congress,
and, taxpayers. Each of these stakeholders holds a portion of
the answer to the puzzle of employment for SSDI/SSI
beneficiaries. Without the willing participation of each
stakeholder to implement the solutions, there is no hope of
achieving the desired outcome of reducing cash assistance
payments for SSDI/SSI beneficiaries through work.
3. The Subcommittee, especially through its Chairman and
Ranking Member, has demonstrated leadership and strong interest
in crafting solutions to barriers to employment for SSDI/SSI
beneficiaries. We strongly encourage the Subcommittee to carry
on in its leadership role on this issue in the areas under its
jurisdiction, and continue to work in a bipartisan, cooperative
mode with other Committees and Subcommittees, and the
Administration, as appropriate, to enact a comprehensive
solution to these barriers. Our goal is to work with the
Subcommittee on Social Security, along with other partners, to
create an effective system that both supports employment for
those who can work and early retirement for those who, due to
the severity of their disabilities, cannot work.
Scope of the Barriers
The solutions outlined above reflect the desire of many
individuals with significant disabilities to change the way
SSDI responds to the needs of persons with work disabilities.
In the beginning SSDI was designed as an early retirement
program to provide income support for injured or ill workers
who could no longer perform Substantial Gainful Activity in a
post World War II Industrial economy. In the four decades that
have elapsed since the inception of SSDI, the economy has
changed substantially, perceptions of individuals with
significant disabilities have changed substantially, and even
the nature of work has changed substantially. SSDI has only
experienced technical modifications that have left it
struggling to cope with a new generation of workers with
disabilities trying to obtain employment in a booming
Information Economy.
In essence, individuals with significant disabilities want
to benefit from taxpayer dollars spent on assisting our efforts
to seek opportunity, employment, productivity, and freedom
rather than for dependence on cash assistance. We want to work
to the maximum of our physical and mental capacities, fully
understanding that even if we do so, some of us will not earn
enough income to be economically self sufficient, and some of
us who are terminally ill or similarly substantially impaired
will be unable to work at all. Nevertheless, we want to engage
in work the most essential of all societal activities to the
greatest extent possible.
In some instances we will attain economic self sufficiency
and require only opportunity and accommodations from society.
In other instances we will be capable of earning a substantial
portion of our support but will require ongoing in-kind support
(e.g., primarily health care, personal assistance, and housing
subsidies) from society to help with the extraordinary expense
of living and working with disabilities. In some instances,
even our maximum work effort will still require both some cash
assistance and in-kind support from society. In all instances,
we want to be active members of society, contributing what we
can and taking only that which we need to survive and prosper.
In all of these instances, the real opportunity exists to
reduce the dependence of SSDI/SSI beneficiaries on cash
assistance and to minimize direct public expenditures on in-
kind support.
However, the current all-or-nothing design of the SSDI
program prevents most beneficiaries from attempting to go to
work. Unlike the SSI program, where recipients who attempt work
lose only $1 in cash assistance for every $2 in earned income
and can continue receiving Medicaid acute medical care,
personal assistance, and prescription medication coverage (up
to State limits), SSDI beneficiaries lose all cash assistance
after earnings reach $500 per month (assuming in this example
that the Trial Work Period has expired). Further exasperating
the situation, SSDI beneficiaries receive free Medicare (which,
because it does not cover personal assistance and prescription
medications is a lesser benefit than Medicaid) for only 36
months. After then, they pay the full Part A premium, currently
$330 monthly, to continue coverage.
The result is that the vast majority of DI beneficiaries
find that working to their maximum capacity under the current
SSDI work incentives rules is so costly that they financially
cannot afford to work. They feel that they are financially and
medically rewarded for remaining on benefits and punished for
attempting work.
An analysis of these ``work incentives'' by the Employment
Support Institute is enlightening. They have designed a
software program that can demonstrate the impact on the net
income of an individual receiving SSDI, SSI, or both when they
attempt to work. Under current rules, an SSDI beneficiary
receiving the average amount ($704 per month DI check in 1997)
who attempts work falls off a net ``income cliff'' after
earning $600 per month ($7,200 per year) and does not recover
the same net income level until earnings reach $2,000 per month
($24,000 annually). An SSI recipient in a similar circumstance
can continue earning more income and take home more net pay
after passing $600 per month because of the Sec. 1619 two for
one offset of cash assistance they have available to them. SSI
recipients do not experience the ``income cliff'' until they
reach their State Medicaid threshold and attempt to purchase
medical coverage.
These are only two examples of the unfortunate situations
(visit the ESI Web page at http://www.vcu.edu/busweb/esi to
review other scenarios, all of which are significant barriers
to employment for SSDI/SSI beneficiaries) that are an
unintended result of Federal and State social policies that
were developed without a coordinated purpose. The result is a
conflicting maze of work incentives that all too often rewards
SSDI/SSI beneficiaries who try to work with the receipt of an
over payment letter from SSA rather than income security. No
wonder less than one-half of 1% of SSDI beneficiaries leave the
rolls to work.
If a work incentive similar to the SSI Sec. 1619 program
were instituted for SSDI beneficiaries, and combined with
extended health coverage, tax incentives, and choice in
providers, DI beneficiaries could work to the maximum extent
that their disabilities and other personal circumstances
allowed. This would result in savings to the SSDI Trust Fund as
beneficiaries entered the workforce and began to forego all or
some of their DI cash assistance. These cash savings would grow
over time as SSDI beneficiaries gained skills and confidence.
The following section discusses a comprehensive package of
changes required to implement these solutions.
Barriers and Solutions
Barrier 1: Health Benefits. Access to private health
insurance is increasingly cited as the key obstacle to
employment, particularly in light of the increase in part-time
work, which rarely brings access to health insurance. With
underwriting practices and limits on benefits acting as
critical disincentives, many people with disabilities must seek
Social Security benefits in order to gain access to public
health insurance.
Solution 1: Extend Health Benefits. An individual who is an
allowed SSDI/Medicare or SSI/Medicaid beneficiary who returns
to work, should remain in a continuing disability status unless
medical recovery is determined. Health coverage should be
maintained for SSDI/SSI beneficiaries going to work in three
ways: 1) Continue Medicare free until $15,000 of earned income,
then with a buy-in at 10% of earned income capped at the full
Part A Medicare premium amount; 2) Establish a Medicare-only
buy-in similar to number one above for individuals with
disabilities who would be DI eligible except for earning above
SGA, capped at the full Part A Medicare premium amount; and, 3)
Create an optional state Medicaid buy-in for working SSDI/SSI
beneficiaries.
Barrier 2: Complexity of Work Incentives. The SSDI and SSI
programs both have work incentives that are designed to assist
beneficiaries and recipients to leave the rolls by going to
work. These work incentives have the potential to be effective
but they complex and incomplete and therefore are
underutilized. In addition, they are not coordinated for people
who receive both SSDI and SSI. Despite intense efforts by SSA
and advocacy groups to publicize and educate SSDI/SSI
beneficiaries about these benefits, they are used by only a
small fraction of those eligible. They also are very expensive
to administer and too often result in benefit overpayments that
must be returned by the payees.
Solution 2: Streamline Work Incentives. The ``work
incentives'' in current law must be renamed and simplified so
that SSDI/SSI beneficiaries can understand and utilize them,
and so there is a decrease in the expense of their
administration. The goal should be to modify them into easily
understood and usable work facilitators that encourage the
transition from sole reliance on public benefits to economic
security primarily through employment.
Barrier 3: Financial Penalties. Enabling individuals who
have been unable to afford to enter or re-enter the workforce
due to the economic disincentives inherent in the current
system requires the redesign of the program. This should be
done in a way that facilitates former SSDI/SSI beneficiaries to
earn an income that enables them to survive. The current SSDI
structure punishes rather than rewards people with disabilities
who attempt to leave entitlement programs to work. The SSDI
system eliminates eligibility for both cash assistance and in-
kind support (e.g., health care) before the individual can earn
a living wage. Whie the SSI program has Sec. 1619, SSDI has no
similar work incentives. This sudden loss of support is known
as the ``income cliff'' and represents a significant
disincentive to work.
Solution 3: Make Work Pay. A combination of declining cash
assistance similar to the SSI Sec. 1619 program, disability
expense related tax credits, and tax deductions will enable
individuals with significant disabilities to work. We also
recommend a change in the asset limitations for SSI recipients
who work to facilitate savings and investment. This recognizes
that some individuals with the most significant disabilities
will need ongoing support due to their limited earning
capacities.
Declining cash assistance. An allowed SSDI/Medicare
beneficiary who goes to work should have their DI cash
assistance reduced by $50 for every $100 earned beginning at
$500 of monthly earned income. The $50/$100 sliding scale
offset would replace Substantial Gainful Activity (SGA)
measures only for allowed SSDI beneficiaries who attempt to
work. SGA, defined as earnings from wages or salaries that
equal or surpass $500 monthly (for non blind disabled
beneficiaries) would remain a principal criteria for
establishing a work disability at initial eligibility.
CCD recognizes that this provision has been analyzed by CBO
and determined to have high costs. We respectfully disagree
with the assumptions underlying these results. We urge the
Congress to work with CCD and the Employment Support Institute
at VCU in developing state-of-the-art computer models for
anticipating work efforts. The financial barriers to work for
SSDI/SSI beneficiaries are real. As a nation we must afford
these individuals every opportunity to work; we certainly
cannot afford to trap them in a lifetime of poverty on
government cash assistance payments.
Disability Expense Tax Credits. The vast majority of
working Americans have their wages supported by tax breaks,
either through personal exemption; standard or itemized
deductions; or tax credits. Individuals with disabilities
should be rewarded for working through the alleviation of their
extraordinary expenses of living and working with a disability.
A tax credit of one-half of all disability related expenses,
including personal assistance services, of up to $15,000,
should be provided for SSDI/SSI beneficiaries who are working.
Costs for disability related work expenses beyond those applied
to the Disability Expense Tax Credit should be deductible as
Impairment Related Work Expenses.
Personal assistance is defined as one or more persons or
devices assisting a person with a disability with tasks which
that individual would typically do if they did not have a
disability. This includes assistance with dressing, bathing,
getting in and out of bed or one's wheelchair, toileting
(including bowel, bladder and catheter assistance), eating
(including feeding), cooking, cleaning house, and on-the-job
support. It also includes assistive technology devices and
services, assistance with cognitive tasks like handling money
and planning one's day, and fostering communication access
through interpreting and reading services.
Impairment Related Work Expense Tax Deductions. A
modification of the existing Impairment Related Work Expense
tax deduction available to workers who itemize deductions on
their tax returns would enhance long term employment for
individuals with significant disabilities. This modification
would allow former SSDI/SSI beneficiaries to deduct costs of
disability related work expenses beyond those covered by the
proposed disability expense tax credit.
Facilitate Savings and Investment. SSDI/SSI beneficiaries
who work should have their unrestricted asset limitation raised
to $5,000 (indexed to inflation). ``Super IRA's,'' ``qualified
plans'' and medical savings accounts should be exempted from
this resource limitation. These plans allow savings for
education, medical emergencies or retirement.
Barrier 4: Consumer Choice of Services and Providers.
People with disabilities who are SSDI beneficiaries or SSI
recipients have no choice in the providers of their services.
Consumers are assigned to a service provider, which by law must
be a state vocational rehabilitation agency, usually by type of
disability rather than type of services required. Consumers who
determine that they are not receiving appropriate or high
quality services generally have no recourse other than to
purchase services themselves from private vendors. Given the
cost of private services and the state of most consumer's
finances, this is an option very few can afford.
Solution 4: Enhance Consumer Choice of Services and
Providers. Active participation in the rehabilitation process
is a proven method for increasing the chances of a successful
outcome. Enabling consumers to choose their services and
providers gives the individual a feeling of ownership in the
process. This choice of services and providers treats the
beneficiary as an adult, capable of making significant life
choices, thereby enhancing the individuals self-esteem and
confidence. Choice eliminates the conflicting signals currently
sent by the referral system, which tells beneficiaries they are
capable enough to work, but they are not capable to select by
themselves where to go for employment and related vocational
services. Choice is also important for those individuals with
cognitive impairments who may need assistance in exercising
choice.
Consumers must be able to choose from among the many
thousands of public and private rehabilitation, employment
service, and related providers in the nation. Limiting the
choice of SSDI/SSI beneficiaries who want to work to only the
network of State Vocational Rehabilitation Agencies (SVRA's)
will quickly overwhelm a system that is already struggling to
serve some of the individuals with disabilities who request
their assistance to prepare for and enter the work force. In
addition, the sheer magnitude of SSDI/SSI beneficiaries who may
want to access services to prepare for and go to work demands
that we focus the full capacity of the nation's employment and
training resources on assisting them to work.
Consumer choice will only work if there are a wide range of
high quality, effective public and private providers available.
This means that an infrastructure that enables providers to
contact, recruit, serve, and to receive timely payment for
having served consumers must be designed from the ground up to
be effective in this outcome-based system.
Since 1981, Congress has required the only authorized
provider of employment services to SSDI/SSI beneficiaries
SVRA's to share the risk of assisting them to work by
reimbursing relevant service costs only after the attainment of
a measurable outcome: returning to work at or above the SGA
level. This strategy has reduced expenditures from the SSDI
Trust Fund without significantly reducing the numbers of those
who reach SGA. It is time to modernize this risk based payment
system so that all public and private employment service
providers have an incentive to assist SSDI/SSI beneficiaries to
work.
The updated payment system should encourage work by all
SSDI/SSI beneficiaries, regardless of their ultimate work
capacity. Instead of rewarding providers only for removing
people from the rolls, it should reward providers for assisting
people to minimize their dependancy on cash assistance
programs. Paying providers a portion of the savings realized by
the Federal Government will enable many more people to work to
their full capacity and result in greater savings than only
paying for those attaining SGA.
Payment should be made through a milestone approach.
Providers should receive partial payments at three points: When
a consumer and provider agree on an employment plan; 60 days
after the consumer begins employment; and when the consumer
completes 9 months of employment. Subsequently, providers
should receive quarterly payments equal to a portion of the
savings the Government realizes due to the reduction of the
cash assistance paid to the consumer for five years. Milestone
amounts should be limited so that no more than one-third of the
total payment made to providers are received before the
consumer achieves the third milestone.
Designing and implementing this program will be a
significant challenge to SSA. CCD recommends that a Commission
with equal representation from consumers and their self-
selected representatives, providers, and employers be appointed
and charged with responsibility to assist SSA in this endeavor.
The Commission should have broad authority to research, model,
test, and recommend the final structure of the program to SSA
and the Congress by a date certain. It is imperative that the
missteps that occurred during implementation of the Alternate
Participant program be avoided.
In any system involving negotiations between parties there
will be disagreements. Therefore, funding for advocacy services
specifically designated to assist SSA's beneficiaries to
resolve disputes with providers should be made available. It
should protect their legal and human rights, and assist and
advocate for such individuals in their relationship with public
and private providers through alternative dispute resolution
means as necessary.
Finally, the management of the new program should be
contracted to a private sector firm on a competitive bid
similar to the arrangement in the current Alternate Participant
program. This will minimize the administrative burden of the
program on SSA.
Barrier 5: Inadequate Work Opportunities. Individuals with
significant disabilities face competition from many directions
in their efforts to work. Individuals who are leaving welfare,
those who are graduating from schools and colleges, and those
who are dislocated due to corporate down-sizing and economic
restructuring all are competing for a limited pool of jobs.
Solution 5: Help Employers to Employ Individuals with
Significant Disabilities. The Committee should study the impact
of an expansion of the Work Opportunity Tax Credit to employers
for hiring and retaining former SSDI/SSI beneficiaries. It
should also study other ADA and disability related employment
incentives already available to employers.
Work in the Information Age
The new definitions generally accepted for work in the
Information Age recognize that the creative application of
technology can enhance the inherent skills, abilities, and
talents of all workers. A work disability now exists as a point
in time when an individual acquires a physical or mental
incapacity and can no longer perform SGA, rather than a
lifelong incapacity to do any work. However, only the
application of new techniques in medical rehabilitation,
assistive technology, and employment training, when combined
with the employment supports that we discussed today which
accommodate the lifelong physical or mental disability, can
open this unprecedented array of employment opportunities to
individuals with significant disabilities.
Most of us languish behind a wall of barriers made up of
all the best intentions of the policy makers who have gone
before us. Only those most fortunate among us have been able to
use our unique personal circumstances to go to work. My
rehabilitation and work experience is an example of this
serendipity.
I became a C-4 quadriplegic in 1970 as a result of a body
surfing accident. I was 18 years old, and just graduated from
high school. My work skills and experience included mowing
lawns, raking leaves, washing cars and dishes, and three
summers as a life guard, swimming instructor and swim team
coach. These jobs are not exactly what you need to prepare for
working in an economy of high skill, high wage jobs, especially
with a disability as severe as mine. After medical
rehabilitation, I was evaluated by the Virginia Department of
Rehabilitative Services in 1971, determined to have no work
potential, and sent home to live with my parents.
In 1975, I was again connected with the Virginia Department
of Rehabilitative Services and evaluated for work potential. In
the few years between 1971 and 1975, the expectations of the
potential of severely disabled persons changed substantially,
mainly due to the emergence of the Independent Living Movement.
I was determined to have work potential under these new
expectations. I wanted to earn a college degree, and agreed to
a program of study to become a computer programmer. After one
year of study, during which I demonstrated a complete and utter
lack of talent or aptitude for programming computers, I
realized that I could be successful not by accomplishing tasks
directly, but by managing human and other resources to
accomplish tasks, so I changed my major to Business
Administration and completed my degree program.
I initially went to work at the US Department of
Agriculture as a Budget Analyst under a Schedule A appointment
which paid a salary but did not provide health coverage. The
only reasons why I was able to accept this opening was the fact
that I was covered under my Mother's employer sponsored health
insurance, and that as a GS-7, I was, at that time, able to pay
for some of my personal assistance services. Without a personal
assistant to help me shower, get dressed, and prepare for work,
I would have been unable to even consider working. I relied on
family and friends for the balance of my needs, such as grocery
shopping, doing laundry and house keeping, taking medications,
going to the doctor, and other routine activities of life.
My next job was as the Executive Director of a Center for
Independent Living. As the boss, I could decide who to cover
under our health plan and chose to cover my entire staff as a
group. Mixing employees with and without disabilities under a
small group plan was difficult even 15 years ago, but that
coverage and my ability to pay for more of my personal
assistance expenses made it possible for me to continue to
work.
A few years later I experienced some significant health
problems that forced me to retire from the active workforce for
a time and left me with a secondary disability and a propensity
for decubitus ulcers (pressure sores or bed sores). When I
recovered, I worked part-time as a consultant in public policy
for persons with disabilities. I worked part-time because I
could no longer sit in my wheelchair for the full amount of
time required for a full time job due to the decubitus ulcer
problem. I worked as much as I could, relying once again on my
Mother's family health coverage, along with Medicare, SSDI, and
volunteer personal assistance. I was reviewed by a Continuing
Disability Review once during this period and determined not to
be performing SGA. This was a difficult and extremely trying
time for me and my family.
In 1990, technology, workplace theory and civil rights for
individuals with disabilities began to catch up with my
disability. The introduction of the personal computer and
telecommuting, along with the passage of the Americans with
Disabilities Act, enabled me to accept a full-time position
with the American Rehabilitation Association at an excellent
salary and with health and retirement benefits. The state-of-
the-art working environment at American Rehab, including job-
related personal assistance at work, flexible working schedule,
telecommuting, and accessible personal computers, enabled me to
significantly advance my career. The knowledge and experience I
obtained there led me directly to the position I currently hold
at UCPA.
I have been able to build some personal financial
stability. This ``personal safety net,'' as I call it, consists
of personal savings, retirement savings, and an investment plan
for building my personal wealth. This means that I have the
personal resources to weather a financial setback without
needing to immediately return to public support, and to look
forward to retirement without the prospect of relying solely on
Social Security retirement checks. Federal policy should
encourage everyone to build this type of ``personal safety
net'' as soon as possible. We recommend a change in the asset
limitations for SSI recipients who work to facilitate savings
and investment.
None of this would have been possible without a series of
fortunate circumstances. My Mother was working, and I was
covered under family health insurance that allowed me to ignore
the number one barrier to work: fear of losing health coverage.
I lived in my parents' home (after accessibility adaptations)
rent free, which allowed me to afford to pay for the
extraordinary expenses of living and working with a disability,
thus avoiding barriers two and three: the complex work
incentives and the earnings cliff. I was not able to choose my
rehabilitation provider, which meant that I had to wait until
the changing attitudes of the work capacity of individuals with
significant disabilities permeated my sole mandated service
provider before I could receive services; I might have been
working years earlier had I been able to choose other provider
options. Finally, my first employer had an internal incentive
to hire me: as a Schedule A appointment, I did not count
against the Branch's FTE limit, thus boosting the productivity
of the unit substantially.
It is not in the best interests of society, either from a
fiscal standpoint or from a humanistic view, to force SSDI/SSI
beneficiaries to rely on luck as a means to opportunity,
employment, productivity, and freedom. It is certainly not in
the best interests of SSDI/SSI beneficiaries, as analysis
clearly shows. These barriers that were inadvertently built
into the system must be removed; the physical, mental, and
financial health of SSDI/SSI beneficiaries depends upon the
timely enactment and full implementation of effective,
comprehensive solutions. The financial health of the nation
demands the full participation of all of its citizens to the
maximum extent of their capabilities. The Congress has an
historic opportunity to use the full range of tools at its
disposal to meet the converging needs of SSDI/SSI
beneficiaries, providers of rehabilitation services, employers,
and taxpayers. We are ready, willing, and able to assist the
105th Congress to achieve this important goal.
[GRAPHIC] [TIFF OMITTED] T5046.006
Mr. Hayworth [presiding]. Mr. Young, thank you very much
for your testimony. As you see I have some big shoes to fill.
The Chairman's been called away to speak on the floor, and so I
am pleased to be sitting here with my dear friend from
Connecticut and hearing all of your testimony.
Let's move along now. Lorraine Sheehan, chairperson of the
governmental affairs committee of The Arc of the United States,
accompanied by Marty Ford, assistant director of governmental
affairs.
Ms. Sheehan.
STATEMENT OF LORRAINE SHEEHAN, CHAIRPERSON, GOVERNMENTAL
AFFAIRS COMMITTEE, ARC OF THE UNITED STATES; ACCOMPANIED BY
MARTY FORD, ASSISTANT DIRECTOR, GOVERNMENTAL AFFAIRS OFFICE,
ARC OF THE UNITED STATES
Ms. Sheehan. Mr. Acting Chairman, and Members of the
Subcommittee, thank you for the opportunity to testify. We
appreciate the leadership of Chairman Bunning and
Representative Kennelly in taking a serious and long overdue
look at the work incentive and barrier issues in the Social
Security Disability Program.
I want to focus on issues and problems facing people with
mental retardation. I am testifying as chairperson of the
governmental affairs committee of The Arc of the United States,
and also as the mother of my son, John.
John is 31 years old, has mental retardation. He works in
groundskeeping, in a Maryland State park during the summer, and
has been receiving SSI benefits since 1984. During the school
year, he works for the Marriott Corp. in the cafeteria at St.
John's College in Annapolis.
His work is known as supported employment because he has a
job coach to assist him with job-related issues. I also want
you to know that he is well-known in his neighborhood and he is
good looking.
Many people with mental retardation receive title II Social
Security benefits as adult dependents of their parents who have
retired, become disabled or died. In addition, a growing number
receive SSDI benefits as a result of their own work history and
disability.
People with mental retardation have a lifelong disability.
Although most can work, those who are severely disabled enough
to qualify for SSDI or SSI benefits are likely to need lifelong
support of some sort, even if they are working.
Success for many people with mental retardation must be
measured in decreasing dependence, increasing productivity and
community participation. It should not be measured solely in
terms of elimination of benefits. The fact that many people
continue to use section 1619 of the SSI Program without moving
off should not be viewed as a failure.
In my son's situation, the SSI exclusion for impairment-
related work expense makes work pay. Transportation to and from
work absorbs half his earnings. The IRWE helps cover those
expenses before SSI benefits are reduced on the basis of
earnings.
Due to the nature of the disability and the nature of job
opportunities traditionally open to people with mental
retardation, many will start as low-wage workers and will
remain at lower levels of income most of their lives, often in
jobs which do not provide health or other benefits. Many will
be the last hired, the lowest paid, and the first to be fired
in any restructuring or downsizing.
While my son has been working at St. John's College for 4
years, previous to that he had a series of four or five jobs
that lasted between 1 and 5 months. Even with the additional
support of a job coach it was, and can be, very hard to find
jobs which are an appropriate match for the individual with
mental retardation and the employer.
Sometimes fitting in with untrained or uninterested
managers and coworkers can be an insurmountable hurdle. In
spite of that fact, my son clearly wants to work, as others do
like him. And in spite of the Americans with Disabilities Act,
and the Rehabilitation Act it can be very difficult to find
jobs which provide the right match for people with significant
cognitive limitation.
It is even more difficult to find those jobs which provide
long-term stability and support needed by an individual with
significant impairment over a lifetime. John's two jobs are
considered part time, and do not provide health or retirement
benefits.
The cash cliff of title II and the cost of continuing
Medicare are very real barriers to work. In the SSI Program,
sections 1619 (a) and (b) allow for gradual decline in cash
benefits and continuing Medicaid coverage if the person needs
continuing Medicaid in order to work.
The Social Security Disability Program does not have
similar work incentives.
In addition, there are very significant complications for
people who move from SSI 1619 to the title II disability
programs, and for those who receive benefits from both title II
and SSI. Typically, when a child reaches 18, the family will
sign them up for SSI, and then the parent retires or becomes
disabled, and then the individual becomes eligible for SSDI.
But the major change comes when we die, when parents die.
Believe me when I say this, our greatest fear as parents of
children and adults with mental retardation, is what is going
to happen to our kids when we die. It is a thought constantly
on our minds.
And in today's world, with the title II benefits, my son
could actually lose the stability of a job, as well as
wondering who is going to care for him, and all of the rest.
For my son and others like him, loss of meaningful work
also means loss of part of your identity, as for many of the
rest of us.
The Arc would like to work with the Subcommittee on all of
these incentive issues. Our goal is to really make it work. And
I hope that you will be sensitive to the different needs of
different people with different strengths and limitations, and
we look forward to working with you.
Thank you.
[The prepared statement follows:]
Statement of Lorraine Sheehan, Chairperson, Governmental Affairs
Committee, Arc of the United States
Thank you, Mr. Chairman and Members of the Subcommittee,
for this opportunity to testify on the barriers to employment
for Social Security disability beneficiaries. The Arc of the
United States has joined in the statement of the Consortium for
Citizens with Disabilities. We appreciate the leadership of
Chairman Bunning and Representative Kennelly in taking a
serious and long overdue look at the work incentive and barrier
issues in the Social Security disability programs. I will use
this opportunity to highlight and discuss in further detail the
issues and problems facing people with mental retardation.
I am testifying in my capacity as Chairperson of the
Governmental Affairs Committee of The Arc of the United States
and also as mother of my son John. John is 31 years old, has
mental retardation, works in groundskeeping at Sandy Point
State Park during the summer, and has been receiving SSI
benefits since 1984. During the school year, he works for the
Marriott cafeteria at St. John's College in Annapolis. His work
is known as supported employment because he has a job coach to
assist with transitional and other job-related issues.
Title II and People with Mental Retardation
Before I make certain basic points about the experience of
people with mental retardation in the Title II program, let me
explain why Title II is important to people with mental
retardation. Many people with mental retardation receive
``Title II'' Social Security benefits as adult dependents of
their parents who have retired, become disabled, or died. To
qualify in this way for benefits based upon a parent's work
history, the adult ``child'' must have been disabled during
childhood. This group of eligible adults disabled during
childhood are often referred to as ``DACs'' (disabled adult
child).
In addition, a growing number of people with mental
retardation receive Title II disability insurance benefits as a
result of their own work history (quarters of coverage) and
disability.
Since the eligibility criteria and work incentive
provisions of the disability insurance program are applied to
all of these categories of adults, the term SSDI (Social
Security Disability Insurance) is often used in references to
encompass all of the Title II disability programs (even though
it is technically incorrect for encompassing all). It is
important that improvements in any of the work incentives be
applied to all people who receive Title II benefits on the
basis of disability, not just those who are technically in the
SSDI program.
The Lessons of Section 1619 and Title II Work Incentives
I would now like to highlight a number of key issues
regarding work incentives for people with mental retardation,
based on the experiences of people with mental retardation as
reported to us over the years by themselves, their parents, and
service providers.
People with mental retardation have a life-long
disability. Although most can work, those who are severely
disabled enough to qualify for SSDI or SSI benefits are likely
to need life-long support of some sort even if they are
working. That need for support will vary with the individual,
depending on circumstances including age, health, skill
development, and family and community support, to name a few.
Success for many people with mental retardation
must be measured in decreasing dependence (financial or
otherwise) and increasing productivity and community
participation; success should not be measured solely in terms
of elimination of benefits. The fact that many people continue
to use Section 1619 of the SSI program without ``moving off''
should not be viewed as failure. For the people with mental
retardation involved, they have increased their own financial
stability while reducing the amount of cash benefits paid out
of the general treasury.
In my son's situation, the SSI exclusions for
impairment related work expenses make work pay. Transportation
to and from work absorbs half of his earnings; the IRWE helps
cover those expenses before SSI benefits are reduced on the
basis of earnings.
Due to the nature of the disability and to the
nature of job opportunities traditionally open to people with
mental retardation, many will start as low-wage workers and
will remain at lower levels of income most of their lives,
often in jobs which do not provide health or other benefits.
Many will be the last hired, lowest paid, and the first to be
fired in any restructuring or downsizing. While my son has been
working at St. John's College for 4 years, previous to that he
had a series of 4 to 5 jobs which lasted from 1 to 5 months.
Even with the additional support of the job coach, it was and
can be very hard to find jobs which are an appropriate match
for the individual with mental retardation and the employer.
Sometimes, fitting in with untrained or uninterested managers
or co-workers can be an insurmountable hurdle. In spite of the
fact that my son clearly wants to work, as do others like him,
and in spite of the Americans with Disabilities Act and the
Rehabilitation Act, it can be difficult to find jobs which
provide the right match for people with significant cognitive
limitations. It is even more difficult to find those jobs which
provide the long term stability and support needed by an
individual with significant impairment over a lifetime. John's
summer job does not provide health or retirement benefits; his
school-year job is also considered part-time and does not cover
benefits.
Therefore, the ``cash cliff'' in Title II (the
loss of all cash benefits after reaching the substantial
gainful activity (SGA) level of earnings for the 9 months of
the trial work period (TWP)) and the cost of continuing
Medicare are very real barriers to work. In the SSI program,
Sections 1619(a) and (b) allow for a gradual decline in cash
benefits as earned income increases beyond the SGA level and
for continued Medicaid coverage, even beyond the cash break-
even point, for as long as the person needs continued Medicaid
in order to continue working. The Social Security disability
program does not have similar work incentives. There, people
lose all cash after 9 months of trial work and Medicare is very
expensive for lower income earners when the extended period of
eligibility (EPE) is exhausted. It is important to note that,
when the Section 1619 program was made permanent in 1986, the
TWP and EPE were eliminated in SSI; with the gradual cash
offset and the availability of continued Medicaid, TWP and EPE
were no longer necessary.
In addition, there are very significant
complications for people who move from SSI Section 1619 work
incentives to the Title II disability programs and for those
who receive benefits from both Title II and SSI.
We strongly believe that a parallel program to
Section 1619 should be established in Title II, including
elimination of the confusing TWP and EPE.
In our experience, there is a very typical
scenario for people with mental retardation and their attempts
to work despite severe, life-long disability. Of course, there
are innumerable variations, but the basic scenario is repeated
over and over again across the country in family after family.
--First, the young person, often upon becoming 18 years
old, becomes eligible for SSI based on disability and low
income and resources. The individual is able to increase income
to the best of his/her ability using the Section 1619 program.
This is where my son fits into the scenario.
--Then the individual's parent retires or becomes disabled.
The individual becomes eligible to receive a benefit of 50
percent of the parent's benefit. This will happen to my son
John soon. As you know, an SSI beneficiary must apply for and
accept all other sources of income or benefits he/she is
entitled to, because of the nature of the SSI program as
supplemental income.
--As a result of this increase in unearned income, the
individual may lose SSI completely OR may receive both SSI and
SSDI simultaneously. It is at this step that it becomes clear
that the work incentives in SSI and SSDI are not at all
coordinated.
--The next major change comes when the parent dies. As
parents, our greatest fear is not for our own futures, but for
the future of our sons and daughters, particularly when they
have significant limitations in their ability to anticipate and
care for their own needs. At this point, the individual becomes
eligible for a Title II benefit equal to 75 percent of what the
parent's benefit was. Once again, the individual may lose SSI
altogether and move completely into Title II, OR may continue
to receive SSI and SSDI simultaneously.
--Throughout all of this, the individual has not changed at
all. There may have been no change in job status, no change in
job or income, no promotion. Yet, the person, through no action
of his/her own, may become ineligible for basic safety net
support and is forced to choose between that critical support
or work which cannot meet his/her needs.
--The loss of SSI benefits and the loss of those work
incentives which make it possible to improve financial
stability, therefore, may also mean the loss of work and the
loss of an important factor in quality of life. The individual
with a significant impairment and the need for some level of
life-long support simply cannot afford to work at this point
unless potential income is high enough to skip over the cliffs
and canyons created by the loss of the Title II cash benefit
and medical coverage. For the individual whose income is likely
to start and remain low, including most people with mental
retardation, the loss of work is likely.
--For my son and others like him, loss of meaningful work
also means loss of part of your identity. As for many of us,
your work is who you are.
The movement between programs requires other
trade-offs also. In SSI, the Sec. 1619 work incentives
encourage work. However, a person cannot save meaningfully for
the future because of the limits on resources. While in SSDI,
the work incentives do not encourage work, so a person cannot
earn. However, there are no restrictions on savings for the
future. Both programs require that the individual give up one
or the other of these essential components for future financial
security, if not total financial independence. Families helping
a person with significant cognitive impairment, like mental
retardation, must be concerned for the future and the long-
term.
In designing a series of changes for Title II and/
or SSI, remember that, for people with mental retardation, work
is often for the first time and may require different
approaches than for people who are ``returning'' to work.
Finally, I would like to make a comment on SGA.
The substantial gainful activity level needs an increase and
should be indexed for inflation. Rep. Phil English has
introduced a bill which is long overdue. We urge the Committee
to address it as part of its work incentive improvement
efforts. However, caution will be necessary to ensure that it
works in the overall context of work incentives addressed here
this week.
The Arc would like to work with the Committee on all of
these work incentive issues. Our goal is to make work
incentives really work, to make them sensitive to the different
needs of people with different strengths and limitations, and
to have them incorporate the need to potentially support some
people over a lifetime. We look forward to working with you.
Mr. Hayworth. Ms. Sheehan, thank you very much for your
testimony. Now we will hear from Brenda Crabbs, a current SSDI
beneficiary who is here to testify on behalf of the National
Arthritis Foundation.
Ms. Crabbs.
STATEMENT OF BRENDA CRABBS, CURRENT SOCIAL SECURITY DISABILITY
INSURANCE BENEFICIARY, BALTIMORE, MARYLAND, ON BEHALF OF THE
ARTHRITIS FOUNDATION
Ms. Crabbs. Thank you, Mr. Chairman. Ladies and gentleman,
my name is Brenda Crabbs, and I am here today on behalf of the
Arthritis Foundation, and I am also an SSDI recipient.
Forty million Americans have arthritis, and it is the
number one cause of disability in America, and the second
leading cause of disability payments. Overall, the impact of
arthritis and related diseases on the economy amounts to more
than $149.8 billion, approximately 2.5 percent of the gross
national product.
Women under the age of 65 with musculoskeletal diseases
represent 7.3 percent of all SSDI recipients, and I am one of
those women. I have rheumatoid arthritis. I was diagnosed 34
years ago, and stopped working 5 years ago, so I made it longer
than most with my problem. But I have had three operations in
the last 4 years and there is more to come.
There is no expectation that I am going to experience a
medical recovery, so the question becomes who would want to
employ me, and, more importantly, who would want to insure me?
I do not need referral to vocational rehabilitation. I have
skills, but there is no expectation that I will ever get
better, only worse.
As a self-employed person who works on a contract basis,
Social Security regulations subject me to an ever higher
standard of substantial gainful activity when determining SGA
for me, and the Social Security Administration considers the
value of my work to the business that I am contracting with,
and evaluates whether I provide significant services to that
business.
In terms of my self-employment, I am the business. And the
hours I can work each month are restricted. This higher
standard, combined with the current SGA level of $500 per
month, requires me to give away my skills if I want to have
something to do.
The $500 cap needs to be adjusted to keep pace with
economic growth. In addition, I constantly worry about
inadvertently violating a rule which would cause me to lose my
health benefits. I am even concerned about being here today,
frankly.
Existing work incentives are extremely complex and hard to
understand. Adequate and well-trained administrative resources
are absolutely essential to serve beneficiaries. The booklets
are hard to understand. I could not figure them out, and I
consider myself an educated person.
So I went to the Social Security office and met with an
employment representative. His main advice to me was do not
make more than $500 under any circumstances.
I was never told that I could buy into Medicare. I was
given a form to fill out, and told to mail it in, and to
continue to report any work experience that I had.
I could not get the form through the mail. I have to go to
the office to get the form. This is not a user-friendly system,
and part of the disincentive to try working is the lack of
faith in the predictability of the system's response.
Once on Medicare, the loss of those health benefits is a
major disincentive to returning to work. Part-time employment
does not provide health benefits, and private health insurance
is not available to those with difficult medical backgrounds.
Current underwriting practices, and limits on benefits are
critical disincentives. Employers do not want a disabled person
on their health plan, because it pushes up their insurance
rates.
After being disabled for 2 years, a person is offered
Medicare, and the information states that if he does not take
it then, the premium will increase by 10 percent for each year
he waits.
When I accepted Medicare assignment, I thought that if I
did not take it then I would not have another opportunity until
age 65, which at the time was a long way away for me.
Once a person signs on, Medicare becomes the primary
coverage, and private insurance drops you, even as a secondary
insurer. The only secondary coverage available is a Medigap
policy.
For people who are under 65 who are disabled, there are
very few Medigap insurance products available nationwide. None
provide prescription coverage.
So for the people who need the coverage most, there is the
least available.
As a divorced woman, I have had firsthand experience of the
dilemma of choosing between Medicare or health care provided
through my ex-husband as part of the divorce agreement. His
plan provided excellent benefits, and included prescription
coverage. But I chose to take Medicare because I simply could
not afford to risk the loss of health benefits if something
happened to his job.
In choosing Medicare, I lost his plan, even as a secondary
insurer, and had to take a Medigap policy, which, of course,
forced me to absorb the expense of prescription drugs.
In order to be self-supporting and get off of SSDI, a
person has to be able to work on a regular basis a substantial
amount of time for good wages. part A costs $4,000 a year. part
B adds another $500. Prescription costs are $3,600.
A Medigap policy premium is $1,200. That is over $9,000 in
basic medical costs before a doctor is visited or a procedure
completed.
Then there are the rest of living expenses, food, clothing,
rent, transportation, and so forth. When you are disabled, it
costs more to do everything, whether it is choosing a place to
live, or pumping gas.
Congresswoman Kennelly's Transition to Work bill brings the
Medicare buy-in program into the real world, and would enable
me to work when I can without limits on the amount I can make,
but still have the safety net when I need it. This would go a
long way toward helping me maintain financial independence, and
would enhance the quality of my emotional and psychological
well-being.
In conclusion, the system badly needs reform. There is
sometimes an attitude in society that individuals on disability
are derelict and do not want to work. Not only is that picture
unfair. It is simply inaccurate.
Many people on the SSDI roles are educated and have skills
that make them employable in spite of their disability. They
need help simply because life has dealt them a different hand.
They want to work.
The potential loss of Medicare, and complicated rules for
returning to work serve as a deterrent for even attempting to
leave Social Security rolls.
Help people work with their disabilities and remain
productive members of society. One set of rules does not fit
all circumstances. The system needs flexibility to deal with
different types of disability.
Some consideration should be given to differentiating
between individuals who are likely to recover from their
illness and those who are chronically ill and have no chance of
medical improvement.
Thank you very much for this opportunity to appear.
[The prepared statement follows:]
Statement of Brenda Crabbs, Current Social Security Disability
Insurance Beneficiary, Baltimore, Maryland, on behalf of the Arthritis
Foundation
Good afternoon Mr. Chairman, ladies and gentleman.
My name is Brenda Crabbs and I am here today on behalf of
the Arthritis Foundation to speak about Social Security
disability reforms and back to work incentives. I am the chair
of the Public Policy and Advocacy Committee for the Maryland
Chapter, a member of the Foundation's national Public Policy
and Advocacy Committee and an SSDI beneficiary.
Arthritis, one of the oldest diseases known to man, is a
major factor in the economic and social fabric of the United
States. Each year, 40 million Americans with arthritis and
other musculoskeletal conditions make 315 million physician
visits, have 8 million hospital admissions and experience
approximately 1.5 billion days of restricted activity.
Arthritis is the number 1 cause of disability in America and
the second leading cause of disability payments. Overall, the
impact of arthritis and related diseases on the economy of the
United States amounts to more than $149.8 billion,
approximately 2.5% of GNP.
The economic realities of the graying of the baby boomers
and increased longevity of the American population cannot be
ignored as you consider reforms to the SSI and SSDI programs.
The size of the Social Security disability rolls will mushroom
in the next two decades and serious changes need to be made to
minimize the strain to the disability system. By the year 2020,
the number of Americans with arthritis will jump to 60 million.
When combined with other chronic diseases, the potential cost
to the Social Security disability system is staggering.
Of the 40 million Americans of all ages with some form of
arthritis, nearly two-thirds of them are women. These diseases
destroy joint tissue, damage internal organs, shorten life
expectancy, weaken the spine, make bones brittle and in many
cases, deprive individuals of physical and financial
independence. Osteoarthritis and rheumatoid arthritis are
leading causes of work limitation among women. Patients with
rheumatoid arthritis have a one in three chance of becoming
disabled and 50% of patients with rheumatoid arthritis stop
working within 10 years of diagnosis, 60% within 15 years.
Some facts related to Social Security Disability Payments
One in ten of all women under 65 receiving SSI
payment is a woman disabled by musculoskeletal disease: the
fourth largest category after mental disorders, retardation and
diseases of the nervous system.
Within the age group 60 to 64, the proportion
rises to one in 5, only slightly lower than the leading
category.
Women under the age of 65 with musculoskeletal
diseases represent 7.3% of all SSDI beneficiaries.
Lifetime costs of lost earnings because of
rheumatoid arthritis are close to heart disease and stroke.
I, unfortunately, am one of the 7.3% of women under 65 who
has had to stop working because of rheumatoid arthritis. I was
diagnosed 34 years ago and stopped working 5 years ago. Because
of excellent medical care, advances from research and a lot of
determination, I beat the odds and was able to work longer than
most, but I miss working. There is no expectation that I am
going to experience a medical recovery. My ability to work is
limited by significant loss of function in many joints, and
multiple operations (three in last four years with more to
come). So the question becomes who would want to employ me? And
more importantly, who would want to insure me? I don't need
referral to vocational rehabilitation because there is no
expectation that I will ever get better. And yet, it would
certainly be better for my mental and emotional health if I
felt like I was able to be productive.
Perhaps a tax credit should be considered for disabled
persons who try to work despite their disabilities and, or a
personal assistance tax credit to compensate working people for
the help they need to work. These tax credits would provide an
additional incentive for people to leave the Social Security
disability rolls by compensating them for additional expenses
such as transportation and health care costs incurred by
returning to work.
In addition, a tax credit for employers might make them
more receptive to hiring persons with disabilities who want to
return to work. The credit would make up for additional
expenses that an employer would have to absorb for any changes
in the workplace that would be required to accommodate a person
with a disability.
Because of my background, I occasionally have the
opportunity to use my skills working from home at my own pace,
but I am limited by the $500 cap or ``substantial gainful
activity'' definition. If I exceed that amount, I not only lose
my benefits, I lose my health insurance. The $500 figure does
not fit with today's cost-of-living and needs to be adjusted to
keep pace with economic growth.
As a self-employed person who works on a contract basis,
Social Security regulations subject me to an even higher
standard of Substantial Gainful Activity. When determining SGA
for me, SSA considers the value of my work to the business and
evaluates whether I provide significant services to the
business. The hours I can work each month are restricted. This
higher standard combined with the current SGA level of $500 per
month requires me to give away my skills. In addition, I
constantly worry about inadvertently violating a regulation
which would cause me to lose my benefits.
Existing work incentives are extremely complex and hard to
understand. Adequate and well-trained administrative resources
to serve beneficiaries are essential. The booklets put out by
the Social Security Administration are confusing. I went to my
local Social Security office and met with a representative. His
main advice was not to make more than $500. He never told me I
could buy into the Medicare system. I was given a form to fill
out and told to mail it in. The form is not available by mail
and yet the Social Security Administration wants recipients to
report earned income on a continuing basis. This is not a user
friendly system and part of the disincentive to try working is
the lack of faith in the predictability of the system's
response.
Once on Medicare, the fear of losing Medicare benefits is a
major disincentive to work. Part-time employment does not
provide health benefits and private health insurance is not
available to those with difficult medical backgrounds. Current
underwriting practices and limits on benefits are critical
disincentives. Employers don't want a disabled person on their
health plan because it pushes up their rates.
After being disabled for 2 years, a person is offered
Medicare and the information states that, if he doesn't take it
then, he won't have another opportunity until age 65. Once a
person signs on, Medicare becomes primary coverage and private
insurance drops an individual even as a secondary insurer. The
only secondary coverage available is a medigap policy. For
people under 65 who are disabled, there are very few medigap
insurance products available nationwide. None provide
prescription coverage. So for the people who need coverage the
most, there is the least available.
As a divorced women, I have firsthand experience of the
dilemma of choosing between Medicare or health coverage
provided through my ex-husband as part of the divorce
agreement. His plan provided excellent benefits and included
prescription coverage but I chose to take Medicare because I
simply couldn't afford to risk the loss of health benefits if
something happened to his job. In choosing Medicare, I was
forced to absorb the expense of prescription drugs.
In order to be self supporting and get off of SSDI, a
person has to be able to work on a regular basis a substantial
amount of time for good wages. Currently, I believe the
Medicare buy-in cost is $332 per month or $4000 per year for
Part A. Part B premiums add another $500 per year. In addition,
my prescription costs are approximately $300 per month or $3600
per year. A medigap policy premium is another $1200 per year.
This is over $9000 in basic medical costs before a doctor is
visited or a procedure is completed. Then there are the rest of
living expenses--food, clothing, rent, transportation, etc.
When you are disabled, it costs more to do everything from
cleaning your house to pumping gas.
A simplified, well advertised and affordable Medicare buy-
in should be established. Congresswoman Kennelly's Transition
to Work bill brings the Medicare buy-in program into the real
world and would enable me to work when I can without limits on
the amount I can make, but still have the safety net when I
need it. This would go a long way toward helping me maintain
financial independence and would enhance the quality of my
emotional and psychological well-being.
In conclusion, the system badly needs reform. There is
sometimes an attitude in society that individuals on disability
are derelict and simply do not want to work. Not only is that
picture unfair, it is simply inaccurate. Many people on the
Social Security disability rolls are educated and have skills
that make them employable in spite of their disability. They
need help simply because life has dealt them a different hand.
They want to work. The potential loss of Medicare and
complicated rules for returning to work serve as a deterrent
for even attempting to leave the Social Security rolls.
Help people work with their disabilities and remain
productive members of society. One set of rules does not fit
all circumstances, the system needs flexibility to deal with
different types of disability. Some consideration should be
given to differentiating between individuals who are likely
recover from their illness and those who are chronically ill
and have no chance of medical improvement.
Thank you for this opportunity to appear before you. I
would be happy to answer any questions you may have.
Mr. Christensen [presiding]. Thank you.
Ms. Erb.
STATEMENT OF SUZANNE ERB, FORMER SOCIAL SECURITY DISABILITY
INSURANCE BENEFICIARY; AND MANAGER, STUDENT SERVICES,
ABILITECH, PHILADELPHIA, PENNSYLVANIA
Ms. Erb. Good afternoon ladies and gentlemen of the
Subcommittee. Thank you very much for the opportunity to have
the pleasure of providing my testimony for you this afternoon.
As you can tell, I am using an instrument that I bought as
a result of being on Social Security disability. My computer
that I have here is something that I was able to purchase while
I was still on SSDI.
I am here representing not only myself, but I work for an
agency called Abilitech, and we provide services for people
with disabilities who want to return to work. We provide
training for people in the computer fields, so they can then go
out and get meaningful and viable jobs with their disabilities.
As manager of student services at Abilitech, I help people
with all sorts of disabilities who sincerely want to return to
work, especially people with severe physical disabilities,
mental disabilities, drug and alcohol issues--all sorts of
disabilities.
And we help them learn to develop the skills they need as
well as to write good resumes, interviewing skills--all that
sort of thing. We work very closely--we are a project with
industry, and we work very closely with private industries in
the Philadelphia area to work specifically on people's needs.
We draw from the expertise of these business leaders,
rehabilitation specialists, and the Federal Government to
provide people with disabilities gainful employment. At
Abilitech not only do we help people get jobs, but we also have
a component that enables people with disabilities to provide
services to local businesses in the form of training people to
use equipment, and so forth.
We work with the advisory committee in our admissions
process. During our admissions process they help us to provide
services for the people, and they help us to determine some of
our admissions criteria, in our selection of students, in our
curriculum development. They serve as advisors in helping us to
decide what courses to teach.
And in our internship and placement phases, they also serve
as potential internship host sites, and sometimes even as
actual placements in jobs.
I, myself, have been on both sides of the desk. I was born
blind, so I have been educated as a blind person. I attended
the Overbrook School for the Blind as a blind youngster. So the
State has actually invested a lot of money in me. That's true.
When I was in senior high school, I went on to the local
high school, and this was just before 94-142, so the public
school still did not have to accept me, but they did. And I
hope that they were glad that they did, because I certainly
was. I had a good time in high school.
And I actually graduated from the Shipley High School,
which is a private high school outside of Philadelphia. I
studied at Bryn Mawr College. I received a bachelor of arts
degree from Bryn Mawr, and I received some rehabilitation
services while I was in school.
I received help with readers, and I also got lots of
student loans. And then after I finished my schooling, I was
very lucky. I was able to get a job right away out of going
from college.
I worked for many of the agencies serving blind people in
Philadelphia, and then I took a civil service job. I said,
Well, I want to broaden my horizons, and get out into the
``mainstream society,'' and so I took a civil service job, and
went into child welfare for several years.
And that was really exciting, because I got to travel all
over the city, and work in foster care. And that was really
exciting and challenging work.
However, the demands of the job were such, the
unpredictable nature of the job, led me to consider going back
to school, which I did. I went back to the University of
Pennsylvania and received my master's degree.
During this time, I went on disability. Had it not been for
SSDI, I would not have been able to return to school. I would
not have been able to take advantage of the opportunity that I
had to go back to school and to live while I was going back to
school.
After I graduated, however, it was difficult for me to find
employment. So I really did still continue to need SSDI
benefits while I was working part time. I was under the
threshold, so fortunately for that threshold, I was able to
work part time, and still continue to receive benefits.
Mr. Christensen. Ms. Erb, Mr. Hayworth has to go to the
floor, and he wants to ask a couple questions before he leaves,
and your time is also expired, and I want to ask you some
questions as well. So if it is OK, we would like to go to some
questioning.
Ms. Erb. Sure.
Mr. Christensen. Good job. I enjoyed your testimony.
Mr. Hayworth. Yes, I would like to thank Ms. Erb, and all
of the panelists here today who are on the frontlines, living
this challenge, wanting to be part of the work force.
Now, for purposes of full disclosure, as many who join us
here today might ascertain, representing the State of Arizona,
I have a previous acquaintanceship with Ms. Webb. And we had a
chance to sit down a few weeks ago and talk. Weeks turned into
months, but to me it just seemed like a twinkling of an eye.
Not to get scriptural or anything, Susan. But we are glad
you are here today. But your story is very, very compelling.
And I want to talk about the Arizona Bridge to Independent
Living. I love the acronym--ABIL.
I would like you to share with my colleagues here some of
the intricacies of what you have done with ABIL that you shared
with me previously, and how you have been able to address and
deal with some of these challenges that you and the other
panelists have pointed out where it appears that there are
actually disincentives to try and return to the work force.
Ms. Webb. I think that the proposal that we brought forward
details the solutions, and I think we need to focus on those
solutions. But I think that ABIL represents one of 400
independent living centers around the Nation, established by
title VII of the rehabilitation act.
And what that started out as was finally those of us who
live with disabilities have our own voice. If there is anybody
who knows what these solutions are, it is those of us who have
lived them.
And I think that is the basic point that we are trying to
make today, that finally we are very grateful that you folks
within Congress recognize that we are professional people,
credible people, who can develop our own proposals, who know
what it is like, and who can come up with solutions using a
reasonable and cost-effective approach.
I had a meeting with one of your former staff folks on this
Subcommittee about a year and a half ago, and she shared with
me that the feeling among many Congressional Members is that
people with disabilities are still entitlement mongers. That's
really all we want, is to live on all these marvelous benefits
that keep us clothed and fed and housed. And that is not what
we want.
And that is what independent living centers were formed to
create, was a way to help people be part of the community, not
institutionalized, to make our choices, and accept
responsibility for those choices that we make.
Bonnie O'Day talked about the summit in Dallas, and I was
one of the participants in that as well. And at that summit,
with 400 people who represented consumers, the overriding final
frontier for us was economic independence.
The ADA has been a marvelous tool. It has given us that
boost, but the fact is that we still have a deplorable
unemployment rate. That is because we are still trapped in
these systems.
You have the leadership and the ability on this
Subcommittee to get that ball rolling, to get other Members of
the Legislature, other Committees involved in a comprehensive
solution to this.
Accept our proposal as that. The things you have heard on
this panel today represent divergent views of people who can
get off the system entirely. But some cannot. And the system
needs to be seamless in terms of health care, transportation,
being able to move in and out of it when you need to.
And again, I am not an economist, but that has just got to
be healthy for our country. Reducing dependency means dollars
in the taxpayer's pocket. Sorry. That is just pure and simple.
Mr. Hayworth. Susan, the thing I found gratifying was the
whole notion of getting people together in Houston and trying
to hammer out policies. Not totally unlike what happens in this
institution, although we come from a variety of different
backgrounds, and do not have as intimate a knowledge of what
you face every day.
With that in mind, and certainly we want to take the
Houston blueprint, and I think Members on both sides of the
aisle think that is a good working document, but with what is
in the hopper today, have there been specific legislative
proposals in the 104th Congress, or now in the 105th Congress
that you think line up with some, or perhaps all of the goals
established in Houston?
Ms. Webb. Mr. Chairman, and Representative Hayworth, I am
really enthusiastic and excited about what I have seen so far.
The bill that Representative Bunning introduced last session,
the bill that Representative Kennelly has introduced this
session, the bill that Senator Jeffords has introduced last
session, and I believe is drafting again--we are going in the
right direction.
I think we just need to continue going where we are going.
Providers have come forward with an excellent proposal. I am
not sure about the Ticket to Independence issue from my own
personal perspective. I like more of a consumer control/
provider partnership.
As a provider myself I know that there is no way that I can
keep people on my service system for a year or more without
being paid for the services I provide. That is not realistic,
especially for smaller providers.
But I think that we can form a partnership that includes
all the stakeholders, and I think you are going in that
direction. I am very encouraged.
And I guess you cannot do it. I know you cannot do it
without our input. That is the way the system works. So what we
are here today saying to you is thank you for that opportunity,
and we are here to work with you, to give you the ammunition
that you need to go to the floor and fight for us.
Mr. Hayworth. Ms. Webb, thank you very much. To my
colleague from Nebraska, the Acting Chairman--well, our
Chairman has arrived again. I thank you very much, and I yield
back the time.
Chairman Bunning [presiding]. Mrs. Kennelly.
Mrs. Kennelly. Thank you, Mr. Chairman. Ms. O'Day, Ms. Webb
just referred to the ticket approach, and we had some
discussion on it yesterday as you know, and in some of our
proposals we addressed using that kind of a method.
I am going to ask you, from what our discussions have been,
if you would add to it. Should the Social Security
Administration give tickets to only those they think will use
the ticket, or should everybody get the ticket and decide if in
fact they want to use the ticket?
And the second question is, if a beneficiary is
participating in a Vocational Rehabilitation Program, and they
are in fact offered a job, should they be made to take that
job, and possibly lose their benefits? How would you see this
playing out if we do use this new system?
Ms. O'Day. Well, I am a very firm believer in the concept
of choice, whether that refers to choice in the marketplace as
to what kind of car you want to drive, or choice in the
marketplace as to where you receive your rehabilitation
services.
Twenty years ago I think choice meant not being pushed into
the kind of job that was a stereotyped position. For example, a
sheltered workshop, or some other position that would be
``appropriate'' for a blind person.
But I think today we are seeing choice as much broader--we
are looking at it in a much broader way. And we are seeing that
choice needs to be what kind of provider, whether public or
private, do you want to go to as a consumer, and what kind of
information can you get as a consumer?
Sometimes people say I went to agency x and they told me
about a particular training program. If they did not provide
any other options, then the person is going to be likely to say
yes to that training program.
So along with the Ticket to Independence Proposal, we
believe there needs to be some kind of mechanism, perhaps using
the private nonprofit network, perhaps funded with a percentage
of dollars from the trust fund, that educates people about what
their choices are, and evaluates those choices based on
outcomes.
Now, to answer your question. I do not believe that anyone
at the Social Security Administration with all due respect has
the expertise to determine when someone walks in the door
whether or not they can work.
I believe that individuals if provided the opportunities
and the options and the supports who are able to work will be
able to work.
There are no ways that I have seen that can adequately
predict who can and who cannot work. Based on stereotypes,
those of us sitting at this table would be deemed unable to
work.
So I believe that the ticket should be offered to anyone
who applies for SSDI, perhaps within a particular age range,
and that they then should be given the choice of what provider
they should go to.
I also believe that there do need to be safeguards so that
individuals are not forced into taking a particular job if they
do not want to. I believe that most private agencies, private
for-profit and nonprofit operate like businesses, and they have
more of a business mentality than those of us within government
may have, and they understand that if you force someone to do
something they do not want to do, eventually it is not going to
work out.
An individual who takes a job that they do not want or do
not like is not going to be able to stay there. They are going
to find some way to leave that job, whether it is poor
performance, or moving someplace else, or what have you.
So I do not believe that most private agencies will force
individuals to take jobs. I do not believe that that is an
appropriate approach. I hope that answers your questions.
Mrs. Kennelly. And I would like to comment. Was it Ms. Webb
that said some staffer said that the only thing that people
wanted was the benefits? I certainly hope it was nobody on this
Subcommittee. But I think I can speak for the Chairman and
myself, that we understand what people want. People want to
live as normal a life as possible, work, take care of
themselves.
But the problem we are having is that less than 1 percent
of those who go on disability get off disability. So we have to
be very frank in how we talk about it, because the successes
are not as many as many of us who want to have people get off
disability would hope for.
And that is why we are doing exactly what we are doing. Let
me ask one more question of Mr. Young, Mr. Chairman.
There are several possible types of tax incentives--and as
you know, we are the tax committee, and that is how we are
going to get from here to there--which one might adopt. My bill
offers an incentive directly to the disabled person, through a
disabled worker tax credit.
Mr. Bunning's bill provides an incentive to the employer by
reducing the FICA tax. And then you have suggested a tax credit
for disability related expenses, and obviously we cannot
finance them all.
If you had to pick one, what would your druthers be? I ask
you that question, but it is probably the one you suggested.
[Laughter.]
Choose between us.
Mr. Young. I guess I did not get the southpaw question.
Actually, Mrs. Kennelly, the tax credit that we proposed, the
disabled worker tax credit, that is aimed at persons with
disabilities who have extraordinary work expenses, is sort of
the migration from your tax credit that came from the NASI
proposal for a tax credit above and beyond EITC.
What we wanted to try and do was focus the tax credit
toward those individuals who actually have extraordinary
expenses of working, so that we get, if you will, the most bang
for the buck.
Instead of just giving it to a person, because they have a
disability, or because they were a former beneficiary, we aim
it toward people who were former beneficiaries or even current
beneficiaries who are trying to work their way off, so that the
persons with the most severe disabilities and who have the most
intense expenses in going back to work can get some relief
through the Tax Code, keep some more of their income, and be
more self-sufficient.
So we kind of chose you, only you differently.
Mrs. Kennelly. We had someone in here yesterday who had, I
think, $36,000 in expenses per year for work.
Mr. Young. Yes. Not unusual.
Chairman Bunning. Thank you. Now that I have returned, I
get a chance to ask questions. Both Ms. O'Day and Ms. Webb said
one size does not fit all. And I think that you will not have
any disagreement up here.
In your testimony, Ms. Webb, you recommended that SSDI and
SSI benefits be reduced one dollar for every two earned above
$5,000 in earned income.
Ms. O'Day. $500.
Chairman Bunning. Is that what I said?
Ms. O'Day. You said $5,000.
Chairman Bunning. Excuse me. $500. You also mentioned that
such an offset would not be available for consumers who begin
working at a high wage.
At what earnings level would you suggest that the two for
one offset not apply?
Ms. Webb. The NASI information that they provided says
that--I think the threshold there is $32,000. That when a
person earns $32,000, that is when the offset would work itself
out. And the NASI recommendation was that that was too high.
I do not have any particular recommendation because my
thinking on that is that if I am working and paying taxes, if I
am losing one dollar for every two dollars I earn regardless of
what my income is, I'm still taking less from the taxpayer than
I would otherwise be if I were not working.
So I do not think that the threshold is the issue. The
issue is reducing dependency, rather than getting off the
rolls.
Chairman Bunning. OK. Let me talk to you about CBO, and
their problem. When we put a bill in, we have to get it scored
by CBO, unfortunately--or fortunately.
CBO says that the more we allow individuals with
disabilities to earn once they are allowed benefits, the more
individuals with disabilities will be enticed to enter the
program.
So it's kind of a catch-22 for CBO. How do we get by that?
In other words do you have a suggestion on how we can get by
that scoring? Because if we did what you suggested, they would
score it in a negative way, and therefore we would have to go
find some money to offset that CBO scoring.
Ms. O'Day. I understand. I am a bit familiar with this
issue, so if it is all right with you, Mr. Chairman, I would
like to go ahead and answer.
Chairman Bunning. And anyone else that would like to do it
in a short period of time, I would appreciate that.
Ms. O'Day. Thank you. First of all, in looking at the two
for one, the benefits will actually zero out at about $15,000,
based on some statistics that come from the Employment Support
Institute at Virginia Commonwealth University.
If you are losing a dollar for every two dollars you earn,
that is the approximate--using averages--that is the
approximate place where you will then be receiving zero
benefits.
In terms of the CBO scoring, I would say a couple of
things. There are two issues here. First of all, there are some
individuals who leave the system who earn less than $15,000.
And the second issue is the issue of individuals being enticed
onto the program.
My sense is that CBO did not consider the 5-month waiting
period, the lack of medical benefits for 2 years, and other
issues that are endemic to this program when they came up with
those figures.
However, the statistics that we have show that if 5
percent, only 5 percent of all the individuals with
disabilities on SSDI go to work, even considering those CBO
cost figures, that this will be a cost neutral proposal.
Chairman Bunning. That would be a very good goal for us to
have, when we do some kind of legislation. Let me ask Mr.
Young, you recommend making work pay through a variety of
measures, including a disability expense tax credit. Would you
like to elaborate on that for us?
Mr. Young. As we were discussing just a minute ago, the
disability expense tax credit will kick in, hopefully when the
two for one kicks out.
So that when people go to work and have expenses for
personal assistance services, so they can get up in the morning
and get ready to go to work, for transportation--an adapted van
or adapted car, for adapted computer equipment or a job coach,
or some of those expenses that a person without a disability
does not have to incur when they go to work.
The person would be enabled through working at a high
enough level and being able to keep a bit more of their--the
money they would pay in taxes, Federal taxes, to be able to
afford to pay for those things themselves, as opposed to being
dependent upon another Federal or State program for inkind
supports, as we call them, or either personal care services or
public transportation or van service or something like that.
Chairman Bunning. My time is almost expired, but I want to
ask Ms. Sheehan, you raise a number of very good points
regarding the unique challenges disabled adult children face in
trying to work. The impaired-related work expenses, as I
understand them, are the costs of certain impaired-related
items and services that persons need to work, which are
deducted from the gross earnings in figuring SGA.
They are in essence allowing individuals to keep more of
what they earn.
In your view, are the impaired-related work expenses
understood by families, and are they being utilized?
Ms. Sheehan. In my experience, and that may be limited,
although I think I have talked to numbers of people on this, I
do not think that people are using it as much as they could.
And the reason for that is, and I hate to dump on Social
Security, but often these things are not explained.
The view of parents with kids is, if my kid goes to work, I
am going to lose the SSI and he is going to lose his medical
insurance, and even though that is not true, you hear that.
So that we do not have----
Chairman Bunning. Are you saying that SSA is discouraging--
--
Ms. Sheehan. No. I am not saying they are discouraging. I
am saying that they are just not helpful. And it varies from
office to office.
Chairman Bunning. In other words, they do not explain the
ramifications of what you----
Ms. Sheehan. Right. And I think that the provider community
does not know enough about it, and so forth.
But once you get on it, and once you understand it, I mean,
it is really making all the difference in the world for John
and for others, I know. And, of course, the SSDI does not allow
this type of thing at all.
So in that case, people are correct in saying I am going to
lose my benefits if I go to work.
Chairman Bunning. OK.
Mr. Christensen.
Mr. Christensen. Thank you, Mr. Chairman.
Ms. Erb, thank you for your testimony. I appreciate hearing
that. You made a comment that I want to have you elaborate on a
little bit. You said something about being lucky, and that you
were lucky to get a job.
Well, I do not believe you are lucky. You went out there,
and you got that job. You worked hard. You worked hard through
school.
And I do not believe in luck, and I do not think you were
lucky. So I give you all the compliments in the world for
making it happen on your own initiative.
I do want to ask you about your computer, though. Can you
explain to me, when you were typing there a bit ago, were you--
what were you doing? Were you inputting, or were you taking out
a script that was already put in your computer. Explain to me
what you were doing?
Ms. Erb. Well, I was doing a little bit of both. I had to
type in to retrieve the file. Part of my testimony was written,
and part of it was not. I was doing some reading from the
computer while I was sitting here.
I use this--this is actually a braille output device. I
type the braille into it, and braille comes out. And I can also
use speech output with this computer.
This computer can hook up to a print printer, and print out
print or it can be hooked up to a braille printer and print out
braille.
Mr. Christensen. So you were doing a little bit of reading
as well as just on your own.
Ms. Erb. Right.
Mr. Christensen. OK. And I cut you off during your
testimony, so if you have full testimony within your computer
that you would like to have printed out and inserted into the
record, make sure we get that done before you leave today.
I have a question though for you concerning your experience
as far as working with outside employers. What do outside
employers see as the barrier to hiring people as yourself, and
other people with disabilities?
Ms. Erb. I think some of the barriers they see are having
to provide what they consider to be perhaps expensive
equipment, assistive technology, for example, for blind
workers, for example, speech output for computers, other kinds
of assistive technology.
I think also sometimes people are afraid that people with
disabilities just are not going to be able to perform
competitively, and yet we have, as disabled workers, we have
very good records in terms of our productivity, and in terms of
our absenteeism. We are very reliable workers, generally
speaking.
I think that especially today, because of so many advances
in technology, for example, to provide speech or braille output
for people with disabilities on the job, the expenses are far
lower than they used to be.
I think especially in my case, where I as the disabled
worker obtained much of the equipment for myself, and the
Bureau of Blindness and Visual Services also helped provide
with some of it, and the employer helped, but all three,
working in concert with each other enabled me to perform my
job, I think, satisfactorily.
And I think as the ADA becomes more ingrained in our minds
and hearts as a country, that perhaps this will turn out to be
the model that will eventually work into the system, I hope.
But I do think that many employers are afraid of what they
consider to be the expenses involved, and I think they are
afraid, they do not necessarily know how to work--they are
afraid, what if the disabled person does not do the job well,
how can I fire them?
Instead of looking at the positives, it is like any other
unknown. People just do not know. So I think education for
people is probably one of the best things that we can do.
Mr. Christensen. Thank you very much. Thank you, Mr.
Chairman.
Chairman Bunning. Ken, would you like to inquire?
Mr. Hulshof. Thank you, Mr. Chairman.
Chairman Bunning. We have two votes on the floor, and after
your inquiry we will recess and go vote, and then we will come
back and continue the questions, if you will be so kind as to
be patient with us as we vote and come back.
Mr. Hulshof. Thank you, Mr. Chairman.
Mr. Young, this is an extraordinary Committee, the Ways and
Means Committee, with the jurisdiction over so many different
issues. And I want to compliment you on how you deflected that
very tough question by Mrs. Kennelly. [Laughter.]
One of the solutions that you propose, and one that I am
very intrigued by, is your suggestion that in discussing the
solution to the barrier of health benefits, to create this
optional State Medicaid buy-in for working SSDI and SSI
recipients. Medicaid is not within the jurisdiction of this
Committee.
Have you shared your proposal with the Commerce Committee,
that does have jurisdiction? And if so, can you just tell us
briefly what reaction you have had?
Mr. Young. We have just begun to work with the Commerce
Committee to share our ideas. We have not yet had a chance to
have a formal dialog with them to the extent that we have been
working with this Committee on that issue.
We think that the way we want to present this, and the way
of moving people off of other Federal benefits, and allowing us
a wraparound, if you will, with the Medicaid Program providing
vital services, particularly personal assistance, and durable
medical equipment and prescription medications to the Medicare
Program will be something that the Commerce Committee we hope
will see as fruitful as we think this Committee sees the other
work incentives.
Mr. Hulshof. Good luck in that endeavor. Ms. Crabbs, let me
ask you a question. You mentioned in your testimony that some
consideration should be given to differentiating between
individuals that are likely to recover from their illness and
those who are chronically ill and have no chance of medical
improvement.
What are the issues that you think are the most important
for us to address in terms of differentiating programs or
changes in these programs for the chronically ill?
Ms. Crabbs. Well, in my situation, just in comparison to
the other things we have heard here, and I do not mean to
disparage anybody's disability, not at all. But someone who is
blind, she has learned to deal with that. She was born that
way, and she does not have a different challenge every day.
Likewise, Ms. Webb, who was injured a long time ago and is
not experiencing any additional injuries. For people with
arthritis, it changes from day to day. I could get up and get
myself organized to come here today. Tomorrow, I might not be
able to get out of bed.
And that is not unusual. My situation changes from day to
day, from week to week. But when I am able I would like to be
able to work. And it is that irregularity, I guess, of my
problem that makes it very hard to deal with the rules as they
are.
And that is why I think we need some sort of flexibility in
the system.
Mr. Hulshof. I certainly appreciate you sharing your very
personal aspects of your life and your story with us.
Recognizing the amount of time we have left, I will yield back,
Mr. Chairman.
Chairman Bunning. Well, we will recess for two votes, and
we will return as quickly as possible, so please be patient.
[Recess.]
Chairman Bunning. The Subcommittee will come to order. I
have some general questions for this panel, and I would like to
proceed, and when my colleagues return from their second vote,
they can do whatever they like as far as asking their
questions.
First of all, I am impressed by all of you, and commend you
for the extreme hurdles you have overcome and the great
achievements you have made in becoming self-sufficient and
productive in the workplace.
But tell me one thing: Are you all exceptions? Or can we
expect to have a significant number of recipients with similar
disabilities to become as successful as yourselves? Who would
like to start?
Ms. O'Day. I would like to respond, sir. The National
Council has conducted a series of thirteen public hearings
around the country for the specific purpose of hearing from
individuals with disabilities about what their experiences are
with return to work.
While there were many people that we heard from who were
not able to work because of the tremendous barriers that they
faced in terms of medical coverage and financial disincentives,
and so forth, we also did hear from many, many people with
disabilities who are working.
There are many people--I think there is a stereotype that
individuals with disabilities do not work. And we certainly do.
The impetus, I think, of this panel is that we feel that with a
holistic and comprehensive approach to changing some of the
structures that really inhibit work, that many, many more
people right now could work.
I think there are a couple of things you could do that
would really make a huge difference. One is to increase the
opportunities for health coverage, so that individuals who work
do not lose their health benefits. We heard over and over that
that was the major barrier.
And the second thing I think you could do is to deal with
the $500 income cliff, so that individuals are not induced to
work below the poverty level and below poverty level wages to
be able to keep their benefits.
Chairman Bunning. Mr. Young.
Mr. Young. Mr. Chairman, what has been extraordinary or
lucky or fortunate or whatever term you might like to choose
among many of us here on this panel is that we were in a
position as we were trying to go back to work where the
systemic disincentives in the program, we can ignore them. They
did not apply to us.
I had family medical coverage. Susan had family medical
coverage. We were able to get away with going on that coverage
until the time that we got our own job and were able to get
employer-mandated coverage. I was able to live at home and cut
my expenses way, way down, so that the jobs that I got could
cover the expenses that I had.
The problem is that we cannot--a large group of people will
not move off the rolls unless they have something more reliable
to depend on than just fortunate family circumstances or other
kinds of circumstances that happened into their lives.
What we want to do is make sure that everyone has the same
opportunities that we have been able to have over the last few
years so that we can move large numbers of people into the work
force as productively as possible.
Chairman Bunning. Ms. Webb.
Ms. Webb. Chairman Bunning, Members of the Subcommittee,
there is something that we have not addressed today. And we
were talking about it while you were out voting.
And that is that those of us who you see here today
represent persons with very significant disabilities, but the
rolls are growing because of disabled workers that are coming
off of the workers' compensation system.
At my agency we run an employment program where we place
people back into the work force in community-based and
integrated jobs. It amazes me in all of the many hundreds of
people that have gone through my program, generally speaking, I
think it is a fair statement to say, that the things that are
keeping them from working have very little to do with their
disability.
We work with every major employer in Phoenix. We work with
the American Expresses, the Motorolas, the Honeywells, on and
on. And employers, and maybe it is our economy in Phoenix, but
employers are dying for good workers, and they really do not
care if a person has a disability. They want somebody with the
skills they need to get the job done.
People with disabilities for whatever reason are out of
work for the same kinds of reasons that other people on other
welfare programs are out of work. They are trapped in systems.
The systems, transportation, health care, child care, job
training and work force development, the big four.
If we can solve those problems, people with disabilities
will in fact--and I will come back here 5 years from now and
tell you I was right.
Chairman Bunning. You won't tell me. I won't be here.
[Laughter.]
You can tell Barb. She will be here.
Ms. Webb. I will tell somebody.
Chairman Bunning. All right.
Ms. Webb. Anybody will listen, that people with
disabilities can in fact be very, very vital working members of
this community. It is not our disabilities that keep us
unemployed, and I think you have heard it across this panel
today.
The other issue, as was brought out very eloquently, is
this is always an all or nothing thing for us today. We are
either all on benefits, or we are all not. We have got to have
a seamless system that allows people whose disabilities might
be episodic to move in and out without penalty. And that we do
not do today.
So those two factors, I think, are the critical pieces in
this.
Chairman Bunning. Would someone else like to add something?
Ms. Sheehan. Just briefly, Mr. Chairman. Thank you for your
comments. I consider my son, John, a very successful human
being. He is working as hard as he can and using every ounce of
his energy, and whatever he has in making himself successful.
But I want to make the point again that success for people
with mental retardation might not necessarily be getting off
the rolls, but rather a lesser dependency on the public system,
with a little bit of both, with their work, and with public
assistance.
And that can be a measure of success.
Chairman Bunning. Anyone else? Do you have anything you
would like to add?
Mrs. Kennelly. No, Mr. Chairman, but I would like to thank
the panel for their exceptional testimony and ask them if they
would continue to work with us as we try to get to the same
goals that we all want.
Chairman Bunning. I appreciate all of your testimony,
obviously, and it seems to me that if there is a middle ground
that we can come to, where the disincentives are weighted
against the incentives to the point where they are not a
barrier for work, I think we can expect to increase the return
to work rate to 30 or 40 percent of the people, if we can find
middle ground.
Such middle ground would be where workers with disabilities
do not lose their health care, and where there is some kind of
incentive program for employers to offset the expense of new
technology and equipment that is needed to accommodate more
disabled workers.
And mental health is a very, very critical area. And the
fact of the matter is, if we can get people with mental illness
back to work sometime, it is better than not working at all.
And that gives them added meaning to their lives.
I have some grandchildren that fall under that category, so
I am very familiar with it. I thank you all for your testimony.
[The following was subsequently received:]
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Susan Webb
1. In your testimony, you summarize a number of recommendations
involving work incentives, removing financial incentives,
enhancing employer incentives, and extending medical services.
You do point out that the National Council on Disability
proposal is designed so consumers have wide-latitude to pick
and choose. So, in fact, are you advocating a type of menu-
driven approach, where one size does not fit all? How would you
see such a program being administered, and what role would SSA
play?
1. My testimony on behalf of the National Council on
Independent Living (NCIL) does advocate a menu-driven approach
so that consumers of SSI and SSDI benefits can choose from an
array of options to fit his/her individual circumstances. We
believe this approach has several advantages:
A. By increasing consumer choice, the consumer also accepts
personal responsibility and accountability for those choices.
Typically, a case management approach that focuses on process,
procedures and one-size-fits-all regulations relieves the
individual from decisionmaking on his or her own life.
Consumers are then lulled into a dependent posture where it is
easy to claim he or she is a ``victim'' of the system and,
therefore, can pass the blame to someone else.
B. Consumer choice by default achieves a consumer ``buy-
in'' to the plan rather than merely a sign-off role as exists
today. Greater likelihood of success occurs when the consumer
truly buys in.
C. In the current system a consumer typically has several
gatekeepers, each of whom have some level of expertise (e.g.
vocational rehab counselor, SSA caseworker, medical
practitioners, independent living specialist, etc.) Each of
these gatekeepers specializes in a particular aspect of a
consumer's life. However, the only member of the team who truly
has firsthand knowledge of all aspects of the consumer's life
is the consumer him/herself. Shouldn't the one person who knows
the most about the consumer as a whole be the primary
decisionmaker about his/her life?
D. NCIL's (and NCD's) proposal moves a consumer away from
receiving cash benefits simply for being disabled and moves
toward public money being used specifically for those services
and technologies that directly represent actual costs of work
barriers and disincentives specifically related to disability.
The costs associated with an individual's disability are very
specific to that individual. Not every individual who is blind,
for example, has the same costs associated with working simply
because he or she is blind. A menu-driven approach, then,
provides for that individual to take total charge of his or her
start/return-to-work effort but only pays for actual expenses.
Those individuals who are blind and live in rural communities,
for example, may have a much higher transportation cost than
those who live in an urban area with good public
transportation. A totally blind individual may have a higher
cost to acquire computer technology with voice synthesis
software than will a person who is partially sighted who may
only need less-costly large-print software.
The administration of such a program should be consumer-
controlled and market-driven. Consumers should be able to
choose among existing public programs such as State Vocational
Rehabilitation, Job Training Partnership Act, Personal
Responsibility Work Opportunity Restoration Act, Job Corp, etc.
using a voucher or similar method. In addition, a consumer
should be able to purchase services (including personal
assistance and assistive technology) from the private sector
just as he or she would purchase other goods and services in
the community. Several concerns immediately come to mind with
this model:
A. How do we ensure that consumers have access in the
private sector to all the types of services needed all across
the country, especially in rural communities?
B. How do we ensure that consumers receive quality services
and avoid ``fly-by-nights''?''
C. How do we pay providers in a way that enables them to
provide comprehensive, ubiquitous services while still only
paying for outcomes?
D. How do we ensure that providers are not ``creaming,''
that is, only serving those who are easier and less costly to
place, while those with the most significant disabilities or
harder to place get inadequate or no services?
E. How do we ensure that consumers use their vouchers for
realistic services with high potential for positive outcomes?
What do we do if consumers purchase services and then do not
reduce reliance on SSI/SSDI?
Admittedly, our position is weak on this issue. The Return-
to-Work Group, the National Academy of Social Insurance and
other private provider-based organizations probably can answer
these concerns better than we. However, a mechanism for
consumers to evaluate providers and report problems to a
consumer-controlled protection and advocacy entity is a checks
and balances approach that is highly recommended. Protection
and advocacy entities exist today around the country to ensure
that consumers can report problems with existing State VR and
Independent Living programs. Such a methodology could be
applied to private providers also. Current P&A agencies should
be changed, however, to require that they be consumer-
controlled; at least 50% of their Board of Directors and staff
should be individuals with disabilities.
A comprehensive, compensable consumer training and program
orientation should be included in the reforms being proposed.
NCIL members and consumers report that consumers receive little
or no information today about work incentives and the
information they do receive is often inaccurate. If consumers
are expected to control their own lives and start/return-to-
work activities, they MUST have access to accurate, timely
information about their options.
NCIL's Social Security Subcommittee has yet to address the
issue of potential consumer fraud or misuse of vouchers.
Consumers with disabilities are like every other segment of the
population who pursue training and employment. If barriers and
disincentives are reduced, most will succeed and some will
fail. The NCIL subcommittee will take up this issue in the near
future and report back to you on our position. Current welfare
reform efforts under the Temporary Assistance to Needy Families
(TANF) programs include sanctions of individuals who do not
achieve work outcomes. Perhaps a similar methodology could be
deployed in the start/return-to-work of individuals with
disabilities at some point in the future. However, given the
deplorable unemployment statistics among SSI/SSDI
beneficiaries, we believe that such a significant number of
individuals with disabilities could and would return to work if
the disincentives were removed from the system that directing
much attention to fraud and sanctions at this time is
premature.
The role SSA should play in the whole start/return-to-work
effort is, with all due respect, to just get out of the way.
Susan Daniels, Associate Commissioner of the Office of
Disability Policy at the Social Security Administration, is
right on target. She has said many times that the SSA is a
safety net there to provide cash benefits to people who simply
cannot work at some point in their life. They are not qualified
to be traffic cops or vocational providers. Yet the current
system puts the SSA in a position to determine whether an
individual has the capacity to work, whether an individual's
work goal is realistic and can only refer an individual with a
work goal to the State VR system that can serve only a limited
number of these beneficiaries. SSA caseworkers are not
qualified to make these decisions nor does such a system
empower the person who knows most about capacity to work--the
consumer him/herself. The SCI's role should be as it was
intended originally: determine whether an individual is
eligible for cash benefits based on inability to perform
substantial, gainful activity. Provide the safety net needed by
such individuals until such time as they determine they no
longer need them in whole or in part. Although we know that
today only a tiny percentage of beneficiaries voluntarily leave
the rolls, this situation should automatically correct itself
by removing the barriers and disincentives. In particular, de-
linking availability of healthcare coverage from SS and SSDI is
critical to allowing beneficiaries to reduce their dependency.
Likewise, a system that allows for gradually leaving the rolls
and reduced dependency by those who can work part-time or
episodically would greatly impact the likelihood of more
beneficiaries starting or returning to work.
2. Some individuals are so severely disabled that they may not
have any remaining capacity to work. Although no one should be
prevented from trying to work, we wouldn't necessarily expect
all disabled recipients to work. But, there are some disabled
individuals who would be good candidates for rehabilitation
services. Yet, we know that Social Security law requires
suspension of benefits for those SSDI and SSI recipients who
refuse to accept vocational rehabilitation services. Should
legislation require that recipients with potential for work
take advantage of return-to-work services?
2. At this time NCIL's position is that beneficiaries found
to be eligible for SSI/SSDI benefits should not be required to
start or return to work. Since the overwhelming majority of
current beneficiaries are not starting or returning to work, it
is intuitively obvious that something is wrong with the current
approach. We believe that millions of current beneficiaries
could start or return to at least part-time or temporary work.
However, most are fearful to even try to do so because those
who have tried have experienced such punitive attitudes and
outcomes by the SSA's inefficiencies and errors, that they
never try again and advise others not to try. Further until the
current disincentives and barriers are removed and we have some
data on the results (qualitative as well as quantitative), a
system that REQUIRES a return to work will be more punitive
than is justified at this time. Discussion of such a
requirement also poses the $64,000 question: Who determines
``potential for work'' and how is that determined? We need only
look at the ``medicalized'' Workers' Compensation system with
its ``100% recovered'' approach to know how that would end up.
3. Do we need to provide additional incentives in the law for
employers to hire individuals with disabilities?
3. Employers hire qualified individuals to get the job
done. Our proposal includes employer incentives we believe to
be useful. However, the most important issue for employers is
not the ``incentives'' but rather a ``reduction of perceived
risk.'' Employers, especially small employers, want to be
assured that they will not increase their liability and costs.
Our proposal includes exemptions of the employer's FICA match.
However, allowing employers to take tax credits when they
actually incur additional expenses directly related to an
employee's disability makes sense. We know from data published
over the years by employers that the average employee with a
disability is not expensive in terms of accommodations.
However, have we done an adequate job of employing pepsins with
the most significant disabilities? We do know that only a tiny
percentage are returning to work so what would the actual costs
be for these workers? Employers need an assurance that they can
recoup extraordinary costs when those occur. Job coaches, sign
language interpreters, on-the-job personal assistance can be
costly. Yet we know that an employer tax credit would rarely
cost more than keeping that individual with the most
significant needs out of the workforce and totally dependent
upon public entitlements.
4. If only one tax credit could be implemented for disabled
Social Security recipients, would you recommend a personal
assistance tax credit or a disabled worker tax credit? Please
explain.
4. We highly recommend tax credits for personal assistance
but that includes a broad definition of personal assistance.
For example, attendant care in preparation for and returning
from work in addition to on the job, personal assistance on the
job such as sign language interpreters, readers, job coaches,
etc. and assistive technology such as voice synthesis software,
hand controls, home modifications, etc. should all be available
with a tax credit where it is not employer-provided. The
disabled worker tax credit is designed for low wage earners and
serves a very different purpose. We are proposing both but
believe the personal assistance credit is critical. The
personal assistance credit also removes those types of services
from the typical ``medical'' category, which we believe is more
of 90's concept! Personal assistance is a lifestyle issue
rather than a medical issue but is just as necessary to the
independence and well-being of a person with a disability as
medical services.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Bonnie O'Day
1. Have you discussed your recommendations with SSA? And if
so, what has been their reaction? I recognize that your forums
have been ongoing over the last few months and your report is
about to be finalized, however many of the issues you have
raised have been around for a long time. Why, in your view, are
only a few of the NCD's recommendations included in the
Administration's ticket proposal?
The NCD recommendations have been informally
shared with Social Security personnel during the development
and public hearing stages. Additionally, Social Security
officials attended several of the public hearings held by NCD.
While the SSA has provided technical information and support
during proposal development, SSA has not formally responded to
NCD's proposals.
SSA's Ticket proposal is budget neutral. In
contrast, the NCD believes that some up-front expenditure of
funds is essential for the ticket program's success, and did
not limit itself to ``no-cost'' approaches. We do believe,
however, that over time, the NCD proposals will prove to be
cost effective by returning recipients of SSI and SSDI to work.
2. You suggest that Congress should designate a certain
percentage of trust fund monies for a competitive grant for
information dissemination about return-to-work incentives. How
do you envision such a program working?
Our intention is that centers for independent
living, employment agencies, disability organizations, and
other local agencies be offered the opportunity to submit grant
applications to SSA through an RFP process to provide
employment counseling services to SSI/DI applicants and
beneficiaries. SSI/DI applicants should immediately be referred
to such services. Employment counselors located at these
agencies would explain how to use the SSI/DI work incentives,
inform applicants of the vocational training and other supports
available to them through vocational rehabilitation and other
agencies, and help applicants negotiate through the
bureaucratic maze so that they can make full use of the work
incentives and employment services available.
3. How important to a successful return-to-work program are
rehabilitation provider evaluations?
To maximize choice of rehabilitation providers,
consumers must have concrete, performance based information
about rehabilitation providers. This information should be
based primarily upon outcome measures such as numbers and types
of placements, wages, types of disabilities served, and
consumer satisfaction. This information should be widely
disseminated, since independently gathered, outcome-based
information is crucial to consumers in making informed
decisions. If this information is lacking, consumer choice will
be based largely upon public relations materials distributed by
agencies, relating choice to the size of agency advertising
budgets rather than consumer outcomes.
4. Some individuals are so severely disabled that they may not
have any remaining capacity to work. Although no one should be
prevented from trying to work, we wouldn't necessarily expect
all disabled recipients to work. But, there are some disabled
individuals who would be good candidates for rehabilitation
services. Yet, we know that Social Security law requires
suspension of benefits for those SSDI and SSI recipients who
refuse to accept vocational rehabilitation services. Should
legislation require that recipients with potential for work
take advantage of return-to-work services?
During the Houston meeting, where the first draft
of the NCD proposals were drafted, consumers held a heated
discussion about whether recipients should be required to use
the work incentive and vocational services. Consumers felt
strongly that a far greater number of SSI/DI recipients could
return to work, and that the culture of lack of expectation of
work prevalent in the Social Security system should be altered.
However, there is no fail-safe evaluation mechanism that can
accurately assess an individual's likelihood of successful
employment. Much depends upon the local economy, education,
skill, age, level of disability, and motivation of the
recipient. Additionally, a holistic rather than piecemeal
approach, which includes vocational training, medical
insurance, cash or other assistance and employer incentives may
be needed to enable recipients to return to work. Until all of
these elements are in place, a punitive system which coerces
beneficiaries to use return-to-work services is likely to
result in waste of effort for the rehabilitation agencies,
complex administrative enforcement procedures for SSA, and
significant anxiety for consumers.
5. Do we need to provide additional incentives in the law for
employers to hire individuals with disabilities?
The NCD believes that employers should receive a
tax credit for any additional costs incurred for hiring someone
with a disability. For example, employers are currently
required to offer the same level of health coverage to
employees with disabilities that they offer to other employees.
Under our proposal, the employer would receive a credit only
for any additional health care expenses resulting from the
individual's disability. The NCD also supports a tax credit for
employers who provide disability diversity training to
employees.
Several hearing participants also testified about the
devastating impact of employer discrimination on their efforts
to find employment. While not contained in this proposal, the
NCD strongly supports the provision of additional resources to
the Equal Employment Opportunity Commission and the Department
of Justice for ADA education, mediation and enforcement.
6. If only one tax credit could be implemented for disabled
Social Security recipients, would you recommend a personal
assistance tax credit or a disabled worker tax credit? Please
explain.
The NCD supports a Disability Work Expense (DWE) tax credit
that would reimburse 75 percent of an individual's expenses
related to preparing for, traveling to and from work, and any
expenses incurred at work. The reimbursement could not exceed
the individual's gross earnings, and would be capped at
expenses of $15,000 per year.
The DWE Tax Credit would include any personal assistance
services (PAS) expenses in preparing for work, traveling to and
from work, and during the work day. Additionally, it would
benefit SSI/DI recipients who do not use personal assistance by
covering other disability-related items used for work, such as
adaptive equipment, readers or drivers for blind persons, or
other supports.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Tony Young
1. In your testimony, you mention that SSA's current work
incentives are expensive to administer and too often result in
benefit overpayments that recipients must pay back. Since SSA's
payment system is not able to compute monthly accounting for
earnings, it seems to me that the $1 for $2 offset would result
in multiple overpayments for those recipients attempting to
work. Are you concerned at all about this?
Yes, this does present a concern. However, we propose
several changes to the procedure through which the current $1
for $2 offset for SSI recipients is administered that would
mitigate this problem. First, we recommend that the offset be
calculated on a Quarterly rather than a monthly basis. This
would avoid the common problem of the five pay check month that
pushes recipients into an overpayment problem. Second, we
recommend that the offset be administered in $100 increments;
that is, for every $100 earned, a recipient foregoes $50 in
benefits. This would level out many small changes in income
that would require a minor adjustment in benefit payments.
These changes to the way benefit offsets are administered, if
applied to the current SSI offset and the proposed SSDI offset,
would save SSA millions of dollars in administrative costs over
the next five years. In addition, we recommend that SSA be
directed in legislation that it should work with the IRS to
begin accessing quarterly IRS earnings statements
electronically to facilitate the processing of any benefits
offset. There should be an interagency working agreement
between SSA and IRS to facilitate the administration of the
offset. SSA should electronically access the quarterly earnings
reports submitted by employers to ascertain the earnings levels
of beneficiaries participating in the offset program, calculate
the correct offset amounts, and distribute the change equally
over the next three monthly benefit checks.
2. Some individuals are so severely disabled that they may not
have any remaining capacity to work. Although no one should be
prevented from trying to work, we wouldn't necessarily expect
all disabled recipients to work. But, there are some disabled
individuals who would be good candidates for rehabilitation
services. Yet, we know that Social Security law requires
suspension of benefits for those SSDI and SSI recipients who
refuse to accept vocational rehabilitation services. Should
legislation require that recipients with potential for work
take advantage of return-to-work services?
The legislation should not require recipients to take
advantage of return-to-work services. We know that there are
SSI/DI beneficiaries who are good candidates for potentially
returning to work or entering the workforce for the first time.
What we do not know with any certainty is which SSI/DI
beneficiaries are those who can successfully enter or reenter
the workforce. There is no proven technique or test that can
accurately, reliably predict success in employment based upon
disability status. If there was, it is uncertain whether or not
the benefits of such screening would outweigh the
administrative cost of testing SSI/DI beneficiaries for work
potential and tracking their participation. We recommend that
every beneficiary be given a ticket and allow the providers in
the free market system to use its marketing tools to entice
beneficiaries to access employment services.
3. Do we need to provide additional incentives in the law for
employers to hire individuals with disabilities?
No. Given the current economic demand for workers and the
recent questions regarding the effectiveness of incentives for
employers to hire workers from targeted populations, it is
inappropriate to provide additional incentives in this law for
employers to hire individuals with disabilities. If the
Subcommittee wishes, it may consider studying the potential to
expand WOTC to SSDI beneficiaries as well as SSI beneficairies
and make it permanent.
Chairman Bunning. We have a second panel. John Halliday,
director of the Bureau of Rehabilitation Services in Windsor,
Connecticut, and chairman of the Council of State
Administrators of Vocational Rehabilitation, Social Security
Relationship Committee; Richard Christman, from Metro
Industries, from my home State, Lexington, Kentucky and reading
his testimony will be Mary Gennaro, from the American
Rehabilitation Association; Dr. Thorv Hessellund, president of
the National Association of Rehabilitation Professionals in the
Private Sector, from Pleasant Hill, California; Fred Tenney,
president of Southwest Business Industry and Rehabilitation
Association in Scottsdale, Arizona; and Stephen Start, chief
executive officer and president of S.L. Start & Associates in
Spokane, Washington.
And Barb would like to introduce her constituent.
Mrs. Kennelly. Thank you, Mr. Chairman. I am delighted that
Mr. Halliday from Connecticut is able to be with us. As a
public servant dedicated to helping individuals return to the
workplace, I think he is eminently qualified to talk about the
barriers to employment for people with disabilities, and I
thank him very much for coming to Washington today to share his
knowledge with us.
Thank you, Mr. Chairman.
Chairman Bunning. Mr. Halliday, would you like to begin,
please?
STATEMENT OF JOHN HALLIDAY, DIRECTOR, CONNECTICUT BUREAU OF
REHABILITATION SERVICES, ON BEHALF OF COUNCIL OF STATE
ADMINISTRATORS OF VOCATIONAL REHABILITATION
Mr. Halliday. Thank you, Mr. Chairman. Mrs. Kennelly, thank
you very much for your kind remarks.
It is a pleasure and an honor to have the opportunity to
address this Subcommittee on behalf of the Council of State
Administrators of Vocational Rehabilitation.
As you are aware, the public vocational rehabilitation
system has been providing services to SSDI and SSI recipients
since the beginning of those programs, and continues to do so.
We have demonstrated, through our partnership with consumers,
families, other government agencies and the private sector,
success in assisting individuals on SSI and SSDI to enter
employment.
Over 45,000 people a year who are SSI and SSDI recipients
are entering employment as a result of that effort. The
challenge before us is to increase both the number entering
employment and the earnings of those individuals.
The association provided, I believe, a white paper to the
Members of the Subcommittee.
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Mr. Halliday. I will not go through all of that. I would
like to focus on a couple of key barriers and our main
recommendations if I may.
The barriers we see come in three main areas: One is
disincentives. And the panel before us did an outstanding job
of identifying the major ones there.
Clearly the availability of medical coverage is a key
factor in preparing for and maintaining employment.
It is the advances in treatment and rehabilitation that
allow people to function at work and to increase their
employment levels.
The other disincentives are the structural ones, and those
are the ones I would like to spend the most time talking about.
They fall into the following areas.
We need to become much more effective in identifying those
on disability who are involved in rehabilitation activities. In
order to do this, we need to work very closely with the Social
Security Administration so that I could come here and say, of
the approximately 7,000 people in Connecticut who are active
participants in vocational rehabilitation, x number are on SSI
and SSDI.
Today I cannot do this because we have been unable to get
the necessary information from Social Security.
We have to be able to give recipients fast, clear,
accurate, and, most of all, predictable information regarding
work incentives. Like all of us, if I cannot get clear answers
in a very complex matter, and the decisions I make will have
direct impact on what my income is, what my benefits are, and
it is fuzzy and it is unclear--I am not going to act.
We are concerned and scared by contradictory information.
We need to provide consumers clear, understandable information
so that they can make decisions that will hold up over time.
The other structural barrier is the impact of reimbursement
on benefit systems. As I come here before you today, the latest
figures I have show 87 million dollars' worth of potential
reimbursable costs sitting in Baltimore. These are
reimbursement claims the public vocational rehabilitation
agencies are asking Social Security to consider for people who
have gone to work for a minimum of 9 months.
These funds need to be turned around more quickly so that
they get back into the VR system, where they will be spent in
returning individuals to work.
I think one of the things you heard the panel before say,
and we have talked about in our report, is clearly people need
work incentive education. Much of the information they get,
unfortunately, is from hearsay, and off the street. It is
inaccurate, and does not contribute to their being able to make
timely decisions.
Those kinds of changes in that kind of system can be done
without adding cost.
The other point that we are deeply concerned with is that
we do not spend our scarce resources on building infrastructure
and competing systems. We need cooperation and collaboration
between the public and private sectors to maximize our
financial resources.
Many recipients of SSDI are also receiving services from
private programs such as workers' compensation or disability
insurance. We need to look at jointly working toward the common
goal of employment.
Thank you for this opportunity. We are available to work
with you, and look forward to doing so. Thank you, Mr.
Chairman.
[The prepared statement follows:]
Statement of John Halliday, Director, Connecticut Bureau of
Rehabilitation Services; and Chair, Council of State Administrators of
Vocational Rehabilitation, Social Security Relationship Committee
Chairman Bunning and distinguished members of the
Subcommittee, it is a privilege to have the opportunity to
provide testimony on behalf of the Council of State
Administrators of Vocational Rehabilitation (CSAVR) regarding
the barriers facing Social Security Disability recipients in
their efforts to return to and maintain employment.
The CSAVR is composed of 81 state officials who administer
the Public Vocational Rehabilitation program in the 50 states,
the District of Columbia and the territories. This program has
a history of providing vocational rehabilitation services to
recipients under the various Social Security Disability
Programs since the inception of the SSDI and SSI programs. Our
goal today is to share with your our understanding of the
factors that impact individuals receiving Social Security
Disability Benefits as they consider active participation in
our national economy.
We are proud of the history and achievement of the Public
Vocational Rehabilitation Program in assisting annually
thousands of recipients of Social Security Disability to
prepare for, enter, and maintain employment. Of the 1.2 million
people served annually by the Public Vocational Rehabilitation
Program, 40% are conservatively estimated to receive SSI and
SSDI when they enter or participate in the Vocational
Rehabilitation System. Over 200,000 individuals enter work
annually through their efforts with the Public Vocational
Rehabilitation Program. Approximately 45,000 of these
individuals are also SSI and SSDI recipients. The level of
partnership with consumers, families, and other public and
private rehabilitation programs exhibited in the delivery of
services through the Public Vocational Rehabilitation Program
is exemplary and this partnership has brought about the success
of the Program. It is through the continued growth and
development of such partnerships that our efforts to assist
increased numbers of individuals with SSI and SSDI need to be
based.
The mandate of the Public Vocational Rehabilitation Program
is to assist eligible individuals with disabilities to enter
and maintain competitive employment in the full range of
economic activities that our society offers.
The barriers to Social Security recipients entering and
maintaining employment fall into three categories:
disincentives, structural issues and resource issues.
In the area of disincentives, the barrier is the
availability of continued Medicare and Medicaid eligibility to
cover the costs of treatment, medicine and other necessary
services that in fact, enable people with significant
impairments to enter and maintain employment. These barriers
are well documented and widely agreed to. The other major
disincentive is the loss of income, both perceived, and in some
cases real, resulting in individuals finding themselves in
severe economic crisis. There is broad agreement that we need
to continue to work on various modifications to the Medicare
and Medicaid structures in order to enable persons with
disabilities to continue to have access to necessary medical
and rehabilitation treatments.
One of the greatest disincentives to Return-to-Work is the
lack of understandable information on what will happen to both
cash benefits and medical coverage. I refer to this as the
twilight zone, in that one feels lost in a fog of confusion
with contradictory messages often being received. Beneficiaries
are frequently told to just go ahead and take a job, so that
they then, only after taking it, will be informed as to what
will happen to their benefits. The system must be simplified to
encourage persons to return to work. The redesign of this
system should be focused on a customer service orientation
which would result in people having confidence around returning
to work. We must decrease the great unknown that we ask people
to leap into when we ask them to consider return to work.
In the area of structural barriers, it is clear that the
timing of outreach to encourage beneficiaries to return to work
is poor. It is poor because it occurs at a time when persons
with disabilities are either trying to prove they cannot work
or when they have just been allowed benefits. Also complicating
the matter is the lack of a joint method between the Public
Vocational Rehabilitation Program and the Social Security
Administration to determine who is receiving benefits.
It gets worse when you look at the reimbursement process
where bureaucracy, in terms of paper, is extremely time
consuming to the Public Vocational Rehabilitation Agency. Then,
as if this frustrating process is not enough, there is the
unpredictability of response and reimbursement of funds in a
timely fashion.
The impact of these two structural areas can be seen
clearly when the Public Vocational Rehabilitation Agency tries
to set up a process to check with Social Security on the status
of applicants or eligible individuals. There is no easy and
consistent way we can do this nationally. This leaves states in
the situation of having to try to get the information directly
from consumers who are often receiving services from numerous
programs and are somewhat confused as to exactly which they are
receiving and why. In addition, at the time of placement into
employment, there is no easy way to identify whether or not an
individual was, and still is, receiving Social Security
Benefits. This clearly impacts on the reported effectiveness of
the Public Vocational Rehabilitation Program. An example in
Connecticut: For a short period of time we were able to access
information and, as a result, identified an increase in a three
month period of 30 percent of the cases we could identify who
were in employment above the Substantial Gainful Activity level
who were on SSI and SSDI and therefore would qualify under the
Reimbursement Program. If this is an indication of the true
impact Public Vocational Rehabilitation has on employment
outcomes for beneficiaries, clearly improvements in identifying
those receiving Social Security would show that, in fact, the
Public Vocational Rehabilitation Program is even more effective
than the present data shows.
Due to the lack of predictability around the timeliness of
reimbursements, State Vocational Rehabilitation Agencies find
themselves unable to determine funding levels and, thus, unable
to commit more funds to the delivery of services to SSI and
SSDI recipients. The current structure of the Return-to-Work
Program costs the Social Security Administration no money since
the full up front costs for services administration collection
is borne by the Public Vocational Rehabilitation Program. Even
under these conditions, Social Security, apparently, has been
unable to design an effective, efficient and timely
reimbursement structure. One must, therefore, raise the
question of what will happen with a wider, more complex system
of reimbursement that is contained in many of these proposals.
A third barrier is the area of resources. It is interesting
that one of the general assumptions behind many of the Return-
to-Work proposals is the idea that access to services through
the Public Vocational Rehabilitation Program and other
rehabilitation agencies is problematic for individuals on SSI/
SSDI. I must say that I have never heard this as a complaint
from consumers. We may have heard of individuals who did not
get a particular service, but we have never heard that they can
not get into an agency, make application or have their
eligibility determined, develop plans, etc. If there are
limitations on services, it is due to the lack of actual
funding available to the agencies rather than lack of access or
openness to serving SSI and SSDI recipients. These individuals
would be placed on a waiting list until funds become available.
In fact, the priority set by the Rehabilitation Act as amended
in 1992, matches perfectly with the priority of returning
individuals on SSI and SSDI to employment.
The Rehabilitation Act ensures that Public Vocational
Rehabilitation Program funding and the reimbursements received
through the Social Security Reimbursement Program go back into
vocational rehabilitation services and, thus, those resources
are available to serve more individuals. Proposals we have
reviewed, to this point, seem to have no assurances that the
funds reimbursed or paid out through various schemes would, in
fact, add any new capacity to provide vocational rehabilitation
services at the community level. Many of the proposals suggest
that there might be considerable pitfalls in them, such as the
shifting of costs to public programs by creating potential
windfalls in private for-profit programs. This would happen as
a result of most of the proposals allowing for-profit programs
to serve only those individuals who are already involved with
them due to their agreements under insurance and other
programs. In these situations, there would be no new capacity
created and no incentive to expand funds to serve more
individuals beyond those already receiving services.
Furthermore, these proposals lack any appeal process or fair
hearing for individuals who would receive services.
I have seen some references to private disability programs
having higher percentages of success in terms of Return-to-Work
figures. It would be interesting to do some real demographic
studies on the populations served by private disability
programs. In general, one could assume that they would probably
be individuals who have attained much higher levels of
education, job training and income who have the resources and
perceive the risk to protect their present income levels. If
such individuals require disability, they clearly have numerous
options for employment that would not be available to the full
range of individuals served by Social Security who do not
possess these advantages. One might then ask, is this really a
fair comparison or are we looking at a population with specific
characteristics that is served primarily by private disability
programs?
I would like to discuss, for a moment, some of the main
recommendations that the CSAVR has made regarding the Social
Security Program. We are presenting to you today a Paper which
we have developed outlining our concerns and recommendations.
First, we must eliminate what we call the ``leap of faith''
or the ``all or nothing approach,'' whereby recipients must be
either on or off benefits with no sliding scale, etc. We
recommend for SSDI that consideration be given to some type of
sliding scale benefit rather than the ``trial work period''
approach. There must be continued eligibility for Medicare
coverage and the type of community health services provided
under Medicaid. We realize that in both of these areas there
are cost concerns which must be projected and considered for
possible financial impact.
We recommend simplification of the Work Incentives Program,
including employment related work expenses, 1619 A&B
provisions, PASS Programs, etc. We further recommend that the
Committee consider these programs being administered by the
Public Vocational Rehabilitation Program rather than by the
present system of trying to deal with the Social Security
Administration structure. The Social Security Administration
does many functions extremely well, particularly the issuing of
checks and determining of financial disability eligibility. It
does not, however, have the expertise nor the structure to
administer incentive programs which help people deal with
planning beyond just the Social Security Programs.
Consideration must also be given to the various other Federal,
State, Local resources and programs available in order to
complete and implement a successful Return-to-Work effort.
We strongly urge continued joint effort based on the
Agreement that now exists between the Social Security
Administration, the Rehabilitation Services Administration, and
the CSAVR. In terms of identifying effective and specific plans
for outreach, it is important to provide education and
information to Social Security recipients regarding Return-to-
Work opportunities. Secondly, we must work to simplify the
reimbursement program so that this can be done quickly with the
minimum of paperwork.
The cooperation of the RSA, the SSA, and the CSAVR will
help us begin to chip away at the mixed message we give our
citizens and our communities regarding disability. On the one
hand, under Social Security, we identify people as totally
disabled, unable to be involved in any economic activity in
their community, and in fact, so disabled that their impairment
may result in death. On the other hand, under Title I of the
Rehabilitation Act and the Americans with Disabilities Act, we
assume that persons with disabilities, regardless of their
impairment, have the capacity to work, and should have that
opportunity. We cannot underestimate the impact of having to
implement these paradoxical messages. For example, we ask
treating physicians and other health professional to, on the
one hand, describe the significant level of impact of
impairment such that it prevents the person from doing any work
in the community for at least a year in order for them to be
eligible for Social Security. A short time later, we turn
around and ask those same people to describe what functional
strengths and potential for employment the Social Security
recipient has. This double message impacts the individual with
the disability, all the individuals who interact with him or
her, and the community at large, creating a sense of confusion
around what potential individuals with disabilities have and
what our public policy is toward disability.
In order to address these larger public policy issues, we
have suggested a long term consideration of a temporary
disability program for some groups. For example, individuals
who acquire a disability at a young age could be granted a
fixed period of financial eligibility for benefits, combined
with ongoing availability of medical coverage. They would be
required to be involved in Vocational Rehabilitation to
continue their education and/or development of vocational
skills to enter the workforce. Another way of addressing this
would be the consideration of a temporary, partial disability
program which would provide for the needs of individuals who
require Disability after they have developed job skills and
have been in the labor market. This approach would allow them
to continue to participate in the labor market rather than
having to make the decision to describe themselves as either
totally unable to work or able to work, with nothing in
between.
In conclusion, we believe that the Public Vocational
Rehabilitation Program is effective in providing vocational
rehabilitation services to SSI and SSDI recipients. Thousands
of these individuals enter employment each year. We have
streamlined the Public Program and have reached out to the
Social Security Administration. The Public Vocational
Rehabilitation Program has greatly increased its flexibility.
We are working in partnership with Social Security and other
public and private agencies, particularly in researching ways
to effectively simplify incentives to ``Return-to-Work.''
This partnership must continue. In addition, there are
critical questions which we must ask:
Do we want to take our precious limited resources and
invest them in competing publicly administered structures which
do nothing to increase the resources available?
Is it our goal to create more levels of public programs and
greater confusion on the part of recipients and providers in
the community as to who is doing what?
Does it make sense to set up public and private agencies as
competitors and risk damaging the good collaborative efforts
which currently exist within the Vocational Rehabilitation
Community?
Our answers to these questions must be ``No'' if we believe
those with disabilities should be offered the same choices as
others to fully participate in the economic activity of their
communities.
I wish to thank you on behalf of CSAVR. We stand ready to
actively participate in the development and continued evolution
of an effective coordinated employment program for Social
Security Disability recipients.
Chairman Bunning. Ms. Gennaro, would you read Mr.
Christman's statement?
STATEMENT OF RICK CHRISTMAN, EXECUTIVE DIRECTOR, METRO
INDUSTRIES, LEXINGTON, KENTUCKY; AND KENTUCKY ASSOCIATION OF
COMMUNITY EMPLOYMENT SERVICES; AS PRESENTED BY MARY GENNARO,
AMERICAN REHABILITATION ASSOCIATION
Ms. Gennaro. Thank you, Mr. Chairman. Rick Christman was
honored to have been given the opportunity to testify here
today, and I know as a fellow Kentuckian he was thankful for
your leadership. And unfortunately weather kept him in
Kentucky. All his flights to try to get here were canceled. So
thank you for your kindness in letting me read his testimony.
I am the executive director of Metro Industries, a not-for-
profit community rehabilitation program in Lexington, Kentucky.
Metro Industries provides employment, occupational skills
training and job placement to people with a variety of barriers
to employment, including persons with disabilities.
I am representing today a group of like organizations in
Kentucky known as the Kentucky Association of Community
Employment Services. Metro Industries is also a member of the
American Rehabilitation Association.
As you are already aware, the state of affairs for persons
with disabilities relative to employment is sad. According to a
survey conducted by Lou Harris for the National Council on
Disability in 1994, only 68 percent of persons with
disabilities in the United States are unemployed, an actual
increase in unemployment for this population, compared to 1986.
This disturbing phenomenon has worsened despite our
Nation's passage of the Americans with Disabilities Act in
1990. While not all persons with disabilities are SSDI or SSI
recipients, this statistic serves to underscore the problem of
the explosion in beneficiary rolls.
Accordingly, in addition to rights and public access for
persons with disabilities, policymakers should equally focus on
programmatic innovation and the elimination of work
disincentives.
The current system for delivery of employment-related
services to beneficiaries can be improved. What is necessary is
a choice-based market-driven service delivery system which will
drive effectiveness and innovation. And, second, the
alleviation of risk of loss of health insurance.
With regard to the implementation of a market-driven
service delivery system, and the correct assumption that SSDI/
SSI beneficiaries would benefit from having a much larger pool
of service providers from which to select, we know that a
provider pool will not have to be developed from scratch.
In addition to public providers, there already exists in
every community providers known as community rehabilitation
programs. In fact, some 6,700 organizations exist to provide
employment-related services to persons with disabilities.
Unfortunately, only a fraction of beneficiaries are
referred to these organizations. By creating a workable payment
mechanism, and directly linking beneficiaries to service
providers, the underutilized potential of these organizations
will be unleashed.
In the State of Kentucky, members of our association worked
in cooperation with Kentucky's Department of Vocational
Rehabilitation to develop a highly accountable fee for service
outcome-based funding mechanism.
Taking a page from the farsighted vision of Kentucky DVR, a
similar mechanism could also be fashioned for the Social
Security Administration. Because of the 9-month trial work
period necessary for beneficiaries to demonstrate their job
placement success, and the investment needed to prepare someone
for employment, a fee system based on the attainment of certain
milestones will be necessary.
These milestones would include completion of a
rehabilitation plan, 60 days of employment, and 9 months of
employment. Then continued payment based on savings will
support ongoing maintenance of the former recipients'
employment status.
Without these milestones, too many providers will find it
impossible to participate.
Now, to the issue of work disincentives. Over the course of
my 20-year career in vocational rehabilitation, one of the
prime fears I have encountered among recipients and their
families is health care. Most people are far more concerned
about loss of Medicaid or Medicare than of cash benefits.
Because of this fear, when vocational rehabilitation
professionals work with recipients job placement into truly
self-sufficient employment is seldom attained. Too frequently,
we professionals assist persons with disabilities to obtain
positions below their abilities and earning capacity simply to
preserve health benefits.
The problem of the medical insurance disincentive is a
complex one to be sure. However, our agency has found that the
SSI Program and its graduated reduction of cash benefits
against earned income, with the recipient maintaining medical
coverage, to be much more conducive to employment than the
structure of the SSDI system.
A means of allowing recipients to purchase Medicare and
Medicaid coverage after attaining self-sufficient employment is
certainly an idea worth serious consideration.
Thank you, Mr. Chairman for the opportunity to comment.
[The prepared statement follows:]
Statement of Rick Christman, Executive Director, Metro Industries,
Lexington, Kentucky; and Kentucky Association of Community Employment
Services
Thank you Mr. Chairman, and distinguished Members of the
Subcommittee, for the opportunity to testify on the important
issue of assisting beneficiaries of Social Security Disability
Insurance (SSDI) and Supplemental Security Income (SSI)
benefits to increase their self-sufficiency through employment.
I am the Executive Director of Metro Industries, a private,
not-for-profit community rehabilitation program in Lexington,
Kentucky. Metro Industries provides employment, occupational
skills training and job placement to persons with disabilities
and other individuals with a variety of barriers to employment.
Today, I am representing a group of similar organizations in
Kentucky known as the Kentucky Association of Community
Employment Services (KACES). Metro Industries is also a member
of the American Rehabilitation Association.
The state of affairs for persons with disabilities relative
to employment is unsatisfactory. 1994 U.S. Census Bureau data
indicates that 73.9% of persons with severe disabilities, age
21 to 64, were not employed. It has been estimated that only
about one out of every 1,000 beneficiaries is rehabilitated
each year (GAO/HEHS-96-62). More people can and must be
assisted to work or ``return to work.'' More that $57 billion
in cash benefits was paid out to people with disabilities in
1995 through the Social Security Disability Insurance (DI) and
Supplemental Security Income (SSI) programs. The United States
General Accounting Office reports that if an additional 1% of
the 6.6 million working-age SSI and SSDI beneficiaries were to
``leave the rolls,'' by returning to work, lifetime cash
benefits would be reduced by an estimated $3 billion (GAO/HEHS-
97-46, March 17, 1997). Guaranteeing rights and public access
has increased the ability of, and opportunity for, persons with
disabilities to become employed. Now we must also focus on
programmatic innovation and the elimination of work
disincentives to increase employment.
The current system for delivery of vocational
rehabilitation services to SSDI/SSI beneficiaries has assisted
people to become employed, but many more people with
disabilities want to work and need access to the services which
will enable them to do so. A key element in helping them move
into employment, and off of benefits, is already in place,
namely, the estimated 6,700 community rehabilitation programs
throughout the country. These community based organizations
provide directly, or facilitate the provision of, vocational
rehabilitation services to individuals with disabilities. They
work with countless businesses across the country. Through
quality evaluation, training, placement and support, they
assist people with disabilities to work to their highest
potential. We must expand access to rehabilitation services and
allow consumers to choose their providers from among the many
public and private providers available. This will enable more
people with disabilities to receive the services they need to
participate in the workforce.
A combined outcome-based, milestone payment system is a
necessity. An outcome-based system will help ensure quality
results, but milestone payments are also essential for quality.
If milestone payments are not available, too many community
rehabilitation providers will find it financially impossible to
bear the risk of participating. The program must attract an
adequate supply of diverse providers in small and large
communities alike. Providers should receive milestones payments
at completion of an employment plan, after 60 days of
employment, and after nine months of employment. This essential
for success of the program. Once a person with a disability is
working and no longer eligible for benefits, the provider
should receive a percentage of the monthly benefit until five
years post employment, while the person continues to remain off
of benefits.
The Alternate Participant Program illustrates the problem
posed by an inadequate payment system. This program is likely
to be little utilized because it only reimburses for actual
costs and payment is only made after a person has completed
nine months of work at the ``substantial gainful activity''
level or higher. For non-blind individuals with disabilities
this would be earnings of $500 a month or higher. There must be
a sharing of risk, otherwise participation will be limited to
only a few large providers who have the cash flow necessary to
serve a substantial case load with only the possibility of
future payment.
Lack of access to adequate and affordable health care
coverage is a significant barrier to employment for persons
with disabilities, which we must address in any ``return to
work'' effort. Over the course of my 20-year career in
vocational rehabilitation and other disability-related
positions, one of the prime fears I have encountered among
persons with disabilities and their families is loss of health
care coverage, so much so, that the risk of the potential loss
of one's Medicaid or Medicare coverage is often the primary
impediment to work. Persons receiving SSDI and/or SSI, who
become employed, should be able to maintain their health care
coverage. Eligibility for Medicare and Medicaid should be
maintained up to a certain level of earnings at which point a
person with a disability should be able to pay for continued
coverage under these programs. The need for personal assistance
and long-term supports must also be addressed and Medicaid is
virtually the only source of reimbursement for long-term
services and supports.
We should also attempt to address the current economic
disincentive to work which exists for SSDI beneficiaries. In
the current system persons face a sudden lose of benefits after
achieving a certain level of earnings over a period of time.
This loss of support occurs before the individual is earning
enough to support him or herself, and acts as a financial
disincentive to working.
Participation in the program should be voluntary, at least
until the program is in place for a period of time. It should
also be fairly simple for a provider to be ``certified'' to
provide services. Quality assurance should be built into the
program. Providers should provide information on their services
and outcomes in order to facilitate consumer choice. At the
same time, providers should not be ranked or graded, because
this would involve comparisons which cannot be made fairly.
A ``ticket'' approach presents many concerns for providers.
It will make the payment system difficult and uncertain. If a
consumer needs more than one provider at the same time, how
will the funding represented by the ticket be disbursed? If a
consumer decides to change providers, how will payment be made?
To enhance the design and implementation of the program, a
commission with representation by consumers, providers and
employers should be appointed. Working with the Social Security
Administration, such a commission will ensure the development
of a program that, from the onset, has the input of all the
parties most critical to its success.
A system which provides for consumer choice, expands access
to services, addresses disincentives to work, provides for an
adequate payment system, assures quality, and includes key
stakeholders in its design and implementation, will work. We
need to create such a system. Many, many people with
disabilities who seek greater independence and wish to more
fully utilize their skills and abilities will benefit. The
country as a whole will benefit as more of its citizens are
able to more fully contribute to the community, lessening their
dependence on government and contributing to the tax rolls.
Metro Industries, along with community rehabilitation providers
in Kentucky and throughout the country, stand ready to help
create such a system and work within it to assist more people
with disabilities to increase their independence and self-
sufficiency through employment. Thank you Mr. Chairman, and
members of the Subcommittee, for the opportunity to comment.
Chairman Bunning. Thank you very much. Next would be Dr.
Hessellund, please.
STATEMENT OF THORV A. HESSELLUND, ED.D., CRC, PRESIDENT,
NATIONAL ASSOCIATION OF REHABILITATION PROFESSIONALS IN THE
PRIVATE SECTOR, FRAMINGHAM, MASSACHUSETTS
Mr. Hessellund. Thank you, Mr. Chairman. My name is Thorv
Hessellund. Today I am here as president of the National
Association of Rehabilitation Professionals, NARPPS, to provide
our recommendations on Social Security reform.
I will cite how private sector can enhance the current
system and return those Social Security recipients with
disabilities back to the job market. In addition to being
president of NARPPS, my education is in rehabilitation
counseling. I am a certified rehabilitation counselor and have
been in the field 31 years, 22 of those years as a private case
practitioner and businessowner in the State of California.
I also serve as vice chair of the Washington, DC-based
group, Mainstream, a nonprofit group dedicated to creating jobs
for individuals with disabilities.
NARPPS' members, approximately 3,200 strong, are located in
every State in the country. Our organization represents private
sector members who could be either a solo practitioner, a
businessowner, or a member of a regional or national
organization. But we all have one goal in mind.
And that is to take every referral we receive back to the
maximum level of productive activity, with the most preferable
outcome being a return to suitable gainful employment.
NARPPS has formed many strategic alliances with this goal
in mind with other organizations, with the goal of providing
high quality rehabilitation services. Some of these
organizations include NASPPR, the National Association of
Service Providers in Private Rehabilitation; Vocational
Evaluation and Work Adjustment Association, which is VEWAA;
Mainstream, Inc.; the National Management Alliance, based in
Cornell; Return-to-Work Group Coalition; as well as the Case
Management Association Coalition.
Who are we? Who are the service providers? Educationally we
are most likely to have a master's degree in rehabilitation
counseling or a related field, a bachelor's degree or higher in
nursing or it could be a registered occupational or physical
therapist.
Our certifications include certified rehabilitation
counselor, certified case manager, certified disability
management specialist, certified rehabilitation nurse,
certified vocational evaluator.
In some States, we must be licensed, depending on the State
requirements. Our referrals most commonly come from workers'
compensation carriers, long-term disability insurers, health
insurers, managed care companies, employers, attorneys and
persons with disabilities.
We have a proven history of effectiveness of providing
savings to the insurance industry by enhancing the functional
levels of the clients we serve. We also must abide by a
professional code of conduct, both set by our organization,
NARPPS, as well as other organizations we belong to.
We are subject to peer review and malpractice if we do not
adhere to these codes.
Our members have been following closely the dialog on
Social Security reform. Privatization of vocational
rehabilitation services for Social Security beneficiaries is a
huge potential referral source if set up correctly.
The current system was established with good intention, and
public vocational rehabilitation professionals are some of the
most dedicated. Many of our members got our start there. I
worked for the State agency for 3 years myself.
However, due to the sheer scope and magnitude of the issue,
the public sector cannot do it alone. In fact, the private
sector continues to exist and prosper, specifically because of
our ability to return individuals with disability to gainful
employment over a substantial period of time.
We would now like the opportunity to apply the success rate
to SSA beneficiaries.
What do we need in order to return SSA beneficiaries with
disabilities to gainful employment? The consumer group, the
previous panel, did an excellent presentation, and it was
informative to hear we are on the same page along these lines.
First, to minimize the disincentives beneficiaries have
that impede them from returning to gainful employment. First
and foremost is to protect the beneficiaries' health insurance,
and in this regard, we are in support of the 5-year
continuation of Medicare coverage that is currently in the
Rehabilitation Return to Work Act of 1996.
Second, to tie beneficiary and service provider incentives
to benchmark outcomes. Third, to give the beneficiary an
informed choice through an option to select the rehabilitation
service provider from a number of prequalified public and
private sector service providers.
Fourth, to establish benchmark milestone payments for
services rendered. We are in support of the milestone payment
system as proposed by the Return-to-Work Group in concept, and
Return to Work Act. Quite simply, our members would not be able
to provide services if we had to wait for 9 months or longer
before we would be paid for our services. There just would not
be a market for us.
Five, the first milestone that we are recommending in terms
of payment is the point of termination of vocational
feasibility. This could be much the same as done by an
independent screener, as now exists with the Department of
Labor, Federal Employee Compensation Act.
Sixth, the higher service provider payments come at the
point of completion of an individual employment plan, and
ultimately upon return to work.
On behalf of NARPPS, and myself, I want to thank you for
the opportunity to provide this testimony. And we remain
available to work further with the Subcommittee. I would be
happy to answer any questions at the appropriate time.
[The prepared statement follows:]
Statement of Thorv A. Hessellund, Ed.D., CRC, President, National
Association of Rehabilitation Professionals in the Private Sector,
Framingham, Massachusetts
Introduction
Good afternoon, my name is Thorv Hessellund. Today, I am
here as President of the National Association of Rehabilitation
Professionals in the Private Sector (NARPPS) to provide our
recommendations on how to reform Social Security. More
specifically, I will cite how the private sector can enhance
the current system and return those Social Security
beneficiaries with disabilities to gainful employment.
In addition to being President of NARPPS, I have a
Doctorate in Rehabilitation Counseling, I am a certified
Rehabilitation counselor, a certified Case Manager with 31
years experience in the field of vocational rehabilitation, and
for the last 22 years I have been a California based private
sector vocational case management business owner and
practitioner. I am also a current Vice Chair of Washington,
D.C.-based Mainstream, Inc.--a national non-profit organization
dedicated to improving competitive employment opportunities for
individuals with disabilities--and a Director of Vocational
Programs for Paradigm, Inc.--a company that provides national
catastrophic injury case management services.
NARPPS members, approximately 3200 strong, are located in
every state in the country. The number of medical and
vocational rehabilitation professionals that NARPPS actually
reaches is much larger. Many organizations with multiple
offices and employees often take on limited membership and
distribute our Newsletter, Journals, and other communications
internally once received. Our organization represents private
sector members who may either be a solo practitioner, member of
a regional or national company, or a business owner. Whether
the emphasis of the company is medical or vocational case
management or both, we all have one goal in mind which is to
take every referral to the maximum level or productive activity
with the most preferable outcome being the return to suitable
gainful employment.
We are not alone in our dedication and proven results,
NARPPS has engaged in many strategic alliances and partnerships
with other organizations united in the cause of providing high-
quality rehabilitation services to individuals with
disabilities. Some of these prestigious organizations are:
National Association of Services Providers in
Private Rehabilitation (NASPPR)
Vocational Evaluation and Work Adjustment
Association (VEWAA)
Mainstream, Inc.
National Management Alliance (Headed by Cornell
University)
The Return-To-Work Group Coalition
Case Management Association Coalition
Who Are Private Sector Rehabilitation Service Providers?
Educationally, we are likely to have master's degrees in
rehabilitation counseling or a related field, a Bachelors
degree or higher in nursing, or could be registered an
occupational or physical therapist. Our national certifications
include Certified Rehabilitation Counselor, Certified Case
Manager, Certified Disability Management Specialist, RN, BsN,
Certified Vocational Evaluator, OTR, RPT are the most common
designations. In some states, we must be licensed. Our
referrals commonly come from workers' compensation carriers,
long term disability insurers, health insurance companies,
managed care companies, employers, attorneys, and persons with
disabilities. We serve several masters--our referral source,
the payer, who is not always one in the same, as well as the
beneficiary of services. These referral sources engage the
services of private rehabilitation professionals in order to
enhance the quality of life of the individual needing
rehabilitation services, but also to minimize the costs and
long-term expense and liability involved in settling a claim or
caring for the long-term needs of individuals with
disabilities, especially in workers' compensation cases.
Private sector rehabilitation professionals have a proven
history of providing savings to the insurance industry by
enhancing the functional levels of the clients they serve. We
adhere to the NARPPS professional code of conduct as well as
those of our particular certification(s). We are subject to
peer review and malpractice if we do not adhere to these codes
of conduct. We remain employed and/or in business only if we
achieve results. We are generally perceived only as good as
most recent referral. Though we have generally been paid on a
fee for service basis, flat rate billing for pre-agreed
services is becoming more common place.
We Can Apply Our Desire and Ability To Return Individuals with
Disabilities to Gainful Employment to SSA Beneficiaries
Our members have been following closely the dialogue on
Social Security reform. Privatization of vocational
rehabilitation services for Social Security beneficiary is a
huge potential referral source. If properly structured, there
is opportunity for creative and productive rehabilitation for
those recipients who are able and desirous of benefiting from
return-to-work services. In many, if not most states, our
members are becoming increasingly handcuffed by regulations,
such as workers' compensation; managed care, which limit
achievable outcomes. We are looking for new markets to utilize
our proven capabilities. With Social Security reform, there
remains an opportunity to establish a results based system
where the private sector works in sync with the public sector
toward one common goal, to return Social Security beneficiaries
to productive activity and thus taking them off the disability
rolls. In this way, we can work to bring our experience in
delivering cost-effective, outcome oriented services to Social
Security beneficiaries with associated benefits of minimizing
cost and long-term expense to the Trust Fund.
The current system was established with good intention and
public vocational rehabilitation professionals are some of the
most dedicated. In fact, many of our members got their start
with State VR agencies. However, due to the sheer scope and
magnitude of the issue, the public sector cannot do it alone.
The private sector has a long and proven history of providing
cost effective and successful return-to-work outcomes within
the insurance industry. In fact, the private sector continues
to exist and prosper specifically because of its ability to
return individuals with disabilities to gainful employment over
a sustained period of time. We would now like the opportunity
to apply this success rate to SSA beneficiaries.
What we Need in order to Return SSA Beneficiaries with Disabilities to
Gainful Employment
1) Minimize the disincentives beneficiaries have that
impede them from returning to gainful employment. First and
foremost is to protect the beneficiaries' health insurance. In
this regard, we are in support of the five year continuation of
Medicare coverage following return to work as proposed in the
Rehabilitation and Return to Work Act of 1996.
2) Tie beneficiary and service provider incentives to
benchmark outcomes.
3) Give the beneficiary an informed choice through an
option to select their rehabilitation service provider from a
number of pre-qualified private and public sector
rehabilitation professionals.
4) Establish benchmark/milestone payments for services
rendered. We are in support of the milestone payment system as
proposed by the Return-To-Work Group and as incorporated in
concept in the Rehabilitation and Return to Work Act. Simply
stated, our members will not become alternate providers under
the current system where payment is not available until after
the beneficiary has maintained suitable gainful activity for
nine months. The nine months could be reached anywhere from one
year to two or more years following referral, depending on the
rehabilitation services provided, and only the largest of
national providers would have the necessary cash flow to wait
so long for compensation for their work.
5) The first milestone should be at the point of
determination of vocational feasibility. That is, a
determination as to the likelihood of the beneficiary
benefiting from vocational rehabilitation services now or in
the future. This is to performed either by an independent
screener(such as now exists with the Department of Labor FECA
referrals) or by the long term service provider.
6) The higher service provider payments come at the points
of completion of an individual employment plan and ultimately
upon return to suitable gainful activity for the full nine
months.
Conclusion
For myself and on behalf of NARPPS, I want to thank you for
the opportunity to provide this testimony. We remain available
if needed to work further with the Subcommittee on legislation
to return SSA beneficiaries to gainful employment.
I would be happy to answer any questions the Subcommittee
may have for me as a rehabilitation professional in the private
sector.
Chairman Bunning. Thank you very much, Doctor. The next
person to testify is Fred Tenney, from Scottsdale, Arizona.
STATEMENT OF FRED E. TENNEY, PRESIDENT, SOUTHWEST BUSINESS
INDUSTRY AND REHABILITATION ASSOCIATION, SCOTTSDALE, ARIZONA
Mr. Tenney. Chairman Bunning, and Members of the
Subcommittee on Social Security, it is with a great deal of
pleasure and optimism that I reappear before this Subcommittee.
I would like to commend the Chairman and the Ranking Minority
Member for maintaining the momentum on this issue in a
bipartisan manner.
I would also be remiss if I did not compliment the
Subcommittee staff on their endeavors and their similar
commitment to this very important goal. My principle reason for
testifying here today is to answer the question, Can this be
done?
I offer to you that not only can it be done, but that it
has been done. My experience in more than a half dozen research
and demonstration projects dealing with SSI and SSDI
recipients, including the often referenced Project Network,
demonstrated beyond any doubt that success in utilizing private
sector rehabilitation providers is successful.
Here I must acknowledge the cooperation and professional
approach of such people as Dr. Thomas Rush and Ms. Natalie Funk
and others from Social Security in creating a professional
environment to implement these projects.
The case management approach to rehabilitating the SSI
recipients is a valid approach. While some changes are
necessary, I feel that this prescriptive approach not only
works but maintains the sense of continuity and consistency,
and, more importantly, avoids being another bureaucratic
handoff.
The advent of computerized technology and the ongoing
medical and rehabilitation achievements have led many U.S.
taxpayers to question the deep pockets of their Federal and
State governments. Civilized individualism has replaced the
cradle to grave social contract that arose early in the 20th
century.
Educational institutions, social and religious
organizations, health care vendors and their respective funding
sources have been called upon to provide a system that allows
all citizens to be full participants in the economic
achievements the world over.
Critical to the successful implementation of any return to
work program is inherent in the main premises of Project
Network: The case management concept that was able to provide
ongoing continuity and coordination in the process of assisting
people; a resource management component that insures adequate
reimbursement to providers of quality services, and management
of those resources to assure availability of services to
clients as heeded; and client empowerment in the whole
decisionmaking process, not only because it is right and
reasonable, but because it creates vestitures.
I would like to drone on for a couple of hours,
enthusiastically describing the process and the success that we
have had, but I would refer you to an article in the upcoming
NARPPS Placement Journal which documents this information.
The commission referenced in our proposal and the bill
Chairman Bunning introduced last year is essential. Regardless
of the well meaning attacks, this is not another layer of
bureaucracy. Rather, an oversight commission compiled of all
interests looking out for the welfare of everyone.
It is a venue for all interests to give input outside the
bureaucracy. This is a much needed and extremely valuable
resource to all concerned.
In addressing the State/Federal rehabilitation system, the
facts are indisputable. They have been less than responsive to
this target population. It is recognized this is a
rehabilitation program meeting the needs of many in the
community.
The sometimes heard concern that this bill would eliminate
VR rings hollow when they currently serve less than one-tenth
of 1 percent of those SSA beneficiaries referred.
Again, as in the testimony I gave this Subcommittee 2 years
ago, I suggest keeping them in the system, and encouraging them
to participate as any other vendor. But please, keep the
playingfield level.
VR can and will be our partners in this process. We look
forward to our continued close relationship.
There are those who suggest this bill will promote
creaming. You bet it will. The question that goes begging is
what is the definition of creaming? The conventional definition
has been serving only the less disabled. Not so in my world.
Creaming to us in the private sector is serving those who
want to go to work. The severity of the disability has little
to do with our ability to get a person a job. In short, bring
us someone who wants to go to work, and we will almost without
fail see that they are employed in the shortest amount of time.
Incentives is a term that seems to be on everyone's lips.
The only incentive we found to be critical is the ability to
get medical insurance. I urge you to facilitate a system that
allows access to health insurance as part of any bill you pass.
Medical insurance has become critical to all Americans.
There will be others who suggest that tax credits for
extraordinary expenses associated with employment are
important. I have no dispute with them, but I cannot testify to
the critical need.
Employer incentives is a term that I have heard discussed
most often by people who are not in the actual job placement
business. Let me comment on a couple of issues relating to
employer incentives.
In the early fifties, this Nation embarked on a hire the
handicapped campaign. It must have worked. There is little
resistance to hiring the disabled, and it's getting better
daily.
In short, businesses hire the disabled because it is in
their best interest, and, thankfully, socially accepted, not
because of incentives, but because it is the right thing to do.
Frankly, there are more jobs than there are people to fill
them. Demand exceeds supply.
And I will submit the rest of my testimony in written form
to the Subcommittee. In anticipation of Mr. Collins being here,
I had 1 page prepared for him from the last testimony.
[The prepared statement follows:]
Statement of Fred E. Tenney, President, Southwest Business Industry and
Rehabilitation Association, Scottsdale, Arizona
Chairman Bunning, members of the Subcommittee on Social
Security, it is with a great deal of pleasure and optimism that
I appear before this Subcommittee. I would like to commend the
Chairman and the Ranking Minority Member for maintaining the
momentum on this issue and in a bi-partisan manner. I would
also be remiss if I didn't compliment the Subcommittee staff on
their endeavors and for their similar commitment to this very
important goal.
My principal reason for testifying here today is to answer
the question, ``Can the private sector return SSDI recipients
with disabilities to work?'' I offer to you that not only can
it be done . . . but that it has been done. My experience in
more than a half dozen research and demonstration projects
dealing with SSI/SSDI recipients, including the often
referenced Project Network, demonstrated beyond any doubt the
success of using private sector rehabilitation providers. Here
I must acknowledge the cooperation and professional approach of
such people as Dr. Thomas Rush, Ms. Natalie Funk and others
from SSA in creating a professional environment to implement
these projects.
The ``case management'' approach tested in Project Network
was successful in rehabilitating SSA recipients and would be a
valid approach on a larger scale. While some changes are
necessary for full national implementation, I feel that this
tested prescriptive approach not only works but maintains a
sense of consistency, and more importantly avoids being another
bureaucratic hand out.
The advent of computerized technology and the ongoing
medical and rehabilitation advancements have led many U.S.
taxpayers to question the ``deep pockets'' of their federal and
state governments. ``Civilized individualism'' has replaced the
``cradle to grave'' social contract that arose earlier in the
Twentieth Century. Educational institutions, social and
religious organizations, health care vendors, and their
respective funding sources have been called upon to provide a
system that allows all citizens to be full participants in the
economic advancements occurring the world over.
Critical components to any successful return to work
program are: 1) a case management component to provide ongoing
continuity and coordination to the process of assisting people,
2) adequate reimbursement to providers of quality services, and
3) client empowerment in the whole decision making process. I
would love to drone on for two hours and enthusiastically
describe the process and our successes but I will refer you to
an article to be published in an upcoming NARPPS placement
journal which details the results of this approach. Instead I
will touch on some areas of concern I have which have grown out
of a year and a half of reviews of the recommendations of the
Return-To-Work (RTW) Group, of which I am a member.
The Commission as referenced in our proposal and the bill
Chairman Bunning introduced last year would be effective,
regardless of the well meaning criticism. This is not another
layer of bureaucracy, rather an oversight commission compiled
of all interests looking out for the welfare of everyone. It's
a venue for all interests to give input outside the
bureaucracy. This is a much needed and extremely valuable
resource to all concerned. In addressing the state/federal voc
rehabilitation system, the facts are indisputable, they have
been less than responsive to this target population. It is
recognized this is a rehabilitation program meeting the needs
of many of the community. The sometimes heard concern that this
will eliminate VR rings hollow when they currently serve less
than one tenth of one percent of those SSA beneficiaries
referred. Again as in the testimony I gave before this
Subcommittee two years ago, I suggest keeping them in the
system and encourage them to participate as any other vendor.
But please keep the playing field level. VR can and will be our
partners in this process. We look forward to our continued
close relationship.
There are those who are concerned that the Chairman's bill
of last year would promote ``creaming.'' You bet it will! The
question that goes begging, ``what's the definition of
creaming?'' The conventional definition has been, serving only
the least disabled. Not so in my world!! ``Creaming'' to us in
the private sector is serving those who want to go to work. The
severity of the disability has little to do with our ability to
get a person a job. In short, bring us someone who wants to go
to work and we will almost without fail see that they are
employed in the shortest amount of time.
``Incentive'' is a term that seems to be on everyone's
lips. The only incentive we found to be essential is the
ability to get medical insurance. I urge you to facilitate a
system that allows access to health insurance as part of any
bill you pass. Medical insurance has become critical to all
Americans. There will be others who suggest tax credits for
extra ordinary expenses associated with employment. I have no
dispute with them but I can't testify to the critical need.
Employer incentives is a term I hear discussed most often by
people who are not in the actual job placement business. Let me
comment on a couple of issues related to employer incentives.
In the early 1950's this nation embarked on a ``hire the
handicapped'' campaign. It must have worked. There is little
resistance to hiring the handicapped and it's getting better
daily. In short, businesses hire the handicapped because it's
in their best interest and thankfully socially accepted, not
because of incentives but because it is the right thing to do.
Frankly there are more jobs than people to fill them. Demand
exceeds supply. There are probably companies with noble usage
of the incentives, we just haven't encountered them to any
significant degree. That's not unusual because most of our
placements are with small businesses who don't want to be
bothered by ``government red tape.'' Others see this as a civic
responsibility.
I earlier mentioned Project Network. Let me share some
salient facts.
16% of all benefices who received a solicitation
notice from SSA called to find out about the project.
38% agreed to an interview with a case manager.
66% of all referenced interviewees agreed to
participate in the project.
157 clients were placed during the project.
100 clients remained working at projects end.
It would be difficult to establish the exact cost
effectiveness of the project until the 9 month trial work
period expires. However, a glimpse into the future will likely
show $539 a month or $6,470 a year in benefits will be replaced
by $881 pr month in wages. If only 100 clients remain working
(without benefit of follow-up) $647,000 in benefit saving per
year will be realized. Over a normal 20 year work span without
any added inflationary factors the savings on this one little
project in AZ will be in excess of $13 Million dollars.
In summation I have asked myself why am I here today? Why
have I worked so hard for these recommendations to become a
reality? In all likelihood I'll be retired before it's
implementation. My answer is simple. It's the same answer you
give every day. Because it's right for the taxpayers, it's
right for the consumers, it's right for our economy and finally
it's just plain right for America.
Mr. Chairman and members of the Subcommittee, thank you for
allowing me to appear before you today.
Chairman Bunning. We appreciate your testimony, and sorry
Mr. Collins is not here, but I would be more than happy if we
could send off and find him somewhere.
Stephen Start, please.
STATEMENT OF STEPHEN L. START, CHIEF EXECUTIVE OFFICER, S.L.
START & ASSOCIATES, INC.; AND COCHAIRMAN, RETURN-TO-WORK GROUP,
SPOKANE, WASHINGTON
Mr. Start. Mr. Chairman, and Members of the Subcommittee, I
would like to thank you for the opportunity to discuss ways to
increase the number of individuals that leave the SSDI rolls to
return to work.
My name is Steve Start. I am cochairman of the Return-to-
Work Group, and chief executive officer of S.L. Start &
Associates. S.L. Start is one of the largest providers of
residential and return to work services for people with
disabilities in the Northwest.
We have served as one of the original Social Security
return to work demonstration projects, and have been involved
in the national Projects with Industries effort for the past 20
years.
Our Project with Industries has returned over 2,000 people
to work.
A successful return to work program must address the needs
of beneficiaries, employers, and providers. Studies indicate
that 15 to 40 percent of the people on disabilities rolls would
like to return to work if given the opportunity. Many, however,
are highly fearful of losing their medical benefits. You have
heard it 20 times today.
Chairman Bunning. Not to disrupt you, but we heard it 20
times yesterday, too.
Mr. Start. Extension of the benefits is essential for an
effective return to work program.
Chairman Bunning. I think that's pretty well the consensus.
Mr. Start. Yes. Consumers want a choice of providers,
control in developing their return to work plan, and economic
gain as an outcome. They need knowledge of the job market, and
access to employers with jobs that match their skills and
abilities.
Employers are concerned about economic survival and getting
the job done. The key qualities they look for in hiring
employees are people who display positive attitudes, work
habits, and a willingness to learn.
Some critical factors about jobs: Over 75 percent of the
net job activity in our country occurs in small, middle and
startup companies. Less than 12 percent of the job openings
nationally are posted with public employment agencies, such as
employment security agencies.
Approximately 80 percent of the jobs filled nationally are
through word of mouth or personal relations in the local
community. Employment experts dub this phenomenon the hidden
job market.
Employers provide more training to more people than all the
trade schools and universities combined. The employment rate
for employment-based training is higher than any other training
method. The use of OJT and tax incentives can increase access
to jobs, especially those that require more than entry-level
skills.
Projects with Industries, vocational rehabilitation firms
and rehabilitation facilities exists in virtually every
community in this country. They are directly tied to the hidden
job market. They understand the needs of beneficiaries, are
accomplished at matching job candidates' abilities with local
employers, and many are highly interested in serving people on
the rolls.
Unfortunately, neither current alternative provider program
being implemented by SSA, nor the proposed Ticket for
Independence Program will take full advantage of this vast
resource.
The provision of both programs to pay providers only after
people have come off the rolls is financially impossible for
the vast majority of providers. This approach will produce very
limited choice for consumers, and will fail to effectively
access the hidden job market.
It is an attempt to totally eliminate the risk of investing
in a viable return to work effort that will essentially
guarantee that billions will continue to be wasted on people
who want to return to work.
Many providers will actively participate in a program that
shares some risk by paying outcome-based milestones, combined
with long term, keeping people off the rolls.
We have recommended three simple outcome-based milestones.
An initial $300 payment for a return to work plan signed and
committed to by both the beneficiary and the provider. The plan
would contain as a minimum employment goal, the method to
obtain employment, resources to be used, and a financial
analysis of the benefit upon successful completion for that
beneficiary.
A second milestone would include the individual obtaining
and retaining employment for 60 days, with a third being
leaving the rolls.
The total cost for the proposed outcome-based milestone
program is $2,700 for persons coming off the rolls.
Historically State VR agencies have been reimbursed in the
neighborhood of $10,000 to $12,000 depending on the year per
person coming off the rolls to cover their agency's cost of
rehabilitation.
Pricing the milestone level below cost forces providers to
produce long-term savings to stay in business. The return to
work group has designed a program model to implement such a
national scale return to work program. We have also developed a
computer simulation model to assess risk, cost/benefit, and
output performance for a wide variety of programs.
Using even very conservative historically-based performance
assumptions that come directly from SSA research and
demonstration projects, our simulation indicates that a
milestone approach would produce a low risk and highly cost-
effective program.
During initiative 7-year implementation, it predicts over
144,000 people would come off the rolls at a total savings to
the taxpayers of $12.3 billion. The program would pay for
itself in 4 years.
A cost/benefit of the program would be 13.9 cents saved for
every dollar invested. A simulation that assumes even very
modest impacts from the implementation of medical benefit
extensions, worker incentives, or employer incentives increases
the number of people coming off the rolls to 264,000.
We recommend that such a program be initiated during this
Congress, and that a bipartisan commission made up of
consumers, providers and employers be appointed to oversee such
a program's refinement, implementation and outcome reporting
back to Congress.
Refinement of incentive programs or provider reimbursement
can be tested in various regions during the 7-year rollout.
Chairman Bunning. Mr. Start, your time has expired.
Mr. Start. I am finished. Every day we waste lives and
money. Thank you, Mr. Chairman.
[The prepared statement follows:]
Statement of Stephen L. Start, Chief Executive Officer, S.L. Start &
Associates, Inc.; and Cochairman, Return-to-Work Group, Spokane,
Washington
Mr. Chairman and Members of the Subcommittee:
Thank you for providing me the opportunity to discuss with
you today the development of a RTW program that will assist
individuals on the social security disability rolls in
returning to substantial gainful employment. I have been
involved in the provision of vocational rehabilitation,
employment placement, and supported residential living services
for people with disabilities for the past 25 years. My company
provides services in the states of Washington, Oregon, and
Idaho. I have managed in excess of 350 grants and contracts
focused on developing and providing innovative approaches to
assist individuals with significant barriers to employment and
to maximize their ability to engage in employment activities
that will provide a stable and desirable standard of living. I
have also designed, developed, and operated numerous programs
to assist disabled people to leave institutional settings and
live independently in their communities. Services we have
provided have been funded through a wide range of contract
relationships with a broad array of government agencies. A
small sample includes the Social Security Administration (SSA),
the Rehabilitation Services Administration (RSA), the
Department of Labor, and the Department of HEW at the federal
level. Many of our contracts are with agencies of state and
local governments. A project that I am especially proud of and
from which we have learned many lessons about RTW practices is
the Inland Empire's Projects With Industry (PWI). Our PWI is
part of a national initiative funded under the RSA that has
resulted in the development of a national network of projects
that represent an activity partnership between rehabilitation,
RTW organizations, and employers. For the past 20-plus years,
PWIs across the country have provided the most cost-effective,
outcome-based, RTW effort of any initiative in our nation that
I am aware of which has been undertaken by the public sector.
My firm participated very actively in the Research and
Demonstration Project (RDP) funded by SSA. As a result of these
activities, my company has worked with several thousand
disabled individuals and hundreds of employers throughout the
Pacific Northwest. Later in my testimony, I will share with you
some important lessons that we have learned from PWI experience
and participation in the RDP process.
In testimony today, I want to focus on what we in the field
of RTW have learned over the years about the four stakeholders
in this process; namely, employers, people with disabilities,
providers of service, and SSA. I will then focus on the
implications of those lessons for policy and program
development, and finally outline for you a cost-effective
approach to a national RTW effort that draws on the lessons
that we have learned from the stakeholders.
What We Have Learned
About People with Disabilities in Relation to the Job Market:
Many disabled individuals (even those with severe disability)
sincerely want to return to work, take control of their own lives, and
be productive, self-sufficient citizens. Various studies have indicated
that from 15 percent to as high as 40 percent of those on the social
security rolls would like to return to employment.
Consumers want to have a choice of providers, methods of
returning to work, and the type of occupation they pursue.
They want to be able to exert real and meaningful control
over their RTW effort and their lives.
A significant percentage of people on the rolls cannot
return to full-time employment and desperately need income and medical
support provided by SSDI and SI programs.
Many are very fearful of losing their medical support. This fear
transmits into placement counselors, mental health professionals, and
social workers who interact with these individuals to such a degree
that the service community will often help disabled people strategize
ways to maximize their personal income while avoiding the loss of
benefits. Counseling staff are placed in the untenable situation of
asking someone to essentially risk their life to pursue employment that
may turn out to be temporary under the current eligibility guidelines.
Most individuals with disabilities lack the specific skills and
knowledge necessary to adequately seek out and obtain employment in the
competitive workplace. The behaviors and attitudes that are required
for an individual to secure social security benefits are the exact
opposite of the behaviors and attitudes required to convince an
employer that the individual is the right person for a job. The current
eligibility system requires a focus on disability, inability, and
dependency to gain access to benefits. Employers are looking for
independent, positive, and upbeat employees who focus on what they can
do, not what they can't do.
Without RTW assistance, the employment rate for people coming off
the rolls will continue to be incredibly low. The onset of disability
and the system to access benefits is often demoralizing and
inadvertently takes away from the individual his sense of self-
confidence and focus on goal-oriented, productive behavior that is
essential to obtaining and retaining employment.
Some individuals believe that, as a result of the Americans with
Disabilities Act (ADA) and Affirmative Action, employers have an
obligation to employ them and that fear of government intervention will
motivate employers. It is our experience that using the ADA as a threat
to gain access to employment for a specific individual virtually
guarantees that an employer will not hire that person.
Many people believe that in order to compensate for their
disability they must have highly developed, specific vocational skills
to compete effectively in the work force. Our experience indicates this
is not necessarily true.
Many people with disabilities tend to believe that employers
basically do not like people with disabilities, are concerned only
about the bottom line, and require significant financial incentive to
motivate them to employ people with disabilities. While placement
professionals know this is not true with the majority of employers,
this fear serves as a barrier to return to work.
Things We Have Learned About Employers
The primary motive or objective of most employers is to get
the job done: operate a healthy, positive work environment and
produce a reasonable return on investment. While profit is an
important consideration and essential to survival, many
businesses (especially smaller businesses) were started because
of the employer's personal attachment to the profession or
interest in producing particular goods or services.
Employers primarily want to hire employees who display a
positive attitude, have good, dependable work habits, have the
ability to work as a team player, and display a willingness to
learn. Individuals (whether disabled or not) who appear to be
litigious in their approach are avoided at all cost. Some
employers are willing to make significant levels of
accommodation to facilitate the productivity problem
encountered by a person with a disability, if the employee
displays the work habits previously mentioned. Many employers
take pride in their corporate citizenship and their ability to
assist disabled people to become productive and gain
independence from the tax dole.
Many employers are highly intimidated by and afraid of
large government agencies such as Employment Security, the
Department of Labor, and Vocational Rehabilitation, etc.
Employers feel such organizations do not understand, value, or
appreciate the private sector and stand ready at a moment's
notice to trigger legal action if something goes wrong with the
employment of a disabled individual or other protected classes
of employees. The various programs and laws we have created to
help individuals with significant barriers to employment gain
acceptance into employment have created what is perceived as an
immense threat to business. This phenomenon may explain why,
since the enactment of the ADA, there has been essentially no
net gain in employment in our country for people with
disabilities.
Some policy makers and advocates believe that the key to
employment is targeting large Fortune 500-style companies. The
reality is that over 75 percent of the net job activity in the
United States comes from small-and medium-sized employers.
Employment experts have dubbed this the hidden job market.
Eighty percent of those jobs are filled by informal word-of-
mouth and through personal relationships within a local
community. Less than 15 percent of the job openings available
nationally are posted with public employment agencies. This,
coupled with fear of government agencies, may, in part, explain
why the public vocational rehabilitation systems have produced
poor results.
Employers provide more job training to more individuals
than all the vocational-technical schools and universities in
our nation combined.
Tax incentives and on-the-job training dollars are useful
tools (especially with middle-sized and large employers) in
helping individuals obtain employment. Most employers are
focused more on getting a good employee, dependable follow-up,
and an honest relationship with the RTW provider. Some will
choose not to utilize such incentives because of their fear of
government intervention in their daily affairs.
Employers and disabled employees sometimes rely on the RTW
provider as a mediator to help solve problems and decrease the
chances of litigation. If, for example, a job simply doesn't
work out for a person, a good provider will quickly facilitate
transition into a new job somewhere else. The disabled employee
avoids financial harm and the employer's chances of facing
litigation are greatly decreased.
There is a significant movement on the part of employers in
this country to move away from well-funded benefit packages for
full-time employees toward the use of part-time employees who
receive little or no benefit package. While this tendency
disturbs me on a personal level, it has created opportunities
for people with disabilities to enter the job market and gain
experience. This phenomenon could be especially useful if a
working mechanism is in place to allow beneficiaries to sustain
their benefits. Some of the most successful PWIs have aligned
themselves with temporary employment agencies to capitalize on
this opportunity.
Organized labor has worked as a consistent supporter over
the past 20 years of the PWI employment initiative and, in many
cases, has actually taken the lead in building the bridge
between people with disabilities and the employer community.
Many employers (especially large firms) have come to the
realization that disability and its related unemployment are
extremely expensive. Such employers are developing the internal
capacity to do job station modification and other RTW
interventions. These efforts, hopefully, will offset some of
the growth in utilization of the SSDI system. Moreover, they
provide a mechanism inside of industry to link a RTW program
for those currently on the rolls.
What We Have Learned About Providers of Rehabilitation and RTW
Services:
The vast majority of professionals employed in these fields
entered their profession out of a sincere commitment to help
people with disabilities maximize their ability to be self-
sufficient in our society. Most counselors possess a sincere
interest in the welfare of the disabled individual; and if
placed in a situation where the welfare of the client is pitted
directly against the potential for their company to secure
profit, they will err on the side of the client.
The provider community across the country has developed a
highly refined set of skills to evaluate an individual's
employability, to develop cost-effective RTW plans, and to use
methods to re-engage people in competitive employment.
Unfortunately, many state worker's compensation systems'
efforts have focused vocational rehabilitation professionals on
empirically determining on paper that disabled people are ready
to return to employment. Outcomes have not focused on return to
gainful employment. This phenomenon gets people off the state
worker's compensation rolls but doesn't return people to work.
It also results in the development of statistical surveys
across our country that significantly understate the power of
rehabilitation to actually return people to gainful employment.
Providers are ready, willing, and able to participate in an
effective RTW effort for SSDI beneficiaries. Unfortunately, the
current alternate provider initiative by SSA to ``level the
playing field'' with private providers and state vocational
rehabilitation agencies is more artificial than real. It will
not retain a significant number of providers in the RTW effort.
The proposed alternate provider method of paying for
rehabilitation costs only after placement ignores the
substantial losses associated with those who fail in the
rehabilitation process and will require substantial amounts of
working capital. It attempts to place all the risk on the
provider and fails to ``level the playing field'' because the
state vocational rehabilitation agencies are still fully funded
for all their efforts (both successful and unsuccessful)
through RSA. The reimbursement that state agencies currently
receive upon successful client termination from benefits is a
bonus payment or pure profit for the state agency. If Congress
were to truly create a ``level playing field'' and pay all
expenses out of General Fund revenues for attempting to
rehabilitate social security recipients and then pay social
security Trust Fund dollars for successful outcomes, thousands
of private providers would participate. Such an effort would be
prohibitively expensive, however, and would not represent a
balanced approach of sharing risk between the government, the
provider, and the person with disability.
Through the RDPs funded by SSA, we learned that returning
beneficiaries to work is hard work, but doable. Successful
projects would place 5 to 15 percent of those originally
contacted at the Substantial Gainful Activity (SGA) level of
employment as defined by SSA. Even with a 5 percent placement
rate, private sector-based return to work is highly cost-
effective and is more than a tenfold improvement over the
current practice.
Beneficiaries participating in the Continuing Disability
Review (CDR) process seem to display a significantly higher
employment rate than the general caseload or those in the
application process.
Providers across the country are willing to participate in
milestone-based payment systems that focus on a combination of
outcomes and savings to the Trust Fund. Literally thousands of
RTW rehabilitation counseling firms, worker's compensation
agencies, rehabilitation professionals, PWI operators, and
rehabilitation facilities are in place and process the basic
prerequisites to participate in a national RTW effort. Only a
very small percentage, if any, can financially afford to
participate in a system that does not pay any milestone
payments but instead withholds all payment until Trust Fund
savings are realized.
SSA is currently reviewing another strategy that would pay
providers a percentage of the savings to the Trust Fund after a
person leaves the rolls. Such rear-end loaded strategies like
the alternate provider program place impossible operating
capital requirements on providers. Only very large providers
could even consider participation.
Many providers throughout the country (especially PWI
operators and private worker's compensation firms) have very
well-established relationships with literally thousands of
employers throughout our country. They provide immediate,
readily available access to small, middle-sized, and large
employers throughout the entire economy.
What We Have Learned from Working with SSA
The vast majority of employees we have worked with in SSA
(both locally and at the national level) are hard-working,
intelligent, and dedicated. They possess a sincere and
heartfelt commitment for people with disabilities and shoulder
a serious sense of responsibility towards the Trust Funds they
administer. By design and practice, SSA and its staff know very
little about the specifics of return to work, how it works, how
to contract for effective services, or how to work with
consumers in a RTW plan. Their corporate culture has been
designed around the mission of protecting those who, as defined
by the listings and regulations, are incapable of work.
Knowledge gained from RTW Research and Demonstration
Projects and Project Network experiences a very short memory
cycle within the agency due to personnel moves and is not
widely distributed or understood. The very nature of the
experimental models drives up the cost of projects and
substantially reduces the effectiveness of the projects. It
seems clear, however, that the RDPs have shown that while SSDI
recipients pose significant challenges, they can be returned to
work in significant numbers by utilizing private organizations
and networks within local communities.
Providers have known how to effectively place people into
employment since the 1970's. The well-intentioned tendency of
the agency to prove unequivocally through scientific study the
hows, whats, whens, and wheres of a successful RTW effort will
never, given the nature of return to work itself, be truly
successful. Continuing to research this issue, while putting on
hold a national implementation of a private sector-based
program, will result in literally tens of billions of dollars
being lost through missed opportunity. Literally hundreds of
thousands of individuals who could be returned to substantial,
gainful activities will be left to sit in idleness and
dependency while we engage in a never-ending effort to
empirically prove what people in the RTW and placement field
have known for years.
Implications for the Development of an Effective and Cost-Beneficial
RTW Program
Administration and Oversight:
The Return-To-Work Group recommends that:
1. An initial implementation of a national program begin
immediately (see implementation plan).
2. A bipartisan commission of 9 individuals (3 consumers, 3
providers, 3 employers) be appointed to assist with rule
making, oversee program implementation, review outcomes,
recommend ongoing changes to improve incentives and remove
program barriers, and report to Congress with SSA on the
results of program implementation and recommendation for
improvement.
3. The testing and refinement of various incentive
strategies will be tested in different parts of the country
during the first five years of implementation.
4. Program management will be contracted out to a private
firm or firms that will have a presence in each region of the
country. We believe having two firms each serving different
parts of the country will provide a back-up in case one firm
cannot perform to standards.
5. To ensure full geographic coverage, providers must
assure that a network of services is available across a broad
geographic area. Services available must include case
coordination (case management), core services (assessment,
counseling, training, plan development, placement, and support
services), and specialized services (those designed to deal
with unique barriers created by specific disabilities). Service
access can be assured by several small organizations across a
geographic service area coming together through contractual
relationships to form their own network.
6. To simplify administration, billing, accountability, and
the provision of a seamless service to consumers, SSA (through
its program manger) will contract with the network provider(s)
who will be responsible for all subcontractors and held
accountable for all outcomes. This approach creates no new
bureaucracy or layers, but simply utilizes existing providers
and a private management firm.
7. Network providers will have to submit an annual audit to
the contract manager to ensure billings are appropriate,
allowable, and accurate. The provider will bear the cost for
such audits.
8. Annual report cards for outcomes and customer
satisfaction will be developed and made available to the public
and all potential customers at program entry.
9. Periodic reviews of services and audits will be
conducted by review teams contracted through the manger. Teams
will consist of a consumer, an outside provider, and an SSA
representative.
10. Milestone payments will be made for outcomes, in
combination with a five-year follow-up commission based on
Trust Funds savings used to reimburse providers.
11. All beneficiaries up for CDR be referred for mandatory
RTW assessment. Those who participate in a RTW plan will
receive an extension of benefits until completion and avoid
disability review.
People with Disabilities:
To assist those who have a sincere interest in returning to
work, we must provide a safe and understandable protection of
medical benefits. The program must encourage and develop
individual consumer choice and control throughout all aspects
of the RTW effort. The effort must be grounded in organizations
that have existing relationships with small, medium, and large
employers in every community of our country. Meeting with
hundreds of providers across the country has traught us that
milestone payments are essential to attracting and retaining
these well-established, small-and medium-sized providers.
Counseling and case coordination must focus on the ability to
instill positive work habits and attitudes in guiding people
back to employment. Programs must help individuals market
themselves in a way that is desirable and nonthreatening to the
employment community. The system must provide incentives for
providers to develop service plans and move individuals quickly
and effectively toward return to work; and also provide long-
term, ongoing support to assist individuals in retaining
employment and developing a positive career ladder approach.
Emphasis on simply finding individuals jobs will not result in
a long-term, positive effect of keeping people off the rolls.
Tying a significant percentage of the provider's fee to
continued Trust Fund savings over five years, in combinatoiun
with simple, clear, outcome-oriented milestone payments, will
ensure a choice of providers for consumers, increase the access
to more employers and jobs, enhance job retention, and,
consequently, ensure greater long-term Trust Fund savings.
The model msut be designed to ensure that people with
disabilities are responsible for following through on their RTW
plan and are enablers of their own success. Each individual
must participate and have active control in the development and
sign off on a RTW plan that contains specific employment goals,
both long-and short-term, specific objectives necessary to
reach those goals, and an individualized economic analysis of
the individual's plan to demonstrate the ability of the plan to
move the person toward financial self-sufficiency. The provider
and the consumer are considered partners whereby the provider
and the consumer will financially invest in training and other
necessary support to obtain employment. The network provider,
case coordinators, or case manager will assist consumers in
taking full advantage of funding currently available through
vocational rehabilitation, JTPA, student loan programs, etc.
Employers:
The initiative must include providers of service who have a
direct, ongoing relationship with employers of all sizes
throughout our economy. Employer incentives to offset the cost
of training and job modification will enhance the total number
employed and the number of employers who participate.
Incentives are not essential for all employers or all types of
disability. While all employers may not utilize these benefits,
they serve to attract a large segment of marginally interested
employers who will not otherwise participate. The RTW effort
must be viewed as a method to assist employers in being good
corporate citizens and not be used as a method to threaten and
intimidate employers into employing people with disabilities. A
negative approach will guarantee utter failure.
Providers:
The initiative should utilize reimbursement methods that
place heavy emphasis on rewarding outcomes and provide some
incremental payment for completion of outcome-based milestones.
Our research and analysis recommends three milestone payments
for specific outcomes:
1. The development of a mutually agreeable RTW plan--$300
2. Obtain and retain employment for a reasonable period of
time (60 days in our analysis)--$1,100
3. Reaching SGA/coming off the rolls--$1,300
A job retention follow-up fee of 25 percent of savings
would also be paid. This reimbursement would be paid monthly
and would be based on the percentage of the annual cost of
maintaining the average beneficiary on the rolls for any given
year. The fee would be adjusted annually.
To ensure long-term savings, we recommend a follow-up fee
for five years for keeping individuals off the rolls. Such a
system should encourage providers to find initial jobs that
provide stairsteps to more long-term, career-oriented
employment and provide the incentive to encourage ongoing
support of the individual to ensure the maintenance of
employment. Approximately 80 percent of people who lose jobs in
our economy do so because of poor work habits and ``bad
attitude.'' The payment system encourages providers to deal
with these and ancillary issues that have a dramatic effect on
long-term employability.
The primary measure of program quality should be a job that
is chosen by the consumer that provides a level of support both
financially and intellectually and that is otherwise acceptable
to the customer. Experience by providers with other ouctome-
based payment systems overseen by government agencies has
taught us that agency staff have little or no understanding of
the labor market or the full cost of RTW. They seem compelled
to ``Help'' the consumer attain higher quality outcomes by
adjusting process requirements and outcome levels necessary for
payment. Attempts to externally define quality by imposing
processes, approaches, or minimum income levels for jobs will
retard the individual's ability to return to work, limit their
access to jobs that provide a platform for labor market
reentry, diminish individual choice, and, in effect, say that
people with disabilities are incapable of making their own
informed decisions. The system recommended here will provide
true choice for consumers. If a provider can't develop a plan
and deliver acceptable services, the consumer will choose
another provider. With the customer goes the funding.
Quality assurance monitoring should be in place that
ensures that funds are spent for allowable outcomes and that
individuals are offered a full array of providers to develop
their plans, have meaningful employment options, and exercise
power and choice throughout the RTW effort. The initiative must
encourage the development of local and regional provider
networks that maximize access to the hidden job market and
existing training and support services within local
communities. Providers should have built-in quality improvement
programs, submit to annual Certified Public Audits, have public
report cards done on an annual basis, conduct standardized
satisfaction surveys published in their report card, and be
reviewed periodically by an external quality assurance team
that includes consumer representation.
Summary of a National Implementation Model
The following summary represents an overview of an
implementation model for the development of a full-scale,
national RTW effort staged over a seven-year period. The model
attempts to establish a balance in dealing with the needs of
all the stakeholders, balance risk across all partners, and is
based on demonstrated outcomes from recent RDPs and Project
Network. The model produces results that are highly cost-
effective and incorporates the combined milestone and outcome
payments previously cited. This payment method substantially
limits the Trust Fund's financial exposure in developing this
effort and essentially assures that SSA does not end up buying
services instead of outcomes. It is also designed to ensure
that even with very conservative or poor results, SSA would
receive a positive cost benefit from their investment in the
RTW effort. The payment milestones used have been vigorously
negotiated. The milestones represented are below the cost of
services historically experienced by providers. The state
agency programs have been receiving over $10,000 on average to
cover the cost of those coming off the rolls. The cumulative
milestone reimbursement total for a person in our combined
model is $2,600. Providers would have to keep people off the
rolls for extended periods of time for profit to occur.
Full National Implementation Model
This full national implementation scenario is presented in
four phases that progressively increase the degree of
sophistication and the volume of services provided. It looks at
the provision of services to applicants, CDRs, and general
caseloads. The computer simulation program used to generate
these outcome numbers utilized different assumptions computing
enrollment and success rates for each of these discrete
populations. Cost/benefit savings are calculated over the ten-
year-average life of a case as currently reported by SSA. The
model does not include the cost of extended medical coverage
that has been recommended. PWIs nationally find that
approximately 50 percent of the people they place enroll in
employer health insurance plans which will save considerable
federal funding. This savings should more than offset the cost
of extended benefit plans that incorporate a staggered buy-in
provision. The outcome assumptions used to calculate program
costs and savings over time are based on actual results
obtained by SSA Research and Demonstration Projects, Project
Network, and national PWI data. These results were achieved
under current conditions. The work and employer incentives that
have been recommended by various groups should significantly
increase the participation, outcome rates, and projected
savings. These increased savings would be partially offset by
the cost of such incentives.
Overview: Phase I--Preparation Phase
Objective:
Complete basic regulatory development referral mechanism
design and set up initial provider network to begin RTW
services. Establish four implementation and refinement beta
sites, one in each quadrant of the country. Should use RDP/
Project Network or PWIs who have experience for this task.
Notify public that the change is coming. Disability does not
equal unemployability and/or retirement.
Timeline:
1 year
Total elapsed time--1 year
Key Activities:
Set up consumer, employer, provider network and
oversight committee.
Develop fee-for-outcome guidelines.
Solicit vendor from RDP Group, Project Network,
PWI, state certified facility programs, and state certified
injured worker programs.
Develop self-placement model not requiring
provider.
Develop agreements with providers.
Develop tracking system/M.I.S.
Develop necessary regulations.
Orient SSA staff.
Develop national public relations campaign
strategy and initiate.
Determine incentives to be tested.
Begin beta site programs.
Service Enrollment Levels
Cumulative Total
Per Year Phase Total All Phases
Applicants......................................................... N/A
CDR................................................................ N/A
General Caseload................................................... N/A
Youth.............................................................. N/A
Total Return-To-Work (SGA) Off Rolls............................... N/A
Totals--Financial Summary
Net Cost Trust Fund Current Phase ($500,000 Public $800,000
Relations, $300,000 SSA)............................
Public Relations Costs............................... N/A
Trust Fund Savings Reinvested Annually in RTW........ N/A
Savings to Federal Budget (Over 10 years--Cumulative N/A
Program)............................................
Benefit/Cost Ratio (Federal Budget--Over 10 years)... N/A
Benefit/Cost Ratio (Excluding FICA & FUTA)...........
(Total Savings/Incremental Cost)................. N/A
Overview: Phase II--Objective
Initiate Program
Develop nationwide service delivery capacity with emphasis
on getting people back to work who are medically stable and
need support the least (``creaming'') and dealing with
malingerers. Provide opportunity for youth to seek employment
and avoid disability syndrome. Begin changing public
expectation away from disability equals unemployability toward
everyone can participate in some level of gainful activity.
Minimize need for incremental funding increase to initiate
program.
Timeline:
2 years
Total elapsed time--3 years
Key Activities:
Presidential Congressional announcement of new
direction.
Initiate public relations campaign within agency
and with local communities.
Notify prospective participants.
Initiate referral system.
Test referral system with Project Network
providers, RDPs, and PWIs--first year.
Expand referrals second year to facilitators,
state certified providers, and individuals.
Implement provider payment system.
Implement monitoring system.
Refine automated applicant referral and screening
system.
Coordinate national public relations campaign.
Service Provided To:
Cumulative Total
Per Year Phase Total All Phases
Applicants......................................................... 0 0 0
CDR................................................................ 45,000 90,000 90,000
General Caseload................................................... 4,688 9,375 9,375
Youth.............................................................. 0 0 0
--------------------------------------------
49,688 99,375 99,375
Total Return-To-Work (SGA) Off Rolls............................... ........... 33,237 33,237
Totals--Financial Summary
Net Cost Trust Fund Current Phase.................... $153 million
Public Relations Costs............................... $2.4 million
total
Trust Fund Savings Reinvested Annually in RTW........ 0
Savings to Federal Budget (Over 10 years-Cumulative $2.9 billion
Program Nominal $'s)................................
Benefit/Cost Ratio (Federal Budget--Over 10 years)... $13.96 saved for
every $1 invested
Benefit/Cost Ratio (Excluding FICA & FUTA) (Total $17.98 for every
Savings/Incremental Cost)........................... $1 invested
Overview: Phase III Objective
Expansion/Refinement
Expand number of providers, refine processes, serve more
difficult to serve, extend services to select applicants,
increase service capacity to fully operating, steady state
level. Continue to reinforce with the public the expectation of
employability of our disabled citizens. Operate RTW services
exclusively out of savings to Trust Fund from prior year's
efforts.
Timeline:
2 years
Elapsed time--5 years
Activities:
Implementation.
Focus on refinement of referral, follow-up,
evaluation of components.
Disseminate outcome and follow-up reports on all
participating providers to clients and public from prior years.
Full national implementation of applicant RTW
referral system.
Presidential/Congressional progress report to the
nation.
Bring on more specialized services and services to
small community providers.
Maintain public relations campaign.
Service Available To:
Cumulative Total
Per Year Phase Total All Phases
Applicants......................................................... 6,250 12,500 12,500
CDR................................................................ 45,000 90,000 180,000
General Caseload................................................... 9.375 18,750 28,125
Youth.............................................................. 0 0 0
--------------------------------------------
60,625 121,250 220,625
Total Return-To-Work (SGA) Off Rolls............................... ........... 40,554 72,407
Totals--Financial Summary
Net Cost Trust Fund Current Phase.................... 0
Public Relations Costs............................... $2 million total
Trust Fund Savings Reinvested Annually in RTW........ $154.5 million
Savings to Federal Budget (Over 10 years--Cumulative $6.6 billion
Program)............................................
Benefit/Cost Ratio (Federal Budget--Over 10 years)... $15.19 for every
$1 invested
Benefit/Cost Ratio (Excluding FICA & FUTA) (Total $19.78 for every
Savings/Incremental Cost)........................... $1 invested
Overview: Phase IV Objective
Full-scale Operation
Service level optimized to return maximum number of people
to gainful activity, continue system refinement. Public
attitude focuses on ability not disability. Benefits considered
temporary assistance for most people with disabilities, not a
form of retirement.
Timeline:
2 years
Elapsed time--7 years
Activities:
Easier cases have been placed, providers seek out
more difficult cases.
Continue to refine referral system.
Report on provider success for all prior periods.
Poor providers drop out.
More highly specialized providers develop niches.
More difficult people being placed.
Providers increase effectiveness.
Rate of malinger applicants should drop.
RTW services become more efficient and effective,
standards of performance evolve.
Service Available To:
Cumulative Total
Per Year Phase Total All Phases
Applicants......................................................... 10,000 20,000 32,500
CDR................................................................ 50,000 100,000 280,000
General Caseload................................................... 37,500 75,000 103,125
Youth.............................................................. 0 0 0
--------------------------------------------
97,500 195,000 415,625
Total Return-To-Work (SGA) Off Rolls............................... ........... 65,220 134,552
Totals--Financial Summary
Net Cost Trust Fund Current Phase.................... 0
Public Relations Costs............................... $1.0 million
Trust Fund Savings Reinvested Annually in RTW........ $400 million
Savings to Federal Budget (Over 10 years--Cumulative $12.3 billion
Program)............................................
Benefit/Cost Ratio (Federal Budget--Over 10 years)... $14.36 for every
$1 invested
Benefit/Cost Ratio (Excluding FICA & FUTA) (Total $18.63 for every
Savings/Incremental Cost)........................... $1 invested
Conclusion
The key components to bring together an effective working
partnership between people with disabilities, return-to-work
providers, employers, and the federal government are known and
available. Methodologies to return individuals to employment
have been in practice for over 20 years and have demonstrated
repeatedly that individuals with severe disabilities can be
returned to gainful employment. Many individuals currently on
the rolls are highly motivated to return to work; and many
employers are ready, willing, and able to provide jobs,
especially if reasonable incentives are provided to offset
extra costs. The Social Security Administration has
acknowledged the need for a return-to-work program and has
expressed interest in pursuing a more aggressive approach. The
key ingredient that is needed to bring together these essential
stakeholders is a clear and decisive directive from Congress
and the Executive Branch to proceed expeditiously with such a
program. Private sector providers with substantial levels of
experience are also ready, willing, and able to assist other
partners in completing the design and implementation of an
effective program.
We request that you give us and our other stakeholders the
directive to move forward so that we may begin immediately to
assist hundreds of thousands of individuals return to self-
sufficiency and initiate an effort to stop the economic drain
that is currently depleting the Trust Fund. We will assist you
in whatever way possible to achieve these outcomes. Thank you
for your attention to this issue and for requesting our input.
Chairman Bunning. Thank you very much. Since we have all of
you, and you have given us great testimony, I would like to let
you know that if we don't get to ask all the questions, we are
going to submit written questions to you for your response. I
know I am not going to get to ask all the questions I have and
I would like Barb and J.D. to do the same if they have
questions.
[The following was subsequently received:]
Questions received from Hon. Jim Bunning, and Subsequent Responses from
John Halliday
Question 1. Recognizing that you provide services to
individuals with severe disabilities along with SSDI and SSI
recipients, what is your average cost per client?
The average cost per SSI/SSDI recipient rehabilitated by
the public vocational rehabilitation program in FFY 1996 was
$4,986.00. The average cost for non-recipients was $3,261.00.
This reflects the actual purchase of service costs for persons
closed successfully rehabilitated.
An important issue in the discussion of costs for
rehabilitation services is that SSA considers the public
vocational rehabilitation program as the first dollar.
Therefore, the Ticket to Independence proposal, as well as most
other proposals, is based upon the continued use of the public
vocational rehabilitation program for services. The result is
that public vocational rehabilitation will be expected to pay
for many of the necessary purchased services and provide
vocational counseling. These costs will not be included in the
cost estimates of return to work proposals of private groups.
As a result, public resources will be used to provide the
actual services, but the reimbursement will go only to the
private program.
It is important that there is a clear understanding of the
role of the public program in the specific proposals, so that
the real cost to the public can be fully understood. A formal
cost sharing agreement with the Social Security Administration
and the Rehabilitation Services Administration needs to be
developed to address the fact that public vocational
rehabilitation dollars are being used, while the private
providers are receiving reimbursement.
Question 2: You mention in your testimony that the timing of
outreach to encourage recipients to return to work is poor.
What are the optimum times to provide this outreach?
The experience of the public vocational rehabilitation
program is that recipients are more likely to choose to engage
in vocational rehabilitation either long before they apply for
and start receiving benefits or after they have been receiving
benefits for a period of time. Preliminary results from the RSA
longitudinal study are that over 96% of the recipients that use
vocational rehabilitation come from vocational rehabilitation
outreach to the community, not from SSA referral. Approximately
25% to 30% of the people who use vocational rehabilitation are
SSA recipients. The enclosed NIDRR study indicates that they
have generally been receiving benefits for 40 to 55 months
prior to engaging in vocational rehabilitation.
Referral at the time a person is determined eligible for
disability benefits is not generally an appropriate point to
initiate outreach. In fact, the Disability Determination
Services (DDS) referral process often discourages, rather than
encourages, recipients to apply for vocational rehabilitation.
Currently, the DDS refers 10-15% of applicants to the public VR
program at the time of disability determination, immediately
following the completion of a complex process to prove their
inability to work. As a result, only a small percentage of the
people referred actually follow through and apply for VR
services.
If Social Security is going to begin to place greater
emphasis on employment of its disability program beneficiaries,
a complete paradigm shift will be necessary. Beginning at the
point of application for benefits and continuing through
benefit cessation, beneficiaries should be reminded on a
regular basis of the availability of vocational rehabilitation
to help them return to work. Further, beneficiaries must have
access to reliable, accurate and comprehensible information
regarding work incentives and the impact of work on benefits.
Without this, even those individuals for whom work incentives
are potentially beneficial will not risk losing the security of
cash and medical benefits.
Question 3: You mentioned in your testimony that State VR
agencies are unable to service additional SSDI and SSI
recipients because of funding issues. Under current law, State
VR agencies are funded through the Rehabilitation Act and are
80% federally funded and 20% state funded. Also under current
law, State VR agencies are reimbursed for reasonable expenses
for recipients who return to work for 9 months. In these
instances, State VR agencies are being paid twice. Please
explain why you are under funded for the purposes of serving
more SSDI and SSI recipients?
The resources available to the public vocational
rehabilitation program are not sufficient to meet the demand
for services from potentially eligible persons. The funding
formula is a fixed amount that does not increase based upon
demand for VR services. The eligibility criteria for vocational
rehabilitation is much broader than for SSI/SSDI. The
requirement for an order of selection in the Rehabilitation Act
when states do not have enough funds to meet the demand for
services is a clear acknowledgment of the limited resources.
The lack of sufficiency of funds for vocational
rehabilitation services can most clearly be seen when one
compares the VR allotment with expenditures for SSA disability
programs. While hundreds of billions of dollars are spent on
SSA cash and medical benefits which keep people dependent on
government entitlements, only $3 billion is allotted to VR,
which assists individuals to increase their independence.
The present reimbursement structure, as established by SSA
to replace a prepaid approach, was designed to pay only for
outcomes. The system was to create an incentive for states to
aim for the SGA level of employment when serving SSI/SSDI
recipients. The SSI/SSDI recipients who use the public
vocational rehabilitation program have over a 50% employment
rate after starting an employment plan. The majority, however,
do not choose to work enough hours to achieve or maintain SGA,
resulting in the public program not receiving reimbursement.
This is due largely to financial disincentives in the SSA
benefit structure. It should also be noted that, even in cases
where the person achieves SGA, if the recipient has impairment
related work expenses or subsidies, vocational rehabilitation
often is not eligible for reimbursement.
Another factor that should be considered is that the public
program is the only program that is required by law to reinvest
the funds back into vocational rehabilitation services. The
present alternative participant program and the various return
to work proposals do not require that any funds be used for
future services. It also must be remembered that the return to
work proposals will no doubt continue to use the public program
as first dollar and minimize the use of private resources.
Question 4: You say that 45,000 recipients enter the workforce
each year because of efforts provided by the state VR program.
Yet, in 1996, SSA reimbursed state VR agencies for little more
than 6,000 recipients. Does this mean that the other 39,000 SSA
recipients did not remain in the workforce for nine month or
were there other reasons why state VR's were not reimbursed for
these clients?
There are three issues involved in this question. The first
is that the 6,000 cases reported by SSA reflects the number of
cases that SSA was able to process for reimbursement, not the
number of actual cases that the public program submitted which
are expected to be eligible for reimbursement. Second, without
direct access to SSA data, states cannot easily determine which
of their consumers whose earnings are at SGA level are
recipients of SSA benefits. Third, many SSA recipients who go
to work as a result of the VR program choose to limit the
number of hours worked, so as to retain SSA benefits.
In FFY97, SSA had over 20,000 cases in their system
submitted by states, representing SSA recipients who had
returned to work. At the present allowance rate of 66%, this
would mean over 13,000 cases are likely to be at the SGA level.
Even this significant increase is an understatement of the
actual number of SSI/SSDI recipients that the public program
has assisted to achieve SGA, as we are generally unable to
access accurate information regarding whether or not
individuals are SSDI/SSI recipients. In Connecticut, we were
able to obtain access to a direct way of checking all of the
employment closures for SSI/SSDI eligibility for a short period
of time. The result was that we were able to identify 30% more
cases of recipients who were working at the SGA level.
The public VR program is effective at assisting recipients
to enter paid employment. It is the disincentives inherent
within the SSA disability programs that keep individuals
working below the SGA level. This is the primary reason CSAVR
is recommending a restructuring of the disability program, with
particular emphasis on disincentives around cash and medical
benefits. The types of jobs and the wage levels of individuals
who return to work through using the public VR program reflects
the diversity of our economy. The key to the SGA issue is that
although over 90,000 recipients entered paid employment in the
last two years, most chose to keep their hours worked per week
at a level that resulted in earnings below the SGA level. The
NIDRR study showed that the SSDI/SSI recipients worked an
average of about 25 hours per week while non-recipients worked
over 30 hours per week. The choice of many recipients is to
work to supplement benefits, rather than to replace benefits.
The maintenance of cash and medical benefits is seen as
critical by many of these individuals.
Question 5: In your testimony, you recommended simplifying
SSA's work incentives, including employment-related work
expenses, the SSI monthly payment reduction of $1 for $2
earnings over $85 per month, and the Plan to Achieve Self
Support (PASS) program. You also suggested that these SSA
programs be administered by State VR agencies. How would this
work?
The work incentives could be more effective if the method
of providing information was specialized and simplified at the
community level. The present structure of going though the SSA
district offices is ineffective and inefficient. The public
vocational rehabilitation program has a national infrastructure
that could be built upon so that a system of return to work
information and technical support could be developed. The goal
would be to use vocational rehabilitation professionals as
specialists to provide education, approval of PASS and IRWE's
and coordination of public/private initiatives. Public VR
counselors possess the necessary education, training and
experience to assist individuals in developing vocational goals
which will lead to employment. The use of the public VR
structure would minimize costs to SSA.
One approach would be for SSA to enter into an agreement
with RSA to have the VR program establish a network of return
to work information and education centers in the states. These
would build upon the already existing outreach efforts by many
state VR agencies to provide beneficiaries with information on
vocational rehabilitation. It is through the state VR agencies'
outreach that approximately 96% of beneficiaries have chosen to
enter the vocational rehabilitation program. There is clearly a
basic infrastructure in place and with some additional
resources from SSA, this could be expanded to increase access
for many more beneficiaries.
The CSAVR White Paper also recommends that SSDI use a
gradual reduction in benefits, similar to SSI. The PASS program
is essentially nonexistent at this time. It has a rejection
rate for plans submitted in the 70% to 80% range, and is
unpredictable in the time it takes to get a decision. The
purpose and processes for the PASS program need to be clear.
Using professional vocational rehabilitation counselors to
administer the program would greatly increase its
effectiveness.
[GRAPHIC] [TIFF OMITTED] T5046.087
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Rick Christman
You mentioned in your testimony that participation in a return-
to-work program should be voluntary, at least until the program
is in place for a period of time. Is there any point at which
you think recipients who have work capacity should be required
to accept rehabilitation services?
This is an interesting question. Inasmuch as I believe
practically every person of working age with a disability of
has some degree of work capacity, the answer should be ``yes.''
However, I must also quality this answer and emphasis that it
is important to understand that, for persons with significant
disabilities, the full realization of vocational potential
takes time and no small amount of expertise. As I described in
my original testimony, the field of vocational rehabilitation
has, as of yet, not been able to return significant numbers of
beneficiaries to self-sufficient employment. Thus, to
involuntarily compel large numbers of beneficiaries to attain
assistance from a system which has not yet sufficiently focused
itself on the attainment of self-sufficiency, could very likely
result in a public policy disaster of colossal proportions.
Rather, I believe it would be prudent to initiate return-to-
work legislation on a voluntary basis. Over time, the
innovations and service improvements which are certain to
result from the implementation of a system of market-based
competition, will strengthen the quality of vocational
rehabilitation services nationwide. I would foresee that, with
time, the enactment of return-to-work legislation greatly
improving the efficacy and capacity of vocational
rehabilitation services. Accordingly there could come some
future point, which today I could not predict, wherein Congress
could reasonably consider making assessments of vocational
capacity for all recipients mandatory.
You also say that providers should not be ranked or graded.
How can consumers make informed choices for services without
some type of provider evaluation?
It is essential that consumers have access to clear and
accurate information on the efficacy of providers in order to
make informed choices. Basic information and outcomes-based
performance indicators of such data as service locations,
service area, numbers of persons served, types of services
offered, types of disabilities served, success ratios, types of
jobs obtained and wages obtained should be readily available to
consumers in an accurate, standardized format. Collection and
publication of such objective and obtainable data should be a
function of a third party. It is this objective information
which should be the prime driver of recipient choice.
Beyond some basic requirements to insure that providers are
legitimate, I would leave the selection of service providers on
the basis of the aforementioned data and avoid ranking or
grading. I believe it will be far better for consumers to have
a pool of providers which is inclusive, rather than exclusive.
Ranking or grading, in my opinion, would be exceedingly complex
and very difficult to perform in a reliable, unbiased manner.
Ranking or grading would do little to improve the likelihood of
positive outcomes and only serve to discourage the emergence of
new providers, thus limiting consumer choice.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Dr. Thorv Hessellund
1. You mentioned in your testimony that employers and clients
often rely on the provider to mediate when problems occur.
Under SSA's ticket proposal, a provision is made for protection
and advocacy services solely for the SSA recipient. While
consumers may well need a dispute resolution mechanism, what
about providers? In the ticket proposal, do you see any
potential situations arising where the provider may need a
dispute resolution mechanism?
Answer: Yes. For example, there is a dispute over whether
or not a bench mark was (is) achieved which would potentially
result in payment to the provider and a step towards
independence for the beneficiary. Suppose the provider is of
the opinion that a beneficiary has the capacity to proceed with
full participation in a return to work program or is able to
return to work and the beneficiary disagrees with the opinion.
In this case, the dispute is over whether or not payment is
due. It is also about controlling costs in a fixed, benchmark
payment environment.
On another level, it is also about the need for a forum for
the parties to express their opinion regarding return to work
issues (capacity to return to work; level of services provided;
cooperation issues on the part of the beneficiary), and setting
precedents.
There also may be situations where an impasse is reached
regarding the feasibility of return to work services.
Situations may exist where either side may contend that RTW is
feasible and the other side disagrees.
Lastly, for the service provider, I would like to see an
option to bring in a second opinion from an independent
vocational evaluator to assist in a determination as to the
feasibility of RTW.
2. You mentioned that your organization's providers are subject
to peer review. Do you see peer review having any particular
role in return-to-work legislation?
Answer: It is NARPPS' recommendation that all RTW service
providers belong to a professional organization or be
accredited through a national commission that has a peer review
mechanism. The purpose is self-governance and preservation of
public trust. There is a national certification process for
rehabilitation service providers (Commission on Rehabilitation
Counselor Certification). Additionally, most professional
associations--NARPPS included--have a professional code of
ethics by which members pledge to abide. There are varying
degrees of state licensing requirements for providers of RTW
services. The national association or an accrediting body
provides an avenue for peer review when the code of ethics of
an association has been violated. When questionable ethical
behavior on the part of rehabilitation service providers is
identified, it is in the best interest of the general public
served by the profession and the maintenance of trust in the
service providers, that the profession be allowed to review any
alleged improprieties and make recommendations as to their
accuracy as well as a remedy, if indicated.
3. You also suggest tying recipient and service provider
incentives to benchmark outcomes. Could you provide some
examples as to how this might work?
Answer: For example, benchmarks might include:
Determining the feasibility of return to work.
Service provider documents recipient participation in
determination, reviews recommendations with recipient and has
recipient sign off on report (agree or disagree) prior to
submitting report and invoice for payment.
IWRP signed by recipient and provider and
submitted to the commission for review and approval. Payment to
provider would occur when determination on IWRP is completed by
the commission.
IWRP successfully completed and signed off as such
by recipient and service provider. Agreement (understanding) by
recipient as to time limit and conditions of remaining
benefits.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Fred Tenney
A common theme in most of the return-to-work proposals is the
need for consumer choice in obtaining rehabilitation services.
You mention the success of case management in SSA's project
network with which you've been a participant. Won't case
management happen anyway, as providers work with the recipients
to determine vocational goals, ongoing supports, etc? Do you
believe a specific case management requirement needs to be
addressed in the law?
Yes, I expect case management will be a natural course of
events for ``successful'' vendors. My first blush reaction is
to avoid mandating a case management model. There may well be
valid reasons for including it in the legislation but none come
to mind immediately. Hopefully, the consumers will insist on
the level of service they need to become successful. It is
certainly without question in my mind that the ``successful''
vendors will include that in their arsenal of services.
In your testimony you mention that employer incentives are most
often discussed by people not in the job placement business.
Are employer tax incentives critical to a return-to-work
program in your view?
As I noted in my testimony do not feel employer tax
incentives are ``critical'' to a return to work program.
Certainly this would be a tool which would make the job
placement task easier. However, if you review TJTC (targeted
jobs tax credits) you will find that it was rare that small
business took advantage of the program and the large businesses
that did take advantage frankly ``beat the system'' by
surveying ``en masse'' the ``new hires' after the fact for TJTC
eligibility. There was little if any attention given to TJTC by
human resource departments prior to hire. It's the party line
to suggest that business and industry needs a financial
incentive to ``hire the handicapped,'' frankly that is not the
case at all. Dependable manpower is at such a demand level that
job placement is not the critical issue.
Should referral of recipients to providers be mandatory?
I have wrestled with this question for some time. If the
question is in the literal sense them yes I do think mandatory
referral is essential. To insure that all participants are
given the opportunity to access the program mandatory referral
is essential. If on the other hand, you're referring to
mandatory ``participation'' I'm not so sure the time is right
for that. Primarily because I believe the voluntary
participation of those who volunteer will be overwhelming. If
the program is as successful as I believe it will be then 5
to10 years down the road we might want to address those who are
reluctant to pursue work. We have bitten off a big bite here
with those folks that ``want'' to return to work.
Questions received from Hon. Jim Bunning, and Subsequent Responses from
Stephen L. Start
Question 1: Some witnesses pointed out that milestone payments
to providers would be costly and complicated to administer.
What are your views?
In the last 27 years I have administered in excess of 500
government contracts to provide social services and employment
services to a wide range of government entities. The milestone
payment system recommended by the Return-To-Work Group would be
one of the simplest contracts to administer when compared to
the array of other options available.
We recommended three milestone payments: (1) at the
completion of a signed plan, (2) after 30 days or 60 days of
employment, and (3) after one year of employment or at the
point of time the individual comes off the rolls. Each one of
these payment points is easily verifiable and could be audited
by certified public accounting firms available in each
community across the country. In our proposal we recommended
that every provider have such an audit on an annual basis. We
anticipate the total cost of administration for the return-to-
work program with this payment methodology would be
approximately 4 to 5 percent, paid to a contracted manager.
Administrative rates for government programs typically run from
a low of 10 percent to as high as 30 and 40 percent. On a
comparative basis, the milestone method we have recommended is
very inexpensive.
Question 2: Have you compared the outcomes of your proposal to
that of the Administration's ticket proposal. If so, what are
the findings?
The Administration's proposal anticipates an increase of
3,000 to 6,000 per year in the number of individuals coming on
the SSDI rolls as a result of implementation of their program.
They also predict an additional 1,000 to 3,000 persons per year
coming off the SSI rolls. These numbers are substantially below
those anticipated by the proposal developed by the Return-To-
Work Group. In developing our model and computer simulation to
predict outcomes, the Return-To-Work Group utilized actual
research outcomes obtained by Project Network programs
conducted by Social Security and Research and Demonstration
Projects conducted with private firms by Social Security. These
research projects have been conducted over the past seven years
and did not enjoy the benefit of Medicaid medical coverage
extension or any of the incentives that are currently being
contemplated by the committee. Assuming then that there is no
increase in the success rates obtained over that in the
research projects, our model indicates that over a seven-year
implementation period, 134,552 people should permanently move
off the rolls. Our projections included a seven-year phased in
ramp-up of providers from across the country with full
participation in year five of implementation. We also assumed
that approximately 45,000 CDRs per year would be notified and
encouraged to participate in the project. Based on our research
results, the CDR population has a significantly higher
likelihood of enrolling in services and returning to work than
individuals who are simply applying for services or are on the
general caseload. Several factors seem to contribute to the
possible differences in projections we have developed as
compared to those in the Administration's ticket proposal.
1. The Administration's proposal apparently has relied upon
results obtained by the public VR agency in returning
individuals to work. Our results are based upon actual research
conducted with private firms who have produced significantly
higher results than those obtained in the public sector.
2. The Administration's proposal does not implement a
milestone program, and therefore, has a very conservative
number of providers participating actively in the program. The
milestone proposal presented by the Return-To-Work Group could
easily attract several hundred networks to participate and
several thousand individual providers to participate in those
networks. After all rehabilitation costs and return-to-work
costs are paid, our model predicts a 12.3 billion dollar
federal savings to be realized as a result of the outcomes
obtained during the seven-year implementation. The
Administration's ticket proposal would, in all probability,
only realize a savings in the one to two billion dollar range.
In other words, there would be a 10 billion dollar opportunity
cost loss as a result of implementing the ticket proposal as
compared to the milestone proposal recommended by the Return-
To-Work Group.
Computer modeling indicates that the addition of work and
employer incentives could conservatively result in 264,658
people going off the rolls during the same seven-year
implementation period, resulting in a savings of 23.9 billion
federal dollars.
Question 3: You mentioned in your testimony that 75 percent of
the net job activity in the United States comes from small- and
medium-sized employers. How successful are providers in placing
consumers with small- and medium-sized companies?
Very successful. The Projects With Industry program, which
is a national placement effort of private providers funded
under the Department of Education, is the best source of
information regarding employers of people with disabilities.
The experience of Projects With Industry on a national basis
directly parallels the experience that S.L. Start & Associates,
Inc., has had in the northwestern United States. Our experience
indicates that over half of the individuals who are employed
through our project and projects nationally are employed in
small- and medium-sized businesses. The actual percentage may
vary depending upon the economic composition of a specific
local community and the affiliation of specific projects. There
are projects, for example, that are closely allied with large
manufacturers in the aerospace industry who place exclusively
with large employers. There are other projects scattered across
the country that focus virtually all of their activities on
small- and medium-sized employers.
Question 4: Is it essential to have all various employee and
employer incentives worked out before we initiate a national
program?
No. It is absolutely critical, however, that some form of
medical extension be implemented as part of any truly effective
employment approach. In order of magnitude, the next most
important barrier to deal with is the earning income cliff
experienced, especially by those on the SSDI rolls.
There are a variety of approaches that have been suggested
to deal with this issue, but perhaps the tax credit is the most
viable way of fully offsetting negative incentive of returning
to work. It is difficult to predict, however, the economic
impact and full cost that this approach or others proposed may
have on projected savings to the trust fund.
Providers who have participated in previous research
projects have been able to return significantly higher numbers
of individuals to employment than the current state-of-the-art
program without the addition of these incentives. We believe
that the addition of incentives will significantly improve the
overall performance of the program, but that a program could be
initiated which tests different approaches to determine which
is most effective.
Question 5: You mentioned that employers and clients often rely
upon the provider to mediate when problems occur. Under SSA's
ticket proposal, a provision is made for protection and
advocacy services solely for the SSA recipient. While consumers
may well need a dispute resolution mechanism, what about
providers? In the ticket proposal, do you see any potential
situation arising where a provider may need a dispute
resolution mechanism?
There are actually several ways in which disputes could
arise where the provider would need a dispute resolution
mechanism available to them. For example, if a provider spends
a significant amount of private funds to provide education and
training to an individual, and then the individual repeatedly
turns down jobs that are well within their skill base and
ability level. The provider would have expensed their funding
in good faith, but the beneficiary would be preventing the
provider (through the lack of their cooperation) from receiving
the reimbursement they are due.
Another situation may be where a provider again expends
dollars and professional service hours to return an individual
to work. At the point in time when the individual is ready to
obtain employment or shortly after they have obtained
employment, the individual may choose to switch providers or
switch the payment provision to a friend or relative. Without a
dispute resolution method, neither the provider nor SSA would
have a systematic way of dealing with this situation. The
current rehabilitation act already requires a beneficiary to
participate actively in their rehabilitation program to
maintain benefits. If an individual has enjoyed the benefits of
services provided by a private provider and then simply refuses
to pursue employment, under current law, the individual could
be denied future benefits. Some form of a mediation process
must be present to determine where or not the individual is
actively participating and whether or not a recommendation
should be forwarded to SSA to deny further benefits to an
individual who is not actively participating in rehab or
seeking employment when they appropriately should do so.
The proposal presented by the Return-To-Work Group for
consideration by Chairman Bunning contemplates that, at points
in time, providers may, in fact, loan money to beneficiaries to
participate in educational and rehabilitation efforts; or that
the individual may directly contribute their personal finances
to the realization of a rehabilitation return-to-work plan.
Conflict could arise when a provider, in good faith, goes
forward and makes their financial contribution to the
individual's plan, but the beneficiary then reneges or
withholds on their share of participation. I am sure there are
other areas that could provide conflict between the provider
and the beneficiary. These three seem to portray the primary
areas of problem that might be anticipated from an outcome-
based payment-type model where providers are expected to
expense time and personal resources prior to receiving any form
of compensation for their efforts. If some form of mediation is
not available to providers, providers will become highly
selective in the type of individuals they choose to serve,
resulting in a significant reduction in the number of
individuals who would be returned to work.
The use of a milestone payment system would decrease a
provider's financial exposure and, therefore, reduce the
probability of conflict between consumer and provider. If this
program is to, in fact, be a partnership, then both partners
must have rights, responsibilities, and access to a method to
address grievances, should they arise.
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Chairman Bunning. Mr. Halliday, I would like to start with
your testimony. Right now the State vocational rehabilitation
agencies are the only source of rehabilitation services for SSA
recipients. To what degree do you provide these services
yourself, and to what degree do you contract out to other
service providers?
Mr. Halliday. Well, I would like to clarify one part of
that question. We are not the only source. One of the largest
myths in reading all the materials is that somehow there has
developed this myth that the recipient can only come to the
public agency.
The only thing the public agencies offer is the opportunity
to educate the recipient as to what is available, not only
through us, but through the SSA programs, and it is the
consumer who chooses.
The consumer has all the choices they want. They can walk
into the public or private program today. They can go to job
service, they can go to DD, they can go to any one of these
private providers, or the thousands of others.
So I do not know where that mythology came from, but I find
it quite interesting, and would be interested to know what the
source is.
Second, I would answer the question this way----
Chairman Bunning. Well, they are the only agency that the
Social Security Administration refers to.
Mr. Halliday. That is correct. They are not the only people
Social Security recipients are educated about.
Chairman Bunning. No. But they have to go through you
first.
Mr. Halliday. No, they do not.
Chairman Bunning. Well, then is there some breech in the
law somehow.
Mr. Halliday. No, no. It is the consumer's choice whether
or not he or she responds to us. If the consumer calls us, and
says, Gee, is there anybody else in the community, I say sure,
who do you want to know about.
Chairman Bunning. But, see, they have to go through you.
They cannot go directly to the third party.
Mr. Halliday. Absolutely they can. They can ignore our
outreach to them, and tomorrow morning pick up the human
service yellow pages, and walk right down the street. Nothing
preventing the consumer from doing any of that at all.
Chairman Bunning. Well, we will check with the Social
Security Administration about that.
Mrs. Kennelly. Could I just ask a question? Is it possible
there is a difference on reimbursement?
Mr. Halliday. Let me answer that----
Mrs. Kennelly. You are the only one that can get
reimbursed.
Chairman Bunning. That is correct.
Mr. Halliday. That is correct.
Chairman Bunning. OK. Then they have to go through you.
Mr. Halliday. Wait 1 minute, that is a critical issue,
though, because what all the choice discussion is really
about--and I am all in favor of choice; I think we are
implementing that fine--is the issue of resources.
If we do not put resources, what everyone here previously
has said, what milestones is about is putting more resources
into the system.
But in the era of choice, the consumer is free to choose,
and many do many other publicly funded programs for
rehabilitation. And I think that is an interesting thing we
should look at in terms of what other public resources are
being used by recipients. Many are accessing many other public
programs.
But as to the other question, 40 to 50 percent of the
dollars in public vocational rehabilitation are spent outside
the public agency. In Connecticut, it runs 40 to 50 percent.
And where we spent that money is, over 50 percent of that money
is spent with community rehabilitation program providers.
So that what the costs we are reimbursed for, very little
of that cost has to do with services provided in the agency. It
is reimbursement of the costs of the services we purchase.
If I do a van modification for a consumer, for $15,000,
that is the cost. That $15,000 was not spent in my agency. It
was spent with a private provider.
If I sent persons to a private provider as part of that,
for job placement and situational assessment, and that
resulting placement, that cost averages around $2,600 in
Connecticut, is----
Chairman Bunning. I am not going to let you talk all of my
5 minutes. I want to ask you another question.
Mr. Halliday. Sure.
Chairman Bunning. In your experience, are there certain
areas of the country lacking facilities to provide services? If
so, where are they, and how do you provide services to the
other areas?
Mr. Halliday. I can talk about the Northeast. I cannot talk
about other areas of the country.
Chairman Bunning. Talk about the Northeast, then.
Mr. Halliday. In the Northeast, I have not seen that be
raised an issue. What I have seen be raised as an issue is that
waiting lists occur in public agencies and private agencies
because the funds are not available. The connection is made
with the consumer, but we do not have the money to purchase.
Chairman Bunning. OK. Let me ask the other four panelists,
in your areas of the country, are there other areas that have
that problem?
Mr. Start. I can talk to the Northwestern United States and
I cannot think of a town, for example, in Washington or even
northern Idaho, which is about as remote as you get, that does
not have some kind of a provider, community-based, usually
nonprofit, but also private there.
And some outreach, frankly, from a State agency, typically.
Mr. Hessellund. In terms of the private sector from NARPPS
I agree. The private sector, there is rural rehabilitation, and
then there is metropolitan rehabilitation. But we cover all the
sections.
Chairman Bunning. How about Kentucky?
Ms. Gennaro. I know that Mr. Christman has said that there
are providers throughout the area. And as you said I am from
the American Rehabilitation Association. We have members from
all over the country.
Chairman Bunning. Mr. Tenney.
Mr. Tenney. Yes, in the Southwest, as well as the Pacific
Basin where I have had some experience, there is a significant
network of providers there that are available to provide these
services, if they have the resources to provide the services.
That is the whole key.
Chairman Bunning. Barb, go ahead.
Mrs. Kennelly. Thank you, Mr. Chairman.
Mr. Halliday, I believe you expressed concern that
providing the tickets for the SSDI recipients to use in private
vocational training could create a cost shift from private
insurance to public vocational rehabilitation programs.
Could you expand further? And let me add another question
onto that. If we prevented workers' compensation from requiring
policyholders to use their Social Security tickets on the
Workers' Compensation Vocational Rehabilitation Program, do you
think that we might moderate the threat of a cost shift?
Mr. Halliday. I need some clarification on the second
question.
Mrs. Kennelly. From the private to the public.
Mr. Halliday. Yes. What is presently, as I understand it,
existing, is if you buy private disability insurance, often the
great majority will require you to apply for SSDI, if you reach
a certain level, and once eligible the income you receive from
SSDI is offset to what the private pays you.
So that is a savings to the private insurance company.
Also, many of the private insurance companies do very
aggressive rehabilitation. And as many of the private sector
programs here indicate they provide that service.
That is accounted for and paid for in the premiums. We need
to be careful that we do not set up a situation where what was
already going to be provided at private cost as a result of
what you and I pay as premiums for that insurance does not in
any kind of ticket proposal end up with the public paying on
top of that again.
Because what we would end up with, obviously, is a
situation where we are doubling the resource without more
people being served, as well as the money not going back into
further service. It goes into a profit margin which, I am very
in favor of profit margins, but I think the insurance system
probably already has that well taken care of in their premium
structure, I would hope.
As far as the workers' compensation, I think again we need
to look carefully at what the relationship is between being on
SSDI and workers' compensation, and be cautious again that if
rehabilitation services are called for and covered for under
the Workers' Compensation Program, that those are prioritized,
and we are not again replacing those funds with Social Security
funds.
I think those are a couple of areas of risk we run here.
Mrs. Kennelly. Ms. Gennaro, for Mr. Christman. In the
testimony that you read for Mr. Christman, he expressed concern
about what would happen when a person needs services for more
than one provider.
Now, when we had the Social Security Administrator here, he
said that he believes providers of different type of services
will enter into arrangements with one another. And maybe
network and offer a range of services to the ticketholder.
Now, this whole concept of tickets is still controversial.
Do you think they could build up this network, or they could
work with each other with the proposal?
Ms. Gennaro. Well, I know in the testimony, his concern was
simply how would the payment be worked out. And I believe that
something certainly probably could be worked out, but in terms
of the complexity, for instance, if a consumer starts with one
provider, they provide a certain amount of services, and then
they switch to another provider, how do you divvy up the
payment. Things like that will be difficult.
Mrs. Kennelly. When I was listening to the service talking,
I think we have more work to do on that, in that whole area.
And once again we are going to have to use the expertise of
people like yourself.
Mr. Start, would you like to comment on that?
Mr. Start. Yes. In the Return-to-Work Group's
recommendations to deal with that issue, we recommended that it
be required that a provider certify that they can provide a
network of services across a predefined geographic area, like
half of a State, to make sure the people in rural areas would
get served, and to make sure that case management was in place
to provide that seamlessness of services, and that the full
array of services was there.
So that was a provision that we recommended to deal with
that specific issue.
In terms of, by the way, the guidelines, like what would
happen if somebody changed providers after they had had a job
for 2 years, one of the reasons that we recommended the
development of a commission was we considered this to be work
in progress, and it will continue to be. And that we need to
look at those issues in a combined way for a couple, 3, 5
years, to really refine all of the guidelines.
Mrs. Kennelly. CBO says that they do not think the Social
Security plan will bring that many people back to work, that
the same ones that would have gone back go back. Do you have
any reason why you think CBO is more or less negative on the
Social Security plan?
Mr. Start. I really do not. I mean, my major concern with
the Ticket Proposal is just that I do not believe, nor any of
the providers that I have talked with, that it will attract
enough providers that will aggressively pursue people, and
especially take some risk.
They are only going to place the for sure people, like the
current program. People that are already going to be placed are
the only ones you work with.
Mrs. Kennelly. Thank you.
Chairman Bunning. Mr. Hayworth.
Mr. Hayworth. Thank you, Mr. Chairman.
At the risk of sounding incredibly parochial, I am very
pleased that on both panels today we have representatives from
Arizona.
Chairman Bunning. That was prearranged to take care of you.
[Laughter.]
Mr. Hayworth. Selected especially for us. Well, Mr. Tenney,
I am glad you are here. I am sorry my colleague from Georgia,
Mr. Collins, is not. And I will spare you my efforts to
impersonate his distinctive accent.
Let us talk some about incentives, and talk about your
testimony where you say that demand exceeds the supply. I am
curious about incentives, though, in small business. Do we see
a discrepancy between corporate America and many small
businesses when it comes to hiring in this regard?
Mr. Tenney. Yes. There is a huge difference, as our
experience has shown. The large corporations, at least in
Arizona, the McDonalds and McDonnell-Douglas, and some of those
other larger corporations, they get involved in the employer
incentives pretty much after the fact.
They hire these employees, and then they will go out and
hire a specialist to mine that field, that garden of
incentives, to try to see what can we now reap, what kind of a
benefit can we now reap as a result of hiring them, which is
certainly not the intent of the incentives.
With the small businesses, which is where we place almost
all of our people--most of our people go to work in the small
businesses--they just do not really want to be bothered with
what they call the government redtape, whether or not it is
valid or invalid. That is not a judgment that we should subject
them to.
They do not want to be involved with redtape. They just
plain want people to go to work, and they sometimes find that
it is not only good work, but it is a civic responsibility.
Mr. Hayworth. So, really, from your perspective, are you
telling us that there is no real need to try and provide
incentives to small business, based on your experience, or what
should we provide?
Mr. Tenney. Well, it is almost heresy for me to sit in this
kind of meeting and say that, but what the heck I will be out
of here probably soon anyway, so--yes, I would say, I think it
certainly would help us. But I do not think that it is, from my
own personal experience, I have not found that it is that
important.
Mr. Hayworth. But the key is, if incentives are provided,
that they should be as redtape free as possible.
Mr. Tenney. As redtape free as possible, but incentives
probably would be better used going to the employees as opposed
to the employers. They seem to be the people that I think would
most welcome it.
Mr. Hayworth. Fred, thank you for your candor and your
testimony, and thank you, Mr. Chairman.
Chairman Bunning. If the panel would sit back and relax, we
have one vote, and we will go over and vote. The Subcommittee
will recess until we return to finish our testimony. Thank you.
[Recess.]
Chairman Bunning. The Subcommittee will come to order. If
the panel would take their seats, we will try to complete this
as expeditiously as possible, without being too quick.
First of all, I want to thank the panel for staying, and I
would like to ask Dr. Hessellund some questions. You
recommended providing SSA recipients with an informed choice of
prequalified private and public rehabilitation professionals.
What criteria should be used, and how should rehabilitation
professionals prequalify for a return to work program?
Mr. Hessellund. There are certain standards in the industry
at this point, in terms of certification, certified
rehabilitation counselor, certified disability management
specialist, and I will just give you my own experience, that I
have just--one of my other jobs is director of vocational
rehabilitation programs for a national case management firm
that specializes in catastrophic injuries.
The standards we set were certified rehabilitation
counselor with 5 years experience in the field. Now, those are
the standards that we set for providing and having experience
with catastrophic injuries.
So I would say that the standards are, there is a general
standard you could set, but also that you would be prequalified
with particular experience with a particular field, or a
particular type of disability.
So I would say there are two standards. One, and this
particular experience was with catastrophic injuries. So I
would say it is both a level of education, of experience and
certification, combined with experience with a particular type
of population or disability.
And that is with the person, the rehabilitation counselor
who is developing the vocational plan. There may be somebody
else that is part of that network, as Mr. Start mentioned
earlier, that would be providing the job placement services.
But that is where I would start and what I would recommend.
Chairman Bunning. Would anybody on the panel like to make
comment?
Mr. Start.
Mr. Start. The Return-to-Work Group, in looking at this
issue recommended that the individual that functions as a case
manager within a network be a certified individual or an
individual with the kind of prequalified experience that he
just spoke to, but that we not require all of the individuals
that work with folks have fancy certifications, because we
would overburden it, and it would limit choice.
A lot of people would like to go with folks that may not be
certified or have degrees to provide placement services
followup and further case management.
Chairman Bunning. Anyone else?
Ms. Gennaro. For community rehabilitation programs, there
are certifications out there. Right now the name escapes me.
But I also know that local offices of MRDD services and mental
health services also provide certifications, and programs are
also known to the State VR agency.
So there are systems in place already to assure quality.
Chairman Bunning. Anyone else?
Mr. Tenney.
Mr. Tenney. Yes. I would suggest that we really would not
want to require certification on all level of provision of
services. That is a good way to exclude a lot of people from
the process, and to include those people who are already in
possession.
So I think that in helping to develop the RTW proposal, we
felt that if, indeed, we could do case management certification
and then have the experience factor weigh heavily on the other
disciplines, then we would do just fine.
Inasmuch as it is a prescriptive program, and inasmuch as
it is a performance-based program, you still are not paying for
anything you are not getting.
Chairman Bunning. Mr. Start, I would like to ask you a
couple of questions. You mentioned that in order for private
providers to participate in a return to work program they would
need substantial amounts of capital.
Several witnesses said yesterday that providers, even small
providers, do not need up front capital to serve SSA recipients
since an open market system would create innovative funding
opportunities.
What are your views on this issue, and how do we insure
that providers won't just produce milestones and not trust fund
savings?
Mr. Start. Well, that is quite a question. I do not know
where the witnesses yesterday got their information that
providers could come up with money to fund, for example, the
Berkowitz model, the model that is based strictly off of
savings.
I have helped start six businesses myself, and I can tell
you for sure that you cannot take that proposal to the bank.
There is no way. There is no experience base whatsoever. There
is no industry history, knowledge.
You cannot even take it to a venture capitalist. I mean,
they expect literally 1,000 percent return over a 5-year
period, is what the venture capital guys want.
So I do not know where that comes from. What I do know is
that in meeting with hundreds of providers across the country,
presenting our proposal, in a variety of States, that many of
them say they could participate with a small level of milestone
payment like we have prescribed toward the front end.
In terms of making sure that you do not end up just buying
milestones, it is critical that those milestones be priced,
frankly, below cost, and the milestones that we have
recommended are below cost.
People that try to just crank out milestones with that kind
of a performance-based system will go out of business. And keep
in mind that the primary thing here is an outcome-based model,
where the outcomes are reported to the customers.
Customers simply are not going to go to providers that do
not produce results. So somebody that tries to get by with just
doing evaluations, set up an evaluation mill or something like
that. They are going to go out of business in no time at all.
Chairman Bunning. Did I understand your testimony, or was
it someone else, that it generally costs about $11,000 to
rehabilitate somebody and move them from the rolls, in the
present situation? Your milestone suggestion would be less
costly?
Mr. Start. Yes.
Chairman Bunning. Give me that cost.
Mr. Start. OK. The numbers I used, the historical numbers
that we had from Social Security research was that on average
the State vocational rehabilitation system is reimbursed about
$10,000 to $12,000 for the people coming off of SGA.
That is not necessarily cost at placement. That is 1 year
later, and just for those that are successful. We used $2,700
total cost for ours.
We have also indexed those numbers, though, against other
programs such as the Job Training Partnership Act. I managed
about 30 or 40 of those. Mr. Tenney has managed them for 20
years.
And historical placement rates are, that is just getting
somebody a job. That is not keeping a job for 1 year, like
getting people off the rolls is, costs there run from a low now
of about $3,000 to about $7,500, or so.
It depends on the kind of training, the twist that they
want to put on it, how much education. But by any measure you
used, Projects with Industry has 20 years' worth of data, in
terms of keeping people off the roll that long.
So I do not see how anybody could practically make any
money off of those kinds of milestones.
Chairman Bunning. I want to tell you again that I will
submit questions to you also, in writing, in case I did not get
to them today.
The last question I want to ask the whole panel is that we
have heard much testimony about medical coverage, and what a
barrier that is to getting people to work, to return to work,
if they are on some type of disability.
And it was suggested, 5-year Medicare coverage for those
that are on disability right now. I would like to get all of
your opinions. What is necessary, or what do you think is
necessary, for that disincentive to be overcome, minimal.
In other words, if we write a bill, a new bill, what would
be your suggestion to put in as a minimal coverage so that this
would not be a barrier for people to go back to work, and they
would be free to get a job, and not fearful of losing a job,
fearful of losing their medical coverage.
So what reasonably can we expect, or what should we expect?
For anybody on the panel.
Mr. Halliday. I think there are two essential criteria. One
is the availability, obviously, and the second is that you are
paying for the kind of services that people who go to work
need. They are prescription medication for the physical
disability, and this is a particular problem in the Medicare
system.
Look at what we cover under Medicaid, and figure out could
we cover--because when we have people covered under Medicaid,
we do not present this problem to a large extent. It's people
covered under----
Chairman Bunning. In other words, Medicaid, the system
there is a better system than Medicare because of the----
Mr. Halliday. Oh, yes. What it covered in terms of the
nature--particularly outpatient and community service. That is
where----
Chairman Bunning. What type of--how many years? What are we
looking at.
Mr. Halliday. Well, the other I would look at is a
combination of trying--and some States I know have tried this--
of allowing people to go to work and continued Medicaid with a
buy-in way that the private insurance covers what the private
insurance will cover, and the Medicaid is only covering what
the private insurance will not cover.
I mean, to give you the classic example, most private
insurers today will set a limit on durable medical goods. If
you use an electric wheel chair, it will cost $10,000 to
$15,000.
If $1,500 is the limit on that, there is no way, no matter
what coverage you have, that you are going to pay the
difference of thousands and thousand of dollars.
Chairman Bunning. Well, but would not people generally have
durable equipment before they go to work?
Mr. Halliday. Yes. But you are going to have to replace it.
Chairman Bunning. Oh, eventually you will.
Mr. Halliday. Yes.
Chairman Bunning. And that availability ought to be there.
Mr. Halliday. Right. That is what I am talking about.
Chairman Bunning. Ms. Gennaro.
Ms. Gennaro. I would say that what you need to consider is
when the person can actually afford to buy in. So in terms of
setting a 1-year limit on that, I would be afraid that that
would not be sufficient, because as you have heard from the
earlier panel, especially, some people will work to their
potential and still not be able to afford to buy into Medicaid
or Medicare.
Chairman Bunning. We could set a limit or a ceiling or a
base for earnings, and then anything that gets above that would
be partially responsible.
Ms. Gennaro. Yes. I think it makes sense to look to see
when the person can afford to buy their own coverage or buy
into Medicaid or Medicare.
And also as Mr. Halliday said, consider what Medicare does
not cover, because many people have to try and figure out ways
to get Medicaid coverage, because the Medicare coverage is
simply not sufficient with, for instance, personal assistance
care, and, as he mentioned, prescription drugs.
So you have to make sure that the needs that they have to
be employed are met.
Chairman Bunning. We do not want to have a disincentive, if
we are going to write a new bill.
Ms. Gennaro. Yes.
Mr. Hessellund. When you are sitting on a panel like this,
you want to give an answer, but I will say that that is more of
a consumer issue. All I know is that working with the folks and
trying to get them back to work that are on SSDI, this is one
of the major blocks, one of the major barriers.
Chairman Bunning. So we are going to have to come up with a
solution whether we like it or not.
Mr. Tenney. In Project Network, which is referenced often,
we talked about 1,300 people. Interestingly enough, the very
first question that they asked was not will I lose my check if
I participate in this program. It is will I lose my medical
insurance.
So it is essential from that standpoint, and what I would
suggest is that you have sort of a three--you could have a
three tier system. Either provide the insurance for them, or
subsidize the insurance, or allow them to purchase the
insurance, depending on maybe the level of income.
But at least have it be out there to be able to be
purchased. Because if you put a time limit on it, what we have
going on now out there is an increasing number of contract
employers.
And one of the big reasons for going with a contract
employer if you are in business is you do not have to provide
insurance.
So often they do not provide any insurance to these people.
And they contract with these disabled people to go to work for
them, but they do not have to pay them any insurance. Makes for
a wonderful system for them.
That is their main selling point that that they have, in
contracting. So either provide the insurance, or subsidize the
insurance through a similar approach to what you mentioned,
either ramping up to it, but at least, at the very minimum,
allow them to purchase reasonable medical insurance.
Chairman Bunning. Mr. Start.
Mr. Start. Yes. I concur with Mr. Tenney's comments on
that. And those are in line with the Return-to-Work Group's.
A couple of other thoughts on it. If employer insurance is
available, people should be encouraged, or not reimbursed, I
guess, or allowed to extend their benefit coverage, if it is
already there. So there might be some test to that effect.
What we found in our Projects with Industry is that 50
percent of the people that we place do get health insurance.
Now, you need to make sure it was adequate health insurance.
But in many cases, the employer insurance is more adequate in
terms of drugs and some other things than the Medicaid
coverage.
And another thing, I think, that is absolutely critical is
education. There already is a provision in the law for
extension. But the regulations are complicated, and people do
not readily explain that. And I think the first panelist
mentioned that earlier.
With a private sector, outcome-based model like we are
talking about, if you do not understand the medical benefit
extension coverage, and you cannot sell it to prospective
customers, they are not going to come to you.
And so I think this outcome-driven system that we are
talking about here for the providers is going to force
providers to get educated about how those benefits work, how to
make them available, how to build them into people's plans, or
they are going to walk across the street.
But that education component has been a problem that needs
to be solved as well.
Chairman Bunning. Thank you. I want to thank the panel for
their input today. We really appreciate your traveling here and
giving us the data that we need to eventually write a bill.
With that, the Subcommittee is adjourned.
[Whereupon, at 4:02 p.m. the hearing was adjourned.]
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