The Mirage Of Rehabilitation As A Solution For Disability

The Government Accountability Office (GAO) has just released a study it has done on the effects of Vocational Rehabilitation (VR) on Social Security disability benefits recipients. The results are not encouraging for those who believe that rehabilitation holds dramatic promise for reducing the number of people drawing Social Security disability benefits. VR is clearly of only modest benefit. Once the costs of VR are figured in, it hardly pays for itself, even without considering the often transitory effects of VR.

The only rational response to this study should be to eliminate the Ticket to Work program. Ticket to Work is only of limited value. There are much better ways to spend that money. The program has never been based upon much more than the naive dreams of people who know little about those who receive Social Security disability benefits. The response that has traditionally been given to this dream by those with first hand experience with Social Security disability recipients has been along the lines of: "If you require claimants to be half dead or seriously crazy to get on benefits, why would you expect many of them to go back to work?" It is a simple question, but the proponents of Ticket to Work have never had a good answer for it.

Here is a summary from the GAO report:

• Earnings outcomes were mixed in the year following VR [Vocational Rehabilitation] and also over time. Approximately 40 percent of the over 303,500 SSA disability beneficiaries in our study increased their earnings compared to the year prior to VR services, while 32 percent did not have any earnings and another 28 percent had fewer earnings. In comparison to DI [Disability Insurance Benefits] and concurrent beneficiaries, more SSI beneficiaries—42 percent versus 36 and 39 percent—increased their earnings in the year following VR. Of the disability beneficiaries who exited VR in fiscal year 2000, 33 percent sustained some level of earnings through 2004, although their median earnings decreased by 12 percent over this period.

• Most beneficiaries’ annual earnings remained below annualized SGA [Substantial Gainful Activity, which would be enough earnings to eventually cut off benefits] in the year following VR. Specifically, 88 percent of all disability beneficiaries in our study had annual earnings below annualized SGA in the year following VR. Only a small percentage (5 percent) of beneficiaries from each cohort had annual earnings just below annualized SGA (i.e., earning over 75 percent of, but less than annualized SGA) in the year after VR. However, this does not provide evidence that beneficiaries either were or were not “parking”—i.e., deliberately remaining just below program income limits to retain benefits. Because SSA did not collect monthly earnings for DI beneficiaries during the timeframe of our study, we used annualized earnings for both DI and SSI beneficiaries, thereby limiting our ability to determine the extent of “parking” on a monthly basis.18 For beneficiaries who had earned income in the year after VR, their median annual earnings were $4,476.

• Some beneficiaries in our study earned enough to have their benefits reduced in the year after VR, resulting in decreased DI and SSI program expenses. Benefit reductions from DI and concurrent beneficiaries in our four cohorts who did not receive DI benefits for 1 or more months due to work in the year after VR resulted in an estimated reduction in DI benefit payments of over $106 million. The average annual reduction in DI benefits due to work was $26.6 million. Of the 70,302 SSI and concurrent beneficiaries in our study who had earnings gains from the year before VR to the year after VR, almost 50,000 (71 percent) had a reduction in their SSI benefits. However, we were unable to reliably estimate SSI benefit reductions for SSI and concurrent beneficiaries because SSI benefit amounts can be affected by other factors besides earnings increases (e.g., changes in unearned income, spouse’s income, etc.), and, due to data limitations, we could not isolate the effect of beneficiaries’ earnings increases on their SSI benefit levels.

• For the 2000 and 2001 exit cohorts, 10 percent of beneficiaries were able to leave the rolls at some point by 2005; however, about a quarter of those who left also returned for at least 1 month. While the SSI program saw the most departures, the lower rate of DI and concurrent beneficiaries leaving the rolls may be due to several factors. For example, DI beneficiaries are generally afforded a much longer working period before cash benefits are completely discontinued, and delays in the reporting of beneficiaries’ earnings data to SSA are much more likely to occur for DI beneficiaries. The median annual earned income for all beneficiaries leaving the rolls was $12,027.21 By way of comparison, the average annualized SGA was $9,618, and the average annualized disability benefit was $8,460 for the DI beneficiaries and $4,452 for the SSI beneficiaries in our study in the year after VR.22 Those who returned were off the rolls for an average of 16 months.