Disability System Needs Reform?

A press release from the National Center for Policy Analysis, a Dallas based right wing think tank:

The number of workers receiving disability in the U.S. is growing so rapidly that these benefits are now the fastest rising component of Social Security spending - growing at nearly twice the rate of retirement benefits, according to a new analysis from the National Center for Policy Analysis (NCPA). In a separate study also released today, the NCPA says Chile's disability system costs less than half of the U.S. system - 1.8% of payroll in the U.S. versus 0.7% of payroll in Chile - and provides more generous benefits.

"Older workers often have an incentive to use disability as a form of early retirement," said NCPA President John Goodman. "In Chile, the incentive is to keep working."

The NCPA concluded that the disability system has been growing so fast in part because of perverse incentives. For example:

• According to the Social Security Trustees, the number of disabled beneficiaries more than doubled, from 3.9 million in 1985 to 8.4 million in 2006, whereas people receiving retirement benefits grew less than 25 percent over the same period. Annual disability expenditures grew five fold, while retirement benefits grew less than three-fold.
• If workers claim early retirement benefits from Social Security, the amount they receive for retirement is reduced. By contrast, a 62-year-old worker can claim disability and receive monthly benefits that are about 30 percent higher than early retirement benefits. This creates an incentive to claim disability. And, disability benefits stop if the beneficiary returns to work, therefore discouraging productive labor.
• Although less than 40 percent of disability applicants are initially approved, about 60 percent are approved after appeals. Since appeals are only made by the applicant, not Social Security, the number can only go up, never down, during the appeals process.

Chile replaced its traditional social security system 25 years ago with a system of personal retirement accounts. Workers now put 10 percent of their wages into personal retirement accounts in pension funds of their choice and pay an additional 2.4 percent for survivors' and disability insurance and administrative fees.

Depending on the number of years they have participated and the degree of their disability, Chilean workers are guaranteed to receive as much as 70 percent of their wages - a higher percentage than disabled workers in the U.S. Although workers have a lifetime to save for retirement, they can become disabled at any age. If a disabled worker's retirement account balance is insufficient to purchase an annuity that replaces a guaranteed percentage of his wages, he receives the rest from a group insurance policy purchased by the worker's pension fund. On the average, workers' own savings are projected to cover about 50 percent of the cost of their disability benefits; insurance covers the rest. Due to this reform, Chile's disability system will cost only a fourth of what it otherwise would have been, in the long run.

According to the NCPA's study, several features of Chile's disability system reduce costs and provide workers with incentives to continue working. For example:

• Part of the benefit is financed by the worker's retirement account and investment earnings on the annuity premium.
• Since disabled workers draw on their own retirement accounts to fund their benefits, workers have less of an incentive to claim disability as a form of early retirement.
• Pension funds in Chile participate in the disability assessment procedure and can challenge disability determinations made by independent medical boards.
• Once workers in Chile are approved for permanent disability, they are still permitted to work.

"The experience of Chile suggests disability costs can be contained in a way that benefits both workers and the economy," said former World Bank economist Estelle James, author of the NCPA study. "It is a model worth considering."

Unfortunately, think tanks, particularly right wing think tanks are mostly polemic factories these days. What happens in Chile when you run out of the money you put in your retirement account? If the answer is that you get nothing, then Chile's disability system is not remotely comparable to the U.S. system. What this report does not say is that the U.S. Social Security disability system is among the cheapest in the world, in every sense of the word "cheap".

Californians Angered Over Office Closing

Other Californians are upset about the possibility of the opening of a Social Security office, but residents of San Pedro have the opposite concern. From the DailyBreeze.com:

The San Pedro office of the Social Security Administration shuts its doors today, angering local lawmakers who had been told the branch would remain open another year. ...

"To say that this is unacceptable to us and to the residents of San Pedro and Wilmington who will be unfairly inconvenienced is an understatement," said U.S. Rep. Jane Harman, D-El Segundo, in a letter to Social Security Administration Commissioner Michael J. Astrue.

Harman was joined by other representatives - state Assemblywoman Betty Karnette, Los Angeles County Supervisor Don Knabe and Los Angeles City Councilwoman Janice Hahn - in objecting to the closure, which they said comes a year before the agency's lease for the San Pedro office expires and flies in the face of an agreement worked out earlier to keep the office open awhile longer.

Monthly Social Security Stats

The Social Security Administration has released its monthly statistical compilations for Title II and Title XVI of the Social Security Act.

Social Security Medical Experts

I took a look recently at the documents connected with Social Security's process for hiring physicians as Medical Experts (ME). This caught my eye:

The ME shall maintain a satisfactory quality level of performance when reviewing disability case files. The ME’s level of performance shall be identified through the Office of Medical and Vocational Expertise (OMVE) quality assurance program and its policies and procedures. OMVE will randomly sample 1 or 2 completed work products per ME per month. The work will be reviewed by OMVE full time staff for compliance with SSA policy and procedures, completeness, and accuracy of medical assessment of severity and functional ability. Feedback documentation will be provided to the ME. The ME will have the opportunity to discuss any noted deficiency with OMVE staff and will make the agreed upon corrections to the appropriate documents.

The announcement appears to cover both MEs who testify at hearings before Social Security Administrative Law Judges (ALJs) as well as those who work for Social Security's regional and central offices. I hope these quality assurance reviews do not apply now and are not intended to ever apply to MEs testifying before ALJs.

I Don't Understand

From the Visalia (CA) Times-Delta:

Plans to build a Social Security Administration field office in east Visalia are teetering on the brink of collapse after a neighborhood informational meeting Tuesday night degenerated into chaos for the La Jolla-based developer in charge of the project. ...

Asked if the Social Security building would go up even if residents and the city oppose it, Metz said: "We'll cross that bridge when we come to it." ...

The session exploded into a free-for-all after local architect Lyle Munsch of Visalia-based Canby Associates, who has been working on plans for the Social Security building since February, tried to describe the building's design and aesthetic qualities.

"I don't care if Picasso paints a bucket of garbage, it's still a bucket of garbage," resident George Landis said.

Landis' sentiment was echoed by others, who shouted down Munsch, forcing him to discontinue his presentation. ...

Representatives of the GSA and Social Security Administration were invited to the meeting but did not attend.

Can someone who lives in that part of the world explain this to me? I think that the residents of most cities would welcome a Social Security office. Are they worried that poor people might visit an office in their midst?

Temporary Spending Measure Passed

From Reuters:

The Senate on Thursday passed and sent to President George W. Bush a temporary spending measure to keep the federal government running through November 16, giving Democrats and Republicans time to work out budget disagreements.

By a nearly unanimous vote of 94-1, the Senate approved the bill that is designed to avert government shutdowns that could have begun as early as next Monday if agencies ran out of money on the first day of the new fiscal year.

The legislation, which Bush is expected to sign into law, is needed because Congress failed to complete any of the 12 regular spending bills to fund government programs beginning October 1. The U.S. House of Representatives approved the temporary funds on Wednesday.

Warning About Lack Of Budget

David Traver on the CONNECT board is posting an e-mail that was sent to employees of the Michigan Disability Determination Service (DDS) warning that the federal fiscal year ends on September 30 and no new budget has been adopted for the next fiscal year. Michigan DDS is funded by the same budget that funds the Social Security Administration itself. Neither Michigan DDS nor Social Security can open for business next Monday without a budget. This e-mail advises Michigan DDS employees of procedures if this should happen.

There is no reason for alarm about this. There is every reason to believe that Congress will pass and the President will sign a stopgap continuing funding resolution before Monday, but the delay can make one a little nervous.

Justia

Those of you who are really adept at PACER, the paperless system used by the Federal Courts, are probably already familiar with Justia, I find it to be a revelation. Did you know that you can find out exactly how many Social Security cases were filed in the Federal District Courts yesterday? You can. The number was 28. You can tell where the complaints were filed and the name of the plaintiff. You can then go use PACER (if you have an account) to view the complaint and discover the name of the attorney. You can do this for any time period since the beginning of 2004, although, apparently, Justia has trouble if the search would find more than about 50 cases. Also, there is no way to make it count the number of cases for you -- or at least I have not yet been able to figure out how to do this.