Will Disability Claims Start Declining Next Year?

Social Security's Office of Inspector General (OIG) has issued a report on Social Security's Strategy for Reducing The Initial Claims Backlog. Basically, the report says that the prospects for achieving the agency's goals are poor because the agency expects to be badly underfunded over the near two years at least. The poor prospects are despite the agency's projection that the number of disability claims filed is about to drop dramatically. Does that sound realistic?. See below for the agency's chart:

Congressional Panel Hearing About Overpayment Also Hears About Budget

From the prepared statements at today's hearing before the House Ways and Means Committee on overpayments at Social Security:

Carolyn Colvin, Deputy Commissioner of Social Security

... Our hard-working, dedicated employees have done their utmost to maintain the level of service that the American people expect and deserve. ...  Inevitably though, as our workloads rose and our appropriated funds were less than our budget requests, our service delivery suffered. Despite a long string of increases in productivity, we could not keep up. Throughout most of the past decade, the amount of program integrity work we could handle dropped dramatically, even though we know that work saves the taxpayer about ten dollars for each dollar spent. The time a claimant waited for a disability hearing rose to an average of 800-900 days in many cities, and some claimants waited as long as 1,400 days. Waiting times for in-person and telephone service increased, as did the public’s and Congress’ frustration with us. ...

Patrick O'Carroll, Inspector General of Social Security

... For FY [fiscal year] 2009, SSA [Social Security Administration] reported improper payments totaling $8 billion, including underpayments and overpayments, the third-highest amount of improper payments in the year, behind the Department of Health and Human Services (DHHS) ($71.4 billion) and the Department of Labor ($17.5 billion). SSA’s Supplemental Security Income (SSI) program made $48.3 billion in total payments, including an estimated $4 billion in overpayments and an estimated $800 million in underpayments, resulting in a 10 percent improper payment rate; SSA projects it will reduce that rate to 9.2 percent in FY 2011 and to 8.7 percent by FY 2012. SSA’s Retirement, Survivors, and Disability Insurance (RSDI) program made $659.6 billion in total payments, including an estimated $2.5 billion in overpayments and an estimated $600 million in underpayments, for a 0.5 percent improper payment rate; SSA projects it will reduce that rate to 0.4 percent in FY 2011. Verification and local administration errors, such as a beneficiary’s unreported or undetected financial accounts and wages, cause the majority of SSA’s improper payments, according to the Agency. ...

In conclusion, the President has outlined an aggressive plan of action to reduce improper payments and improve payment accuracy throughout the Federal government. Thus far, agencies like SSA are working to improve their reporting of improper payments and identify overpayment and underpayment causes and solutions, even when budgets are limited and staff workloads are increasing.

Daniel Bertoni, Government Accountability Office

... [W]e also found a limitation in SSA’s Recovery of Overpayments, Accounting and Reporting (ROAR) system. Used to track overpayments and collections, ROAR does not reflect debt due SSA past year 2049 so the total balance due the program is unknown, and likely larger than the agency is reporting....

Ann Roberts, President-Elect of the National Council of Disability Determination Directors

The DDSs [Disability Determination Services] work in partnership with SSA to provide public service to individuals applying for disability benefits while also balancing stewardship commitments. ...The DDSs evaluate CDRs requiring medical review for SSA, ensuring that only those individuals who are eligible, continue to receive benefits. SSA estimates that every dollar spent on CDRs yields $10 in lifetime program savings. Unfortunately, budget constraints have forced a reduction in this integrity workload. The DDSs can also assist in curbing improper payments by identifying fraud in the disability application process. The detection and prevention of improper payments further enhances the integrity of the program. ...

DDS staffing is critical to the processing of all disability claims. Nationally, DDS examiner attrition fiscal year to date (FYTD) is 12.8%. SSA has imposed a hiring freeze on all DDSs due to funding limitations. The continued inability to hire in the DDSs will severely limit the ability to process initial and reconsideration cases and restrict any additional CDR work, resulting in significant backlogs nationally. ...

Eleven DDSs have an attrition rate for disability examiners over 20%.

Joseph Dirago, President, National Council of Social Security Management Associations

Despite SSA’s enormous workloads and challenges, SSA’s FY 2011 appropriation for administrative funding through the Limitation on Administrative Expenses (LAE) account was below the FY 2010 enacted level and $275 million was rescinded from Carryover Information Technology (IT) funds. This funding level does not allow SSA to cover inflationary costs for fixed expenses, which has resulted in a hiring freeze, drastic reduction of overtime hours, and postponements of initiatives to improve efficiency – all of which will have major public service repercussions....

SSA already has an acute staff-to-workload imbalance and is over-extended in critical program areas as it struggles to keep up with rapidly increasing workloads and existing backlogs. Congress must give thoughtful consideration to future appropriations for SSA to ensure the preservation of this valued program. Properly funding SSA to process core workloads and invest in program integrity initiatives to improve payment accuracy will save taxpayer dollars and is fiscally prudent in reducing the federal budget and deficit.

Managers Worried About Administrative Budget

The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management personnel, has issued its June 2011 newsletter. NCSSMA is heavily focused upon Social Security's perilous administrative budget. One short quote from the newsletter describing the current budget situation: "We are 'walking on eggshells' now. It feels like we are being held together by tape and glue."

One Sentence

The Social Security Administration's "Update" contains this sentence: "The number of employees we have determines the amount of work we can complete."

Does that sound innocuous? Self-obvious? The last Commissioner of Social Security, Jo Anne Barnhart, would never have allowed such a sentence in a Social Security document. She promised that the magic fairy dust of her "plan" would make everything all better at Social Security regardless of the number of employees her agency had. She promised wonders from her "plan" but delayed and delayed announcing what her plan was. The delay was almost certainly because she had no more than vague ideas about a "plan." She probably also had an increasing realization that no "plan" would work without additional employees. She finally announced her "plan" shortly before she was to leave office, leaving it to her successor to make her "plan" work. Of course, her "plan" was unworkable and quickly abandoned. The whole thing  deceived the naive, of which there are many.

This week is an opportunity to fully bury the Barnhart approach. We have a Congressional hearing coming up that will focus on the question of why Social Security keeps overpaying people. Undoubtedly, Social Security will be criticized. Social Security can respond by saying, in effect, "Thank you, Congress, for pointing out our errors. We will do better." Or Social Security can respond by saying, in effect, "Yes, we've known about these issues for years. We'd love to address them but we don't have enough personnel. We've been telling you this for years. We got a bigger budget in 2009 and 2010 but never enough to get these problems resolved. Now, our budget has gotten tighter. Get us a bigger budget and we'll take care of these problems. Otherwise, nothing's going to happen and it's not because we don't care." Which would be a more honest answer to the criticism? Which will Social Security give? I understand the need for diplomacy  in  dealing with Republican Congressmen who remain all too eager to believe that the amount of work which may be accomplished by a federal agency is independent of the number of employees that agency has but honesty is needed as well.

Updated Fee Payment Numbers

Social Security has issued updated numbers on payments of fees to attorneys and others for representation of Social Security claimants:

Fee Payments
Month/Year	Volume	Amount
Jan-11	34,467	$113,459,847.04
Feb-11	33,305	$107,796,771.38
Mar-11	34,885	$112,463,768.46
Apr-11	48,033	$153,893,755.37
May-11	36,479	$115,159012.77

This shows a 2% reduction from the same period last year, a reduction this is certainly due not to fewer claims being approved but to more claims being paid much slower. It is taking claimants longer to get paid after a favorable decision on a disability claim.

SSI Overpayments Due To Real Estate Ownership

From a recent report by Social Security's Office of Inspector General (footnotes omitted):

SSI [Supplemental Security Income] is a needs-based program, and SSA [Social Security Administration] considers the applicant’s resources, including real property ownership, when determining program eligibility. Real property consists of land and buildings or immovable objects attached permanently to the land. ...

SSA staff can access the LexisNexis Risk Management Solutions database (LexisNexis) as an optional tool to obtain information about SSI applicants’ or recipients’ real property ownership, transfer of real property for less than fair market value, or recent sale of real property. ...

In a July 2009 report, Supplemental Security Income Recipients with Unreported Vehicles, we found that the Agency would have prevented about $551 million in improper payments had its staff used LexisNexis to identify unreported vehicle ownership. ...

While conducting the 2009 audit, we also found that many individuals who did not disclose their vehicle ownership also did not disclose their real property ownership. ...

[W]e used LexisNexis to determine whether there was any indication these individuals owned real property beyond their primary residences. We also reviewed LexisNexis for evidence of other ineligibility issues. In total, we referred 52 cases to SSA for further development since LexisNexis indicated the recipients owned real property that was not accounted for in SSA’s records. ...

SSA’s determinations of SSI recipients’ resources related to real property agreed with public property records in LexisNexis for 298 (85 percent) of the 350 records we reviewed. For the remaining 52 cases, the information in SSA’s records on real property ownership disagreed with information in LexisNexis. LexisNexis data indicated that the recipients owned one or more properties that were not recorded in SSA’s records. SSA reviewed these 52 cases. For 27 of the 52 cases, SSA determined that the information in LexisNexis was accurate; the recipients owned one or more real properties that they had not previously reported to the Agency....

Projecting our findings to the entire population, we estimate that about 541,580 recipients misreported real property ownership, and SSA improperly paid 320,940 of these recipients over $2.2 billion because of their unreported real property.

I would be a bit cautious about this projections. I have dealt with many SSI real property ownership situations where things turned out to be far more complicated than Social Security originally thought. The most common reason is something called "heir property," property in which an SSI recipient has an undivided interest in common with other heirs. Often, there is no practical way for the SSI recipient to demand that the property be divided or sold because land ownership is badly fractionated and there is no way to finance the  transactional expenses involved in dividing the property or forcing a sale. This sort of property usually ends up being sold for unpaid taxes. There are also many, many tracts of property not worth what county tax records show. This is especially the case when we are talking about undeveloped rural real estate which is often almost unmarketable. This is the type of real estate that SSI recipients are most likely to own in my part of the country. The real estate owned by SSI recipients is a can of worms, probably one that Social Security needs to open, but it is still a can of worms. In any case, Social Security can barely open this can of worms with its current staffing level. OIG can issue reports and the House of Representatives can hold hearings but without more personnel it just isn't going to happen.

Zombie-Nihilists

From the Crooks and Liars blog:

Good grief, this nonsense is just exhausting. Nothing is ever settled with these people, they have been coming after Social Security for 75 years, and they just don't quit, no matter how many times they get chased down with walkers and eaten alive by gray panthers. It's like they are programmed or genetically manipulated, like one of those creepy super-soldiers from science fiction that can't stop fighting after the war is over, even though they recognize the reality. 

Nah, I give them too much credit in that scenario. They are just zombie-nihilists and Social Security is the brain they are driven to eat.

STD And LTD Coverage Plummets

From a press release:

According to new research¹ from The Hartford, 49 percent of U.S. workers have short-term disability insurance [STD] and 44 percent have long-term disability insurance [LTD]. This represents a drop of 6 percent and 3 percent, respectively, over last year’s survey in the number of Americans with the coverage that provides an income if one cannot work due to an illness or non-work related injury.