We Need More Work Incentives!

     Eduardo Porter has a piece in the Business section of the New York Times under the title of Disability Insurance Causes Pain. Here are a few phrases and sentences to give you an idea of what the piece is about:

• Disability insurance takes too many workers out of the job market prematurely ... slows economic growth ...
• Some of its growth reflects changes in the population: we are growing older and becoming fragile with age. Similarly, disability rates among women [are rising because they are a larger part of the work force] ...But these factors account for only a small share of the growing cost. 
• “The health of nonelderly Americans is improving consistently, and we have more technology to help people at work,” observed Mark Duggan, an economist at the Wharton School of the University of Pennsylvania
• [B]reakneck growth in the disability program ...
• [D]isability becomes an attractive alternative for unemployed people ...
• The disability insurance program was meant for another era, in the late 1950s when working conditions were tougher and disabilities were expected to put an end to someone’s working life.
• In the mid-1980s, however, Congress softened the criteria. ... required to give more weight to subjective factors like pain ... opened the door for applicants who reported mental ailments like anxiety, or back pain and other muscular problems ...
• Collecting disability became even easier as rejected applicants were allowed to appeal before an administrative judge without anyone from Social Security present to defend its decision. 
• [T]he disability program suffers from artificial woes that can be corrected. Fixing the system requires providing incentives to enable disabled workers to continue working if they can.

     Let me list the work incentives already present in the Social Security Act and regulations:

• Work Not Substantial Gainful Activity (SGA)
• Unsuccessful Work Attempt (UWA)
• Impairment Related Work Expenses (IRWE)
• Trial Work Period (TWP)
• Extended Period of Eligibility (EPE)
• Expedited Reinstatement (EXR)

     All we need is just one more work incentive program and those folks will be flying off the disability rolls and back to work. That's the bill of goods that people keep trying to sell. I think you can tell how well this works by the fact that Mr. Porter wants another work incentive program despite the number of work incentives that already exist. I think it's reasonable to surmise that Mr. Porter has no idea of the work incentives that already exist.

     By the way, I notice that pain always seems subjective and meaningless when it's someone else's pain. When it's your pain, it's very real and very meaningful.

Price Competition

     The Angell Law Group is offering representation on Social Security disability claims for a fee capped at $3,000. The cap set by the Social Security Administration is $6,000. They claim a 98% success rate, suggesting that their strategy is intensive cherry-picking. If you only take the most gold-plated cases, you have to do little work to earn your fee.
      Update: One sharp-eyed reader noticed that the fine print shows that the Angell Law Group is not offering representation at hearings.Further update: The sharp-eyed reader now acknowledges that the really fine print says that Angell will send someone to the hearing.

Trustees Report

     From a Social Security press release:

The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds.  The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2033, three years sooner than projected last year.  The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate.  The Trustees also project that OASDI program costs will exceed non-interest income in 2012 and will remain higher throughout the remainder of the 75-year period.
In the 2012 Annual Report to Congress, the Trustees announced:

• The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year.  At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits.

• The projected actuarial deficit over the 75-year long-range period is 2.67 percent of taxable payroll -- 0.44 percentage point larger than in last year’s report.

• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $8.6 trillion in present value dollars to pay all scheduled benefits.

     The actual report isn't available online at this point but is supposed to be here later. The press release makes no mention of the disability trust fund. The status of that fund is of much more immediate importance than the status of the retirement trust fund.

     Update: The report projects that the Disability Trust Fund will be exhausted in 2016, the same as last year's projection.
 

     Here's some headlines R.J. Eskow says you will NOT see, but should, in reporting on this:

• "Social Security Trust Fund Even Larger Than It Was Last Year"
• "Growing Wealth Inequity Will Lead to Social Security Imbalance Later This Century"
• "For-Profit Healthcare Poses Threat to Medicare, Federal Deficit, and Overall Economy in Coming Decades"
• "Public Consensus Grows For Taxing Wealthy to Restore Long-Term Entitlement Imbalance"

A Lot Of People Don't Know What They're Talking About

     You can read comments on this board from those who want to remove discretion from disability determination, to require that decision-makers follow only the statutes and regulations so that disability decisions are accurate and predictable. Who could argue with that? 

     Me. I'll argue with it because it's nonsense. When you practice law for more than 35 years you acquire some wisdom. The wisdom sounds a lot like cynicism. Maybe it is cynicism but it's useful than naivete. So, here goes. The determination of disability includes the assessment of pain and mental illness among others things. Have you seen a machine at your doctor's office that measures the amount of pain you're suffering? Of course you haven't. I don't thing you ever will. Do you think that psychiatrists have some reliable test for determining the severity of depression or the frequency of hallucinations and delusions in schizophrenia? Of course not. Physicians assess these symptoms by talking with their patients. They make judgments based upon what they hear and whatever other evidence is available but their judgments are inevitably affected by their social and political views and, yes, their prejudices. It cannot be otherwise because physicians are human.

     Decision-makers at Social Security are also human and they're also assessing pain and mental illness and many other things that cannot be measured, such as fatigue. In situations where there is no clear-cut right or wrong answer they are subject to the same petty influences that affect the rest of us wretched mortals. There is nothing that Congress or Social Security can do to change this because we cannot make humankind different. The bottom line is that there is no gold standard for disability determination and there never will be. We have to accept this.

     You think that disability determination at the initial or reconsideration levels is 95% or more accurate as Social Security claims? Social Security's accuracy rates are ridiculous. They have no gold standard to compare these decisions to. You want proof? Let me show you re-recon, also known as "informal remands." In re-recon, Social Security takes disability claims that have just been denied at the reconsideration (or recon) level, where decisions are supposed to be at least 95% accurate, and sends them back through the same process but with different examiners. Wouldn't you expect this to be pointless? The result would have to be the same almost every time, right? Wrong. I haven't seen the numbers but a very significant percentage of claims that were 95% accurately denied before are 95% accurately allowed on the same evidence by another disability examiner. I know. The cases sent to re-recon are selected based upon some formula designed to find cases that are likely to be reversed -- basically cases of claimants 55 or older or cases involving mental illness -- but that changes nothing. If the determinations were anything like 95% accurate or even consistent, re-recon would be pointless. It isn't because the 95% numbers are ridiculous.
     I'm not sure this completely supports my point but one of the embarrassing problems that caused Social Security to ban claimants filing an appeal as well as a new claim after an Administrative Law Judge (ALJ) decision was that the new claims were frequently approved at the initial level, based upon the same evidence that had previously gotten the claimant denied at the initial and reconsideration levels as well as by an ALJ. In my office, it was happening almost 30% of the time.

     We cannot compare Administrative Law Judges individually or collectively to any particular standard and say that they are good or bad. The notion that disability determination can be completely consistent if decision-makers could be made to follow only the law and regulations is nothing more than naivete.

     I think we can try to reduce subjectivity and encourage consistency in disability determination by modest means but even those will be controversial. Anyone who thinks that there is some magic scheme that will make things dramatically better does not know what he or she is talking about.

Early Claiming Declines

     The Financial Security Project at Boston College reports that the share of Americans claiming Social Security retirement benefits at the early retirement age of 62 has been going down. Why?

NASI Wants To Phase Out Reduction In FICA Tax Over 11 Years

     The F.I.C.A. tax that supports the Social Security Trust Funds has been temporarily reduced by 2% because of the recession. The difference is being made up out of general revenues. The 2% reduction is set to end at the end of this calendar year. The National Academy of Social Insurance (NASI) is promoting a plan to phase out the 2% reduction over 11 years.
     Eleven years!!?? I hope the recession that brought about this reduction is over long before then.

In Case You Were Wondering

     From a press item prepared by the Social Security Administration:

Q: How many Social Security numbers have been issued since the program started?

A: Since 1935, we have assigned more than 465 million Social Security numbers and each year we assign about 5.5 million new numbers. With approximately 1 billion combinations of the 9-digit Social Security number, the current system will provide us with enough new numbers for several generations into the future. To learn more about Social Security numbers and cards, visit www.socialsecurity.gov/pubs/10002.html.

More ALJs Coming

     Apparently, Social Security is hiring more Administrative Law Judges at the moment.