GAO Report Wonders Why Computers Can't Determine Disability; Also, SSA Says Final Mental Impairment Listings To Come Out This Year (I'm Dubious) And Problems With The OIS Project

     The Government Accountability Office (GAO) has issued a report on Modernizing SSA [Social Security Administration] Disability Programs. GAO wants Social Security to take "modern views of disability." GAO thinks that "modern views of disability" would include (with my comments in brackets and italicized):

• Incorporating criteria in the Listings of Impairments that would specify the extent to which certain impairments limit functional ability [You're naive, GAO. SSA already has residual functional capacity guidelines used at the initial and reconsideration levels. They can't put them in the Listings. They can't publish them. They don't want them in writing. They deny they exist. This is because they cannot justify them. But they do exist. They're disseminated and enforced through the quality assurance program.]
• Finding ways of measuring functional ability [Right. Just as soon as someone manages to invent a machine that measures pain or depression.]
• Developing "a computerized tool to assist adjudicators in evaluating how various impairments affect an individual’s function and ability to work."[GAO is saying that since computers can do such wonderful things they must surely be able to determine residual functional capacity better than individuals. You guys at GAO have never read a Social Security disability file, have you?]
• Understand that "Modern concepts focus on an individual’s functional abilities in the workplace environment, including consideration of the presence or lack of assistance, for example, per the requirements for reasonable accommodation by the Americans with Disabilities Act of 1990." [Social Security has rejected the reasonable accommodation route. You're not getting around this without legislation. Even if legislation were passed, I don't think anyone can say how SSA could incorporate reasonable accommodation into disability determination. Even though the ADA was high-minded, it was terrible vague. It's been interpreted nearly out of existence by the Supreme Court. In the real world, the ADA has meant little. Also, if you put reasonable accommodation into the Social Security Act, you might have to amend the ADA to make it really mean something and we know that business interests would fight that tooth and nail.]

     The report contains the statement that "SSA issued a notice of proposed rulemaking to revise its listings of mental disorders in 2010 and has told us that it plans to finalize this comprehensive revision by the end of 2012 ..." We shall see. It's late July  and Social Security still hasn't submitted this to the Office of Management and Budget (OMB) for approval. Once they do, it will take OMB three months or so to study it and it's far from clear that OMB sees eye to eye with Commissioner Astrue on this. Maybe they think they can get the mental impairment Listings approved and published after the election but I have a hard time seeing OMB approving any final rule on this with Michael Astrue's term as Commissioner about to expire unless the new Listing is exceedingly non-controversial. If the final rule was to be exceedingly non-controversial, I think it would have already happened. I think this one will still be on the desk when the next Commissioner arrives sometime next year.

     The report also indicates that Social Security is having problems coming up with a sufficient budget to pursue its Occupational Information System (OIS) project. The project is being delayed due to lack of personnel. The full extent of the problem is unclear since Social Security seems to have little idea how much the full program is going to cost. According to the report:

Without any estimate for the cost of producing the OIS, SSA risks designing a system that would not be a viable or affordable option to complete. Additionally, without maintenance cost estimates, SSA is at risk of designing a system that would be too costly to maintain on a regular basis resulting in outdated information.

     GAO says that Social Security could face "broader challenges" to its OIS project but that SSA "has not done a formal risk analysis of these challenges." According to GAO, these risks include:

• SSA’s lack of expertise with designing an OIS
• Cost of maintaining an OIS
• SSA's history of difficulty managing large, multiyear projects

     OMB should mention but does not the even bigger issue of the legal defensibility of whatever the OIS project produces. Social Security seems to be a bit nervous about this issue. I think they should be extremely nervous about this issue. How does it look if SSA spends several years and a few hundred million dollars on the OIS project and it all goes up in smoke in federal court? Can anyone say there is no risk of that happening? Can anyone quantify that risk? Can anyone predict the fallout if that happens?

Why We Must Enhance Social Security Instead Of Cutting It

     From an opinion piece (subscription required) by Teresa Ghilarducci in the New York Times:

I work on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse — for good reason. 

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. ...

To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security.  ...

If we manage to accept that our investments will likely not be enough, we usually enter another fantasy world — that of working longer. After all, people hear that 70 is the new 50, and a recent report from Boston College says that if people work until age 70, they will most likely have enough to retire on. Unfortunately, this ignores the reality that unemployment rates for those over 50 are increasing faster than for any other group and that displaced older workers face a higher risk of long-term unemployment than their younger counterparts. If those workers ever do get re-hired, it’s not without taking at least a 25 percent wage cut....

The chance to work into one’s 70s primarily belongs to the most well off. Medical technology has helped extend life, by helping older people survive longer with illnesses and by helping others stay active. The gains in longevity in the last two decades almost all went to people earning more than average. It makes perfect sense for human beings to think each of us is special and can work forever. To admit you can’t, or might not be able to, is hard, and denial and magical thinking are underrated human coping devices in response to helplessness and fear.  ...

Basing a system on people’s voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs. 

Not yet convinced that failure is baked into the voluntary, self-directed, commercially run retirement plans system? Consider what would have to happen for it to work for you. First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die. 

Payment Of Social Security Benefits By Debit Card Popular

     From the American Banker:

Nearly all senior citizens and others who receive monthly Social Security benefits on government-issued debit cards are satisfied with their cards and would recommend them to other seniors who are still receiving paper checks, a new survey has found.


The Treasury Department has been issuing the prepaid cards since 2008 primarily to give recipients easier access to their Social Security funds. The MasterCard-branded cards have been issued to more than 3 million Americans, two-thirds of whom did not have access to traditional banking services when they signed up, according to the Treasury.


In a survey conducted in June by KRC Research and commissioned by MasterCard, 95% of recipients who use the cards said they are happy with them and 93% said they would recommend them to others. Also, 97% said that the debit cards are safer than paper checks and 93% said that the card is more convenient than cash for making purchases, the Treasury said Tuesday.

Processing Time Report

     Below is a recent Social Security hearing office average processing time report published in the newsletter of the National Organization of Social Security Claimants Representatives (NOSSCR). Click on each page to see full size.

Congressional Hearing On SSI Technology

     From a press release:

Congressman Geoff Davis (R-KY), Chairman of the Subcommittee on Human Resources of the Committee on Ways and Means, announced today that the Subcommittee will hold a hearing on the use of technology to improve the administration of the Supplemental Security Income (SSI) program’s financial eligibility requirements.  The hearing will take place on Friday, July 20, 2012 in 1100 Longworth House Office Building, beginning at 9:30 A.M.

      Update: This hearing has been postponed to July 25 at 2:00 p.m.

Fighting To Keep Field Office From Closing

     Local officials are still trying hard to keep the Clinton, IA Social Security field office open.

     Just think of how many field offices get closed if the House Republican appropriation for the Social Security Administration becomes law. Now, that I think of it, maybe Social Security should be putting out a press release on this subject now.

Death Master File Remains A Headache For Social Security

     Social Security's Death Master File is drawing more media attention, now with an article about the use of the Death Master File for fraudulent purposes titled Social Security Selling Dead Peoples' Identities For $10 A Pop.      

     If you are just encountering this issue for the first time, please note that Social Security would strongly prefer that no one outside the agency have access to the Death Master File but the Freedom of Information Act (FOIA) requires them to allow this access. Amending the FOIA to keep the Death Master File secret would not be easy. There are plenty of legitimate uses of the Death Master File, some of them of significant importance in preventing fraud. There are no easy answers and the Social Security Administration is caught in the middle.

Private Equity And Binder and Binder

     In June of last year, I posted that Binder and Binder, the largest entity representing Social Security claimants, had been acquired in 2010, at least in part, by HIG, a private equity firm based in Miami, in a leveraged buyout.

     At the time I knew essentially nothing about private equity firms. Since then, the publicity about Mitt Romney's involvement in Bain Capital, another private equity firm, has educated me a tiny bit on private equity companies. It appears that Bain was, in the main, acquiring troubled companies and trying to turn them around for resale at a tidy profit. Sometimes they were unable to turn the companies around and the companies were closed -- usually with Bain making a tidy profit despite the closure. 

     I suppose that there are different private equity models than those employed by Bain. Bain's operations were surely a good deal more complex than what has been described in the press. I have no idea how HIG operates or what triggered this acquisition or what has happened since HIG acquired at least part of Binder and Binder. Still, the involvement of a private equity firm in representing Social Security claimants still seems awfully weird and somewhat troubling to me.

     I am somewhat amused by the thought of HIG's MBAs digging deep into the guts of the business of representing Social Security claimants and being confronted again and again with roadblocks imposed by the Social Security Act and Social Security's regulations and policies. I have trouble imagining them actually reading client files and attending client hearings to truly educate themselves about this messy business. I wonder what those MBAs thought about those Wall Street Journal articles about Binder and Binder. Did they think they didn't matter since few Social Security claimants read the Wall Street Journal? Did they realize the problems those articles could cause Binder and Binder with Administrative Law Judges and Social Security in general -- problems that would inevitably affect the company's bottom line?As I say, the involvement of a private equity company in this business just seems awfully weird to me.