Variability In Social Security Reserve Fund Performance

     You may not have heard of it but there's an International Social Security Association (ISSA). It recently released a report on the performance of larger social security reserve funds, most of which are mostly invested in stocks and non-governmental debt obligations. The nations involved aren't identified by name. I'm not sure if the U.S. Social Security Trust Funds are included in the report. In any case, what the report shows to me is huge variability. Note that the time period selected is after the 2008 crash. This was a time period in which stock and bond markets went up significantly. Below is a table from the report.

Not Happening Here

     There have been suggestions that the United States should emulate the Netherlands which was able to dramatically "cut" the costs of the disability benefits it pays. Elaine Fultz, at the Center on Budget and Policy Priorities (CBPP), has done a report showing how implausible this is. Dutch disability expenses were several times higher than in the U.S., leaving far more space for cutting than would be possible in the U.S. Even after the Dutch "cuts", their costs remain vastly higher than in the U.S. The biggest problem is that the Dutch "cuts" weren't really cuts. The most important way that the Netherlands "cut" costs was by shifting the costs from the government to private employers. Employers were also burdened with the trouble and expense of trying to rehabilitate disabled workers. This had the effect of making it harder for people with health problems to find employment. Many with health problems were shifted to temporary jobs to get around the rules.

     I think there are those on the right who read that the Netherlands dramatically cut its expenditures for disability benefits and read no further. That's the problem. All they were interested in was cutting. They had no concern for the details. Just cut. The right has no Social Security experts much less Social Security disability experts to warn them off something so unworkable in the U.S.

Hearings Begin Today For Eric Conn's Former Clients

     From WYMT in Kentucky:

Starting Thursday, as many as 1,787 people in our region who receive federal disability benefits will be required to participate in hearings to redetermine their eligibility.

They were represented by Floyd County lawyer Eric C. Conn, who Congressional investigators believe used fraudulent information to help secure the benefits. ...

Matty Slone has received disability benefits since a spine condition forced him to stop working seven years ago.

Slone, who lives in the Betsy Layne community of Floyd County, received a letter from the Social Security Administration mandating he attend a hearing Oct. 8 to determine whether the financial assistance will continue.

"My heart beats really fast, the nerves, the stress ...I go to bed crying every night," Slone said. "I've got so much riding on my back with this."

Slone said he would have "no hope" if his benefits are taken away. 

Lawyers for the hundreds of people who had their benefits temporarily suspended earlier this year have sued the SSA, asking a federal judge to stop the hearings.
There's no timetable for the judge's decision. ...

The Number Keeps Growing

     The word had been that Social Security was trying to cut 1,470 people who had been clients of Eric Conn off disability benefits. Social Security is now saying the number is 1,787. The hearings are beginning even as a motion for preliminary injunction is pending in U.S. District Court.

     So far, the only instructions I've seen for how these hearings are supposed to progress were issued last summer. Those instructions seem less than comprehensive to me. I keep wondering if there are more instructions that haven't been released to the public, perhaps some instructions issued just to the St. Louis National Hearing Center office that will be handling most of these cases. If there are such additional instructions, I'd love to see them. They shouldn't be a secret. 

     And, by the way, some of these claimants have moved out of the Kentucky-West Virginia area where they were living at the time they went on benefits. I assume that those hearings will be conducted by an Administrative Law Judge in the area where they now live, rather than by the St. Louis National Hearing Center, right?

Republican Candidates On Social Security -- I'm Noticing A Wedge Issue

     Take a look at the views of the Republican Presidential candidates on Social Security:

• Jeb Bush: Increase full retirement age, possibly to 70
• Ben Carson: Wants people who don't need the money to opt out of receiving Social Security
• Chris Christie: Increase full retirement age to 69 and means-test benefits
• Ted Cruz: Partially privatize Social Security, increase full retirement age and cut cost of living adjustment 
• Carly Fiorina: Increase full retirement age 
• Jim Gilmore:  Put a cap on benefits; praised George W. Bush for proposing partial privatization of Social Security
• Lindsey Graham: Increase full retirement age to 70 and cut benefits for some recipients
• Mike Huckabee: Does not favor Social Security changes.
• Bobby Jindal: Partially privatize Social Security
• John Kasich: Partially privatize Social Security 
• George Pataki: Increase full retirement age
• Rand Paul: Increase full retirement age to 70 and means test benefits 
• Marco Rubio: Increase full retirement age by one year; also believes that benefits should "grow more slowly" 
• Rick Santorum: Privatize Social Security, increase full retirement age, means test benefits
• Donald Trump: Does not favor Social Security changes
• Scott Walker: Increase full retirement age

     Every Republican Presidental candidate other than Carson, Huckabee and Trump supports either raising full retirement age or partially privatizing Social Security. Carson may want such changes but he hasn't yet spoken on Social Security issues in any meaningful way. Encouraging people to voluntarily forego their Social Security benefits? Few people can afford to do so and far fewer would do so. I think he'll be asked specific questions about Social Security in the near future.

     What's going to happen when the Republican race starts narrowing down? If Trump remains the front runner, we can expect to see negative ads from his opponents. How does Trump respond? Social Security seems to be a wedge issue he could use to attack almost any of his Republican opponents. Raising full retirement age and partially privatizing Social Security may be popular ideas with big Republican donors but these ideas are unpopular with rank and file Republicans. The polling we have shows 62% of Republicans in favor of increasing Social Security benefits and 74% of Republicans willing to preserve Social Security even if it means raising taxes. Only 26% of Republicans favor increasing full retirement age to 70. An intra-party debate on Social Security could be devastating for Republicans.

Many Children Disabled By Mental Disorders Not Drawing The SSI They Deserve

     Dr. James Perrin, professor of pediatrics at Harvard Medical School, was on the Here and Now radio program talking about the Institute of Medicine study on Supplemental Security Income (SSI) benefits for children disabled by mental disorders. Perrin was one of the researchers for the study. The main takeaway from Dr. Perrin: the biggest problem with SSI child benefits for mental disorders is that there are many children who should be on benefits who aren't receiving them.

NCSSMA Proposals On Comp Offset

     The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management personnel, has been kind enough to send me a copy of their draft position paper on simplifying the workers compensation offset which is applied when a claimant receives both Social Security Disability Insurance Benefits and workers compensation at the same time. I've posted their position paper on the Social Security Perspectives blog (which I rarely use).

     I think everyone who has to deal with the workers compensation offset wishes it could be made simpler but, so far, there's been no consensus on how to do that. NCSSMA recommends either simplifying the offset by applying a uniform offset amount regardless of the amount of workers compensation benefits paid or somehow forcing reverse offsets on the states. 

     Applying a uniform offset amount would simplify matters some but it still leaves plenty of complexity. In some cases, Disability Insurance Benefits will be reduced by considerably more than the claimant is receiving in workers compensation. Probably the biggest problem is how to apply a uniform offset when a claimant receives a lump sum settlement of workers compensation benefits. Current law allows lump sum payments to be considered as spread over the claimant's remaining life expectancy. This has been a bit controversial but if the lump sum payment is for the claimant's disability over the claimant's remaining life expectancy what's wrong with spreading the lump sum amount over the remaining life expectancy? However, applying a flat rate reduction for the rest of a claimant's entire life would clearly be unfair. 

     Some states now reduce workers compensation benefits as a result of the receipt of Disability Insurance Benefits. Social Security does not apply an offset when the state has applied an offset. Current law limits the reverse offset to 15 states who had a reverse offset before a certain date in the past. This limitation could be removed but there is no way to force states to implement reverse offsets. Also, the NCSSMA plan would require a reverse offset for public disability benefits. That's applied to foreign social security benefits under contributory plans so you'd need to get every country in the world with a contributory social security scheme to adopt a reverse offset to eliminate thatt offset. Nationwide reverse offsets would cost the Disability Insurance Trust Fund a fair amount of money. International reverse offset would cost a little more. I'm pretty sure the reverse offset idea is going nowhere.

"Rude Shocks" For Widows

     The New York Times reports on the "rude shocks" that Social Security can provide for widows.