[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
  BARRIERS PREVENTING DISABILITY BENEFICIARIES FROM RETURNING TO WORK

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 11, 1999

                               __________

                              Serial 106-5

                               __________

         Printed for the use of the Committee on Ways and Means


                                


                      U.S. GOVERNMENT PRINTING OFFICE
 56-970 CC                   WASHINGTON : 1999
------------------------------------------------------------------------------
                   For sale by the U.S. Government Printing Office
 Superintendent of Documents, Congressional Sales Office, Washington, DC 20402



                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Social Security

                  E. CLAY SHAW, Jr., Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.



                            C O N T E N T S

                               __________

                                                                   Page

Advisory of March 4, 1999, announcing the hearing................     2

                               WITNESSES

Social Security Administration, Hon. Kenneth S. Apfel, 
  Commissioner of Social Security; accompanied by Susan Daniels, 
  Ph.D., Deputy Commissioner for Disability and Income Security 
  Programs.......................................................    13
U.S. General Accounting Office, Cynthia M. Fagnoni, Director, 
  Income Security Issues, Health, Education, and Human Services 
  Division; accompanied by Brett Fallavollita, Senior Evaluator..    26

                                 ______

Consortium for Citizens with Disabilities, Social Security Task 
  Force, Mary Gennaro............................................    45
Johnson, Hon. Nancy L., a Representative in Congress from the 
  State of Connecticut...........................................     5
Manic Depressive Association, and National Alliance for the 
  Mentally Ill, Jim McNulty......................................    54
National Association of Developmental Disabilities Councils, Mary 
  Gennaro........................................................    45
National Association of Rehabilitation Professionals in the 
  Private Sector, Jeffrey E. Carlisle............................    61
Ramstad, Hon. Jim, a Representative in Congress from the State of 
  Minnesota......................................................     8
Services for Independent Living, Richard Blakley.................    40

                       SUBMISSIONS FOR THE RECORD

Corporation for Supportive Housing, New York, NY, John Rio, 
  statement and attachment.......................................    67
San Francisco Network on Disability, Berkeley, CA, Jean Nandi, 
  letter.........................................................    71
Stark, Hon. Fortney Pete, a Representative in Congress from the 
  State of California, letter and attachments....................    72



  BARRIERS PREVENTING DISABILITY BENEFICIARIES FROM RETURNING TO WORK

                              ----------                              


                             MARCH 11, 1999

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
room 1100, Longworth House Office Building, Hon. E. Clay Shaw, 
Jr., (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE                           Contact: (202) 225-9263
March 4, 1999
No. SS-4

                       Shaw Announces Hearing on
              Barriers Preventing Disability Beneficiaries
                         From Returning to Work

    Congressman E. Clay Shaw, Jr., (R-FL), Chairman of the Subcommittee 
on Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on barriers preventing Social 
Security disability beneficiaries from returning to work. The hearing 
will take place on Thursday, March 11, 1999, in the main Committee 
hearing room, 1100 Longworth House Office Building, beginning at 10:00 
a.m.
      
    Oral testimony will be heard from invited witnesses only. Witnesses 
will include program experts, representatives of organizations 
promoting the self-sufficiency of people with disabilities, providers 
of services assisting return to work efforts, and consumers and 
potential consumers of those services. However, any individual or 
organization not scheduled for an oral appearance may submit a written 
statement for consideration by the Committee and for inclusion in the 
printed record of the hearing.
      

BACKGROUND:

      
    Social Security's disability programs help protect workers and 
their families against financial hardship if workers experience 
disabling conditions that prevent them from working. Between 1988 and 
1998, the number of working-age recipients on the Social Security and 
Supplemental Security Income (SSI) disability rolls increased 60 
percent. Today, there are 4.7 million individuals receiving Social 
Security disability benefits and 4.3 million receiving SSI disability 
benefits. In addition, disabled recipients are staying on the rolls 
longer than in the past because of increased life expectancy, earlier 
onset of disability, and increased awards for mental impairments, which 
manifest at younger ages.
      
    In 1996, fewer than six percent of new disability recipients were 
referred to State vocational rehabilitation agencies for services, and 
historically less than one-half of one percent of disabled recipients 
have left the rolls because of successful rehabilitation. These facts 
underscore the need for initiatives designed to encourage those 
disabled recipients who want to receive rehabilitation services and to 
re-enter the workforce.
      
    To help Social Security and SSI disability recipients who want to 
return to self sufficiency, H.R. 3433, the ``Ticket to Work and Self-
Sufficiency Act,'' was introduced by then Subcommittee Chairman Jim 
Bunning and Ranking Minority Member Barbara Kennelly, and was passed 
overwhelmingly by the House by a vote of 410 to 1 during the 105th 
Congress. No action was taken by the Senate.
      
    However, during the 106th Congress, S. 331, the ``Work Incentives 
Improvement Act of 1999,'' has been introduced in the Senate and 
approved by the Finance Committee. Many of the provisions in H.R. 3433 
are included in this legislation.
      
    In announcing the hearing, Chairman Shaw stated: ``Many individuals 
with disabilities can and want to work, but the current system offers 
barriers, not opportunities. Everyone should participate in, and 
benefit from, our booming economy. The time to act to provide real hope 
and opportunity for disabled workers is now.''
      

FOCUS OF THE HEARING:

      
    During the hearing, the Subcommittee will consider the views of 
program experts, consumers, and service providers on the barriers which 
prevent disability recipients from returning to work. The Subcommittee 
will also evaluate recommendations on what changes in the law are 
needed to remove those barriers.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect 5.1 format, with their name, address, and 
hearing date noted on a label, by the close of business, Thursday, 
March 25, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways 
and Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements 
wish to have their statements distributed to the press and interested 
public at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Social Security office, room B-316 
Rayburn House Office Building, by close of business the day before the 
hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect 5.1 
format, typed in single space and may not exceed a total of 10 pages 
including attachments. Witnesses are advised that the Committee will 
rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://www.house.gov/ways__means/''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                

    Chairman Shaw. Good Morning.
    Today the Subcommittee will consider ways to provide new 
opportunities for individuals with disabilities to return to 
the work force and lead fuller, more productive lives. As we 
all know, this Subcommittee and the Full Ways and Means 
Committee have played a key role in this effort in recent 
years, leading up to the nearly unanimous passage last year of 
H.R. 3433, the Ticket to Work and Self-Sufficiency Act.
    While that bill did not make it all the way to the 
legislative finish line, there is a real cause for confidence 
that we can reach our common goal this year. My predecessor, 
Chairman Jim Bunning and Ranking Member Barbara Kennelly, and 
the other Members of the Subcommittee, spent countless hours 
over several years holding hearings and refining what became 
last year's bill. For those who were not paying attention, that 
bill promised to ease the transition of disability 
beneficiaries into work by providing easier access to services 
and an additional 2 years of Medicare coverage.
    I think we are all in agreement that this legislation will 
enable thousands of individuals with disabilities who want to 
work to do so. It preserves the Social Security and 
Supplemental Security Income Disability Programs, as a much 
needed safety net for people who are unable to work. As this 
Congress gets rolling, we have a fairly clear road map on how 
to proceed. I know there is some lingering disagreement as to 
some of the details, but these details are minor in comparison 
with the total bill.
    For my money, the differences are just that: details that 
can and will be worked out as we proceed. Given how far we have 
already come together, I am confident we can make this work.
    I welcome all of our witnesses and guests and look forward 
to hearing everyone's testimony this morning.
    [The opening statement follows:]

Opening Statement of Hon. E. Clay Shaw, Jr., a Representative in 
Congress from the State of Florida

    Today the Subcommittee will consider ways to provide new 
opportunities for individuals with disabilities to return to the 
workforce and lead fuller, more productive lives.
    As we all know, this Subcommittee and the full Ways and Means 
Committee have played a key role in this effort in recent years, 
leading up to the nearly unanimous passage last year of H.R. 3433, the 
Ticket to Work and Self-Sufficiency Act. While that bill didn't make it 
all the way to the legislative finish line, there is real cause for 
confidence that we can reach our common goal this year.
    My predecessor, Chairman Jim Bunning, and Ranking Member Barbara 
Kennelly and the other Members of this Subcommittee spent countless 
hours over several years holding hearings and refining what became last 
year's bill. For those who weren't paying attention, that bill promised 
to ease the transition of disability beneficiaries into work by 
providing easier access to services and an additional 2 years of 
Medicare coverage.
    I think we are all in agreement that this legislation would enable 
thousands of individuals with disabilities who want to work to do so. 
And it preserves the Social Security and Supplemental Security Income 
disability programs as a much-needed safety net for people who are 
unable to work.
    So as this Congress gets rolling, we have a fairly clear roadmap 
for how to proceed. I know there is some lingering disagreement as to 
some details. But for my money, the differences are just that--details 
that can and will be worked out as we proceed. And given how far we 
have already come together, I am confident we can make this work.
    I welcome all our witnesses and guests, and look forward to hearing 
today's testimony.
      

                                

    Chairman Shaw. Mr. Matsui.
    Mr. Matsui. Thank you very much, Mr. Chairman. I really 
appreciate the fact that you are holding this hearing today. I 
would like to personally thank you, and your staff, for working 
together with Members of our side of the aisle on this 
particular issue. I understand we are still discussing the 
matter and I appreciate that opportunity.
    If the Chair recalls, last year after the House had passed 
its Ticket to Work version of our legislation, the bill 
eventually died in the Senate before we were able to get it to 
the President. We adjourned. Mainly what occurred was Senators 
Jeffords and Kennedy introduced a bill that would have 
extended, for a longer period of time, the 2-year additional 
period of Medicare coverage. They recently, as those in the 
audience and others know, passed their version of the 
legislation on a 16-to-2 vote, out of the Senate Finance 
Committee. I think it was just last week, in fact.
    I believe the issue again will be addressed in the 
conference, or perhaps on the House floor, or perhaps in the 
Full Committee. We all know that one of the most important 
things for those that are disabled is not only vocational 
rehabilitation opportunities, but also health care. Health care 
is an extremely critical component of making sure that people 
are given the opportunity for self-sufficiency.
    So, it is my hope we can work together and see if we can, 
perhaps, move more in the direction of the Jeffords-Kennedy 
legislation as time goes on and as this legislation proceeds 
further. I believe there is bipartisan support for it, not only 
in the Senate, but also in the House.
    Again, I think this hearing is extremely important. It 
doesn't have the visibility that many other hearings of the 
Congress have, but it will have a significant bearing on 
millions of Americans and their families.
    Thank you, Mr. Chairman.
    Chairman Shaw. Thank you, Bob.
    We have as our first panel, Nancy Johnson and Jim Ramstad, 
two valuable Members of the Ways and Means Full Committee. As 
both of you know, we have your full statements. Without 
objection they will be made part of the record. You may 
proceed.
    Mrs. Johnson.

    STATEMENT OF HON. NANCY L. JOHNSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Mrs. Johnson of Connecticut. Thank you very much, Mr. 
Chairman. First of all, I thank you and Mr. Matsui and the 
Subcommittee for holding this hearing on what is really an 
extremely important bill. I am going to be introducing the bill 
that has been introduced on the Senate side, with Mr. Lazio, 
from Commerce and many Democrats--I hope many from this 
Subcommittee--as well as Republicans, because there is a 
tremendous amount of support for this bill.
    There is a key difference between the really outstanding 
work this Subcommittee did on the Ticket to Work bill last 
year, which is the predecessor, the parent, the core of what we 
need to do for the disabled, and the initiative that some of us 
have worked on. The key difference is in access to medical 
benefits. That is the bottom line.
    As you well know, in the old days of welfare, if someone 
got a part-time job, they were off the program. Even if they 
could see that they could move up to full-time salary; if it 
wasn't a plan with health benefits and their children needed 
benefits, they often could not, in all good conscience, get off 
welfare. They could not afford to lose access to the Medicaid 
benefits. We have put our disabled people in exactly the same 
position.
    There are many barriers to a disabled person getting into 
the work force. One is, you go $1 over the $500 threshold, you 
lose everything. So, they will get a part-time job and leave 
themselves in the position. This is so ironic. You have people 
come to you and sit down and tell you, I am working 10 hours at 
Stop-and-Shop. It's the Christmas rush. They want me to work 
more hours. I want to work more hours but I can't, because the 
government won't let me. If I work a little bit over that time, 
then I lose all of my benefits, both the monetary benefits and 
the health benefits.
    Ticket to Work and the work of this Subcommittee had dealt 
with the issue of declining the benefits as salary grows. It 
has also dealt with the problem of letting someone who has left 
the program reenter the program if their circumstances change 
rapidly and easily. But we have dealt less well with 
maintaining access to health benefits. Particularly for people 
who are disabled as a result of mental illness, with the new 
drugs that are available which are wonderful, effective and 
very expensive, their independence and their ability to work 
depends flat out on their access to that drug benefit. They 
must be able to maintain access to Medicaid if they are going 
to work. This bill really does a lot to encourage States to 
open up Medicaid to their disabled population, even when that 
person is working. Neither level of government is still 
subsidizing their income. That is why Energy and Commerce have 
to do a lot of work on this in order for it to be an effective 
program.
    We did increase access to Medicare benefits. We have to do 
it over a slightly longer period of time so there can be the 
confidence that not only will they be able to have access to 
health care, but they will be able to have it--in a sense--
permanently. If we enlarge that access to 10 years, from the 
current 6 years--currently they have 4 years; we added 2 years; 
it's 6 years--we will give them the confidence over the course 
of that time that the problem of access to medical health 
benefits will be solved for us as a society, according to 
income.
    That is really what many of us are focusing on. The issue 
of mental health benefits has brought that squarely to the 
fore. If a person is taking one of the very expensive, but very 
effective medications for schizophrenia or bipolar whatever, 
they can function very, very well. But they have two problems: 
access to that medication and the problem of relapses. They 
have to be able to get back in the program and have that 
support for short periods of time if they have a problem.
    I thank you for your good work in this area. I thank you 
for putting it high on your agenda. I hope we will have a good, 
solid bipartisan bill that will end up on the President's desk. 
Thank you.
    [The prepared statement follows:]

Statement of Hon. Nancy L. Johnson, a Representative in Congress from 
the State of Connecticut

    I want to commend Representatives Shaw and Matsui for 
organizing a hearing on this important issue of helping 
disabled people return to work. Under the leadership of 
Representatives Bunning and Kennelly, this subcommittee devoted 
considerable time and effort last session into identifying the 
barriers that prevent people on Social Security Disability and 
Supplemental Security Income from returning to work. As a 
result of their work, the House passed, with significant 
bipartisan support, the Ticket to Work Act. I am pleased that 
Chairman Shaw and Ranking Member Matsui have demonstrated their 
commitment to making this issue a priority again this session.
    It is critical that we have federal disability programs to 
support people who have disabilities that prevent them from 
gainful employment. When the nature of those programs become 
barriers to those people returning to work when they are able, 
we need to identify and remove those barriers. The legislation 
put together by this subcommittee last year did this for many 
of the barriers within the cash assistance program, but it was 
not sufficient because it did not address the largest barrier: 
lack of affordable health coverage. By guaranteeing health 
coverage to someone on the system, but removing that access 
when they return to work, we have created a system that any 
rationale person would not want to leave.
    I am very passionate about this issue because I have heard 
many true life stories directly from my constituents who are 
impacted. I have heard about a gentleman with mental 
retardation who works 10 hours a week in a community grocery 
store. The work is critical to his mental and emotional health 
because it gives him the chance to socialize and leave his 
home. His employer is very pleased with his work and would like 
to give him more hours. But the man is confronted with the 
reality that if he works more than 10 hours, he will earn more 
than $500 and lose his disability benefits all at once.
    One of the meetings that caused me to be involved in this 
issue was with a group of people struggling with severe mental 
illness. They portray some of the most compelling reasons for 
this legislation. Returning to work is a significant task for 
these people, not only because of the financial concerns but 
also because of the uncertainty of their illness. The 
effectiveness of psychotropic drugs gives these people the 
ability to maintain mental and emotional health so they can 
perform consistently in a work environment. Without these drugs 
and therapy, returning to work is very difficult. So the most 
important thing for these people is having access to health 
coverage to help afford these treatments. In addition, a 
reoccurrence of their illness could happen at any time, so they 
need to be assured that the disability system will support and 
understand them during a relapse.
    I have also heard from a young man who has had two organ 
transplants because of a bout with childhood diabetes. He 
requires significant health care services and relies on 
Medicare to provide them. Without the guarantee that he can 
continue to receive health coverage, returning to work is a no-
win situation. He wants to work, but would have to earn a 
significant income to make up for the loss of his health 
insurance.
    It is difficult to measure completely the impact that 
having a job makes in a person's life. It gives people a sense 
of personal value and identity, and there is something very 
powerful about being able to support oneself. When people 
return to work there are also positive impacts for our country. 
If only one percent of the 7.5 million SSI and SSDI recipients 
go to work and forgo cash payments from the Social Security 
Administration (SSA), this would result in a cash savings of 
$3.5 billion to the federal Treasury over the lifetimes of 
these individuals. If we factor in the income taxes these 
individuals would pay, their lack of need for food stamps, 
subsidized housing, and other forms of assistance, that $3.5 
billion dollar figure would be even higher.
    In this time of low unemployment, we also need to consider 
the positive benefit of having more workers in our economy. To 
stay strong, our economy needs access to a qualified and 
enthusiastic pool of potential workers. People currently on SSI 
and SSDI are a tremendous untapped resource. Their enthusiasm 
alone would make a significant contribution to our workforce.
    The Senate has taken the lead on this issue in the 106th 
Congress with broad-based bipartisan legislation. Their 
greatest contribution to the debate is their commitment to 
expanding health care coverage, through Medicare and Medicaid, 
for people returning to work. This is an important issue that 
will directly impact people who want desperately to return to 
work and become independent from government assistance. We 
should follow through on our work last session and work with 
the Senate to make sure that we address the critical need for 
health insurance. Thank you for the opportunity to testify this 
morning.
      

                                

    Chairman Shaw. Thank you.
    Mr. Ramstad.

  STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF MINNESOTA

    Mr. Ramstad. Thank you, Mr. Chairman and Members of the 
Subcommittee, for holding this important hearing to talk about 
the barriers which prevent people with disabilities from 
working.
    This is an issue, Mr. Chairman, about which I feel 
passionately. It is an issue I have heard about from my friends 
with disabilities for 19 years. Since my first election into 
the Minnesota State Senate in 1980, I have had a Disabilities 
Advisory Committee. By far, the number one problem discussed by 
people with disabilities on the Risk Advisory Committee has 
been work disincentives within the Federal programs designed to 
assist people with disabilities.
    The most compelling issues facing people who desperately 
want to work and contribute to society are the program rules 
that make working too costly and too complicated. Mr. Chairman, 
the legislation which was alluded to by Ranking Member Matsui 
and talked about by our friend, Nancy Johnson, has 54 
cosponsors, already, in the Senate. Certainly, any time my two 
senators can agree on anything, it is a historic day. Two of 
the names on that bill are Paul Wellstone and Rod Grams. There 
is a bipartisan working group already sponsoring this 
legislation.
    We have got to take steps to prevent abuses in the system. 
In so doing, however, we also have to tear down the barriers 
that prohibit Americans with disabilities from living up to 
their full potential. That is simply wrong. These programs, 
after all, were designed as safety nets, not steel cages.
    Chairman Shaw, you have been a leader in passing the 
monumental and highly successful Welfare Reform legislation. I 
have heard you say many times, and I couldn't agree more, that 
preventing people from working runs counter to the American 
spirit. It is a spirit that thrives on individual achievements 
and societal contributions.
    With our economy humming as it is and growing so rapidly, 
we need skilled workers. Individuals with disabilities are 
eager and highly qualified to meet the employment needs that 
are out there in the marketplace. This is the time to deal with 
this issue. It is not only the right thing to do, it is the 
cost-effective thing to do. Discouraging people with 
disabilities from working, as the present system clearly does, 
earning a regular paycheck, paying taxes, and moving off public 
assistance results in reduced Federal revenues.
    This is something that has hit near and dear to home. One 
of my best friends, who happens to be a person with 
quadriplegia, Tom Habin, worked on my first congressional 
staff. A person who is quadriplegic needs catheters, attendant 
care, and can't take his or her own showers or go to the 
bathroom. Mr. Habin was employed on our staff. Given the 
limitations and the payscales we have, it was a very sad day--
one of the saddest days in my life--when he came to me and he 
said, ``Jim, I now risk losing my medical benefits. I can't 
work for you any more and you can't pay me enough to make it 
worth my while.'' That is wrong to have a built-in disincentive 
to a good, smart person who could contribute so much.
    Now he spends most of his time in his apartment. He has to 
cling to those benefits. These people are scared, deathly 
scared, of losing those important, life-sustaining benefits. 
Those benefits enable them to have some dignity of independent 
living. That is why I feel so passionately about this issue. If 
there is anything we need to work on in a bipartisan way, it is 
this issue.
    That is why I am so grateful you are sitting in that chair, 
Clay, and that we have the bipartisan spirit on this 
Subcommittee, and hopefully on the Full Committee and the 
Congress, to knock down these barriers. We need to do this so 
these people can truly enjoy the dignity of independent living 
and be contributors in the marketplace.
    My own State of Minnesota is implementing a pilot program, 
right now, to help individuals to return to work. With the 
assistance of disability experts and advocates in Minnesota, 
Mr. Chairman, our State legislature is already working on 
limited legislation and wants Congress to pass the bill that 
Nancy and I are cosponsoring. They are in a position to react 
to any additional legislation that Congress passes.
    Again, Mr. Chairman, thank you very much for holding this 
hearing today and for your leadership on this issue. I want to 
also thank your Subcommittee staff who have been very helpful 
in allowing my staff and me to work with them and you on these 
important issues. I am excited to continue our work together in 
helping people with disabilities return to work. As far as I am 
concerned, there is no higher calling for all of us as 
individual Members of Congress.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Jim Ramstad, a Representative in Congress from the 
State of Minnesota

    Mr. Chairman, I want to thank you and the Subcommittee for 
holding this important hearing to discuss those barriers which 
prevent people with disabilities from working.
    The staff of the House Republican Caucus on Disabilities 
and I recently met with a number of advocates for people with 
disabilities--some of whom are in this room today--to talk 
about issues of importance to them. By far the number one topic 
discussed that day was work disincentives within those federal 
programs designed to assist people with disabilities. This is 
also one of the most important issues to the members of my own 
Disabilities Advisory Committee in Minnesota.
    Like many of you, I have heard countless stories of 
frustrated individuals who desperately want to work and 
contribute to society but are literally prohibited from doing 
so because confusing federal programs and rules make working 
too difficult or expensive. Certainly, we must take steps to 
prevent abuse of the system. But in doing so, we must make sure 
our efforts do not prohibit Americans with disabilities from 
living up to their full potential. After all, these programs 
were designed as safety nets, not iron cages.
    Chairman Shaw, as a leader in passing the monumental and 
highly successful welfare reform legislation, you know how 
important it is for people to work. As I have said many times, 
preventing people from working runs counter to the American 
spirit--a spirit that thrives on individual achievements and 
societal contributions.
    Realistically, we also know that our growing economy is in 
need of skilled workers. Certainly, individuals with 
disabilities are eager and highly qualified to meet those 
employment needs. In addition, creating work incentives for 
people with disabilities is not just humane public policy, it 
is sound fiscal policy. Discouraging people with disabilities 
from working, earning a regular paycheck, paying taxes and 
moving off public assistance results in reduced federal 
revenues.
    Like everyone else, people with disabilities have to make 
decisions based on financial reality. Should they consider 
returning to work or even make it through vocational 
rehabilitation, the risk of losing vital federal health 
benefits often becomes too threatening to future financial 
stability. As a result, they are compelled not to work. Given 
the sorry state of present law, that's generally a reasonable 
and rational decision.
    Eliminating the current barriers to work that so many 
individuals face is not just the smart thing to do, it is the 
right thing to do. That's why, in 1993, I worked with Rep. 
Stark on legislation to address the disincentives people with 
disabilities face in federal programs. Last year, I also 
strongly supported the efforts of this Subcommittee to pass 
legislation. While we were not successful in the 103rd or 104th 
Congress to enact meaningful legislation, I remain hopeful that 
we will get something done this year.
    I am confident we can and will work out all the aspects of 
this important legislation. I am glad to report that my own 
state of Minnesota is enthusiastic about implementing pilot 
programs to help individuals return to work. With the 
assistance of disability experts and advocates in Minnesota, 
the state legislature is already working on limited legislation 
and should be able to react to any additional legislation this 
Congress passes.
    Mr. Chairman, thanks again for holding this hearing today. 
Your Subcommittee staff continues to be very gracious in 
allowing me and my staff to work with you on these important 
issues, and I am excited to continue our work together in 
helping people with disabilities return to work.
      

                                

    Chairman Shaw. Thank you, Jim. I can see very clearly that 
you feel very passionately about your testimony, about the bill 
that you and Nancy are filing together. Hopefully, the young 
man that you referred to, the quadriplegic that used to be on 
your staff, can be welcomed back to your staff or some 
productive way of life. You spoke of both of your Senators. I 
can't help but ask how your Governor weighs in on this. 
[Laughter.]
    You talk about a democracy.
    Mr. Ramstad. Well, sir, I never presume to speak for my 
dear friend, Jessie Ventura, our distinguished Governor. 
Knowing that Jessie has a big heart and is also a smart man, 
given his sense of rationality and his feelings for people with 
disabilities, I would be willing to bet my last dollar that 
Jessie would support this legislation. I will get back to you 
on that by the end of the day. He has always been an advocate 
for people with disabilities and we have worked together on a 
number of events to raise money for people with disabilities. 
So, I am sure that Jessie is with us on this.
    By the way, Mr. Habin, the gentleman I referred to earlier 
looks forward to coming out to testify on this bill and looks 
forward to meeting you.
    Chairman Shaw. Very good, very good. We certainly look 
forward to welcoming him before the Subcommittee.
    I have to tell you that one of things my new Governor in 
Florida, Mr. Bush, was looking forward to in going to his first 
Governors' conference was to meet Jessie. I think that was the 
high point.
    Do any of the Members of the Subcommittee have any 
questions?
    Mr. Matsui.
    Mr. Matsui. Thank you. Representative Johnson, I appreciate 
the fact that both you and Jim represent the laws you are going 
to be introducing in this bill. I think that is really great. I 
want to thank you very much for it. Is it my understanding that 
it will be a companion bill, exactly the same bill that the 
Jeffords-Kennedy bill is, or will there be some changes in it? 
Do you happen to know?
    Mrs. Johnson of Connecticut. If any in this Subcommittee 
want to join, we generally don't ask Clay, as Chairman of the 
Subcommittee, and I doubt that Mr. Lazio actually asked you as 
Ranking Member on the Subcommittee, but we will talk about it 
afterward when we will have a broader base. Because the most 
controversial provisions are for Energy and Commerce, in terms 
of Medicaid access and putting some grant money out there to 
encourage the States to really open up their Medicaid Programs, 
we have yielded to the Energy and Commerce members to be the 
leads.
    Mr. Matsui. So it is a work in progress?
    Mrs. Johnson of Connecticut. Yes. We will talk with you 
about it later in the day and update you on where that is. 
Sometimes that takes a little longer than it does on our 
Subcommittee.
    Mr. Matsui. Thank you.
    Mrs. Johnson of Connecticut. I would just like to make one 
additional comment. It is something I have gotten from talking 
to people who are profoundly affected by this legislative 
proposal. I have certainly understood the importance of 
disabled people having the right to work and what it did for 
them personally and what it does for our society. But I did not 
understand what we do to them when we let them into the system 
part way. Then they become a part-time employee who cannot 
participate in any emergency of the business.
    There is a flood or a Christmas rush. Everyone else works a 
little overtime, but they can't. We finally put them in a 
position of always being the employee who says no. Even though, 
actually, they are the employee who wants, more than almost 
anyone else, to work more. We sock them in and, thereby, we 
keep them labeled. We keep them at odds with the people around 
them. We keep them unable to accept their fair share of any new 
workload that comes up. What we do to them to keep them 
identified as other and less competent, even after we let them 
into the work force under the current plan, is positively 
criminal. I am very proud of the work that this Subcommittee 
and our Ways and Means Committee did last year on this issue. I 
think if we can go forward rapidly, we can get the health 
benefit issue addressed, as well.
    Chairman Shaw. Do any of the Members--yes?
    Mr. Hulshof. Mr. Chairman, just a brief statement. First of 
all, I also applaud you for holding the hearing. I think you 
have opened yourself up to the label compassionate 
conservative. I happen to think that is a very positive label. 
Certainly, Mr. Ramstad, we appreciate your work as far as the 
caucus on disabilities and the lead you have taken. I am proud 
to be a member of that caucus with you. Thank you for being 
here.
    Mr. Chairman, and for Mr. Matsui's benefit as well, we have 
got a bill we have been working on that is actually a blend of 
Ticket to Work and the Kennedy-Jeffords bill. Mr. Chairman, you 
hit it right on point saying that, I think, we are all in 
agreement on where we need to be--but some of the details--for 
instance the bill that we are working on. We are concerned 
about the sunset provision in Kennedy-Jeffords on the Ticket 
portion. That is, it sunsets the program by 2004. There is a 
vocational evaluation provision in the House bill that is 
eliminated in Kennedy-Jeffords. Some things like that we are 
really trying to blend together. We want to have the best 
product available. We are glad to have you here, Mr. Chairman.
    Mr. Ramstad. Mr. Chairman, may I respond briefly? There was 
an oversight on my part, along with Ms. Johnson and Mr. Lazio, 
nobody has worked harder on this than Mr. Hulshof. That was an 
oversight on our part, certainly. We appreciate your great 
input on the caucus and also in working on this legislation. 
You have certainly played a major role, to date. I know you 
will continue to do so.
    Mrs. Johnson of Connecticut. I would like to say, too, that 
I really appreciate Mr. Hulshof's leadership and dedication to 
this and getting into the details--the little differences--
between the bills. Many of us have been, sort of, a little more 
focused on getting the other Committee mobilized and moving 
forward. This does have to be a Joint Committee effort this 
year. Last year we were able to bring it through our own 
Committee, but we really have to broaden that base. Mr. 
Hulshof, you have really done yeoman's work on this and we 
appreciate it very much.
    Chairman Shaw. Mr. Doggett.
    Mr. Doggett. Well, I would just like to add a second to 
that broadening the base part. I share the passion both of you 
have voiced, largely from working on related issues at the 
State level for much of the last 25 years. I am afraid that if 
we don't deal more comprehensively with the health insurance 
barrier, we will do the very thing that you, Mrs. Johnson, 
indicated that we do not want to do. That is, to just put them 
in part way and create false expectations that we are 
addressing this issue when, in fact, that health insurance 
barrier remains so very severe. One would think, Jim, if you 
can get that kind of agreement among your senators in 
Minnesota, we ought to be able to reach across all parts of the 
aisle and get it over here in the House and make some 
bipartisan progress to deal with this matter in a comprehensive 
fashion, rather than in a piecemeal fashion.
    Mr. Ramstad. Certainly, we are not ignoring your side. We 
are trying to get our act together first. We want a broad 
bipartisan support for this bill, like they have in the Senate. 
We are going to get it, with your help.
    Mrs. Johnson of Connecticut. There is the assumption in 
this bill, that Medicare is going to find a way to provide, at 
least, critical prescription drugs. We don't specifically 
address that in this bill. But if Medicare fails to do that, we 
will have to come back and specifically address that because it 
is so critical to many who are disabled. The issue of Medicaid 
coverage is extremely important because that is the only health 
program in the Nation, public or private, that covers personal 
assistance care. For many people, without that kind of help in 
getting out the door every morning and getting back and other 
workplace support, we can't do this. This has to be a much 
broader-based approach in terms of health benefits. We were 
able to mobilize the last Congress.
    Chairman Shaw. Any further Members?
    [No response.]
    I want to thank this panel. You have certainly brought 
something to us that we are going to be taking a really hard 
look at. Let us not forget that we need to pay for the 
legislation, so I hope you will have some recommendations for 
us in that way. What you are asking for, I can see, is very 
badly needed.
    I have been advised that we may have as many as six votes 
on the floor. We will return as quickly as we possibly can. 
Everyone has plenty of time to go walk around in the hall for 
awhile, if you want to. We will commence this hearing just at 
the conclusion of the last vote. We stand in recess.
    [Recess.]
    Chairman Shaw. The Subcommittee will come back to order.
    For our next witness we have Kenneth Apfel, Commissioner of 
Social Security. He is accompanied by Dr. Susan Daniels, Deputy 
Commissioner for Disability and Income Security Programs.

  STATEMENT OF HON. KENNETH S. APFEL, COMMISSIONER OF SOCIAL 
SECURITY, SOCIAL SECURITY ADMINISTRATION; ACCOMPANIED BY SUSAN 
 DANIELS, PH.D., DEPUTY COMMISSIONER FOR DISABILITY AND INCOME 
                       SECURITY PROGRAMS

    Mr. Apfel. Thank you Mr. Chairman, Mr. Ranking Member, and 
Members of the Subcommittee for inviting me to speak with you 
today about initiatives to help Social Security and SSI, 
supplemental security income, disability beneficiaries return 
to work. Joining me today is Dr. Susan Daniels, our Deputy 
Commissioner for Disability and Income Security Programs, who 
has been a tireless supporter of efforts to promote work.
    Mr. Shaw, Mr. Matsui, I believe the best element of welfare 
reform has been changing the dynamic about work. Ever since my 
first graduate degree in rehabilitation counseling nearly three 
decades ago, I have believed in work as a pillar, a well to 
drink from, for people and for families. As a nation, we are 
best served when all of our citizens have the opportunity to 
contribute their talent, ideas, and energy. This can and should 
be the year in which we make significant progress toward this 
goal for disabled Americans.
    Today, I would like to provide a brief overview of the 
Administration's efforts to help return Americans with 
disabilities to work and also outline some specific proposals 
now before Congress. Historically, only a small number of our 
approximately 10 million Social Security and SSI, supplemental 
security income, disability beneficiaries attempt to return to 
work each year--in fiscal year 1998, about 10,000 
beneficiaries. But many more individuals with disabilities want 
to return to work. It is the Administration's fundamental goal 
to remove barriers to work.
    Last year, the President established a National Task Force 
for Employment of Adults With Disabilities to create an 
aggressive, coordinated, national policy to promote gainful 
employment. As part of the task force, Vice President Gore 
announced last September the awarding of grants by SSA to nine 
States, totaling $4.4 million, to develop innovative return-to-
work projects. In January we announced that SSA will fund a 
Disability Research Institute that will help provide 
policymakers with pertinent information and research data. In 
February we announced a proposal to increase the amount that 
disabled adult beneficiaries can earn while still remaining 
eligible for benefits. The proposed regulations would increase 
the amount from $500 to $700 per month, and may affect as many 
as one-quarter of a million beneficiaries with disabilities.
    I also want to note that later today I am releasing a 
report on how my agency can improve its disability process 
through improved decisionmaking, stronger safeguards for 
program integrity, increased research into disability and, of 
course, better return-to-work policies. My staff will be 
available shortly to brief you on the report.
    Mr. Shaw, Mr. Matsui, and Members of the Subcommittee, the 
cornerstone of our return-to-work strategy at SSA remains our 
commitment to the Ticket to Work Program first proposed in 
1997, and again included in the fiscal year 2000 budget. For 
too long our disability programs have been seen, in part, as 
tickets out of the work force. It is clear that the cash 
support for our disability program provides essential support 
in needy times for millions of Americans. Millions of our 
beneficiaries will never be able to return to work.
    But the Ticket to Work proposal will help some people get 
off the disability rolls and back to the work force. We believe 
that the Ticket to Work proposal will result in many more 
opportunities for beneficiaries to receive return-to-work 
services. The proposal represents a public-private partnership 
designed to provide its customers with control and flexibility 
in securing rehabilitation and employment services. It is 
fiscally responsible since it focuses on outcomes. Providers 
would only be paid for results. It is innovative, recognizing 
that the customary ways of doing business have not yielded 
satisfactory results.
    Under the Ticket to Work program, all disabled Social 
Security and SSI beneficiaries, except those for whom medical 
recovery is expected, will be eligible to participate. 
Beneficiaries can use the tickets to obtain services from any 
enrolled public or private provider of their choice. Vocational 
rehabilitation agencies can participate on the same basis as 
any other provider. The provider of services would be paid only 
after the beneficiaries return to work and no longer receive a 
cash benefit under the Social Security or SSI Programs.
    We steadfastly believe in the value of the Ticket to Work 
proposal which incorporates some of the more effective 
initiatives already underway and builds upon their strengths. 
For example, 5 years ago this month, SSA amended its vocational 
rehabilitation regulations to broaden the providers of 
rehabilitation services that are available. As of this week, we 
have been able to sign contracts with 419 alternative 
vocational rehabilitation services providers across the 
country. We are encouraged by the results of our initiatives in 
this area. We believe a fully realized Ticket to Work Program 
would make a meaningful difference in helping individuals with 
disabilities return to work.
    The Administration is also seeking support for a 
legislative proposal that provides beneficiaries who attempt to 
work the assurance that cash and health benefits can be 
restored in a timely fashion if they must stop working. Let me 
also say, I believe the assurance of continued health benefits 
is central to any initiative in helping return severely 
disabled individuals to work.
    When I travel around the country, people tell me it is the 
fear of losing health care benefits and coverage that would 
most likely dissuade people from attempting to return to work.
    I want to take this opportunity to thank the Members of the 
Subcommittee for their support of the Ticket over this past 
year, as well as your support in passing an extension last year 
of the demonstration authority of section 505(a) of the Social 
Security Disability Amendments of 1980. Unfortunately, it was 
not enacted and the Administration is seeking a permanent 
extension of demonstration authority so that we can initiate 
new projects for researching return-to-work strategies.
    In conclusion, let me say that the Social Security 
Administration looks forward to working with you and other 
Members of the Congress to enact fiscally responsible 
legislation that can help more Americans with disabilities to 
successfully return to work. It is a goal that is supported not 
only by our disability beneficiaries, but, I believe, by all 
Americans.
    Thank you. We would be happy to answer any questions that 
you may have at this time.
    [The prepared statement follows:]

Statement of Hon. Kenneth S. Apfel, Commissioner of Social Security, 
Social Security Administration

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me here today to discuss initiatives 
to assure that the Social Security Administration's (SSA) 
beneficiaries with disabilities who want to work have the 
opportunity to do so. I am accompanied today by Dr. Susan 
Daniels, Deputy Commissioner for Disability and Income Security 
Programs.
    Since President Clinton took office, the American economy 
has added nearly 18 million new jobs; and unemployment is the 
lowest in three decades. The unemployment rate among all 
working-age adults with disabilities, however, is nearly 75 
percent. According to current estimates, about 16 million 
working-age adults have a disability that leads to functional 
limitations and 14 million working-age adults have less severe 
but still significant disabilities. In addition, individuals 
with disabilities also face multiple barriers to work, which 
include: Lack of adequate health insurance, higher costs of 
work, a disconnected employment service system, and 
inaccessible or unavailable technology. Not only is it more 
difficult for people with disabilities to work; when they do 
work, their earnings are lower.
    As a nation, we are best served when all our citizens have 
the opportunity to contribute their talents, ideas, and energy 
to the workforce. There are a number of initiatives underway 
both at SSA and in Congress which promise to make this year one 
in which we see significant progress in doing just that. Today 
I will discuss the Clinton Administration's ongoing efforts to 
help people with disabilities participate in the workforce.

                   Clinton Administration Initiatives

    I would like to tell you briefly what we have done and what 
we would like to do. As part of this Administration's 
continuing commitment to the return to work effort, President 
Clinton established the National Task Force on Employment of 
Adults with Disabilities on March 13, 1998 by Executive Order 
13078. This high-level task force includes the Secretaries of 
Labor, Education, Veterans Affairs, Health and Human Services 
(HHS), as well as the Administrator of the Small Business 
Administration, the Chair of the Equal Employment Opportunity 
Commission, the Chair of the National Council on Disability, 
and the Commissioner of Social Security.
    Briefly stated, the purpose of the task force is to create 
an aggressive and coordinated national policy to bring adults 
with disabilities into gainful employment at a rate that is as 
close as possible to that of the general adult population. This 
involves studying existing policies to determine what changes 
are necessary to remove barriers to work, to develop health 
insurance options, and analyze the outcomes of programs related 
to employment for young people with disabilities. The final 
report of the task force is due to be issued in July 2002, with 
the first interim report issued last month.
    As the first activity launched by the task force, Vice 
President Gore announced last September that SSA, in a 
collaborative effort with the Departments of Health and Human 
Services, Education, and Labor, would award grants to 12 States 
initially totaling over $5 million to develop innovative 
projects to assist adults to reenter the workforce. It is 
expected that the new approaches now getting underway in these 
States will create Federal/State partnerships and serve as 
models for other States to replicate. This is one of many 
activities recommended by and acted upon by the Administration. 
In fact, as of January, actions had been initiated on every 
recommendation in the Task Force's Interim Report.
    Last July, the President announced his commitment to enact 
affordable, feasible legislation to help people with 
disabilities maintain their health care-coverage and return to 
work.
    In January, I announced that SSA will fund a Disability 
Research Institute to help provide policy makers with 
information and research data in the disability policy area, 
including ways to strengthen return-to-work policies for people 
with disabilities. The Disability Research Institute should be 
operational by the end of the year.
    On February 12th we announced SSA's proposal to increase 
the amount that adult beneficiaries with disabilities can earn 
while still remaining eligible for benefits. The proposed 
increase, from $500 to $700 per month, may affect as many as 
250,000 Social Security beneficiaries with disabilities.
    This year the President continues his commitment to 
improving opportunities for disabled Americans. The President's 
fiscal year (FY) 2000 budget contains a package of new 
initiatives that will remove significant barriers to work for 
people with disabilities. This three-part initiative, which 
invests over $2 billion over five years, includes: (1) The Work 
Incentives Improvement Act, which was introduced in the Senate 
by Senators Jeffords, Kennedy, Roth and Moynihan and includes 
the Ticket to Work proposal enacted by the House last year; (2) 
a new tax credit of $1,000 annually for workers with 
disabilities to help defray the monetary or in-kind costs 
incurred by people with disabilities who need transportation, 
special job equipment, or other assistance to return to work; 
and (3) expanded access to information and communications 
technologies. With these new proposals, the Administration will 
have taken action on every recommendation made in the 
President's Task Force on the Employment of Adults with 
Disabilities.
    As a further incentive to encourage beneficiaries to return 
to work, the Administration has developed a legislative 
proposal to assure cash and health benefits can be restored in 
a timely fashion for former beneficiaries who must stop working 
but continue to meet the disability standards. These 
individuals, whose entitlement was terminated because of work, 
could request reinstatement without filing a new application as 
long as it is within 5 years of the termination, and receive 
provisional benefits--cash and Medicare or Medicaid, for up to 
6 months while SSA is making a determination.

                        Ticket to Work Provision

    In 1997, the Administration first proposed its ``Ticket to 
Independence,'' which was later included in the President's FY 
1999 Budget. Last year, based on the Administration's proposal, 
two former members of this Subcommittee, Representatives 
Bunning and Kennelly, introduced the ``Ticket to Work and Self-
Sufficiency Act,'' which was passed overwhelmingly last year in 
the House and is a key part of this year's Senate Work 
Incentives Improvement Act. This proposal is included in the 
President's FY 2000 Budget.
    We believe that the Administration-proposed ``Ticket'' will 
result in many more opportunities for our beneficiaries to 
receive the services they need in order to work. The ``Ticket'' 
is a public-private partnership to give people receiving 
disability payments what they want and need--the control and 
flexibility to secure services tailored to their individual 
requirements from their choice of providers. The ``Ticket'' 
maintains fiscal discipline, since providers would be paid only 
for results.
    The ticket would enable an SSI and SSDI beneficiary to go 
to either a public or a participating private provider. 
Providers who accept the ticket would have more flexibility in 
selecting their preferred reimbursement.
    The Ticket proposal included in the President's Budget is 
based on the following fundamental principles:
    Customer Choice: We believe that beneficiaries desire and 
need maximum flexibility and choice in pursuing services which 
will help them to become gainfully employed. Beneficiaries with 
disabilities must be able to choose a participating public or 
private employment or rehabilitation provider to receive the 
services that they need to participate in the workforce.
    Paying for Outcomes: Beneficiaries and providers alike 
should focus on the goal of stable employment. A focus on 
outcomes and milestones is best achieved by linking it to 
financial rewards. Our goal is to reward success while using 
public funds in an accountable and targeted way.
    Encouraging Innovation: We believe the competitive spirit 
in the proposed legislation will encourage innovations in the 
private and public sectors by creating opportunities for State 
agencies, local non-profit and for-profit providers, employers, 
and beneficiaries.
    The Administration-proposed ``Ticket'' is designed to bring 
new service providers into this process. We want to develop new 
and innovative ways to bring beneficiaries with disabilities to 
the workforce based on actual outcomes, working with capable 
and committed service providers, and providing a strong 
infrastructure of information and support services. Many of 
these concepts are currently underway at SSA, and I would like 
to take this opportunity to discuss some of our initiatives.

                            SSA Initiatives

    Historically, a very limited number of our approximately 10 
million Social Security, Old Age, Survivors and Disability 
Insurance (OASDI) and Supplemental Security Income (SSI) 
disability recipients leave the disability rolls each year 
because of successful rehabilitation. In fiscal year (FY) 1998, 
SSA paid State VR agencies about $102 million for their 
services provided to approximately
    10,000 beneficiaries with disabilities who worked at least 
9 months at the substantial gainful activity level. Although 
this was a record year for reimbursements, I believe we can do 
better.
    Based on our experience and extensive collaboration with 
professional groups and advocates, we have learned that many 
more individuals with disabilities want to work and will do so 
if they have access to the rehabilitation services they need to 
reenter the workforce. We recognize the myriad of complex and 
sensitive issues that must be addressed to remove barriers to 
participation in the workforce.
    With this in mind, we have made progress on a number of 
other initiatives in the return-to-work arena which I would now 
like to share with you.

                           Alternate Provider

    It is clear that there are many providers in the private 
sector who are willing to help. In March 1994, SSA amended its 
VR regulations to provide more opportunities for people with 
disabilities to receive the employment and rehabilitation 
services they need to return to work or enter the workforce for 
the first time.
    These regulatory changes allowed SSA to refer Social 
Security Disability Insurance (SSDI) beneficiaries and SSI 
recipients who are blind or disabled to VR service providers in 
the public or private sectors. The option of serving the 
beneficiary continues to be offered first to the states; 
however, if SSA does not receive notification that the state VR 
agency has accepted a beneficiary for services by the end of 
the 4th month after the month of referral, we may arrange for 
an alternate provider of rehabilitation services to serve that 
individual. Usually, these providers come to us from the 
private sector. (Of course, this process would change with 
passage of the ``Ticket.'')
    To further expand the pool of alternate providers, we have 
released two RFPs, the second of which will remain open 
continuously. It is important to note that this is not a 
competitive procurement with limits on the number of the 
contracts awarded. We are interested in expanding the pool of 
providers who can serve our beneficiaries and will award 
contracts to all providers who qualify. Through the first week 
of March, we have signed contracts with 419 VR service 
providers nationally.
    Some of these providers have begun to work with our 
beneficiaries. We just authorized payment for the first 
successful case, with several other cases soon to mature for 
payment. Alternate providers, like current VR providers, are 
reimbursed only after an individual has been working at the SGA 
level for at least nine months.

                              Project RSVP

    Our experience with Project RSVP (Referral System for 
Vocational Rehabilitation Providers) will help us better 
understand the concept of using a program manager to oversee 
service providers. The objective of Project RSVP is to assure 
that return to work services are more readily available to SSA-
referred individuals while improving the administration and 
cost-effectiveness of the program. RSVP is a 3-year 
demonstration project to test the advantages and the cost-
effectiveness of contracting out certain administrative 
functions under SSA's VR referral and reimbursement programs, 
and assist in managing the alternate providers. On September 
27, 1997 a contract was competitively awarded to Birch & Davis 
Associates, Inc. of Maryland. Birch & Davis is marketing the 
project to potential VR providers. In addition, a toll-free 
number to provide technical assistance and respond to questions 
from beneficiaries and providers as well as the contractor's 
bulletin board to refer individuals to alternate providers is 
in place.

                        Self-Referral Initiative

    With the assistance of the RSVP contractor, we are 
expanding ways to provide SSDI and SSI recipients with 
disabilities or blindness increased access to rehabilitation 
and employment services to help them go to work. Under this 
process, these individuals have the opportunity to self-
identify their interest in receiving return-to-work services by 
calling a toll-free number. Our contractor will obtain 
information from the caller, combine it with information 
supplied by SSA and transmit a referral to the State VR agency 
and/or the alternate provider(s) serving the individual's area 
of residence. We believe this initiative helps to support our 
intent to offer beneficiaries a more pro-active role in 
assessing services at a time that is most appropriate to their 
circumstances.
    Through all of these provider initiatives, we have and will 
continue to gain valuable insight and experience that we will 
use to ensure the success of the proposed legislation. We are 
encouraged by the results. We have learned that many highly 
skilled, outcome-focused agencies and professionals are eager 
to assist our diverse population to return to work. And, we 
have learned that individualized planning and support is 
essential to successful work re-entry.

                 Delivery of Work Incentive Information

    We are working with the Virginia Commonwealth University to 
develop and test a decision support software package called 
WorkWorld for use in assisting consumers and service providers 
in determining the effects of work on their entitlement to SSA 
benefits as well as other federal/state benefits, such as food 
stamps. This will allow our beneficiaries to make more informed 
choices regarding employment opportunities.
    We have created an attractive education kit called, 
``Graduating to Independence'' (GTI), that is aimed 
specifically at youth in transition from education to 
employment and their families. The kit is designed for use by 
educators or professional organizations to instruct young 
beneficiaries and their families about SSA's work incentives. 
This multimedia kit contains a videotape and several computer 
disks, in addition to written materials, that combine facts 
with motivational examples. We have been very aggressive in 
distributing the GTI kits, sending them to school districts 
across the country, and handing them out at national 
conferences.
    Additionally, we publish a number of other training and 
public information materials on work incentives. These 
materials are provided in multiple formats and have been 
designed with significant consumer input to be user-friendly. 
And, we have developed an Internet website which contains 
information about work incentive provisions, access to our 
publications, and information on our rehabilitation and 
employment programs.
    Finally, SSA Operations and Program Offices are working 
together to assess our policies and procedures relative to our 
work incentive service delivery. Through this process, we are 
exploring ways we can improve the accuracy and timeliness of 
work incentive information in our field offices. Beyond that, 
we plan to develop methods to speed ``on-demand'' information 
to customers and stakeholders.

                        Demonstration Authority

    The demonstration authority of section 505(a) of the Social 
Security Disability Amendments of 1980 expired June 10, 1996. I 
want to thank the members on this Committee for their support 
for an extension passed by the House last year, which 
unfortunately was not enacted. In order to initiate any new 
projects under the SSDI program for researching return-to-work, 
the Administration seeks a permanent extension of demonstration 
authority so that we can test new approaches to accomplish our 
goals in this area. With this renewed authority, SSA can 
develop a comprehensive strategy that integrates earlier 
intervention, and identification and provides necessary 
assistance in removing barriers to work for applicants and 
beneficiaries.
    With renewed authority we will pursue other projects that 
bring us closer to our goal of supporting the active 
participation of our beneficiaries with disabilities in the 
workforce.

                              Health Care

    Finally, although I would defer to HHS on the details, I 
would like to mention the issue of health care coverage, which 
is addressed in the President's legislative package and is part 
of S. 331, ``The Work Incentives Improvement Act.'' Fear of 
losing health care coverage is frequently cited as the most 
common reason many disabled beneficiaries do not attempt to 
return to work. These initiatives would expand Medicare and 
Medicaid so that people can retain their health benefits 
coverage when they return to work. Under the proposal, Medicare 
coverage for disabled beneficiaries who return to work during 
the next 10 years would continue so long as they remain 
disabled and States would be permitted to allow disabled 
individuals to buy insurance through Medicaid. In many cases, 
people returning to work either work part-time and are not 
eligible for employer based health insurance or work in jobs 
that do not offer insurance. These health options, included in 
the President's budget, are essential complements to the Ticket 
to Work and other policies to remove barriers to work for 
people with disabilities.

                               Conclusion

    Mr. Chairman, I want to assure you that the Social Security 
Administration stands ready, willing, and able to work with 
lawmakers on both sides of the aisle to enact fiscally 
responsible legislation to help thousands of Americans with 
disabilities, who with appropriate services and support, can be 
successful in obtaining or continuing to work. People with 
disabilities can bring tremendous energy and talent to the 
American workforce, but institutional barriers often limit 
their ability to work. We need new and innovative approaches so 
that Americans with disabilities can work. The President's 
three-part budget initiative in addition to the other 
initiatives I have discussed today represent not only new 
approaches, but also a continued commitment to make every 
effort to enrich the lives of people with disabilities and to 
help those who want to work do so.
    I would be happy to answer any questions.
      

                                

    Chairman Shaw. Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman.
    I would like to thank Dr. Daniels and you, Commissioner 
Apfel. I just want to ask one question.
    You reviewed the Jeffords-Kennedy legislation that passed 
the Senate Finance Committee, last week, on a 16-to-2 vote, I 
believe. Does the administration support that version of the 
Ticket to Work proposal?
    Mr. Apfel. We support the ticket proposal and we support 
the health care provisions. The Administration supports both. 
There are a series of minor differences that have been raised 
that we will need to work through in the months ahead. We 
believe all of those issues are entirely resolvable. We fully 
support the ticket and the health care provisions.
    Mr. Matsui. Thank you very much. And in both the health 
care and the ticket provisions?
    Mr. Apfel. Yes.
    Chairman Shaw. If I might expand on that, the health care 
provisions, are you also endorsing the revenue raisers on that, 
or have you had a chance to really take a position on that?
    Mr. Apfel. I think you are out of my territory on that one, 
Mr. Chairman.
    Chairman Shaw. For the purposes of the record, you are 
speaking only on the health care provisions and you are not 
commenting on the balance of it.
    Mr. Apfel. I am not commenting. I don't know the answer on 
the revenue proposal.
    Chairman Shaw. That is certainly fair enough. Do any of the 
other Members have any questions?
    Mr. Hulshof.
    Mr. Hulshof. To follow up on Mr. Matsui's question, 
Commissioner, the Work Incentives Improvement Act--I think it's 
the official term of the Kennedy-Jeffords bill that passed the 
Senate Finance Committee last week--requires implementation 
begin within 1 year of enactment, full implementation within 
the following 3 years. As you know, the ticket bill that we 
talked about, and you testified about last time, gives Social 
Security Administration more of a gradual implementation. Is 
there some concern, on your part, on that particular provision? 
That is one of the discrepancies between the two bills. I would 
like your comments.
    Mr. Apfel. It is one of the discrepancies; 6 years in the 
provision in last year's House bill; 3 years in the Senate. We 
think we can work somewhere in the range of those two and come 
up with something that would be perfectly reasonable. We don't, 
at all, oppose the Senate provision of 3 years. We think we 
will be making very strong progress in all areas by 3 years. 
What exactly full implementation is in 3 years is for the 
future. We expect 3 years would be fine. If we could work out 
something a little bit clearer, that would be fine also.
    Mr. Hulshof. As they say in wedding ceremonies, Speak now, 
or forever hold your peace.
    Mr. Apfel. Absolutely.
    Mr. Hulshof. OK. I know I was expecting GAO to testify 
before you, but I am glad to have you here. Let me ask you to 
comment on GAO's testimony. In their testimony they talk about 
the income cliff recipients face if they return to work. Under 
law those who do want to go to work can make as much as $500 
from work, on top of the $500 or so in benefits, but no more 
than that or they lose benefits all together. Is that your 
understanding as well?
    Mr. Apfel. I think the cliff needs to be addressed. I think 
it is one of the more important elements of the reform 
legislation. We have really two answers to that. One is that I 
have promulgated draft regulations to raise the $500 monthly 
amount to $700, to enable more work. We expect about one-
quarter of a million individuals to benefit from that. Also, as 
part of our demonstration authority, we would be able to look 
at a phasedown where benefits would be reduced by $1 for every 
$2 in earnings, which is closer to what happens in the SSI 
Program. This is absolutely the right thing to do. We strongly 
support that provision in the bill. We would like to be able to 
conduct major efforts in this area to determine the cost, the 
efficacy, and the importance of such an approach.
    Mr. Hulshof. Thank you for your testimony.
    Thanks, Mr. Chairman.
    Chairman Shaw. Mr. Cardin.
    Mr. Cardin. Thank you, Mr. Chairman. It is a pleasure to 
have you here, Mr. Apfel.
    We have been talking a great deal about the obstacles in 
the way of disabled individuals being able to work. Let me talk 
a little bit about the vocational rehabilitation programs 
themselves. This change seems like a win-win situation. We are 
allowing the person that is disabled to have a ticket to get 
rehabilitation services from a much broad ranger of providers, 
but the reimbursement is limited to only if the provider 
succeeds in getting the person to work 9 months. The Chairman, 
in announcing this hearing, points out the very low number of 
people who are disabled who return successfully to the 
workplace. Is there interest out there among the providers in 
participating in these programs and getting people into 
rehabilitation services, knowing the risk that reimbursement is 
limited to whether they succeed in rehabilitating the 
individual to work? Is there interest out there?
    Mr. Apfel. I think there is enormous interest. We have over 
400 alternate providers under our current system, so there is a 
lot of interest. What we need is the financing mechanism that 
the Ticket provides.
    I believe that focusing on outcomes is centrally important 
here. Rather than reimbursing for services only, we need to be 
able to ultimately focus on outcomes. I think focusing on 
outcomes almost always makes sense. In this case, paying for 
outcomes is essentially important. We would like to see the 
legislation have a provision included that would allow payments 
or milestone payments--because I think milestone payments make 
sense--only if a person has returned to work, rather than 
milestone payments before the individual has returned to work. 
We believe the alternate providers, the whole provider network, 
the employment networks will be able to, given the extra 
payment system, provide a big difference for individuals. Going 
away from just funding services is centrally important. 
Focusing on the outcome--the outcome is work and the payment is 
tied to work--will create great incentives for our providers to 
move people to work. That is one change we would like to see in 
the legislation.
    Mr. Cardin. Just one last question. With the State 
vocational rehabilitation services, could you talk a little bit 
about the capacity and why there is need to go beyond just the 
traditional State programs?
    Mr. Apfel. Some of our research in the past with the old 
505 demonstration authority showed us that there were many 
organizations, whether it be ARC, sheltered workshops, or 
Goodwill Industries, that would love to be able to help our 
client population return to work. The vocational rehabilitation 
system has done a good job. About 10,000 people last year moved 
through that system and returned to work. We provided about 
$100 million last year for that activity. Broadening the 
program to give individuals choice beyond the traditional State 
vocational rehabilitation system creates, I think, incentives 
for our vocational rehabilitation system to do better, as well 
as provides other vehicles for other organizations to do more. 
We don't think this is going to hurt the vocational 
rehabilitation system. We think this is going to strengthen the 
vocational rehabilitation system, giving vocational 
rehabilitation agencies the capacity to also be involved with 
the Ticket. It creates a more competitive environment with 
individuals having more choice. We think that is good for our 
beneficiaries. We think it is good for the service network.
    Mr. Cardin. Let me just reinforce that. I think it is our 
vocational rehabilitation services at the State level that want 
to be able to expand and allow their clientele to be able to 
have a broader base of providers. So, everything we have heard, 
I think, makes a great deal of sense. I appreciate the fact 
that you want it based upon outcome which is an accountability 
where it should be. It seems to me we can do a lot better job 
in helping people with rehabilitation services, directly, in 
addition to removing the obstacles that are currently in the 
way for a person to be able to be gainfully employed. You are 
doing it from both points of view: Provide the services that 
they need; give them the training; give them the help, and then 
remove the barriers. It seems to me that it is a well-balanced 
program.
    Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Doggett.
    Mr. Doggett. Thank you. Thank you for your testimony. You 
mentioned that under the alternate provider program, I believe, 
through last week you had signed up about 419 vocational 
rehabilitation service providers. About how many beneficiaries 
have actually signed up for services at this point?
    Mr. Apfel. Very few. I don't have the exact number. What is 
needed is the reimbursement system. We have a well of 
organizations that are interested in providing services. But 
without the ticket, there is very little ability to match up 
individuals and need with the organization. What is needed to 
see a significant increase is the ticket.
    Ms. Daniels. I would like to add something to what you 
said, Commissioner. Mr. Doggett, the program is fairly new and 
required us to develop a whole infrastructure: A way to sign up 
providers, a way to run a bulletin board. We are just really 
beginning to put all of that into place. So, we only have a few 
people, now, actually signed up with a particular provider. But 
we expect that over time that will pick up dramatically.
    Mr. Doggett. Now you consider vocational rehabilitation at 
the time of the initial disability determination. Do you also, 
if it is not the appropriate thing to do at that point, have a 
process by which you raise it again later in the process?
    Ms. Daniels. Not at this time. The current alternate 
provider program must follow the current statute which says 
that we have to refer individuals to vocational rehabilitation 
first and wait for vocational rehabilitation to serve them or 
not serve within a certain window. Then we can refer these 
individuals on to other providers. We are beginning to explore 
the opportunity for people to self-refer to alternate 
providers, but we have to work within the constraints of the 
current statutes. The ticket would give us more flexibility in 
offering more opportunity to current beneficiaries who are 
already on the rolls, not just people who just applied.
    Mr. Doggett. As this legislation was proposed last time, 
would it have the flexibility to consider vocational 
rehabilitation referrals at a later point after someone had 
been on the disability rolls for some time? Because I think 
there is some literature that suggests that there is merit to 
doing it other than just at the initial determination.
    Ms. Daniels. My understanding of the ticket is that we 
would be able to issue tickets to all beneficiaries, not just 
to those who recently entered the rolls. So, all of our 
beneficiaries, no matter how long they have been on the rolls, 
could make the choice to seek services.
    Mr. Doggett. I think this is evident, Commissioner, from 
your initial testimony. I gather it is your view from the work 
that you have done that unless we address this health insurance 
issue as it is addressed in the Kennedy-Jeffords bill, we are 
going to leave out tens of thousands of people out there who 
would like to work, who would like to be participating in the 
economy for themselves and for the benefit of the taxpayer as 
well, and would like to be taxpayers. They are going to be left 
out if we don't address the health insurance issue and just 
leave it part way in progress in this area.
    Mr. Apfel. Mr. Doggett, I totally agree. Every time I am 
speaking to disablility groups, to individuals who are on our 
rolls, the major issue is a fear of the unknown. That fear of 
leaving the program and losing health care coverage is the 
absolute biggest concern. I think it is the fundamental issue.
    I would also point out that the provision that we think is 
very important in the Senate bill is what is called the easy on 
provision. Basically, it enables an expedited eligibility 
process if someone goes off the rolls.
    Right now, the decision to move to employment and go off 
the rolls triggers, under current law, the need to reapply all 
over again. That provides enormous disincentives for moving 
into work. So, we need a system, and again the Senate bill does 
address this, that enables an easy on. An individual who leaves 
our rolls through work can come back on automatically and then, 
within 6 months, we would conduct a disability review to 
determine whether there is still a disabling condition. That 
means the individual immediately has access to health care, and 
is immediately able to come back on the rolls. That eliminates 
both the major barriers of access to health care as well as 
concern that you are never going to get back on the rolls. 
Ultimately, the notion of health care coverage is central to 
our future successful efforts in this area.
    Mr. Doggett. Thank you. Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Portman.
    Mr. Portman. Thank you, Mr. Chairman. I commend you for 
having the hearing and for doing all you can to move this 
legislation forward this year--kind of unfinished business from 
last go around.
    I have found this morning just listening and reading this 
testimony, I have been around here too long already. I feel 
like I am still a freshman, but I guess I have been here a few 
years, and, as the archivist of the Subcommittee, I have to 
make the comment that I worked with then-Chairman Bunning and 
Mrs. Kennelly, the Ranking Member on this starting in 1997, 
and, although I am delighted that the Administration has this 
in their proposals, I see here that it was based on the 
Administration's proposal. They actually came up with that 
initially out of this Subcommittee, and I think it was creative 
work, and I think that it deserves to be credited to the former 
Chairman and Ranking Member. So, just that quick comment.
    I really appreciated the testimony earlier, also, from Ms. 
Johnson and Mr. Ramstad and the commitment that I am hearing on 
both sides of the aisles in wanting to move this forward this 
year with the additional Medicare and Medicaid provisions to be 
sure that health is covered.
    I have two quick questions, if I might. One is this notion 
that we were hearing last year from the State folks which we 
need to be sure that SSA is encouraging work at the earliest 
opportunity, and that there is early intervention. We heard 
this from the State administrators, the vocational 
rehabilitation people, and my question to you is, are your 
efforts successful? Is SSA promoting employment possibilities 
at the earliest possible point? Initial disability 
determination, for instance--and is that working well for you?
    Mr. Apfel. It is not working well for us yet. But we 
believe it is the ticket that will help us to be able to do 
that.
    There is another thing that would help us, too, which this 
Subcommittee and this Committee has helped us do, which is to 
extend our demonstration authority which we would like to have 
extended on a permanent basis----
    Mr. Portman. In a pilot program----
    Mr. Apfel. One of the things that we would like to test is 
whether for someone, even before getting on the disability 
rolls there is a way to do an intervention at the point before 
benefits start. We would need our demonstration authority to 
test that. It is one of the reasons why we would like to have 
that demonstration authority.
    But, ultimately, the goal of the ticket, and of our 
demonstration authority, is to test ways to intervene earlier 
and earlier.
    Mr. Portman. Another good reason to get this done this year 
and to include that authority.
    The USA accounts that the President has proposed in the 
State of the Union, and we haven't seen specifics of yet, might 
effect individuals with disabilities, and I wanted to ask you 
about that. Do you know whether folks would be able to make 
withdrawals from these USA accounts if they became disabled?
    Mr. Apfel. As you point out, Mr. Portman, the details on 
the USA accounts are not yet available, but that is also the 
Treasury Department's issue as opposed to the Social Security 
Administration. So, I don't have an answer to that question.
    Mr. Portman. Would you support that?
    Mr. Apfel. I think that is a tough issue. It is a tough 
issue on a couple of different fronts.
    One, if we are creating retirement savings for the future 
as a supplement to a major base of adequate support, then 
having the ability to utilize supplemental resourcese while 
disabled potentially could be beneficial. But, depending on the 
adequacy of the retirement plan out there, if the individual 
account becomes a large part of what a person has for 
retirement, and if that money gets consumed before getting to 
retirement age, then that is putting a person very much at 
risk.
    So, I really am of two minds as to whether that retirement 
account should be available at disability, and there are----
    Mr. Portman. The other question is, what effect would that 
have if that were available on the likelihood of disability 
claims being increased or decreased into the future? And I just 
think that it is something to think about as you are putting 
together this proposal. I assume the Treasury Department is 
coming to you for advice on this since it is related to both of 
your programs, disability and retirement.
    Mr. Apfel. They are, sir, and I will take that under 
advisement.
    Mr. Portman. Both of the hats that you wear.
    Thank you, Mr. Chairman.
    Mr. Apfel. Mr. Portman, if I could add for the record, that 
the Administration first proposed the ticket in 1997, and had 
been working very closely with the Chairman and Mrs. Kennelly.
    Mr. Portman. I'm told that the Bunning bill was September 
1996. I hate to be the historian around here. I've only been 
here since 1993.
    Chairman Shaw. But, also, in order to clarify the record, 
too, the Ranking Member there was Andy Jacobs who was a 
cosponsor.
    Mr. Portman. That is correct. Andy Jacobs was the first 
Ranking Member.
    Chairman Shaw. We will all leave Congress someday, and we 
would like to be remembered.
    Mr. Portman. There you go. I am doing it for the benefit of 
all of us.
    Mr. Apfel. Well, it is my hope and expectation that we will 
all be remembered in a very positive light when this 
legislation is adopted. And, if we look back in a bipartisan 
fashion, the Administration and Congress will all realize that 
we made a major contribution.
    Chairman Shaw. Well, as President Reagan said, there is no 
end to what you can accomplish if you don't worry about who 
gets credit for it. And there is plenty of credit to go around 
on this. This is a great piece of legislation, and hopefully, 
we can get it going this time.
    I want to thank this panel. I don't believe there are any 
more questions at this time.
    Mr. Apfel. If I could, Mr. Chairman, add----
    Mr. Portman. Yes, please.
    Mr. Apfel [continuing]. A couple of other issues in the 
Senate bill I would like to mention. I think that it is 
important to establish a mechanism for dispute resolution, as 
the Senate bill does, and to fund the protection and advocacy 
system. We ought to be able to figure out a way to work 
together to determine how to do that.
    Also, the Senate bill has a 5-year sunset on the overall 
bill which I think is going to create some disincentives for 
the providers to really get behind this legislation. They may 
be concerned that capital improvements potentially could go 
away in 5 years. I think that the sunset is a mistake. I think 
that we clearly will need to do research to determine the 
efficacy of the program, but whether creating a 5-year sunset 
would potentially lead to inhibitions to fully develop systems 
would be a good question to ask providers.
    Another issue would be the advisory panel. Last year's bill 
had some fairly prescriptive advisory panel language where the 
advisory panel would actually be involved in piloting sites, 
determining sites, and so forth. Our recommendation is to be a 
little less prescriptive in that area so that the overall 
guidance would be provided by an advisory board, which I think 
is good. Having the advisory board involved in the actual site 
selection and other operational issues really is what my job is 
and Susan's job, and I would hope we would have a little more 
flexibility in that area.
    The other big fundamental difference between last year's 
bill and this year's bill, as Mr. Matsui, Mr. Cardin, and Mr. 
Doggett pointed out, is the health care provision is centrally 
important. As we heard from the first panel--the ability of 
disabled individuals to be able to return to work without that 
health care provision would be severely limited. It is a 
fundamental issue for people with disabilities. I don't know if 
Susan wanted to add anything.
    Ms. Daniels. I just want to add, personally, that I was a 
Social Security beneficiary myself, and the program was 
enormously important to me and allowed me to finish my 
education and provided me with needed support. But, for so many 
people it has become a trap, especially when they cannot 
replace the health care. I look to the future myself and hope 
that I will not be in a difficult position to secure health 
care for myself. I empathize a lot with the problem. I hope we 
all think that each one of us could be vulnerable to the very 
same problem, and that we empathize with that situation.
    Thank you very much.
    Chairman Shaw. Thank you, Dr. Daniels, and I thank both of 
you for being with us this morning.
    Mr. Apfel. We are honored to be here.
    Chairman Shaw. Yes, sir. And congratulations on getting out 
of here in record time. [Laughter.]
    Mr. Apfel. In 2 hours?
    Chairman Shaw. After your last stay.
    Mr. Apfel. That was 3 hours. [Laughter.]
    Chairman Shaw. All right. Our next witness is Cynthia 
Fagnoni who is the Director of the Income Security Issues, 
Health, Education, and Human Services Division of the U.S. 
General Accounting Office. We have your full statement which 
will be made a part of the record, and we invite you to proceed 
as you see fit. Welcome.

  STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, INCOME SECURITY 
 ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S. 
 GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY BRETT FALLAVOLLITA, 
                        SENIOR EVALUATOR

    Ms. Fagnoni. Thank you, Mr. Chairman.
    I have with me today Brett Fallavollita, who is a senior 
evaluator at GAO who has done quite a bit of work on the 
disability-return-to-work issues.
    Mr. Chairman and Members of the Subcommittee, I am pleased 
to be here today to testify on factors affecting the return to 
work of beneficiaries in the Social Security Disability 
Program. Over the years, the Congress has enacted various work 
incentive provisions designed to safeguard beneficiaries' cash 
and medical benefits to encourage them to test their ability to 
work. Despite these statutory provisions, as well as medical 
and technological changes that have afforded greater potential 
for some beneficiaries to work, not more than 1 of every 500 
DI, disability insurance, beneficiaries has left the rolls by 
returning to work.
    To help improve return-to-work outcomes, Members of 
Congress and advocates for people with disabilities have 
recently proposed various reforms such as allowing working 
beneficiaries to keep more of their earnings, safeguarding 
medical coverage, and enhancing vocation rehabilitation.
    Today, I would like to focus my remarks on three issues: 
Structural and operational weaknesses in the current DI and SSI 
Programs that impede return to work; factors that working 
beneficiaries believe are helpful in becoming and staying 
employed; and tradeoffs and challenges that exist in improving 
work incentives. My testimony is based on a series of GAO 
reports on Social Security Disability Program design and 
implementation, as well as a report on factors facilitating 
work for a group of DI beneficiaries.
    Regarding the first issue, program weaknesses that impede 
return to work, we have found that the DI and SSI Programs' 
design and operational shortcomings do not encourage 
beneficiaries to maximize their work potential. Program 
eligibility and requirements and a disability application 
process encourage people to focus on their inabilities, not 
their abilities. Because the disability decision results in 
either a full award or a full denial of benefits, applicants 
have a strong incentive to establish their inability to work 
and, thus, qualify for benefits.
    Work incentive provisions that are complex, difficult to 
understand, and poorly implemented further impede return-to-
work efforts. Because SSA has not promoted them extensively, 
few beneficiaries have been aware that work incentives exist, 
and, despite providing some financial protection for those who 
want to work, work incentives do not appear to be sufficient to 
overcome the prospect of a drop in income for those who accept 
low-income employment.
    Let me now describe the factors that disabled beneficiaries 
themselves have told us help them return to work. The most 
frequently cited factors were health interventions and 
encouragement from friends and family. Health interventions, 
such as medical procedures, medications, physical therapy, and 
psychotherapy helped beneficiaries by stabilizing their 
conditions and helping them function better.
    These health interventions were viewed as important 
precursors to work, as well as important to maintaining ongoing 
work efforts. For example, one person we interviewed who had 
cancer and was working as a financial consultant told us that 
all of his treatments, chemotherapy, radiation, and eye 
surgery, helped him get well and enabled him to work. Another 
individual with bipolar disorder who is an administrative 
support worker told us that a combination of medications and 
therapy helped her function in a work environment.
    Beneficiaries also told us that they received encouragement 
from family, friends, health professionals, supervisors, and 
coworkers. A beneficiaries who is HIV positive told us that his 
doctor is very supportive, going as far as writing a letter to 
his employer explaining his condition and capabilities. A 
beneficiary with epilepsy noted that his supervisor checks from 
time to time to make sure that everything is OK and that he is 
not burning out, even suggesting that he take days off.
    Now, let me turn to our third point: tradeoffs and 
challenges in improving work incentives. Changing work 
incentives may or may not increase the work effort in current 
beneficiaries depending on their behavior and response to the 
type of change and their capacity for work and earnings. For 
example, allowing people to keep more of their earnings would 
make the program more generous and could cause people who are 
currently not in the program to enter it. Also, improving the 
work incentives could keep some in the program who might 
otherwise have left. Allowing people to keep more of their 
earnings would also mean they would not leave the program, as 
they once did, for a given level of earnings. Such a decrease 
in this exit rate could reduce overall work effort because 
people on the disability rolls tend to work less than people 
off the rolls.
    The cost of proposed reforms is difficult to estimate with 
certainty because of the lack of information on such entry and 
exit efforts.
    Mr. Chairman, this concludes my oral statement, my oral 
remarks. Of course, we have submitted a full statement for the 
record, and I would be happy to answer any questions that you 
or the Members might have.
    [The prepared statement and attachment follow:]

Statement of Cynthia M. Fagnoni, Director, Income Security Issues, 
Health, Education, and Human Services Division, U.S. General Accounting 
Office

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me to testify on return-to-work 
issues facing the Disability Insurance (DI) and Supplemental 
Security Income (SSI) programs. The Social Security 
Administration (SSA) pays out about $5.1 billion in cash 
payments to DI and SSI beneficiaries each month. While 
providing a measure of income security, these payments, for the 
most part, do little to enhance work capacities and promote 
beneficiaries' economic independence. Yet, as embodied in the 
Americans With Disabilities Act (ADA), attitudes have shifted 
toward goals of economic self-sufficiency and the right of 
people with disabilities to full participation in society. 
Moreover, medical advances and new technologies now provide 
more opportunities to work than ever before for people with 
disabilities.
    The DI and SSI programs, however, have not kept pace with 
the trend toward returning people with disabilities to the work 
place. Fewer than 1 percent of DI beneficiaries, and few SSI 
beneficiaries, leave the rolls to return to work each year. 
Yet, even relatively small improvements in return-to-work 
outcomes offer the potential for significant savings in program 
outlays. For example, if an additional 1 percent of the 
working-age SSI and DI beneficiary population was to leave 
SSA's disability rolls by returning to work, lifetime cash 
benefits would be reduced by an estimated $3 billion.\1\ To 
help improve return-to-work outcomes, Members of the Congress 
and advocates for people with disabilities have recently 
proposed various reforms--such as allowing working 
beneficiaries to keep more of their earnings, safeguarding 
medical coverage, and enhancing vocational rehabilitation.
---------------------------------------------------------------------------
    \1\ The estimated reductions are based on data provided by SSA's 
actuarial staff and represent the discounted present value of the cash 
benefits that would have been paid over a lifetime if the individual 
had not left the disability rolls by returning to work. These 
reductions, however, would be offset, at least in part, by 
rehabilitation and other costs that might be necessary to return a 
person with disabilities to work.
---------------------------------------------------------------------------
    Today, I would like to focus my remarks on (1) structural 
and operational weaknesses in the current DI and SSI programs 
that impede return to work, (2) factors that working 
beneficiaries believe are helpful in becoming and staying 
employed, and (3) challenges that exist in improving program 
incentives to work. My testimony is based on a series of GAO 
reports on Social Security disability program design and 
implementation as well as a report on factors facilitating work 
for a group of DI beneficiaries. (A list of related GAO 
products appears at the end of this statement.)
    In summary, program eligibility requirements and the 
application process encourage people to focus on their 
inabilities, not their abilities. Moreover, work incentives 
offered by the programs do not overcome the risk of returning 
to work for many beneficiaries, and the complexities of work 
incentives can make them difficult to understand and 
challenging to implement. Also, there is little encouragement 
to use rehabilitation services, which are relatively 
inaccessible to beneficiaries seeking them. Some DI 
beneficiaries who work despite these program weaknesses cited 
improved ability to function in the work place, resulting from 
successful health care, and encouragement from family, friends, 
health care providers, and coworkers as the most important 
factors helping them find and maintain work. Finally, our 
analysis of some of the proposed changes to work incentives--
such as gradually reducing the DI cash benefit level as 
earnings increase--indicates that there will be difficult 
trade-offs in any attempt to change work incentives. Moreover, 
determining the effectiveness of any of these proposed policies 
in increasing work effort and reducing caseloads would require 
that major gaps in existing research be filled.

                               Background

    DI and SSI--the two largest federal programs providing cash 
to people with disabilities--grew rapidly between 1988 and 
1998, with the size of the working-age beneficiary population 
increasing from about 4.4 million to 7.6 million. Administered 
by SSA and state disability determination service (DDS) 
offices, DI and SSI paid cash benefits totaling about $61.3 
billion in 1998. According to the law, to be considered 
disabled by either program, an adult must be unable ``to engage 
in any substantial gainful activity by reason of any medically 
determinable physical or mental impairment which can be 
expected to result in death or has lasted or can be expected to 
last for a continuous period of not less than 12 months.'' \2\ 
Moreover, the impairment must be of such severity that the 
person not only is unable to do his or her previous work but, 
considering his or her age, education, and work experience, is 
unable to do any other kind of substantial work nationwide.
---------------------------------------------------------------------------
    \2\ Currently, individuals with disabilities are considered to be 
engaging in substantial gainful activities (SGA) if earnings exceed 
$500 per month. The monthly SGA level for persons who are blind is 
$1,110 per month.
---------------------------------------------------------------------------
    Established in 1956, DI is an insurance program funded by 
Social Security payroll taxes. The program is for workers who, 
having worked long enough and recently enough to become insured 
under DI, have lost their ability to work--and, hence, their 
income--because of disability. In addition, Medicare coverage 
is provided to DI beneficiaries after they have received cash 
benefits for 24 months. About 4.7 million working-age people 
(aged 18 to 64) received about $39.9 billion in DI cash 
benefits in 1998.\3\
---------------------------------------------------------------------------
    \3\ Included among the 4.7 million DI beneficiaries are about 
720,000 beneficiaries who were dually eligible for SSI disability 
benefits because of the low level of their income and resources.
---------------------------------------------------------------------------
    In contrast, SSI is a means-tested income assistance 
program for disabled, blind, or aged individuals regardless of 
their prior participation in the labor force.\4\ Established in 
1972 for individuals with low income and limited resources, SSI 
is financed from general revenues. In most states, SSI 
entitlement ensures an individual's eligibility for Medicaid 
benefits.\5\ In 1998, about 3.6 million working-age people with 
disabilities received SSI benefits; federal SSI cash benefits 
paid to these and other disabled beneficiaries amounted to 
$21.3 billion.\6\
---------------------------------------------------------------------------
    \4\ References to the SSI program throughout the remainder of this 
testimony address blind or disabled, not aged, recipients.
    \5\ States can opt to use the financial standards and definitions 
for disability they had in effect in January 1972 to determine Medicaid 
eligibility for their aged, blind, and disabled residents, rather than 
making all SSI recipients automatically eligible for Medicaid. Often, 
the Medicaid financial standards used by states are more restrictive 
than SSI's.
    \6\ This amount represents payments to all adult SSI blind and 
disabled beneficiaries, including those age 65 and over.
---------------------------------------------------------------------------
    The Social Security Act states that people applying for 
disability benefits should be promptly referred to state 
vocational rehabilitation (VR) agencies for services in order 
to maximize the number of such individuals who can return to 
productive activity.\7\ Furthermore, to reduce the risk a 
beneficiary faces in trading guaranteed monthly income and 
subsidized health coverage for the uncertainties of employment, 
the Congress has established various work incentives intended 
to safeguard cash and health benefits while a beneficiary tries 
to return to work.
---------------------------------------------------------------------------
    \7\ State VR agencies also provide rehabilitation services to 
people not involved with the DI and SSI programs.
---------------------------------------------------------------------------

 Structural and Operational Weaknesses in DI and SSI Impede Return to 
                                  Work

    In a series of reports, we have discussed how DI and SSI 
design and operational weaknesses do not encourage 
beneficiaries to maximize their work potential.\8\ The 
cumulative impact of these weaknesses, summarized in table 1, 
is to understate beneficiaries' work capacity and impede 
efforts to improve return-to-work outcomes.
---------------------------------------------------------------------------
    \8\ SSA Disability: Program Redesign Necessary to Encourage Return 
to Work (GAO/HEHS-96-62, Apr. 24, 1996); SSA Disability: Return-to-Work 
Strategies From Other Systems May Improve Federal Programs (GAO/HEHS-
96-133, July 11, 1996); and Social Security: Disability Programs Lag in 
Promoting Return to Work (GAO/HEHS-97-46, Mar. 17, 1997).

    Table 1. Summary of Program Design and Implementation Weaknesses
------------------------------------------------------------------------
                 Weakness                            Description
------------------------------------------------------------------------
Work capacity of DI and SSI beneficiaries   Medical conditions alone are
 may be understated..                        generally a poor predictor
                                             of work incapacity. While
                                             impairment has some
                                             influence over capacity to
                                             work, other factors--
                                             vocational, psychological,
                                             economic, environmental,
                                             motivational--are often
                                             considered to be more
                                             important determinants of
                                             work capacity.
Disability determination process may        ``All-or-nothing'' decision
 encourage work incapacity..                 gives incentive to promote
                                             inabilities and minimize
                                             abilities. Lengthy
                                             application process to
                                             prove one's disability can
                                             also erode motivation and
                                             ability to return to work.
Benefit structure can provide disincentive  The prospect of losing cash
 to low-wage work..                          and health benefits can
                                             reduce motivation to work
                                             and receptivity to VR and
                                             work incentives, especially
                                             when low-wage jobs are the
                                             likely outcome. People with
                                             disabilities may have less
                                             time available for work
                                             than others, further
                                             influencing a decision to
                                             opt for benefits over work.
Work incentives are ineffective in          Few beneficiaries are aware
 motivating people to work..                 that work incentives exist.
                                             Regardless, work incentives
                                             are complex, difficult to
                                             understand, and poorly
                                             implemented, and they do
                                             not overcome the prospect
                                             of a drop in income for
                                             those who accept low-wage
                                             employment.
VR plays limited role in disability         Studies have questioned the
 programs..                                  effectiveness of state VR
                                             agency services. Access to
                                             VR services through DDS
                                             referrals is limited.
                                             Restrictive state VR
                                             policies limit categories
                                             of people referred by DDS
                                             offices, the referral
                                             process is not monitored
                                             (reflecting its low
                                             priority and removing
                                             incentive to spend time on
                                             referrals), and the success-
                                             based VR reimbursement
                                             system is ineffective in
                                             motivating VR agencies to
                                             accept beneficiaries as
                                             clients. In addition,
                                             applicants and
                                             beneficiaries are generally
                                             uninformed about and not
                                             encouraged to seek VR,
                                             affording little
                                             opportunity to opt for
                                             rehabilitation and
                                             employment.
------------------------------------------------------------------------


    In recent years, SSA has made efforts to better promote 
return to work. Also, the Congress and others have proposed 
various alternatives at program reform.

Work Capacity of DI and SSI Beneficiaries May Be Understated

    The Social Security Act requires that the assessment of an 
applicant's work incapacity be based on the presence of 
medically determinable physical and mental impairments. SSA 
maintains a listing of impairments for medical conditions that 
are, according to SSA, ordinarily severe enough in themselves 
to prevent an individual from engaging in any gainful activity. 
About 50 percent of new awardees are eligible for disability 
because their impairment is listed or meets the severity of a 
listed impairment.\9\ But findings of studies we reviewed 
generally agree that medical conditions are a poor predictor of 
work incapacity.\10\ As a result, the work capacity of DI and 
SSI beneficiaries may be understated.
---------------------------------------------------------------------------
    \9\ This percent is based on DI and SSI decisions made at the 
initial level of determination by the DDS offices and subsequent 
decisions made by administrative law judges on appealed cases from 
September 1992 through April 1995.
    \10\ For example, S. O. Okpaku and others, ``Disability 
Determinations for Adults With Mental Disorders: Social Security 
Administration vs Independent Judgments,'' American Journal of Public 
Health, Vol. 84, No. 11 (Nov. 1994), pp. 1791-95; and H. P. Brehm and 
T. V. Rush, ``Disability Analysis of Longitudinal Health Data: Policy 
Implications for Social Security Disability Insurance,'' Journal of 
Aging Studies, Vol. 2, No. 4 (1988), pp. 379-99.
---------------------------------------------------------------------------
    While disability decisions may be more clear-cut in the 
case of people whose impairments inherently and permanently 
prevent them from working, disability determinations may be 
much more difficult for those who may have a reasonable chance 
of work if they receive appropriate assistance and support. 
Nonmedical factors may play a crucial role in determining the 
extent to which people in this latter group can work.

  Program Weaknesses Impede Efforts to Improve Return-to-Work Outcomes

    Because a disability determination results in either a full 
award of benefits or a denial of benefits, applicants have a 
strong incentive to overstate their disabilities to establish 
their inability to work and thus qualify for benefits. 
Conversely, applicants have a disincentive to demonstrate any 
capacity to work because doing so may disqualify them for 
benefits. Furthermore, many believe that the documentation 
involved in establishing one's disability can create a 
``disability mind-set,'' which weakens motivation to work. 
Compounding this negative process, the length of time required 
to determine eligibility can erode skills, abilities, and 
habits necessary to work.
    In addition, VR has played a limited role in the DI and SSI 
programs, in part because of restrictive state VR policies and 
limits on alternatives to providers in the state VR system. 
Beneficiaries have generally been uninformed about the 
availability of VR services and have been given little 
encouragement to seek them. Moreover, the effectiveness of 
state VR services in securing long-term financial gains has 
been mixed, at best.
    Work incentive provisions that are complex, difficult to 
understand, and poorly implemented further impede return-to-
work efforts. Because SSA has not promoted them extensively, 
few beneficiaries have been aware that work incentives exist. 
Despite providing some financial protection for those who want 
to work, work incentives do not appear to be sufficient to 
overcome the prospect of a drop in income for those who accept 
low-wage employment.
    For example, DI work incentives provide for a trial work 
period in which a beneficiary may earn any amount for 9 months 
(which need not be consecutive) within a 60-month period and 
still receive full cash and health benefits. At the end of the 
trial work period, if a beneficiary's countable earnings are 
more than $500 a month, cash benefits continue for an 
additional 3-month grace period and then stop, causing a 
precipitous drop in monthly income from full benefits to no 
cash benefits.\11\ SSA researchers have noted that such a drop 
in income is a considerable disincentive to finishing the trial 
work period as well as to beginning work. It may be more 
financially advantageous for beneficiaries--especially those 
with low earnings--to continue to receive disability payments 
by not working or by limiting earnings than to earn more than 
$500 a month in countable income.
---------------------------------------------------------------------------
    \11\ For 36 months after the trial work period ends, cash benefits 
will be reinstated for any month in which the person does not earn more 
than $500 a month in countable income; this is referred to as the 
extended period of eligibility.
---------------------------------------------------------------------------
Numerous Program Reforms Have Been Proposed

    Our work has called for SSA to develop a comprehensive, 
integrated return-to-work strategy that includes intervening 
earlier, providing return-to-work supports and assistance, and 
structuring benefits to encourage work. SSA has agreed that 
there are compelling reasons to try new return-to-work 
approaches.
    Recently, SSA told us that it has (1) contracted with over 
400 public and private VR providers, (2) trained state VR 
agency staff on SSA work incentives and reimbursement 
procedures, and (3) positioned itself to contract with state 
agencies to research ways to improve service integration for 
beneficiaries attempting to return work. In addition, SSA has 
proposed to demonstrate the effectiveness of vouchers (or 
``tickets'') for beneficiaries to obtain VR services from 
public or private providers reimbursed on an outcome basis. SSA 
has also proposed increasing the substantial gainful activities 
level for beneficiaries, thereby allowing them to have a higher 
earned income before leaving the disability rolls.
    In addition to SSA's proposed reforms, the Congress and 
advocates for people with disabilities have offered various 
reforms. Such reforms have proposed allowing working 
beneficiaries to keep more of their earnings, safeguarding 
medical coverage, and using tickets to enhance vocational 
rehabilitation.

   Multiple Factors Assist Beneficiaries' Movement Into the Workforce

    To understand how DI beneficiaries overcome the challenges 
and disincentives to work, we conducted survey interviews with 
69 people who were receiving DI benefits and working in one of 
three metropolitan areas.\12\ The working DI beneficiaries we 
interviewed cited a number of factors as helpful to becoming 
employed (see table 2). The two most frequently reported 
factors--health interventions and encouragement to work by 
family members and others--appear to have been the most 
critical in helping beneficiaries become employed. First, 
health interventions--such as medical procedures, medications, 
physical therapy, and psychotherapy--reportedly helped 
beneficiaries by stabilizing their conditions and, 
consequently, improving functioning. Not only were health 
interventions perceived as important precursors to work, they 
were also seen as important to maintaining ongoing work 
attempts. Encouragement to work from family, friends, health 
professionals, and coworkers was also critical, according to 
respondents.
---------------------------------------------------------------------------
    \12\ Our findings from these interviews are reported in Social 
Security Disability Insurance: Multiple Factors Affect Beneficiaries' 
Ability to Return to Work (GAO/HEHS-98-39, Jan. 12, 1998). Because 
neither the metropolitan areas selected nor the people we interviewed 
constituted a random sample, our results are not generalizable to the 
entire population of working DI beneficiaries.
---------------------------------------------------------------------------
    Although other factors were reported less frequently, any 
single factor can be the key determinant in an individual's 
becoming employed. These factors include a flexible schedule 
(particularly to have time off to visit a health professional), 
job-related training and vocational rehabilitation services 
(especially job search and on-the-job training), the trial work 
period and extended period of eligibility, and high self-
motivation. To a somewhat lesser extent, religious faith, job 
coaches, assistive devices and equipment, and ADA provisions 
were useful. In general, similar proportions of respondents 
with physical impairments and those with psychiatric 
impairments cited these factors as helpful to being employed. 
However, people with physical impairments found coworkers and 
the trial work period more helpful than did those with 
psychiatric impairments.

 Table 2. Factors That Facilitated Working DI Beneficiaries' Employment,
                        by Frequency of Reporting
------------------------------------------------------------------------
             Factor                   Description        Significance
------------------------------------------------------------------------
Primary:
Health intervention.............  Health              Early return to
                                   interventions       work without
                                   provided medical    health
                                   stabilization and   intervention may
                                   improved            be difficult for
                                   functioning.        some
Encouragement...................  Family, friends,    Desire to work can
                                   coworkers, and      be influenced
                                   health              positively, and
                                   professionals       possibly
                                   provided            negatively, by
                                   encouragement and   social forces
                                   emotional support.
Secondary:
Flexible work schedule..........  Number of hours     Typical 5-day, 40-
                                   and work schedule   hour work week
                                   were responsive     may be
                                   to respondents'     unrealistic for
                                   needs and           some
                                   capabilities.       beneficiaries
Job-related training and          Training and        This factor has
 services.                         services were       implications for
                                   directly related    retaining workers
                                   to finding and      in the labor
                                   performing a job.   force who
                                                       otherwise might
                                                       apply for Social
                                                       Security
                                                       disability
                                                       benefits
Trial work period/extended        SSA provisions      Trial work period
 period of eligibility.            allowed             reported as
                                   beneficiaries to    useful, although
                                   test their work     some felt that 9
                                   capacity without    months is too
                                   jeopardizing        short and $200
                                   benefits and to     earnings level is
                                   ease their          too low
                                   transition to the
                                   workforce.
High self-motivation............  Respondents         Motivation to work
                                   strongly wanted     may develop over
                                   or needed to        time, as about 3
                                   work, especially    in 10 did not
                                   compared with       expect to work
                                   disabled peers      upon program
                                   without jobs.       entry
Tertiary:
Religious faith.................  Religious faith     Interview did not
                                   reported as         specifically
                                   providing source    address religious
                                   of strength and     faith; it may be
                                   guidance.           more important
                                                       than reported
Job coaches.....................  On-site job coach   This factor has
                                   or similar          implications for
                                   specialist taught   retaining workers
                                   work skills.        in the labor
                                                       force who
                                                       otherwise might
                                                       apply for Social
                                                       Security
                                                       disability
                                                       benefits
Assistive devices and equipment.  Among most          Usefulness of
                                   frequently          assistive devices
                                   mentioned items     and equipment is
                                   were back and leg   largely limited
                                   braces, canes and   to people with
                                   crutches, adapted   physical
                                   computers and       impairments
                                   keyboards, and
                                   wheelchairs.
Provisions provided by ADA......  Respondents         About one-third
                                   reported that ADA   were aware of
                                   provided rights,    ADA, and over one-
                                   accommodations,     half of those who
                                   and hiring          were aware said
                                   opportunities.      ADA was not
                                                       helpful
------------------------------------------------------------------------
Note: Factors are categorized into three groups--primary, secondary, and
  tertiary--on the basis of how often all respondents reported them. In
  some instances, we combined related areas of support and services in
  developing the factors and assigning relative importance.


    Beneficiaries' comments illuminate the importance of these 
factors in helping them return to work. For example, Carol, an 
administrative support worker in her thirties with a manic 
depressive disorder, pointed to encouragement and medical 
intervention as factors that enabled her to continue working:

          My family members . . . encouraged me to go to work and not 
        rely on disability income. They were helpful to me in assessing 
        the merits and benefits of potential job offers. . . . I am 
        using a combination of Prozac and lithium medications to 
        control my condition and [enable] me to work regularly where I 
        don't use my sick days. Therapy with my counselor for over 4 
        years has really allowed me to work and function in a work 
        environment.

    Similarly, Mark, a maintenance worker in his thirties with 
epilepsy, said

          Medications for [my] epilepsy help keep [my] condition under 
        control, which minimizes seizures and the risk of getting 
        fired. . . . [My supervisor] checks from time to time to make 
        sure everything is okay [and] even suggests taking days off.

    Stephen, a bartender in his thirties with HIV, identified 
various individuals in the community who support him:

          [My] infectious disease doctor [is] encouraging and is very 
        supportive. He wrote a letter to [my] employer explaining [my] 
        condition and my capabilities. [My] parents are very supportive 
        [and my] medications have made me physically able to work. 
        [Coworkers are] providing emotional support.

    Yvonne, a cashier in her forties with an anxiety disorder, 
found--in addition to medical intervention and community 
support--ADA helpful:

          Psychotherapy and group therapy [have] been helpful. Also, 
        medication has been helpful. . . . My psychotherapist has gone 
        out of his way to help me. I can call him at any time. The 
        pastor of my church has also counseled me. At the college I 
        attended, a director of the disabled talks to my professors and 
        tells them about my condition so that they can take this into 
        account when assigning work and evaluating my performance. . . 
        . ADA has helped because I believe that [my employer] would not 
        have hired me because of my problems.

Longer Term Work Decisions Were Also Affected by Health Concerns

    Not surprisingly, personal health appears to be an overriding issue 
as beneficiaries consider their future status in the DI program and at 
the work site. Among the 44 respondents without employer-based health 
insurance coverage, 29 plan to stay on the DI rolls into the 
foreseeable future or are unsure of their future plans. In contrast, 15 
of 24 respondents with such coverage plan to exit the rolls. Moreover, 
when asked if anything would make it harder to work, about one-half of 
the 46 respondents who responded affirmatively said that poorer health 
would inhibit employment. Similarly, some said that improved health 
would facilitate work. We found little difference in future work and 
program plans between people with physical and psychiatric impairments.

Work Incentives and SSA Staff Played Limited Role

    DI program incentives for reducing risks associated with attempting 
work appear to have played a limited role in beneficiaries' efforts to 
become employed. Although the trial work period was considered helpful 
by 31 respondents, others indicated it had shortcomings or were unaware 
that it existed. For instance, several respondents indicated the amount 
signifying a ``successful'' month of earnings ($200) was too low, an 
all-or-nothing cutoff of benefits after 9 months was too abrupt, and 
having only one trial period did not recognize the cyclical nature of 
some disabilities.\13\ Respondents' mixed views of the design of the 
trial work period suggest that while they value a transitional period 
between receiving full cash benefits and losing some benefits because 
of work, they might be more satisfied with a different design. Finally, 
over one-fifth were unaware of the trial work period and therefore may 
have unknowingly been at risk of losing cash benefits.
---------------------------------------------------------------------------
    \13\ Similarly, some beneficiaries noted that the $500 monthly 
earnings threshold used in the formula to determine if a person with a 
disability other than blindness is working at a gainful activity level 
(and therefore no longer eligible for benefits) is set too low.
---------------------------------------------------------------------------
    Moreover, many respondents were unaware of other work incentives as 
well. Consequently, fewer respondents reported these incentives as 
helpful than might have had they been better informed. For example, 41 
respondents were unaware of the provision that allows beneficiaries to 
deduct impairment-related work expenses from the amount SSA considers 
the threshold for determining continued eligibility.\14\ Using the 
deduction could make it easier for a beneficiary to continue working 
while on the rolls without losing benefits. Moreover, 42 respondents 
were unaware of the option to purchase Medicare upon leaving the rolls. 
As a result, some of these beneficiaries may have decided to limit 
their employment for fear of losing health care coverage, while others 
who planned to leave the rolls may have thought they were putting 
themselves at risk of foregoing health care coverage entirely upon 
program termination.
---------------------------------------------------------------------------
    \14\ Examples of expenses likely to be deductible include attendant 
care services performed in the work setting, structural modifications 
to a vehicle used to drive to work, wheelchairs, and regularly 
prescribed medical treatment or therapy that is necessary to control a 
disabling condition.
---------------------------------------------------------------------------
    Generally, respondents told us that SSA staff with whom they 
interacted provided neither much help in nor were much of a hindrance 
to return-to-work efforts. Fifty-nine respondents answered ``no'' when 
asked if people from SSA assisted them in becoming employed. However, 
52 of the 69 respondents told us that they did not have experiences 
with SSA that made it difficult to become employed. For the 17 people 
reporting difficulties, the most common examples cited were the limited 
assistance offered and poor information provided by SSA.

    Difficult Challenges and Trade-Offs Involved in Improving Work 
                               Incentives

    Because the current work incentives have either impeded or 
played a limited role in helping beneficiaries return to work, 
the Congress and others have recognized the need to reform the 
current work incentives, particularly those in the DI program. 
However, our work has found that changing the work incentives 
involves difficult challenges and tradeoffs. Because of the 
complex interactions between earnings and disability benefits, 
some types of work incentive changes may help some 
beneficiaries more than others. Moreover, tradeoffs exist 
between trying to increase the work effort of beneficiaries 
without decreasing the work effort of people with disabilities 
who are not currently receiving disability benefits.
    Two illustrations using data from Virginia Commonwealth 
University's Employment Support Institute underscore the 
complex interactions between earnings and benefits.\15\ For 
example, figure 1 shows that under current law, a DI 
beneficiary's net income may drop at two points, even as gross 
earnings increase. The first ``income cliff'' occurs when a 
person loses all of his or her cash benefits because countable 
earnings are above $500 a month and the trial work and grace 
periods have ended (which, in figure 1, occurs when the 
individual earns $750 a month). A second income cliff may occur 
if Medicare is purchased when premium-free Medicare benefits 
are exhausted (which, in figure 1, occurs when the individual 
earns $1,500 a month).
---------------------------------------------------------------------------
    \15\ The Employment Support Institute at Virginia Commonwealth 
University developed WorkWORLD software, which allows individuals to 
compare what happens to their net income (defined as an individual's 
gross income plus noncash subsidies minus taxes and medical and work 
expenses) as earnings levels change under current law and when work 
incentives are changed.
---------------------------------------------------------------------------
    Figure 1 also illustrates what happens to net income when a 
tax credit is combined with a Medicare buy-in that adjusts 
premiums to earnings.\16\ In this particular example--although 
the tax credit may cushion the impact of the drop in net income 
caused by loss of benefits--it does not eliminate the drop 
entirely. However, as figure 2 shows, the income cliff is 
eliminated when benefits are reduced $1 for every $2 of 
earnings above the substantial gainful activity level.
---------------------------------------------------------------------------
    \16\ The tax credit used in this example assumes that the credit is 
refundable and supplements the existing Earned Income Tax Credit.
[GRAPHIC] [TIFF OMITTED] T6970.001

[GRAPHIC] [TIFF OMITTED] T6970.002


    In addition, changing work incentives may or may not 
increase the work effort of current beneficiaries, depending on 
their behavior in response to the type of change and their 
capacity for work and earnings. But even if changes in work 
incentives increase the work effort of the current 
beneficiaries, a net increase in work effort may not be 
achieved. This point is emphasized by economists who have noted 
that improving work incentives may make the program attractive 
to those not currently in it.\17\ Allowing people to keep more 
of their earnings would make the program more generous and 
could cause people who are currently not in the program to 
enter it. Such an effect could reduce overall work effort 
because those individuals not in the program could reduce their 
work effort to become eligible for benefits. Moreover, 
improving work incentives by allowing people to keep more of 
their earnings could keep some in the program who might 
otherwise have left. Decreases in the exit rate could reduce 
overall work effort because people on the disability rolls tend 
to work less than people off the rolls. The extent to which 
increased entry occurs and decreased exit occurs will affect 
how expensive these changes could be in terms of program costs.
---------------------------------------------------------------------------
    \17\ See Hillary Williamson Hoynes and Robert Moffitt, ``The 
Effectiveness of Financial Work Incentives in Social Security 
Disability Insurance and Supplemental Security Income: Lessons From 
Other Transfer Programs,'' Disability, Work, and Cash Benefits, edited 
by Jerry L. Mashaw and others (Kalamazoo, Mich.: W. E. Upjohn Institute 
for Employment Research, 1996), and Hillary Williamson Hoynes and 
Robert Moffitt, ``Tax Rates and Work Incentives in the Social Security 
Disability Insurance Program: Current Law and Alternative Reforms'' 
(May 1997), unpublished.
---------------------------------------------------------------------------
    The costs of proposed reforms are difficult to estimate 
with certainty because of the lack of information on entry and 
exit effects. Although our work sheds additional light on this 
issue, the lack of empirical analysis with which to accurately 
predict outcomes of possible interventions reinforces the value 
of testing and evaluating alternatives to determine what 
strategies can best tap the work potential of beneficiaries 
without jeopardizing the availability of benefits for those who 
cannot work.
    Mr. Chairman, this concludes my prepared statement. At this 
time, I will be happy to answer any questions you or the other 
Members of the Subcommittee may have.
      

                                


                          Related GAO Products

    Social Security Disability Insurance: Factors Affecting 
Beneficiaries' Return to Work (GAO/T-HEHS-98-230, July 29, 
1998).
    Social Security Disability Insurance: Multiple Factors 
Affect Beneficiaries' Ability to Return to Work (GAO/HEHS-98-
39, Jan. 12, 1998).
    Social Security Disability: Improving Return-to-Work 
Outcomes Important, but Trade-Offs and Challenges Exist (GAO/T-
HEHS-97-186, July 23, 1997.)
    Social Security: Disability Programs Lag in Promoting 
Return to Work (GAO/HEHS-97-46, Mar. 17, 1997).
    People With Disabilities: Federal Programs Could Work 
Together More Efficiently to Promote Employment (GAO/HEHS-96-
126, Sept. 3, 1996).
    SSA Disability: Return-to-Work Strategies From Other 
Systems May Improve Federal Programs (GAO/HEHS-96-133, July 11, 
1996).
    Social Security: Disability Programs Lag in Promoting 
Return to Work (GAO/T-HEHS-96-147, June 5, 1996).
    SSA Disability: Program Redesign Necessary to Encourage 
Return to Work (GAO/HEHS-96-62, Apr. 24, 1996).
    PASS Program: SSA Work Incentive for Disabled Beneficiaries 
Poorly Managed (GAO/HEHS-96-51, Feb. 28, 1996).
    Social Security Disability: Management Action and Program 
Redesign Needed to Address Long-Standing Problems (GAO/T-HEHS-
95-233, Aug. 3, 1995).
    Supplemental Security Income: Growth and Changes in 
Recipient Population Call for Reexamining Program (GAO/HEHS-95-
137, July 7, 1995).
    Disability Insurance: Broader Management Focus Needed to 
Better Control Caseload (GAO/T-HEHS-95-164, May 23, 1995).
    Social Security: Federal Disability Programs Face Major 
Issues (GAO/T-HEHS95-97, Mar. 2, 1995).
      

                                

    Chairman Shaw. Thank you. Do any Members seek recognition?
    Mr. Matsui. Just very briefly, Mr. Chairman, thank you.
    Thank you for your testimony.
    In terms of the health issue, could you tell me how many 
people that go off and go into the job market actually end up 
having health benefits. Do you have that statistic available?
    Ms. Fagnoni. We don't.
    Mr. Fallavollita. At least among the sample that we 
interviewed, it was one-third of the folks while they were on 
the rolls--this is while they were working--one-third of the 
folks had employer-based health insurance, and the remaining 
did not.
    Mr. Matsui. So the remainder, the approximately 65 or 67 
percent, did not have health insurance. What happens after the 
health insurance benefit runs out after 2 years? That's the 
critical point. One of you can----
    Ms. Fagnoni. Well, I think this is where there are 
concerns, and there is a disincentive for people--you hear a 
lot from people who say they are afraid to go over that $500--
currently DI is at $500 maximum to have their benefits cut off, 
and then ultimately their health benefits are cut off. They 
will cut off their work effort or sometimes stop working just 
to protect those health benefits.
    Mr. Matsui. Right.
    Is that what your surveys basically point to? The sample 
that you took----
    Ms. Fagnoni. Well, what the sample really told us--we were 
interviewing and surveying people who were working--these 
disabled beneficiaries who were working, so we were really 
looking at what helped them get to work, and what they said was 
the health interventions were very important.
    Mr. Matsui. After the benefits run out, I guess they can 
pick up health insurance, though it is hard to imagine the 
individual can pick it up himself or herself, since the cost 
becomes prohibitive because of income levels, right?
    Ms. Fagnoni. Clearly, the loss of health coverage is a big 
concern and barrier to people who are attempting to move from 
disability into the work force and stay in the work force.
    Mr. Matsui. Would you like to respond?
    Mr. Fallavollita. There is a Medicare buyin for DI workers 
if they leave the rolls through their earnings. They have the 
option to purchase the Medicare, but the monthly premium may be 
prohibitive for folks in lower income wages. For instance, it 
is about $400 a month to buy in to that, and so that can add up 
for folks who are not making an income where they can afford 
that.
    Mr. Matsui. Thank you very much.
    Chairman Shaw. Yes, sir.
    Mr. Hulshof. Ms. Fagnoni, under current law, State 
vocational rehabilitation agencies are really the only game in 
town as far as providing rehabilitation services for disabled 
beneficiaries. I am also aware that the Social Security 
Administration has implemented a program where individuals are 
referred to alternative providers, but only after 4 months has 
passed and it is assumed that the vocational rehabilitation is 
not going to provide services. Is this program working?
    Ms. Fagnoni. Well, as you heard the Commissioner say, and 
Dr. Daniels, that program has not been up and running for very 
long, and while they have something like 419 providers signed 
up, very few people have been run through the system. I think 
we were told something like 66 beneficiaries had actually been 
able to take advantage of that alternative-provider system. And 
I think they said that they are only now looking at the first 
person to kind of have some outcome from that program. So, 
there is not yet much to show from that effort.
    Mr. Hulshof. Let me ask you, last year in reauthorizing the 
Vocational Rehabilitation Act of 1973, Congress directed that 
disabled beneficiaries would be presumed to be eligible for 
vocational rehabilitation services unless the State can 
demonstrate by clear and convincing evidence that the 
individual is incapable of benefiting in terms of employment 
outcome due to severity of impairment. And I know that it is 
too soon to have any data, but will this change in law that we 
had last year--do you think that will result in more 
beneficiaries being provided services by State vocational 
rehabilitation agencies, or is it just too soon to tell?
    Ms. Fagnoni. One thing about that provision--if you look at 
some of the reports we have done that have looked at return-to-
work effort, we have put a lot of emphasis on the fact that 
SSA--when people walk in the door to apply for disability 
benefits, SSA does not do a good job of informing people of 
what different services might be available to them, and often 
people are not in a position to want to focus on efforts to 
return them to work or talk about vocational rehabilitation 
because they are focused on trying to prove that they can't 
work so that they can get disability benefits. So, what our 
work has shown is that SSA overall only refers about 10 percent 
of disabled beneficiaries to the State vocational 
rehabilitation agencies.
    So, unless there are other mechanisms for identifying who 
else could benefit from rehabilitative services, then not many 
people are getting to the vocational rehabilitation agencies in 
the first place, so, I think at that front end we probably need 
more focus coupled with more emphasis by the State vocational 
rehabilitation agencies in serving disabled beneficiaries 
coming from SSI and DI.
    Mr. Hulshof. I appreciate that.
    I yield back, Mr. Chairman, and I thank you.
    Chairman Shaw. Thank you very much. We appreciate your 
being with us today, and as usual, you have done a tremendous 
job.
    Ms. Fagnoni. Thank you, Mr. Chairman.
    Chairman Shaw. Thank you for being with us.
    The final panel is made up of Richard Blakley who is the 
executive director of Services for Independent Living out of 
Columbia, Missouri--I believe he will be further introduced--
Dr. Mary Gennaro, who is the director of Federal and State 
Relations of the National Association of Developmental 
Disabilities Councils, on behalf of Consortium of Citizens with 
Disabilities; Jim McNulty, a member of the board of directors 
of National Alliance for the Mentally Ill, in Bristol, Rhode 
Island; and Jeffrey Carlisle, who is president of the National 
Association of Rehabilitation Professionals in the Private 
Sector, from Metairi--am I pronouncing that correctly?
    Mr. Carlisle. Metairi.
    Chairman Shaw. Metairi, Louisiana.
    As with the prior witnesses, we have your full testimony 
which will be made a part of the record, and we invite you to 
summarize as you see fit.
    We will be having another vote coming up in about 20 to 25 
minutes. Hopefully, we can conclude this panel before that 
vote, but before that I yield to the gentleman from Missouri.
    Mr. Hulshof. Thank you, Mr. Chairman.
    It is not often to have a constituent of mine who has 
traveled from Missouri to come all the way to Washington, DC, 
and so I am especially honored and proud to have a constituent, 
Rich Blakley, who we will hear from. Rich is right now the 
executive director for Services for Independent Living in 
Columbia, Missouri. He has done a great job managing, I think, 
19 members on his staff, but he has also been an activist and a 
consultant not only in Missouri, but in Illinois. And recently, 
in fact, just weeks before the election, we had a very 
successful forum, that Rich put together, talking about these 
very issues. And so, it is great to have Rich here to give 
testimony, and it is a special honor and privilege to introduce 
him to this Subcommittee.
    Chairman Shaw. Thank you.
    Mr. Blakley.

STATEMENT OF RICHARD BLAKLEY, EXECUTIVE DIRECTOR, SERVICES FOR 
             INDEPENDENT LIVING, COLUMBIA, MISSOURI

    Mr. Blakley. Thank you. Thank you for those kind words, 
Congressman Hulshof.
    Mr. Chairman and Members of the Subcommittee, I am honored 
to be here today.
    I would like to talk about Social Security work 
disincentives from being on the frontlines and dealing with 
this subject on a day-to-day basis. I would also like to thank 
Diana Beckley from the University of Missouri for assisting me 
in preparing this testimony today.
    First of all, one of the disincentives that we have seen in 
Social Security on people with disabilities returning to work 
is the complexity of the program. People with disabilities 
coming out of a hospital and the newly injured go to the Social 
Security Administration and they are asked, ``Can you work?'' 
And they have to say, no. to get benefits. The same individuals 
then return to the vocational rehabilitation agency and are 
asked, ``Can you work?'' They are told to say, ``Yes, I can,'' 
in order to receive benefits. What is the point of that? We 
don't understand that.
    There is a complexity of the issues that should not exist. 
They need to be streamlined. They need to be taken care of. 
They need somehow to be put into legislation so that you don't 
have discrepancies between these two programs.
    Vocational rehabilitation agencies do a good job, for the 
most part. They vary from State to State. It depends from 
counselor to counselor. The Social Security Administration does 
a good job for the most part, but again, it depends on who you 
talk to. It depends on what information they will give you. It 
depends on what agency you go to and what office you go to.
    One of the things that is also a disincentive to people is 
when you ask them, why don't you get a job? Their answer is, 
because I will lose. I will lose benefits. I will lose income. 
I will lose health insurance. That is not always true, but the 
information is not always given in a way that they can 
understand or that they are willing to accept. Also, people 
with disabilities are a cross section of the population. That 
is not always a popular thing to say. Some people with 
disabilities would rather sit home instead of working. That is 
a fact.
    I think that disincentives that exists must be removed and 
removed in a manner that also encourages people to return to 
work, if that is a feasible course of action for them.
    Let me give you an example. I believe that in my testimony 
that I mention this. At the age of 17, I became disabled 
through a diving accident, and I became a quadriplegic. At that 
point in time I earned enough credits or quarters--it was quite 
awhile ago--I was able to earn $350 a month because of public 
SSDI. It was tough going for awhile, many years. As time 
carried on, I realized that I had to return to college. I 
couldn't live on this the rest of my life. My parents couldn't 
support me for the rest of my life. So, I had an incentive to 
go to work through family encouragement and the knowledge that 
I must return, if only to fulfill what I must do in the future 
and that was to become an IRS employee for about 6 months 
before I discovered another field which I have been in since.
    Many people have these opportunities, and they need to be 
given information which exists that they can return to work and 
that there are incentives to return to work, as an earlier 
speaker suggested.
    A part of the Medicare system that we think needs to be 
fixed but is an extremely difficult thing to talk about is the 
discrepancy between the blind population and people who are not 
blind. One, people could earn up to $1,000 a month, and not 
lose benefits, whereas people who are not blind but they have a 
disability can earn up to $500. It is not a popular issue to 
talk about, but it is something that must be discussed. I 
applaud the blind lobby for getting the job done. I think that 
it is a terrific thing. But people with disabilities also must 
be given that opportunity.
    Let me just conclude by saying that I encourage you to 
streamline this concept, and streamline the Social Security 
process and make it much easier for people to access the 
system, fix the system. Right now, Medicare especially is 
broken. Medicaid is dying out, but Medicare is a train wreck, 
and it is wrecking many people's lives. I encourage you to fix 
it. Make it a ticket program. Millions of people depend on it. 
Those who want to work get back to work and help part of 
society as a whole.
    Thank you very much for giving me the opportunity to 
testify.
    [The prepared statement follows:]

Statement of Richard Blakley, Executive Director, Services for 
Independent Living, Columbia, Missouri

    I want to thank the Chairman and the Committee members for 
giving me the opportunity to present my thoughts and ideas 
regarding the inherent work disincentives that currently exist 
in the Social Security System for people with disabilities. In 
addition, I wish to thank Congressman Hulshof for inviting me 
to Washington to appear before his colleagues in the House of 
Representatives. I consider it a privilege and an honor to be 
able to give my comments to the Subcommittee on Social Security 
in person.
    There are a number of items in the Social Security Act that 
are confusing, irritating, frustrating and incomprehensible to 
the average individual who obtains a disability. I know this 
because 23 years ago I was one of those individuals. Trying to 
get through the bureaucracy and the tangled web of paperwork 
that involves obtaining benefits is frustrating and sometimes 
demeaning. My assumption was that after all these years Social 
Security had changed significantly for people with 
disabilities. After research for this testimony, it seems that 
instead of changing, the tangled web of bureaucratic procedure 
is essentially the same. Hopefully, we can now begin work on 
changing the system to work for people with disabilities 
instead of working against people with disabilities. Let me 
give you an example.
    Once a person is eligible for Title II or Title XVI of the 
Social Security Act, they become dependent on their benefits 
because of a number of factors. These include fear of losing 
health insurance, fear of losing income, confusion, and basic 
dependency. All of these factors prevent people from attempting 
to enter the work force. In addition, there is a lack of 
consistency within the various agencies that attempt to get 
people with disabilities employed as opposed to Social 
Security, which attempts to keep people unemployed.
    If an individual wishes to be employed, the first step is 
to contact the State Vocational Rehabilitation office. The 
person with a disability is then hooked up with a Vocational 
Rehabilitation Counselor. The Vocational Rehabilitation 
Counselor asks, ``Can you work?'' If the person with a 
disability says yes, then they will receive Vocational 
Rehabilitation services if the individual meets the financial 
eligibility guidelines. If the individual says no, then they 
may be denied a college education, hand controls or a lift on a 
van, any opportunity at some type of significant future 
employment, or even a wheel chair that is tailored specifically 
for their needs.
    If an individual wishes to be granted benefits under Title 
II or Title XVI, the person must go to the Social Security 
office. At the Social Security office, they will be asked the 
same question ``Can you work?'' Obviously, the individual with 
a disability must give a completely different answer than what 
was given at the Vocational Rehabilitation office. The answer 
must be ``No, I cannot work.'' Only then will the person with a 
disability receive benefits under the Social Security Act. In 
addition, an individual typically waits six months prior to 
approval due to medical exams, denials, appeals and 
administrative law hearings.
    As you can see, the two agencies are in direct conflict 
with each other. This causes the number one work disincentive 
that exists within the Social Security System. This 
disincentive is confusion. The rules of the Social Security Act 
are complex and changing all the time. You have Title II, which 
consists of Social Security Disability Income (SSDI) and Social 
Security Disabled Adult Child (SSDAC). In addition, Title II 
contains Medicare, which, in most people's minds, is a program 
for seniors, not for people with disabilities. More confusion 
exists under Title XVI of the Social Security Act, which 
includes Supplemental Security Income (SSI) and Medicaid. I 
won't even begin to get involved int he different waivers that 
vary from state to state. This is why I believe people with 
disabilities often times, choose not to work.
    If you ask a person who is on SSDI or SSI what will happen 
if they work, the first answer you will hear is ``I will 
lose.'' The answer ``I will lose'' can mean many things. It may 
mean I will lose income, I will lose insurance, I will lose 
attendant care, and I will lose benefits that I will never have 
the opportunity to obtain once the trial work period is over. 
Many people with disabilities are terrified of the prospect of 
losing something as valuable as insurance or income even though 
it may be a meager living condition in which they exist. Also, 
there is an 18 month waiting period for pre-existing conditions 
on most private insurance companies for people with 
disabilities who have not had the opportunity to be covered by 
a private carrier in the past.
    I remember acquiring my disability at the age of 17. 
Fortunately, I had worked enough quarters to qualify for SSDI 
and eventually began paying into the Medicare system. My only 
income for several years was $350 a month. I was lucky enough 
to live with my parents who did my personal care and assisted 
me with the financial ability to purchase a van. I realized I 
could not live on this amount the rest of my life and only make 
an additional $500 per month. Therefore, the decision to leave 
the program was easier for me, however, it was still very 
frightening being told by the Social Security Administration 
that after a 9 month trial work period, I would never be able 
to receive these benefits again. I can only imagine what it 
must be like for an individual who is capable of working and 
receiving higher benefits to leave the Social Security Program 
and begin working. This ties into the confusion and direct 
conflict that creates a significant work disincentive.
    Another problem with Social Security is Title II of the 
Act, specifically Medicare Insurance. Once again, we are 
involved with confusion and misinformation. First, Medicare was 
specifically set up for seniors and people with disabilities 
were lumped into the program at a later date. If you ask 
anybody on the street what Medicare is for, most individuals 
will say that it is for the senior population. I believe that 
people with disabilities should be pulled out of the Medicare 
program and included in a new and innovative health program, 
specifically set up for individuals with disabilities.
    Medicare should be a program that does not drop you if your 
Substantial Gainful Activity (SGA) exceeds $500. Medicare 
should be a program that addresses the inequities between 
disabilities when it comes to the SGA, i.e., people who are 
blind as opposed to people who have any other type of 
disability. I applaud people who are blind for having the 
ability to raise their SGA to $1,100 per month, however, I 
believe it is important that the SGA is equitable for everyone 
that is involved. If two able bodied individuals are involved 
in an automobile accident and one becomes blind, and the other 
becomes a high level quadriplegic, the blind person will 
receive a SGA of more than double what the quadriplegic will 
receive. Therefore, I believe we need a program where the SGA 
is evened out at $1,100 per month for everyone.
    Medicare also is a terrible program in many other ways. 
First, it has a two-year waiting period before you can acquire 
benefits. Many individuals in that two year span of time, will 
have their life savings wiped out, may become deeply involved 
in debt through medical expenses, may become bankrupt, and may 
be divorced. This is not an exception to the rule. These things 
do happen to people who have to wait two years prior to 
Medicare acceptance. Also, Medicare will not pay for health 
care supplies or medication. People with disabilities usually 
need some sort of supply or medication each month. Having a 
disability is expensive. Medicare does not address this issue. 
People with disabilities are forced to give up savings and 
possessions in order to be eligible for the Missouri Medicaid 
programs.
    One major concern regarding Medicare is the payment for 
durable medical equipment (DME). DME suppliers will not order 
equipment before they receive prior approval from Medicare. The 
reason is that they have not received payment upon a Medicare 
denial if they order the DME prior t pre-approval. This takes a 
significant amount of time and frustration on both the 
consumers's part and the part of the DME supplier. In addition, 
most DME is standardized. Medicare has extreme difficulty 
purchasing specialized equipment for people with disabilities 
that require something different from the norm. Finally, the 
DME has a 20% co-pay. Most people with disabilities, on a fixed 
income, who have a SGA of $500 per month, cannot afford a 20% 
co-pay. To most individuals who qualify for Medicare, any co-
pay is too expensive.
    Assistive technology is something that people with 
disabilities are acquiring and using more and more frequently. 
This is the technology age. People with disabilities have 
discovered new ways to use old devices and are constantly 
seeing new technological devices on the market that they cannot 
afford and Medicare will not pay for. Addressing the technology 
issue for people with disabilities is crucial. Technology is 
ever changing, is a wave of the future, and definitely enhances 
the quality of life and reduces medical expenses for people 
with disabilities.
    Medicare does not provide for attendant services unless 
ordered by a doctor. Ideally, self-directed care would be paid 
for which will enable people to seek employment. Medicare gives 
no assistance on any type of attendant care unless prescribed 
by a physician, therefore causing a tremendous hardship on 
people who wish to live independently. Studies have shown that 
people with disabilities must have the ability to live 
independently before they can be employed. I strongly recommend 
that self-directed attendant care services be available on the 
Medicare Program.
    There is a significant problem with the Subsidy Work 
incentive under the Medicare rules. It puts a person with a 
disability in a position that is demeaning and degrading. The 
person with a disability must ask their employer to inform the 
Social Security office that they cannot do the same work as an 
able bodied employee. This may mean that the individual works 
slower or needs more supervision. At any rate, forcing an 
employee into a position of telling the employer that they 
cannot perform satisfactory work puts the person with a 
disability in a very precarious position. An employer may find 
a way to fire the employee, refuse a subsidy, or may ask the 
employee why they cannot keep up. The whole scenario behind an 
employee going to their boss and telling them that they cannot 
do the work expected without more pay is ludicrous. Imagine 
yourself in this situation. You do the best work you can, 
cannot make over $500 per month, want to stay employed 
therefore, you have to tell your boss you cannot do the job. 
This must be streamlined, re-defined or generally accepted by 
the Social Security Administration when an applicant applies, 
based upon information given by the applicant.
    The Medicaid Program in Missouri is not as bad as the 
Medicare Program under Title II. Unfortunately, this program is 
set up for individuals with disabilities who have virtually no 
assets. Once again, the rules of the program are confusing and 
filled with misinformation. In Missouri, you can own your own 
home and a vehicle and have less than $1,000 in the bank before 
you are eligible for Medicaid. Once eligibility is established, 
you are limited to a certain amount of income unless you enroll 
in the 1619B Work Incentive Program. The Work Incentive Program 
income guidelines vary from state to state. In Missouri there 
is a very liberal income exclusion so that the thresh-hold 
amount does not apply. However, in other states it varies 
around $15,000 to $40,000. There is no real consistency between 
states. This should be rectified in any bill that streamlines 
the system and eliminates confusion.
    Under the Medicaid Program, once again, there is no self-
directed attendant care. A person with a disability has an 
option to a nursing home or has an option for a home health 
care agency, but they have no option to hire, fire and manage 
their own attendant. I know an individual who is currently 
employed, receives Medicaid benefits, is on the 1619B Program 
and uses a home health care agency. Because of the lack of 
control over the attendant services that he receives, this 
individual is continuously late for work, has pressure sore 
problems which prevent him from being at work 8-5 everyday, and 
has an overall morale problem because of his lack of control 
over the attendant services that he receives. Fortunately, this 
gentleman has an understanding employer who has been in a 
similar situation and can relate to the everyday life problems 
that are faced by a lack of self-directed attendant care. 
National ADAPT is working with Congress on the MiCasa attendant 
care bill which, if passed, would provide self-directed 
attendant care services for all eligible participants. MiCasa 
is an excellent example of self-directed attendant care and 
would greatly enhance the ability of people with disabilities 
to be independent and to give them the opportunity to go to 
work. I have never heard of an individual who is in a nursing 
home that is also employed. Nursing homes are there for people 
with chronic or terminal illnesses. People with disabilities 
are not ill therefore; they do not belong in nursing homes.
    Under Title XVI, people with disabilities' SSI is tied 
directly to a Federal Benefit Rate (FBR) of $500. Exceeding the 
FBR in a work environment will once again result in the loss of 
cash benefits. This is a disincentive to work that consistently 
exists. A person may be able to keep their Medicaid under 
1619B, but may lose cash benefits that they have been relying 
on to survive. This is a frightening and confusing prospect for 
people with disabilities.
    In Missouri, Medicaid in not a bad program. In other 
states, it is not quite as good. In some states it is better. 
That is the problem with the lack of consistency. It should not 
depend on where you live that will determine what services you 
receive. Let me give you an example, using myself.
    Five years ago, I lived in the heartland of Illinois. 
Because I have a disability, I automatically qualified for 
public aid, yet I made an annual salary of $35,000 a year. I 
was on a spend-down program and was able to receive self-
directed personal attendant services paid for mostly by 
Medicaid. My co-pay for the attendant services was $50 a month, 
while the state of Illinois paid the additional $650 per month 
for an attendant, morning and night, I lived on my own, without 
an attendant in my household. When I moved to Missouri, it all 
changed. I found that I could not qualify for a nonexistent 
attendant program, due to a lack of a Waiver. I was surprised 
and shocked to find that in order to live on my own it would 
cost $700 per month, out of my pocket. This was unaffordable. I 
had to improvise. I rented a 2-bedroom apartment and gave free 
room and board to a person to assist me with my daily needs. In 
addition, I paid, and continued to pay $200 a month for a back-
up attendant to relieve the person who works for room and 
board. This situation is far from ideal. I personally feel 
penalized for having a disability. I'm not alone in this 
situation. People with disabilities, in Missouri, who are 
employed cannot make over $15,000 per year in order to receive 
self-directed care. This is a huge disincentive in our state. 
Once again, it goes back to the necessity for a National Self-
Directed Care Program.
    In closing, let me state that people with disabilities have 
been subtly discriminated against by a bureaucracy that is 
demeaning, patronizing, confusing and set up to keep people 
with disabilities at poverty levels while penalizing them if 
they work. Sometimes the penalties are genuine and at other 
times they are perceived. Either way, the indisputable fact is 
that they exist and keep people with disabilities from seeking 
gainful, meaningful employment. The work disincentives that are 
deep-seated within the Social Security Act must be erased. 
These intrinsic penalties have been in existence for too many 
years. It is time to change the system. Give it an overhaul, 
lose the disincentives and allow people with disabilities the 
dignity that is afforded everyone else in our society. Don't 
take away the system, but please, I implore you change the 
system.
      

                                

    Chairman Shaw. Thank you, Mr. Blakley.
    Ms. Gennaro.

   STATEMENT OF MARY GENNARO, J.D., DIRECTOR, FEDERAL-STATE 
 RELATIONS, NATIONAL ASSOCIATION OF DEVELOPMENTAL DISABILITIES 
      COUNCILS; AND MEMBER, CONSORTIUM FOR CITIZENS WITH 
            DISABILITIES, SOCIAL SECURITY TASK FORCE

    Ms. Gennaro. Chairman Shaw, Members of the Subcommittee, 
thank you for the opportunity to testify.
    I am Mary Gennaro, director of Federal-State Relations for 
the National Association of Development Disabilities Councils. 
I am also a member of the Social Security Subcommittee of the 
Consortium for Citizens with Disabilities, and it is as a 
member of that task force that I testify today. Last, I am also 
a person with a disability, namely cerebral palsy.
    As a person with a disability who is employed, I am one of 
the fortunate few. This Nation cannot continue to allow human 
potential to be trapped and wasted. Doing so exacts too high a 
price.
    About 70 percent of adults with severe disabilities are not 
employed--one of the largest minorities in the Nation without 
jobs. But people with disabilities want to work, and they want 
to have that opportunity, especially at a time when our economy 
is flourishing and unemployment rates are at all time lows.
    The question is what is preventing people with disabilities 
who want to work from working? What major barriers stand in 
their way? Some of these are: Lack of access to vocational 
rehabilitation and employment services and choice in those 
services and providers; lack of access to health care coverage, 
financial disincentives and complex and confusing rules about 
what happens to beneficiaries when they work. These are rules 
that often punish their efforts and success rather than 
assisting them. These are not all the barriers, but if we 
address these, we will take a significant step forward in 
assisting people.
    This Subcommittee well knows the benefits of a ticket to 
work. It is through your dedication on this issue and the 
bipartisan work of the last Congress that we are here today 
with strong bipartisan legislation in the Senate and you poised 
to work on this also, hopefully in a bipartisan way.
    The ticket moves us one big step closer to addressing this 
problem, but there remains a problem. Beneficiaries will not 
use the ticket if they continue to fear loss of their health 
care coverage. That is the next disincentive that I would like 
to discuss.
    The problem for DI beneficiaries is that they lose Medicare 
after working for a period of time and earning a set amount of 
money. They can lose coverage with earnings of as little as 
$500 a month. They lose coverage, but their disability remains 
and their need for health care remains, but if they took a 
part-time job, or a low-paying job, it is likely that their 
employer does not offer health care coverage. If coverage is 
offered, it is likely to be too costly, given the amount of 
earnings that the person has, or coverage may simply be 
insufficient.
    The Medicare buyin that currently exists is also 
insufficient, costing $350 some dollars a month, it is out of 
reach of most people, and currently only 170 people take 
advantage of enrollment in this program.
    Given the choice between work and health care, people 
choose the only choice possible: preserving their life and 
health. But this is no choice that anyone should have to make. 
The results are needless, wasted potential. We need to continue 
Medicare for people who need it. It must be extended without an 
arbitrary cutoff after a certain number of years. Doing so is 
not a matter of adding new people to the program, but of 
maintaining critical coverage for former beneficiaries who have 
actually been able to move into work. People will simply have 
to choose between work and future risk to life and health in 3 
years, 5 years, whatever arbitrary limit we set. The choice is 
unacceptable.
    People on SSI also face a problem in regard to health care 
when their earnings rise, and we must be able to extend health 
care to them as their needs continue. And we need to let the 
States extend Medicaid in other ways. To assist people with 
disabilities, we need it to work. And we should encourage 
States to develop systems to support the needs of people with 
disabilities and give them the option to assist them to work. 
One of these ways is through personal care assistance.
    The other disincentive for people is financial, and we have 
discussed that along with the others today. The SSDI Program 
does not allow for a gradual reduction of benefits, and it is 
similar to the SSI Program. In the 105th Congress, you 
supported a mandated demo to look at the gradual decrease, and 
we hope you will again include that in any legislation that you 
put forward.
    Finally, as far as barriers are concerned, I wanted to 
mention the complex, confusing nature of the rules that people 
who are beneficiaries of the system must comply with. They are 
confusing; they are complex. People have difficulty getting 
information, clear information.
    Given the risks that people face when they work, it is 
understandable that they fear using the work incentives. They 
fear their work will trigger continuing disability reviews. 
This is not appropriate. We need to protect people so that they 
can attempt to work and not fear that work will bring an end to 
the benefits they still need because their disability remains.
    Also, people are fearful they will not be able to reenter 
benefits should they remain disabled, but somehow are now 
unable to work. We also must address this here so that people 
can step forward and trust that they will be rewarded for their 
efforts, not punished.
    And we need to give people better access to the information 
that they need in order to work. Therefore, we need to create a 
more community-based program of information and assistance so 
that people can have dependable information and have an 
understandable way so that they really know the impact. And we 
need to fund protection and advocacy services for individuals. 
They will be navigating a new system, and they need help and 
assistance in doing so.
    We have a tremendous opportunity here. I hope we can take 
it and move forward. We support the bill in the Senate. It does 
not do everything, but it has important balances. No bill can 
address every issue, but it moves us a great deal ahead.
    Thank you.
    [The prepared statement follows:]

Statement of Mary Gennaro, J.D., Director, Federal-State Relations, 
National Association of Developmental Disabilities Councils; and 
Member, Consortium for Citizens with Disabilities, Social Security Task 
Force

    Chairman Shaw, Members of the Subcommittee on Social 
Security, thank you for the opportunity to testify regarding 
barriers preventing disability beneficiaries from returning to 
work. I am Mary Gennaro, Director of Federal-State Relations of 
the National Association of Developmental Disabilities 
Councils. I am also a member of the Social Security Task Force 
of the Consortium for Citizens with Disabilities and I am here 
testifying on behalf of the Task Force. Lastly, I am a person 
with a disability, namely cerebral palsy.
    The Consortium for Citizens with Disabilities (CCD) is a 
working coalition of national consumer, advocacy, provider and 
professional organizations working on behalf of the 54 million 
children and adults with disabilities and their families living 
in the United States. The CCD Social Security Task Force 
focuses its work on disability policy issues and concerns in 
the Supplemental Security Income (SSI) program and the 
disability programs in the Social Security Old Age and 
Survivors programs. The CCD Social Security Task Force 
appreciates the opportunity to comment regarding the barriers 
preventing disability beneficiaries from returning to work.
    We wish to acknowledge and thank the Social Security 
Subcommittee for its longtime commitment and leadership in 
addressing the barriers that prevent disability beneficiaries 
from returning to work. As the Subcommittee knows, people with 
disabilities want to work, in spite of the daunting, often 
impossible barriers in their attempts to do so. Over the past 
few years these barriers have come into sharper focus and 
efforts to address them have intensified. In the last Congress, 
the Social Security Subcommittee focused its efforts on a 
legislative response to the barriers to employment faced by 
people with severe disabilities. It is largely because of the 
Subcommittee's work to fashion an effective legislative 
response on this critical issue that we are here today, one 
important step closer to positive change--positive change that 
will bring economic opportunity, greater freedom and 
independence, and untold other benefits, to so many people who 
long to more fully share their talents in their communities and 
in this great nation.

                              The Problem

    The Presidential Task Force on Employment of Adults with 
Disabilities indicates in its first report ``Re-charting the 
Course,'' that about 70% of adults with severe disabilities are 
not employed--one of the largest minorities in the nation 
without jobs.\1\ We all know that this is unacceptable, 
particularly when our nation's economy is flourishing and 
unemployment rates are at near all time lows. People with 
disabilities want to work. A 1998 Harris poll found that seven 
out of ten (72%) of people with disabilities age 16-64 who are 
not employed say they would prefer to be working.\2\ There are 
4.8 million individuals receiving Social Security disability 
benefits and 3.6 million individuals with disabilities, aged 
18-64 receiving Supplemental Security Income benefits (SSI). 
Some Social Security Disability Insurance (SSDI) beneficiaries 
and SSI beneficiaries are simply unable to work because of 
their impairments. Some are very seriously ill, others have 
terminal illness. In fact, SSA has found that 20% of people 
receiving benefits die within five years. Other people 
receiving benefits have work potential and want to work to the 
maximum extent of their physical and mental capabilities. It is 
for this later group that the CCD Social Security Task Force 
testifies today.
---------------------------------------------------------------------------
    \1\ Re-Charting the Course--A Report of the Presidential Task Force 
on Employment of Adults with Disabilities, November 15, 1998. 
    \2\ National Organization on Disability/Louis Harris Survey, 
conducted April and May of 1998.
---------------------------------------------------------------------------

          Barriers to Employment for People with Disabilities

    If people with disabilities want to work, what is it 
preventing so many from doing so. The barriers to work are 
many, yet there are ways we can break down these barriers. We 
must not be discouraged by the statistics, for if barriers to 
employment for people with disabilities are seriously addressed 
these statistics will improve and people with disabilities will 
work. Some will attain economic self-sufficiency; others will 
earn enough to move off of benefits, but will require some 
ongoing support to assist with the extraordinary expense of 
living and working with disabilities. This support may consist 
of health care, personal assistance, and housing subsidies, 
transportation, child care, etc. Still others will work to 
their maximum potential and continue to require both some cash 
assistance as well as other supports. In all instances, people 
with disabilities want to be active members of society, 
contributing what we can and taking only what we need to 
survive and prosper.
    Some of the barriers that keep SSDI/SSI beneficiaries from 
working are:
     Lack of access to vocational rehabilitation and 
employment services and lack of choice in vocational 
rehabilitation and employment services;
     Lack of access to health care coverage
     Financial Disincentives
     Work Incentives are Complex and Can Hinder Work 
Attempts

     Barrier: Lack of Consumer Access to and Choice of Vocational 
          Rehabilitation and Employment Services and Providers

    Few beneficiaries of SSDI/SSI are referred for vocational 
rehabilitation, and fewer return to work because of these 
services. The Congressional Budget Office (CBO) has estimated 
that about 10 to 15 percent of new SSDI and SSI beneficiaries 
are referred to State Vocational Rehabilitation (VR) agencies, 
and about 10 percent of those referred are accepted for 
services. 1998 data from the Social Security Administration 
(SSA) indicates that last year 9,950 SSDI or SSI beneficiaries 
moved off of disability benefits into employment due to SSA 
funded VR services. During that time about 4.8 million disabled 
workers received monthly SSDI benefits, and about 3.6 million 
individuals with disabilities, aged 18-64 received SSI 
benefits.
    In addition to limited access to services, SSDI 
beneficiaries or SSI recipients have no choice in the providers 
of their vocational rehabilitation and employment services. 
Historically, consumers have been assigned to a service 
provider, which by law had to be a state vocational 
rehabilitation agency, usually by type of disability, rather 
than type of services required. Now beneficiaries of SSDI and 
SSI,, not accepted for services by VR, have access to an 
Alternate Participant program, but this program is 
significantly hindered by the current reimbursement system. 
Consumers who determine that they are not receiving appropriate 
or high quality services generally have no recourse other than 
to purchase services themselves from private vendors. Given the 
cost of private services and the state of most consumer's 
finances, this is an option very few can afford.\3\
---------------------------------------------------------------------------
    \3\ SSA Disability Program Redesign Necessary to Encourage Return 
to Work, GAO, April, 1996, pp 48-56.
---------------------------------------------------------------------------

    Recommendations to Improve Access to and Choice of Services and 
                               Providers

    Enhance Consumer Choice. The Subcommittee understands the 
need for consumer choice and knows that benefits will result 
from increased choice in and access to services. H.R. 3433, the 
``Ticket to Work and Self-Sufficiency Act,'' introduced by then 
Subcommittee Chairman Jim Bunning and Ranking Minority Member 
Barbara Kennelly, passed the House overwhelmingly by a vote of 
410 to 1 in the 105th Congress. The ``ticket to work'' program 
contained in H.R. 3433 was incorporated, with only a few 
refinements, into S. 331, the ``Work Incentives Improvement Act 
of 1999,'' which was introduced in the Senate and recently, 
overwhelmingly approved by the Finance Committee. Active 
participation in the rehabilitation process increases the 
chances of a successful outcome. The ability to choose one's 
own services and providers recognizes SSDI and SSI 
beneficiaries as an adults, capable of making significant life 
choices. This ownership in the rehabilitation process thereby 
enhances the individual's self-esteem and confidence. Choice is 
important for all consumers of rehabilitation and employment 
services. Some people with disabilities may need assistance in 
exercising choice and such assistance must be easily available 
through out the rehabilitation process.
    Increase Access. The ticket should be available to all 
SSDI/SSI beneficiaries enabling those who wish to attempt work 
to have the opportunity to pursue their goals. Consumers must 
be able to choose from among the many thousands of public and 
private rehabilitation, employment service, and related 
providers in the nation. SSDI/SSI beneficiaries must be able to 
access the services they need whether provided VR, private 
providers, or a combination of both.
    Reward Outcomes. Payment for services must encourage 
outcomes. It should encourage work by all SSDI/SSI 
beneficiaries, regardless of their ultimate work capacity. 
Instead of rewarding providers only for removing people from 
the rolls, it should reward providers for assisting people to 
minimize their dependency on cash assistance programs. Paying 
providers a portion of the savings realized by the federal 
government will enable many more people to work to their full 
capacity resulting in greater savings than only paying for 
those attaining SGA. Payments should be made on a milestone/
outcome approach.
    Provide for an Advisory Commission. Designing and 
implementing this program will be a significant challenge to 
SSA. We recommend that a Commission with equal representation 
from consumers and their self-selected representatives, 
providers, and employers be appointed and charged with 
responsibility to assist SSA in this endeavor. The Commission 
should have broad authority to research, model, test, and 
recommend the final structure of the program to SSA and the 
Congress by a date certain. It is imperative that the missteps 
that occurred during implementation of the Alternate 
Participant program be avoided.

                Barrier: Access to Health Care Coverage

    Access to health coverage is increasingly cited as the key 
obstacle to employment. People fear losing medical benefits 
that can mean the difference between life and death. A ``ticket 
to work'' program will go a long way in addressing some of the 
major barriers to employment, but if lack of access to health 
care benefits is not addressed, the success of the ``ticket'' 
will be greatly hindered. Until they can be assured that 
working will not threaten their ability to receive necessary 
health care services, SSDI beneficiaries and SSI recipients 
will not take full advantage of what a ``ticket'' program can 
offer. In fact, what a ticket program can offer is limited 
unless the other barriers to employment discussed in our 
testimony are addressed.

                                Medicare

    Currently SSDI beneficiaries are eligible for Medicare 
benefits 24 months after becoming eligible for cash benefits. 
They receive Hospital Insurance (Part A) and Supplementary 
Medical Insurance (Part B). (Part B is voluntary, but virtually 
all Part A beneficiaries enroll in Part B.) The Part B premium 
of $45.50 is deducted from the individual's benefit check. SSDI 
beneficiaries lose cash benefits, after they have completed a 
nine month trial work period and a 3-month grace period, and 
earn $500 or more a month. The average monthly cash benefit is 
$733. (The trial work period consists of nine months within a 
5-year period during which a beneficiary is able to test his or 
her ability to work without losing cash benefits or Medicare 
coverage. Earnings of as little as $200 a month will be 
credited toward the trial work period.) After the trial work 
period and 3-month grace period, Medicare Part A coverage 
continues for a 36-month extended period of eligibility and 
cash benefits are suspended for any month in which the 
individual earns $500 or more in income. After this extended 
period of eligibility an individual earning $500 or more a 
month will be found to be able to engage in substantial gainful 
activity and no longer eligible for benefits. Medicare coverage 
will cease. If the person is still ``medically disabled'' he/
she can purchase Medicare through payment of monthly premiums, 
currently $309 a month for Part A and $45.50 per month for Part 
B at a total cost of $354.50 a month. It is quite hard to 
imagine how an individual whose earnings may be as low as $500 
a month ($6,000/ annually or under $42/day) could afford to 
continue Medicare. Last year, 170 people nationwide were 
enrolled under this buy-in program. We believe that the premium 
cost is prohibitive for many people with disabilities.
    What this means in real life terms is that an individual 
with a disability may be working to their fullest potential at 
a part-time job, or at a full-time job with limited earnings 
and lose their cash benefits and health care coverage. Their 
part-time job doesn't offer health insurance, they find it 
difficult to qualify for insurance in the private market, or 
private insurance simply does not provide an adequate benefit 
package. Yet, their need for health care has not changed. 
Forced to choose between critical health care and a job, there 
is only one choice possible; people with disabilities choose to 
preserve their life and health and remain trapped on benefits 
as a consequence.
    Many SSDI beneficiaries find they need Medicaid to 
supplement their Medicare coverage and to cover the cost of 
Medicare premiums, deductibles, and cost sharing requirements. 
Medicare does not cover prescription drugs, non-medical 
personal care or personal assistance services. Many people with 
disabilities need these critical and sometimes commercially 
unavailable benefits. Clozapine, taken by an individual with 
schizophrenia, or the personal care received by an individual 
with a physical disability enabling them to bathe, eat, dress 
and accomplish other activities of daily living can be the very 
things which enable employment. Needing to meet the income and 
asset limits of Medicaid buy-ins then acts as another 
disincentive to work.

                                Medicaid

    Medicaid is a federal-state health insurance and long term 
care program for certain low-income people. In all but 11 
states, individual's who are eligible for SSI are automatically 
eligible for Medicaid. (The other 11 states link Medicaid 
eligibility to Section 209(b) disability definitions which may 
be more restrictive than SSI criteria.) Medicaid mandates 
coverage of a core set of services for all beneficiaries and 
gives states the option to cover 34 additional services. Many 
of these optional services, such as physical therapy, 
occupational therapy, prescribed drugs, prosthetic devices, 
rehabilitation services, personal care services, and home and 
community-based waiver services, are very important for persons 
with disabilities.
    To be eligible for SSI, and thus eligible for Medicaid in 
most states, an individual must be disabled, according to the 
SSA definition of disability and meet the income, assets and 
resource criteria set in the program. Generally, SSA defines 
disability as the inability to engage in ``substantial gainful 
activity'' (SGA) by reason of a physical or mental impairment. 
The current SGA level is $500 per month for non-blind 
individuals and $1,110 per month for the blind. Other 
eligibility criteria requires that an individual's 
``countable'' income fall below the federal maximum monthly SSI 
benefit, which is currently $500 for an individual, and $751 
for couples. The current resource limit is $2,000 for an 
individual and $3,000 for couples.
    Unlike SSDI beneficiaries, SSI recipients can earn more 
than $500 a month and continue to receive cash benefits if they 
continue to be disabled, but for their earnings. Section 
1619(a) and (b) of the Social Security Act allow cash benefits 
to be gradually reduced as income increases. Cash assistance is 
decreased $1 for every $2 in earned income. Eligibility for 
cash benefits will end when the amount of countable income 
equals the maximum benefit level for an individual. Currently, 
this ``break even point'' is $1,085 per month. When eligibility 
for cash benefits end, SSI recipients can continue to receive 
Medicaid if they continue to meet all other requirements for 
SSI eligibility (disability status, assets and resource 
limits), they need Medicaid in order to obtain or continue 
employment, their earnings are not sufficient to provide a 
reasonable equivalent of the benefits they are receiving from 
SSI and Medicaid. Each state sets an earned income threshold to 
measure this last criteria. The thresholds vary by state. For 
example, in 1998 the threshold in Arizona was $12,636, in 
Missouri $19,014 and in New York $28,580.
    Medicaid covered services often meet the critical everyday 
needs of people with disabilities. Medicaid may fund 
residential supports in the community and provide habilitation 
services which assist people with disabilities in gaining, 
maintaining and improving the skills necessary for everyday 
life. It may provide assistive technology to enable an 
individual to communicate, or a wheelchair to enable his/her 
mobility. It may also cover prescription drugs that improve or 
control a person's condition enabling them to function in the 
workplace.

                           Private Insurance

    For many reasons employer based or private insurance will 
not adequately meet the needs of people with disabilities. 
Employers may not offer a group plan, or the cost of the group 
plan offered may be too expensive given the person's income. 
This is especially true in part-time or low income jobs in 
which many SSDI beneficiaries and SSI recipients are likely to 
be employed. Furthermore, if insurance is offered, the benefit 
package may be limited, failing to cover many of the items, 
services and supports needed by many people with disabilities, 
such as coverage of prescription drugs, mental health services, 
durable medical equipment, assistive technology, physical, 
occupational and speech/hearing/language therapies and personal 
assistance services. Additionally, people with severe 
disabilities may have difficulty accessing covered services 
because the insurer uses a narrow definition of medical 
necessity, limiting services to those which restore health, and 
not covering services which maintain function and/or prevent 
deterioration or loss of function. Also of concern is a recent 
Harris Poll finding that: ``Among adults with disabilities who 
are not covered by health insurance, one in five (18%) were not 
able to get insurance because of a disability or preexisting 
health condition.\4\
---------------------------------------------------------------------------
    \4\ National Organization on Disability/Louis Harris Survey, 
conducted April and May of 1998.
---------------------------------------------------------------------------
    Private insurance also does not offer personal assistance 
services, a critical need for many people with disabilities. 
Personal assistance services refer to a range of services, 
provided by one or more persons or devices, to assist an 
individual with a disability to perform daily activities on or 
off the job, which the person would typically perform if they 
did not have a disability. These services may include 
assistance with eating, toileting, grooming, dressing, bathing, 
getting in and out of bed or one's wheelchair, meal planning 
and preparation, managing finances, cooking, cleaning house, 
handling money and on-the-job support.

  Recommendations Concerning Access to Health Care Coverage--Continue 
                           Medicare Coverage

    Continue Medicare Coverage. To address the very real 
concerns SSDI beneficiaries have regarding loss of Medicare 
coverage, access to adequate coverage must be assured. The 
current extended eligibility for Medicare and the Medicare buy-
in are simply insufficient to address the needs of 
beneficiaries. Coverage for Medicare must be extended without 
an arbitrary cut off after a certain number of years. This is 
not a matter of adding new people to the program, but of 
maintaining benefits for beneficiaries. The fear and concern 
over loss of health care coverage is not addressed if there is 
an arbitrary time limit on coverage. The barrier will be 
addressed when beneficiaries can pursue employment secure in 
the knowledge that doing so will not jeopardizing their life or 
health. As long as the need for health care continues, access 
to coverage must be assured.
    Extend Medicaid and Allow a Buy-In to Coverage. Medicaid 
must be available to people with disabilities whose earnings 
now make them ineligible for coverage. SSI recipients must be 
able to work to the maximum extent of their ability and have 
continued access to Medicaid coverage. SSDI beneficiaries must 
have access to Medicaid, without having to limit their earnings 
or impoverish themselves, when they need such coverage to 
supplement Medicare. States should have the option to expand 
Medicaid to assure such access. States should also be able to 
raise income and resource levels for Medicaid eligibility, and 
establish affordable buy-ins for the program.
    Assist Those Who Have Medically Improved. States should 
also have the option to extend Medicaid coverage to people with 
disabilities who are employed and become ineligible for 
benefits due to medical improvement, but continue to have a 
severe medically determinable impairment. This would enable 
people to stay employed and retain coverage for the very 
treatment, services and supports which enabled them to be 
employed.
    Encourage States to Develop Systems of Support. More must 
be done to assist people with disabilities who work. The 
federal government must support and encourage States to develop 
systems to provide the items, services and supports people with 
disabilities need in order to work. Lack of personal assistance 
services often is major barrier to employment for people with 
disabilities. Yet the availability of these services is 
limited. Currently, only 31 states offer personal assistance 
services as an optional Medicaid service. All of the states 
should cover this critical optional service in their Medicaid 
programs and more needs to be done to encourage States to 
provide this coverage.
    Help to Prevent the Need for Cash Assistance. Finally, 
Medicaid coverage should be available to workers who have a 
disability and who without health care and the services and 
supports covered by Medicaid would likely become eligible for 
SSDI and/or SSI. By extending Medicaid coverage in this way, 
people can continue to work and not become dependent on cash 
assistance in order to have their health care needs met.

                    Barrier: Financial Disincentives

    SSDI beneficiaries who work lose their cash assistance 
before their earnings are high enough to make up for the loss 
of benefits. Cash benefits and health care coverage ends at 
earnings of $500 or more a month, rather than declining 
gradually as in the SSI program., The Employment Support 
Institute at Virginia Commonwealth University studied this 
problem in 1997, using decision-support software, called 
WorkWorld and found that under current rules, an SSDI 
beneficiary receiving the then average benefit amount of $704 
per month, who attempted to work fell off a net ``income 
cliff'' after earning just $600 per month or $7,200 annually. 
The beneficiary did not recover the same net income level until 
earnings reached $2,000 per month, or $24,000 annually. On the 
other hand, because their benefits are reduced $1 for every $2 
earned, after allowable income exclusions and disregards, SSI 
beneficiaries do not reach the same ``income cliff'' until 
their income reaches the State Medicaid threshold limit and 
they may be found ineligible for continue Medicaid coverage. 
Then they must attempt to purchase medical coverage.

           Recommendations to Address Financial Disincentives

    Reduce Cash Assistance Gradually. The SSDI program should 
allow for a gradual reduction of benefits as earnings increase, 
similar to the SSI program. This would help alleviate the 
financial disincentive currently faced by SSDI beneficiaries 
who want to work. SSDI benefits should be reduced by $50 for 
every $100 earned beginning at SGA. The $50/$100 sliding scale 
offset would replace SGA measures only for allowed SSDI 
beneficiaries who attempt to work. SGA would remain a principal 
criteria for establishing a work disability at initial 
eligibility. In the 105th Congress this subcommittee supported 
a mandate that SSA conduct a demonstration of this gradual 
decline in benefits. We urge you to include it in this year's 
bill.

   Barrier: Work Incentives are Complex and Can Hinder Work Attempts

    The effects of disability are not static over time. 
Sometimes a person with a disability may be able to function 
quite well and therefore, work to some degree, and at other 
times the same person's functioning may become quite limited 
preventing them from working. This fluctuation in ability is 
not related to desire or willingness to work, but rather to the 
nature of disability itself. Certain disabilities can be 
episodic by nature. For instance, people with multiple 
sclerosis often experience remission of their symptoms, only to 
have their symptoms reoccur again.
    Individuals face two barriers in this regard. First, they 
may work successfully for a time, but their effects of their 
disability may change or worsen, at which time they would need 
to return to benefits. If an SSDI beneficiary attempts to get 
back on benefits after their extended period of eligibility has 
expired, or an SSI beneficiary attempts the same after their 
benefits have been suspended for 12 consecutive months because 
of work, both individuals will face a lengthy, rigorous process 
to determine eligibility, as if the person were applying for 
benefits for the first time. Secondly, work may trigger SSA to 
perform a continuing disability review (CDR) to determine 
whether a person remains disabled and eligible for benefits. 
Even if a person is no longer receiving cash benefits due to 
work, their health coverage is linked to their disability 
status. Once again a person with a disability faces the threat 
that their work will result in a loss of health care coverage.
    Work Incentives for SSDI and SSI are very complex and 
difficult to understand and can hinder work attempts. It can be 
very difficult to get dependable, accurate information 
regarding work incentives. Given the risks that an individual 
with a disability may face (loss of health benefits, lose of 
cash assistance, loss of other income based assistance) when 
attempting to return to work, people fear using work 
incentives. People may fear, with good reason, overpayments by 
SSA. People can be surprised by overpayments of thousands to 
tens of thousands of dollars even when they have reported their 
earnings to SSA. Individuals may forego attempts to work 
because of lack of or incorrect information regarding work 
incentives. Within SSA, and in the community at large, there is 
insufficient knowledge of and outreach regarding work 
incentives. Individuals need information, advice, advocacy and 
other supports and services in order to benefit from work 
incentives and other programs designed to assist them in 
securing or reentering employment.

               Recommendations to Improve Work Incentives

    Protect Workers Losing Eligibility Solely Due to Work. Work 
Activity by a person with a disability should not be basis for 
the scheduling of a continuing disability review. Further, work 
activity by an individual with a disability should not be used 
as the evidence that a person no longer has a disability.
    Provide for Expedited Redeterminations of Eligibility. A 
timely process must be available to promote reinstatement of 
cash and health benefits when a person who continues to meet 
SSA's standards for disability, finds him or herself unable to 
work.
    Establish a Community-Based Work Incentives Planning and 
Assistance Program. In order to reduce the fear and risk 
associated with attempting employment a person with a 
disability must have access to timely, accurate information on 
work incentives, and how use of work incentives will impact 
his/her own life. Community based outreach will help assure 
that people with disabilities receive the information and 
assistance they need to make informed choices in regard to 
preparing for, securing, maintaining and advancing in 
employment, while at the same time accessing or maintaining 
access to necessary health care and other supports and 
services. Work incentives planners using decision-support 
software can assist beneficiaries in making these informed 
choices. SSA must also make a greater commitment within its own 
program to have trained, knowledgeable and accessible work 
incentive specialists through which SSDI/SSI beneficiaries as 
well as community-based planners can obtain reliable 
information and assistance.
    Fund Advocacy and Assistance Services. Beneficiaries of 
SSDI/SSI must have ready access to protection and advocacy 
services to assist with a variety of issues and difficulties 
which can arise as they navigate through a new way of meeting 
the needs of people with severe disabilities for vocational 
rehabilitation, employment supports and services, work 
incentives and other support needs. History has shown us that 
there will always be some instances in which people need an 
effective advocate when deal with large complex, service 
systems. If advocacy and assistance is not available people 
will not be able to fully take advantage of what programs and 
services have to offer them.

                       An Opportunity for Change

    The issues we have discussed are major barriers to the 
employment of people with disabilities. There are additional 
obstacles faced by people with disabilities who want to work--
lack of adequate transportation and lack of affordable housing 
are just some examples of these. Nor are the recommendations we 
have outlined an exhaustive list of actions that can be taken 
to address this problem. For instance, we also support a tax 
credit for disability related work expenses as well tax 
deductions. And we believe asset limitations should be raised 
to facilitate savings and investment, which can help lessen 
dependence. We believe that if the barriers and recommendations 
we have discussed are included in legislation, we would move a 
great step forward in assisting people with disabilities to 
move into employment and reduce their dependence on benefits 
and other assistance. We support S. 331 reported out by the 
Finance Committee. We believe it represents important balances 
of the concerns of key stakeholders and would be an important 
step towards removing barriers. It does not address all issues, 
no bill could, but it does address critical essential elements 
necessary to bring positive change.
    As we move forward and break down barriers to employment 
for people with disabilities we will address another, more 
hidden barrier--attitudes and prejudices regarding the 
abilities of people with disabilities. We can help to erase 
prejudice and shatter myths about the ability of people with 
disabilities to contribute in the workforce and in every area 
of life. Let's take the tremendous opportunity we have to begin 
breaking down barriers.
[GRAPHIC] [TIFF OMITTED] T6970.003

      

                                

    Chairman Shaw. Thank you.
    Mr. McNulty.

STATEMENT OF JIM MCNULTY, MEMBER, BOARD OF DIRECTORS, NATIONAL 
   ALLIANCE FOR THE MENTALLY ILL, BRISTOL, RHODE ISLAND; AND 
            PRESIDENT, MANIC DEPRESSIVE ASSOCIATION

    Mr. McNulty. Thank you, Chairman Shaw and Members of the 
Subcommittee.
    I would like to request that my full statement be made a 
part of the record.
    My name is Jim McNulty. I am from Bristol, Rhode Island, 
and I am here representing the 208,000 members and 1,200 
affiliates for the National Alliance for the Mentally Ill, and 
I would also add that I am president of the Manic Depressive 
Association in Rhode Island which is an affiliate of the 
National Depressive and Manic-Depressive Association which is 
the largest consumer run mental health organization in the 
country.
    I would like to thank you very much for holding this 
hearing to barriers on employment for people with disabilities.
    Rather than read you my prepared testimony, I think I am 
going to depart from it and tell you a little bit about myself, 
my own disability which is not necessarily perceptible to most 
people.
    I have been living with manic-depressive illness for about 
30 years now. I had my first episode when I was about 19 years 
old. I was a sophomore in college, and it had a devastating 
impact on my life, but it did not manifest immediately. It was 
a lingering onset, if you will, and it wasn't until I was 38 
years old that the full impact of it was felt.
    So, I, unlike many people, was fortunate. I was able to 
work from my twenties and into my thirties and buildup a 
history of work. I graduated from an Ivy League university. I 
had my own business. I was in town politics in a small town in 
Massachusetts. I was doing very well. I had two children and a 
very happy family life. But I had this illness which nobody 
understood at that time which made things very difficult. As a 
matter of fact, it ended up destroying my marriage, my job, my 
career, and it ended up with me being in a hospital for a very 
long period of time.
    I have been extremely fortunate, because I have had the 
supports that the lady from the GAO spoke about. She said that 
one of the things they found in their survey is that a 
supportive environment is the most important thing that most 
people who went back to work had. I had that. I started from 
owning a business--it was a pension consulting business. It 
ended up with my first job as a homeless person delivering 
bagels for a local bakery to coffee shops in the metropolitan 
Providence area.
    I was happy to have that job. I wanted to go back to work. 
And I will tell you that I work with mentally ill people every 
day. I work in a hospital. I go onto the units and deal with 
seriously mentally ill people. They want to work. There is not 
one of them that I have run into--I am sure that there must be 
people who don't, but I haven't run into any personally. They 
want to work.
    As my fellow panelists have said, and as others have said 
before me, they can't go back to work. They can't risk their 
benefits. They don't have private insurance. They don't have 
health insurance. They don't have the cliff that we talk about 
falling off. And it is a terrible thing to watch because people 
are torn.
    Congresswoman Johnson talked about the Christmas season. 
People wanted to work, but they couldn't go work the extra 
hours because, if they did, they would lose all of their 
benefits. That is a terrible position to put somebody into. 
That is not the America I grew up in. That is not the America, 
I think, that any of us wants to see.
    As a person with a disability, I want to be accepted as a 
part of the society. I also want to make my contribution as a 
contributing member of the society. Believe it or not, I 
actually like paying taxes--not more than my fair share, 
however. It is an honor to be able to pay taxes, and I think 
that many, many people that I work with on a daily basis 
really, really want that opportunity. It cannot be 
overemphasized, though, that the ticket to work, which is a 
critically important part of what you are dealing with, is not 
going to work without adding the medical insurance portion. 
Believe me, I have thought about this; I have talked about this 
for years. I think that this is the key.
    I think this is a historic moment and a historic 
opportunity, and I would urge this Subcommittee to move this 
legislation forward, and I thank you very much for the 
opportunity to be here today.
    Thank you.
    [The prepared statement follows:]

Statement of Jim McNulty, Member, Board of Directors, National Alliance 
for the Mentally Ill, Bristol, Rhode Island; and President, Manic 
Depressive Association

    Chairman Shaw and members of the Subcommittee, I am Jim 
McNulty of Bristol, Rhode Island, and I serve on the Board of 
the National Alliance for the Mentally Ill (NAMI). I am also a 
president of the Manic Depressive and Depressive Association of 
Rhode Island. At the outset I would like to thank you for 
holding this hearing on barriers to employment for people with 
disabilities in Social Security's programs. This issue is 
critically important for people with severe mental illnesses--
the fastest growing population represented on Social Security's 
disability programs.
    I, myself, have been living with manic depressive illness 
and for the last nine years have worked with many other Rhode 
Islanders suffering from severe mental illnesses, including 
schizophrenia, manic depression, and depression. Over this 
period I have found an almost universal, visceral desire on the 
part of people with disabling mental illnesses to return to 
meaningful, gainful employment. We want to be able to partake 
as fully as possible in the privileges and responsibilities of 
being citizens of the United States.
    Sadly, for many of us the very system that is designed to 
help us when we are at an ebb in our health and require the 
social safety net will not allow us to recover dignity by 
helping us return to work. As you know, the current ``all or 
nothing'' approach to income support and health security 
operates as a massive barrier to work for millions of Americans 
with severe disabilities who seek to achieve greater 
independence and dignity through employment. The dream of the 
Americans with Disabilities Act (ADA) is full integration of 
people with disabilities into the mainstream of American 
society. Reform of the current system is absolutely essential 
to achieving this important national objective.
    NAMI believes that we offer a unique perspective on the 
critical issues of work incentives, income supports, and 
employment for people with severe mental illnesses, which are 
brain disorders. NAMI is the nation's largest organization 
representing people with severe mental illnesses and their 
families. Through our nearly 1,200 affiliates and chapters, 
NAMI represents over 208,000 consumer and family members and 
works to promote greater public understanding of serious brain 
disorders such as schizophrenia, major depression, bipolar 
disorder, obsessive-compulsive disorder, and panic disorder. 
Our major activities include research, education, and advocacy 
aimed at reducing stigma and promoting independence for people 
with brain disorders.
    NAMI has a strong interest in the issue of work incentives, 
income supports, and employment for people with disabilities. 
We share your vision of restoring fairness to the Social 
Security Administration's (SSA) disability programs by enabling 
those who are truly disabled to receive benefits quickly and 
stopping payments to persons who have fully recovered. Work is 
extremely important to people with severe mental illnesses and 
their families. Yet the supports necessary to achieve 
employment and independence are simply not in place for most 
people with these brain disorders who want to leave the 
Supplemental Security Income (SSI) and Social Security 
Disability Insurance (SSDI) rolls and join the workforce.
    As I noted above, people with severe mental illnesses are 
the fastest growing population within both the SSI and SSDI 
programs. More importantly, SSA data reveal that people with 
mental illnesses are coming on to the disability rolls at an 
earlier age than their counterparts with other disabilities. 
Given how difficult it is to get off the rolls through 
employment--less than one percent successfully do so--it 
becomes imperative to enact reforms that end the severe 
penalties for those who are willing to take the tremendous 
risks inherent in entering the workforce.
    However, as important as promoting work is to so many 
adults with severe mental illnesses, NAMI also believes that we 
should not lose sight of how important Social Security's 
disability programs are as fundamental safety net protections. 
We should bear in mind that both SSI and SSDI have the highest 
standard of eligibility for any public disability programs in 
the world--that an individual be totally disabled and unable to 
attain substantial gainful activity (SGA) in any job in the 
American economy. Because of this strict definition, most of 
the adults on these programs have severe disabilities and are 
some of the most vulnerable citizens in our society.
    For the vast majority of SSI and SSDI beneficiaries, the 
cash assistance they receive meets basic everyday needs on a 
week-to-week basis. Most have no savings, and depend on cash 
benefits for food, clothing and shelter. For them, SSI and SSDI 
are programs that are successful in preventing complete 
destitution and keeping them out of a state hospital or an 
institution (and considerably higher cost to taxpayers). Thus, 
while NAMI strongly supports the goal of promoting work and 
independence, we believe that these reforms should keep the 
basic structure of SSI and SSDI in place in order to protect 
the most disabled and vulnerable beneficiaries.

What are the major barriers to employment for people with disabilities? 


    Recent studies (including those from the General Accounting 
Office, the National Council on Disability, and the National 
Academy of Social Insurance) point to five principal barriers 
to the employment of individuals with severe mental illnesses 
who are SSDI or SSI beneficiaries. These barriers are: 1) the 
loss of health benefits; 2) the complexity of the existing 
work-incentives system; 3) financial penalties of working; 4) 
lack of choice in employment services and providers; and, 5) 
inadequate work opportunities. NAMI believes that all of these 
barriers must be resolved to empower beneficiaries to go to 
work.
    The current SSI and SSDI programs themselves too often 
serve as barriers to work. While the existing work incentives 
in the Social Security Act do make it easier for some people 
receiving SSI or SSDI payments to go to work, most people with 
severe mental illness either do not know about, or do not 
understand, the provisions and therefore do not utilize these 
work incentives. This is true, both for the so-called SSDI 
trial-work-period provisions and the SSI 1619(a) and 1619(b) 
programs. For too many people with mental illness there is a 
pervasive fear that employment will result in the immediate 
cut-off of cash benefits and the concurrent loss of critically 
important medical benefits. NAMI believes strongly that the 
episodic nature of mental illnesses justifies the need to 
maintain a basic safety net of assistance for people 
experiencing acute occurrence of severe symptoms.
    Mr. Chairman, as you well know, after certain income 
disregards, some SSI beneficiaries lose 50 cents in benefits 
for every $1 in labor earnings, or a 50-percent implicit tax 
rate on earned income. By contrast, SSDI beneficiaries lose 
access to cash assistance after reaching substantial gainful 
activity (SGA) for nine months (not necessarily consecutively), 
plus a three-consecutive-month grace period. (After losing cash 
benefits, beneficiaries may have their SSDI benefits restored 
for any month they don't work at the SGA level for an 
additional 36 month period). However, even in cases where 
people with mental illness decide to use existing Social 
Security work incentives, they still face the loss of medical 
coverage even if they are able to retain limited cash benefits 
after reaching SGA.
    The issue of access to medical coverage is absolutely 
critical to people with serious brain disorders, especially 
coverage for prescription drugs. This issue generates a high 
level of concern among NAMI members. Without coverage for the 
newest and most effective medications and other treatments for 
disorders such as schizophrenia and major depression, many 
people find it hard to maintain a stable life in the community, 
let alone achieve complete independence through employment. 
Moreover, for many people with severe mental illnesses, the 
first step in the process toward competitive employment is 
supported employment or low-wage, service-sector jobs. Few of 
these opportunities offer employer-provided health insurance, 
especially insurance that adequately covers someone with a 
serious brain disorder. And, even when people have access to 
private health insurance through employment, most of these 
policies do not provide adequate coverage for treatment of 
severe mental illnesses.
    Some of the proposals now before Congress would begin the 
process of eradicating these disincentives by addressing head-
on the loss of health insurance coverage for people who want to 
move away from dependence on public programs through work. NAMI 
strongly supports the goal of making the SSI and SSDI programs 
more responsive to needs of people with serious brain disorders 
who want to leave the benefit rolls for employment.
    Why kind of reform does NAMI support?
    1) It should expand individual choice through enactment of 
a ``ticket to independence'' program for beneficiaries who need 
employment and rehabilitation services.
    2) It should address head-on the issue of extended health 
coverage in a way that recognizes the unique treatments of 
people with severe disabilities, including people with severe 
mental illnesses.
    3) It should begin the process of reforming the severe 
penalties in the SSDI program that wipe out cash benefits just 
as beneficiaries begin moving toward independence.
    4) It should address the overly complicated and often 
conflicting rules involved in each of these public programs.
    5) It should do no harm to those beneficiaries who are 
either not ready to go to work or who try to work and fail.
    6) It must benefit all Americans--taxpayers, employers, and 
families--yet furthering the goals of the ADA by promoting 
empowerment and independence.
    I would like to address these issues individually:
    1) Promoting consumer choice through implementation of a 
``ticket to independence'' program. The ``ticket to 
independence'' program was the linchpin of last year's House 
bill (HR 3433). As members of the Subcommittee know, this 
legislation passed the House on June 4, 1998, by a margin of 
410 to 1. NAMI strongly supports the policy underlying the 
``ticket'' program. Giving individuals a return-to-work ticket 
and placing them in control of their own return-to-work plan 
will be putting consumers in the driver's seat for the first 
time. Providers will be forced to compete for business on the 
basis of how well they meet the individual needs of consumers. 
State vocational rehabilitation (VR) agencies will no longer be 
in control of the resources directed towards helping people 
with disabilities achieve work and independence.
    NAMI believes that the current public VR system is failing 
people with severe mental illnesses. How? The problems 
associated with VR result of the basic structure of VR being 
inconsistent with the employment and training needs of people 
with severe mental illnesses. VR is directed almost exclusively 
toward a single goal: case closure. For VR agencies and 
counselors, the process ends once a client is placed in a job 
for the required time period and a file can be marked closed. 
This inflexible goal fails to take into account the fact that 
illnesses such as schizophrenia and manic depression are 
episodic and intermittent. Moreover, for many people with 
severe disabilities, this ``closure'' is only the beginning of 
the process.
    Ongoing supports and services are oftentimes critical to 
one's ability to stay in a job over the long-term. The current 
VR system spends too much time testing and assessing clients 
prior to employment instead of actually placing people in jobs 
and providing the ongoing supports and services that will help 
them stay employed, get of the rolls, and (eventually) reach 
full independence. People with severe mental illnesses 
typically need assistance that is both flexible and ongoing to 
help them live with their disability in a way that will 
promote, rather than inhibit, work.
    By giving individuals a return-to-work ticket and placing 
them in control of their own return to-work plan, you will be 
putting consumers in the driver's seat for the first time. 
Providers will be forced to compete for business on the basis 
of how well they meet the individual needs of consumers. State 
VR agencies will no longer be in control of the resources that 
are directed towards helping people with disabilities achieve 
work and independence.
    With a ``ticket'' program, individuals will be able to skip 
the laborious testing and assessment process within state VR 
programs. By receiving a ticket directly, consumers will be 
able to select a provider on the basis of their relative 
experience in serving people with severe mental illnesses and 
their record in placing them in jobs. Moreover, extending 
payments to providers for up to 60 months, based upon whether a 
consumer stays in the workforce, will result in increased 
access to support and follow-up services in the workplace.
    By contrast, the current public VR system abandons clients 
after a few short months on the job. NAMI urges that Congress 
resist any effort to remove from last year's bill the 
provisions repealing a) priority referral by Social Security to 
state VR agencies and b) benefit deductions for persons 
refusing to accept VR services. While the ticket program will 
not fix every problem in the current system, when coupled with 
extended health coverage it offers a very positive step 
forward.
    2) Extended health coverage. Health security is central to 
the lives of people diagnosed with a severe mental illness. 
Without access to coverage for treatment, any attempt to enter 
the workforce is doomed to failure. Despite all the progress 
made in scientific research on the brain, we still have no 
``cure'' for diseases such as schizophrenia and manic-
depressive illness. Most treatments are palliative in nature; 
i.e., directed toward the control of symptoms that allows an 
individual to lead a normal life. The most advanced treatments 
for severe mental illnesses involve medications such as new 
atypical anti-psychotics and selective serotonin reuptake 
inhibitors (SSRIs) that can be very expensive.
    Even in cases where consumers and their families have 
access to private health insurance coverage, such coverage 
typically falls short of meeting the real needs of someone 
diagnosed with a severe and episodic illness such as 
schizophrenia or bipolar disorder. Many policies still have 
discriminatory copayments and deductibles or lower treatment 
limits that can exhaust coverage and resources as a result of a 
single hospitalization. While we are making real progress in 
rooting out this discrimination--through the federal Mental 
Health Parity Act of 1996 and the 19 state parity laws across 
the country--more work needs to be done. The reality is that 
too many people with severe mental illnesses have been forced 
onto public disability programs as a result of insurance 
discrimination. Despite efforts to stay in the workforce, too 
many consumers are pushed out of their jobs once their health 
coverage has been exhausted or simply becomes unaffordable. 
Once coverage for essential treatment is gone, consumers are 
faced with no alternative but to go into poverty to qualify for 
Medicaid.
    The need to spend down resources to qualify for Medicaid 
results not only from the disability and poverty, but also 
because Medicare (available to SSDI beneficiaries after 24 
months) does not include an outpatient prescription drug 
benefit. This gaping hole in the Medicare program is a major 
concern for NAMI in trying to reform these programs. Consumers 
and their families should no longer be forced to go into 
poverty to ensure continued access to treatment and some 
measure of income security. The problems associated with the 
mental illness benefit within Medicare are also the reason that 
so many adults with severe mental illnesses are now ``dual 
eligible'' for both SSI and SSDI.
    Mr. Chairman, NAMI recognizes that this Subcommittee does 
not have jurisdiction over the Medicare program. Further, we 
also understand that the Ways and Means Committee's shares 
jurisdiction over Medicare with the Commerce Committee, which 
also has exclusive jurisdiction over the Medicaid program. NAMI 
respects the need for standing committees in the House to 
respect jurisdictional boundaries when developing major 
legislation such as this. Nevertheless, NAMI believes that any 
attempt to reform Social Security's disability programs to 
promote work must forcefully address the issue of access to 
health care coverage.
    Addressing disincentives relative to cash benefits and 
increasing access to employment and rehabilitation services 
will not achieve the goal of getting more beneficiaries into 
the workforce. More importantly, any system that creates a new 
inducement to move toward employment is likely to fall short if 
healthcare coverage is left out. Put simply, few consumers will 
be willing to place their health coverage at risk, no matter 
how effective a reformed system is in meeting their unique 
employment and rehabilitation needs. Thus, inclusion of 
meaningful extended health coverage will ensure that your 
efforts to reform these programs meets both your expectations 
and the aspirations of the disability community. NAMI therefore 
urges you to work with your colleagues on the full Ways and 
Means Committee and the Commerce Committee to ensure that 
extended health coverage is made available to SSI and SSDI 
beneficiaries willing to take the risks inherent in moving off 
of cash assistance and into employment.
    What kind of health coverage is needed? For SSDI 
beneficiaries, Medicare coverage needs to extended far beyond 
the 39 months (under Social Security's existing trial-work 
period and extended period of eligibility programs). The 
legislation approved last week by the Senate Finance Committee 
(S 331) extends Medicare for 10 years for SSDI beneficiaries 
going to work. Such an approach appears generous, but it is 
needed to ensure that people stay in the workforce over an 
extended period.
    NAMI also believes that states should be allowed the option 
of expanding Medicaid eligibility to outpatient prescription 
drug coverage available to individuals who can and want to 
work, but need coverage for medications to get into (and stay 
in) a job. This coverage would be made available to individuals 
who meet Medicaid eligibility standards on the basis of their 
disability, but who would likely fall above Medicaid income 
standards. Such a policy would ``catch people on the way down'' 
by filling the gaps in both private plans and Medicare so that 
they will not have to permanently leave employment and go into 
poverty to ensure health security. This is a critical 
protection needed for individuals living with an episodic 
illness of the brain that too often fails to follow a 
predictable course.
    Critics may charge that extending subsidized Medicare to 
people in the workforce and extending Medicaid eligibility 
beyond current income restrictions is either fiscally 
irresponsible or unfair to current and future beneficiaries who 
elect not to enter the workforce. At the same time, we have to 
recognize that without a change in policy, every disabled 
beneficiary who might take advantage of these options for 
extended coverage would be receiving the same health benefits 
if current law is kept in place. In other words, leaving the 
status quo in place will, in all likelihood, result in the same 
individuals staying on public assistance.
    Moreover, the empowerment and increased self-esteem that 
can result from being gainfully employed rather than dependent 
on cash benefits is likely to have the added effect of actually 
limiting future health care costs. Such a beneficial impact may 
not be readily assessed as part of a Congressional Budget 
Office ``score,'' but it something tangible that many people 
with severe disabilities (including serious mental illness) and 
their families experience everyday.
    3) Reforming the SSDI ``cash cliff.'' Last year's House-
passed legislation HR 3433 required Social Security to conduct 
a demonstration of a sliding-scale reduction in SSDI cash 
benefits. This study is critically important for moving us 
toward an income-security system that meets the needs of SSDI 
beneficiaries in the 21st century. NAMI believes that the 
ultimate solution to the problem of the ``cash cliff'' in the 
SSDI program is a ``2 for 1'' cash offset for earnings above 
SGA. Under current law, SSDI beneficiaries earning above the 
artificially low SGA level can lose eligibility for cash 
benefits all at once. This barrier to work strikes consumers 
just at the point when they are beginning to achieve the 
rewards of work and independence. It sends a terrible message 
to consumers and their families when case managers and Social 
Security field office staff tell consumers that they are better 
off quitting their part-time job or severely cutting back their 
hours.
    The time is now to put in place a sliding-scale ``2 for 1'' 
offset that gradually reduces benefits as earnings rise. Such a 
system would reward, rather than penalize, work. NAMI is deeply 
troubled that Congress has been prevented from enacting this 
fundamental reform because of concerns about the budgetary 
impact of such a change in federal policy. It is important to 
note that these estimates, in NAMI's opinion, are based not on 
a careful evaluation of data generated from actual experience 
of declining cash assistance on a sliding-scale basis. Rather, 
these estimates appear to be based on untested assumptions 
regarding ``induced entry'' or ``woodworking'' among persons 
not currently in the SSDI program. NAMI believes that such 
assumptions about the behavior of workers under a reformed SSDI 
work-incentive program are simply invalid.
    The experience of NAMI's consumer and family membership is 
clear: there is no way that otherwise eligible consumers would 
leave the workforce for a period as long as 36 months (the 
duration of the disability determination process for many 
consumers) to eventually take advantage of sliding-scale cash 
benefits. The experience of the 1619(a) and 1619(b) programs 
bears this out. NAMI is confident that a properly designed ``2 
for 1'' offset demonstration program will reveal that the 
fiscal burden is minimal and probably a benefit to taxpayers in 
the long run.
    4) Simplifying the process for consumers and families. One 
of the most common complaints among NAMI members about the 
current work-incentive structure is the Social Security 
bureaucracy. When trying to get straight answers about one's 
own benefits and possible opportunities for work incentives 
(including PASS), consumers often find that SSA field offices 
and headquarters staff give conflicting and confusing answers. 
No doubt, this flows from the complexity of the programs, 
especially in the case of PASS and 1619(a) and (b) for SSI 
beneficiaries. However, this complexity does not excuse wrong 
or misleading answers to basic questions and the (too often) 
complete lack of effective counseling about what the real 
options are. Making work incentive specialists available to 
beneficiaries will go a long way toward helping consumers cope 
with this new program. More importantly, these work-incentive 
specialists should not be employees of SSA so that the advice 
they give consumers is independent and free of the biases that 
we often see in SSA field staff.
    5) Beneficiary protections. NAMI feels strongly that any 
legislation designed to reform the current SSA work-incentive 
programs should first ensure that it does no harm to vulnerable 
beneficiaries with severe mental illnesses and other severe 
disabilities. No individual with a severe mental illness who is 
receiving SSDI or SSI should have his or her benefits 
jeopardized by enactment of these badly needed reforms. Several 
proposals in Congress in recent years have contained important 
protections ensuring that persons who take the risk and go to 
work will not be subject to an unscheduled continuing 
disability review (CDR).
    The reality is that there are many people with mental 
illnesses who are currently part of the SSI and SSDI programs 
who are experiencing symptoms that are so severe that they 
cannot be reasonably expected to enter the workforce over the 
short-term. They should not be forced to participate in a work-
incentive program until they are ready. Likewise, participation 
in this program should not be used as evidence that an 
individual no longer meets the standards of eligibility for SSI 
or SSDI. Participation in this program should operate 
independently of the current CDR requirement for beneficiaries, 
both in terms of timing and the evidentiary standard for future 
eligibility.
    Finally, NAMI urges that serious consideration be given to 
adding protections for both the ticket and healthcare coverage 
elements of a reform package so that consumers can seamlessly 
move on and off of these programs. The episodic nature of 
serious brain disorders such as schizophrenia, manic-depressive 
illness, and major depression requires that these programs be 
flexible enough to accommodate consumers who may experience 
severe, though brief, episodes of acute illness.
    6) Benefits for all Americans. Congress is poised make 
important improvements in Social Security's disability programs 
that will enable SSDI and SSI beneficiaries to work to the 
greatest extent of their abilities. It is important for SSA 
disability programs to begin the process of evolving from their 
original purpose of serving as early retirement programs for 
injured workers. They must start moving toward including a new 
purpose of supporting individuals with disabilities in the 
workforce. In this way SSA's disability programs can be 
transformed from a safety net into a trampoline so that they 
not only catch people with disabilities as they fall out of 
work, but also give them a boost back into work when they are 
ready.
    These reforms have the potential to be a win-win situation 
for all Americans. It can help beneficiaries by enabling them 
to return to or enter the workforce as wage earners. It can 
help employers by adding skilled workers to the labor pool. It 
can help employment service providers by enabling them to serve 
more participants. Finally, reform offers tremendous long-term 
potential benefit for taxpayers by assisting workers with 
disabilities to begin, or continue, paying taxes.

                               Conclusion

    Mr. Chairman, millions of people like me who live with a 
serious brain disorder are able to work and be productive. We 
are taxpaying members of our communities. With access to 
effective treatment through healthcare coverage, people with 
severe mental illnesses who are on the SSI and SSDI rolls can 
move toward greater independence. Unfortunately, the current 
structure of the system, including both the pervasive work 
disincentives in the SSDI program and the unresponsive nature 
of the state-federal VR program, make work a frequently 
unachievable goal. Put simply, the current system is hostile 
toward work for people who can and want to work, but whose 
disability prevents them from moving rapidly and permanently to 
full employment. More important, the system has the perverse 
effect of trapping people in poverty. The status quo cannot 
remain in place if we are to achieve the important national 
goal of full participation and integration into the mainstream 
of American society for all people with disabilities.
    Finally, work and independence are also vital to our 
ongoing efforts to eradicate the stigma that is so closely 
associated with severe mental illnesses. Reform of these 
outdated and unfair programs will continue the path of progress 
Congress established with the ADA and the MHPA. Thank you for 
this opportunity to share NAMI's views on this important 
legislation.
      

                                

    Chairman Shaw. Thank you for being here.
    Mr. Carlisle.

     STATEMENT OF JEFFREY E. CARLISLE, PRESIDENT, NATIONAL 
  ASSOCIATION OF REHABILITATION PROFESSIONALS IN THE PRIVATE 
                             SECTOR

    Mr. Carlisle. Chairman Shaw, Ranking Member Matsui, and 
Members of the Subcommittee, on behalf of the National 
Association of Rehabilitation Professionals in the Private 
Sector, NARPPS, I thank you for allowing me to testify.
    I am here as the current president of NARPPS to provide our 
analysis and comments on Social Security reform and barriers 
which prevent disability beneficiaries from returning to work. 
My education is in rehabilitation counseling, and I am a 
certified rehabilitation counselor, case manager, and 
disability analyst. I have worked in the field of 
rehabilitation for approximately 25 years with 19 of those as a 
private practitioner. As such, I am often called upon by the 
Social Security Administration to serve as a vocational 
rehabilitation expert in SSI and SSDI determination hearings.
    Representatives of NARPPS have had the honor of testifying 
before this Subcommittee in the past, and I would like to thank 
the former Chairman of this Subcommittee, now-Senator Jim 
Bunning, for all of his work on this issue.
    Our primary goals are to limit the impact of disability, to 
restore the individual to the maximum level of functioning 
possible, and to return individuals with disabilities to 
suitable and gainful employment.
    NARPPS believes that there are three main barriers from 
preventing Social Security beneficiaries from returning to 
work: The cash cliff, the fear of losing health care, and the 
inability to choose a private-sector or public-sector 
vocational rehabilitation provider.
    We believe the consumer is the expert on the cash cliff and 
about what health care he or she needs in order to make it 
easier to return to work. However, we also strongly believe 
that continuation of health care significantly enhances an 
individual's chance for successful and long-term employment. As 
for choice, we believe any legislation to remove these barriers 
must contain a means by which a consumer can utilize the 
services of the private sector, or specifically, a ticket to 
work.
    A ticket program would provide the consumer with a choice 
over who their service provider is, and it will motivate 
providers to deliver cost-effective, timely, and results-
oriented services to that consumer. However, for the ticket 
program to be successful, we also believe that it must contain 
certain safeguards.
    We recommend the inclusion of milestone payments at two 
significant levels of progress achieved prior to actual 
placement of the individual. Such payments will make it 
possible for more qualified providers to participate in the 
program. Without milestone payments, smaller providers could 
not participate because of the tremendous burden of having to 
be capitalized until the recipient has been placed and employed 
for a number of months.
    NARPPS agrees with SSA and believes there is a need for the 
program to be open ended without being reauthorized. To include 
a reauthorization date may prevent a significant number of 
beneficiaries and providers from getting involved, if they have 
reason to believe that such a program could be eliminated, or, 
at the very least, interrupted for a period of time.
    We believe that any phase-in sites for the ticket program 
should be chosen by the SSA Commissioner with special 
consideration given to past demonstration projects and in 
consultation with providers and consumers who have participated 
in these programs.
    Finally, we support the creation of an advisory panel made 
up of all the sectors impacted by and participating within this 
program which can assist the Social Security Administration 
with the evaluation of project effectiveness and with 
recommendations to the President and Congress. We welcome the 
inclusion of State vocational rehabilitation agency 
participation, and we believe the public and private-sector 
rehabilitation professional can form an effective partnership 
to deliver this much needed service to the disability 
beneficiary. Already in many parts of the country, State 
vocational rehabilitation agencies contract with the private-
sector rehabilitation provider to provide the initial 
evaluation of an applicant, and, likewise, the Social Security 
Administration contracts with private-sector rehabilitation 
counselors to serve as vocational experts at SSI and SSDI 
hearings.
    Now, it will be critical for the service provider to have 
substantial expertise and experience within the field of 
vocational rehabilitation, employment, case management, and 
other support services. NARPPS actively enforces standards and 
ethics which meets this criteria.
    In conclusion, before us is a significant and exciting 
opportunity to help the disability beneficiary return to work, 
resume truly productive lives, and enhance one's self-
sufficiency. We welcome the opportunity to provide these 
return-to-work services to Social Security disability 
beneficiaries and to work further with the Subcommittee to help 
make this a reality.
    On behalf of NARPPS and myself, I thank you for the 
opportunity to meet with you and to provide this testimony 
today.
    Thank you very much.
    [The prepared statement follows:]

Statement of Jeffrey E. Carlisle, President, National Association of 
Rehabilitation Professionals in the Private Sector

    Chairman Shaw, Ranking Minority Member Matsui and members 
of the Subcommittee, on behalf of the National Association of 
Rehabilitation Professionals in the Private Sector, NARPPS, I 
thank you for allowing me to testify before you today. I am 
here as the current President of NARPPS to provide our analysis 
and comments on Social Security reform and barriers which 
prevent disability beneficiaries from returning to work. I will 
focus my remarks primarily on how the private sector can play a 
significant role in the effort to return Social Security 
recipients with disabilities back to meaningful employment.
    My education is in rehabilitation counseling and I am a 
certified rehabilitation counselor, case manager, and 
disability analyst. I have worked in the field of 
rehabilitation for approximately twenty-five years, with 
nineteen of those as a private practitioner. For the past five 
years, I have been a partner in my current place of employment 
which is located in the New Orleans, Louisiana area. As such, I 
am often called upon by the Social Security Administration 
(SSA) to serve as a vocational rehabilitation expert in SSI and 
SSDI disability determination hearings.
    Representatives of NARPPS have had the honor to testify 
before this Subcommittee in the past, and I would like to thank 
the former chairman of this Subcommittee, now Senator Jim 
Bunning, for all his work on this issue. Our membership, 
approximately 3,200 in number, includes vocational 
rehabilitation counselors, nurse case managers and allied 
health professionals. Our membership consists of individuals 
who are private practitioners, business owners, and employees 
of regional or national organizations. Our primary goals are to 
limit the impact of disability, restore the individual to the 
maximum level of functioning possible, and return individuals 
with disabilities to suitable and gainful employment.
    NARPPS believes that there are three main barriers 
preventing Social Security beneficiaries from returning to 
work; the cash cliff, the fear of losing health care, and the 
inability to choose a private sector, or public sector, 
vocational rehabilitation provider. NARPPS believes that 
consumers are the experts on the cash cliff and on what health 
care he or she needs in order to make it easier to return to 
work. However, we do believe that the continuation of health 
care significantly enhances an individual's chance for 
successful and long-term employment. As for choice, we believe 
that any legislation to remove these barriers must contain a 
means by which a consumer can utilize the services of the 
private sector, or specifically, a ``ticket to work.''
    A ticket program would provide the consumer with a choice 
over who their service provider is, and it will motivate 
providers to deliver cost-effective, timely, and results-
oriented services to that consumer. The ticket will create a 
natural weeding-out process of those providers who fail to 
deliver a high standard of service to the consumer. However, 
for the ticket program to be successful, it must contain 
certain safeguards.
     We recommend the inclusion of milestone payments 
at two significant levels of progress achieved prior to actual 
placement of the individual. Such payments will make it 
possible for more qualified providers to participate in this 
program. Without milestone payments, smaller providers could 
not participate because of the tremendous burden of having to 
be capitalized until the recipient has been placed and employed 
for a number of months.
     NARPPS believes that there is a need for the 
program to be open ended without being reauthorized. To include 
a reauthorization date may prevent a significant number of 
beneficiaries and providers from getting involved if they have 
reason to believe that such a program could be eliminated, or 
at the very least, interrupted for a period of time.
     We believe that any phase-in sites for the ticket 
program should be chosen by the SSA Commissioner with special 
consideration given to past demonstration projects and in 
consultation with providers and consumers who have participated 
in these programs. Together with providers and consumers, the 
Social Security Administration will be in a good position pick 
such sites.
     Finally, we support the creation of an advisory 
panel made up of all of the sectors impacted by and 
participating within this program, which can assist the Social 
Security Administration with evaluation of project 
effectiveness and with recommendations to the President and 
Congress.
    We welcome the inclusion of state Vocational Rehabilitation 
(VR) agency participation. These agencies have developed over 
the years an effective model for evaluation and service 
delivery. Individual counselors who work in that setting are 
extremely dedicated. Many private sector individuals got their 
start with a state VR agency. The private sector likewise has 
developed an effective model for evaluation and service 
delivery which also has the added component of bottom-line 
results and payment from our referral sources. We believe that 
the public and private sector rehabilitation professional can 
form an effective partnership to deliver this much needed 
service to the disability beneficiary.
    Already, in many parts of the country, state VR agencies 
contract with the private sector rehabilitation provider to 
provide the initial evaluation of an applicant. Likewise, the 
Social Security Administration contracts with private sector 
rehabilitation counselors to serve as vocational experts at SSI 
and SSDI hearings. In addition, the Department of Veterans 
Affairs, Vocational Rehabilitation Agency, contracts with 
private sector rehabilitation providers to conduct the initial 
evaluation of veterans and to recommend a vocational 
rehabilitation plan for those who have applied for 
rehabilitation benefits. As I stated earlier, I am fortunate to 
be one who provides these services to the Social Security 
Administration and also the Department of Veterans Affairs.
    It will be important for the service provider to have 
substantial expertise and experience within the fields of 
vocational rehabilitation, employment, case management, and 
other support services. NARPPS has published Standards and 
Ethics by which each member is required to abide. They are 
subject to peer review and are a condition of membership. 
NARPPS has a Standards Compliance Review Board for peer review 
functions. In addition, the typical NARPPS member has board 
certification in one or more areas on a national level, and 
because of certain state requirements, must be licensed to 
practice vocational rehabilitation in certain areas of the 
country.
    Before us is a significant exciting opportunity to help 
disability beneficiaries return to work, resume truly 
productive lives, and enhance one's self sufficiency. The 
private sector rehabilitation professional has enjoyed this 
opportunity in many other arenas which deal with disability. We 
welcome the opportunity to provide these return to work 
services to Social Security disability beneficiaries and to 
work further with the Subcommittee to help make this a reality.
    On behalf of NARPPS and myself, I thank you for the 
opportunity to meet with you and to provide this testimony 
today. I would be happy to answer questions at the appropriate 
time.
      

                                

    Chairman Shaw. Thank you.
    Mr. Hulshof.
    Mr. Hulshof. Thank you, Mr. Chairman.
    First of all, I thank each one of you for being here with 
your very powerful testimony about what you each have 
encountered, so thank you for being here and helping to 
enlighten us.
    Rich, a couple of things--you talked about--and I wasn't 
aware, really, to the significant degree of the confusion that 
is caused by having to give different answers to the very 
simple question, Can you work? What recommendations, if any, do 
you have to correct that anomaly, if you will?
    Mr. Blakley. First of all, I think the Social Security 
Administration and local State vocational rehabilitation 
agencies need to work closer together. There needs to be some 
sort of way for them to connect and to stop making people give 
different answers. What that would be precisely is something 
that I can't answer right now. I would like to give some 
thought on it, but I think it is something that can be fixed. 
At this point in time, I am not exactly sure what it would be.
    Mr. Hulshof. The other question I would have of you, Rich, 
and really anybody on the panel that wishes to answer, feel 
free, but I know especially because of your background having 
been both in Missouri and in Illinois--and as your written 
testimony pointed out, there are differences between State 
policies that affect people with disabilities. You talk about a 
necessity for a national self-directed care program. Do you 
have any suggestions or recommendations on implementation of 
this or other policies we might want to pursue on a nation-wide 
basis?
    Mr. Blakley. Very much so.
    I like the mi casa bill which is a policy which is being 
promoted by the national ADAPT. Mi casa would be a national 
attendant-care program.
    Right now, depending on what State you live in, either you 
get attendant care or you don't. When I moved from Illinois to 
Missouri, it was sticker shock. In Illinois, I made 
approximately the same as I made in Missouri monetarily, and 
the State paid $650 in attendant care. I paid a $50 copayment. 
I moved to Missouri, and there was nothing. I had to get a 
roommate and offer free room and board for an attendant. It was 
not an ideal situation. It was very, very difficult, and it 
still is. Missouri is lagging behind Illinois and Kansas in 
that respect, and we have told people that live along the 
border, when they call our office and ask, What should we do? 
we have actually said that they may want to move across the 
river or across the border to receive attendant care, and that 
is a shame.
    Mr. Hulshof. Anybody else have a comment on that question?
    Mr. McNulty. I would just like to make one brief point 
analogous to the personal care attendant situation. For people 
with mental illness, very often our lifeline to being able to 
work is medication, and, unfortunately, most of the medications 
that are effective are very new, and they are very expensive, 
and Medicare currently has no provision to pay for those, but 
it does under Medicaid.
    Different States do have different policies, but people run 
into sticker shock if they move from one State to another even 
within New England. They find that if you move from Rhode 
Island to one of the other States--I don't want to name any--
you might find that a medication that is paid for in Rhode 
Island is not paid for in another State which means that you 
would have to go to one of the old-style, antipsychotic 
medications which are inexpensive, but they also have such 
terrible side effects which is why people very often stop 
taking them.
    So, it is one of those penny-wise, pound-foolish kind of 
things that does mandate, I think, a more rational policy.
    Mr. Carlisle. On a related matter, I have found that there 
are differences from State to State just in terms of 
eligibility for vocational rehabilitation services on the State 
level.
    For example, in a State like Louisiana, because of some 
funding issues, they are only accepting the most severely 
disabled individual for vocational rehabilitation services, 
whereas, the State of Mississippi allows them to accept a wider 
population of individuals.
    Mr. Hulshof. I appreciate that--I'm sorry?
    Ms. Gennaro. I also just wanted to chime in that they might 
possibly do a great deal in the area of attendant services and 
supports. We are hoping that another bill similar to the mi 
casa bill will be introduced that more clearly indicates what 
it will cover and it will really help the situation out 
tremendously.
    Mr. Hulshof. Again, thanks very much, each of you, for 
being here.
    Mr. Chairman, my time has expired, and thank you again.
    Chairman Shaw. Surely.
    Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman.
    I would just like to thank the panel. I think their 
testimony was very revealing and helpful to me, and I hope to 
others as well. I thank all four of you.
    Chairman Shaw. Mr. Doggett.
    Mr. Doggett. Ms. Gennaro, I think you addressed this 
critical health insurance matter in your testimony. Is it your 
belief that unless we address the health insurance issue in the 
manner that the bipartisan Senate bill has done, that, for most 
individuals with disabilities who are out there and who would 
like to go back into the work force, we really will have 
essentially just given them a ticket to no where?
    Ms. Gennaro. Yes, that is true.
    The Senate bill recognizes the need to let people trust 
that the Medicare coverage is going to be there when they need 
it--not a limited coverage that will go a few years more for 
you because the risk still is there for them in terms of what 
exactly they will need down the line, I have been successful 
with my employment but my disability is still there and I have 
critical needs. Yes, we will have false expectations for 
people.
    And also we will have said that we will have made 
tremendous improvement in employment, and that really won't 
happen because people won't be able to use the ticket as they 
could. It will be a lost opportunity.
    Mr. Doggett. Or to put my same question another way, if all 
this House does in this session of Congress is the little that 
it did last time in approving--and I voted for it along with, I 
think, all but one Member of the House who voted that day--but 
if all we do is this very limited, narrow type of ticket to 
work bill that was considered last session, we may create the 
illusion of progress, but in terms of really making a 
difference in the real-life struggle of most people with 
disabilities, we will have done very little.
    Ms. Gennaro. That is true, unfortunately.
    Mr. Doggett. Mr. McNulty, do you agree with that?
    Mr. McNulty. Absolutely, Mr. Doggett, I do. It is 
unfortunate, but without health insurance people can't work. 
Our lives are dependent on our health, everyone's is, but we 
are just more aware of it than most people because we are 
confronted with it every day.
    Mr. Doggett. Mr. Blakley do you agree with that?
    Mr. Blakley. Yes, I do, and one thing I am really concerned 
about is the Medicare Program. You say Medicare to people and 
what you think about is senior citizens you don't think about 
people with disabilities. Ask anybody on the street, and they 
will say that Medicare equates seniors. Maybe it should be 
pulled out of the Medicare's purview and a new innovative 
program set up for people with disabilities to receive health 
insurance.
    Mr. Doggett. Mr. Carlisle, I know that your focus has been 
on the very important issue of vocational rehabilitation, but 
you see these health insurance issues come up also. Do you 
agree with that?
    Mr. Carlisle. Oh, yes, sir, absolutely. When we are working 
with an individual and placing them back into employment, a 
primary consideration is benefits, bottom line and most 
importantly the issue of health care. And there are any number 
of times when we have been working with individuals that have 
all the qualifications necessary for the job, are extremely 
interested in it, but because of the virtual lack of health 
care available to them, they simply can't take the job.
    Mr. Doggett. Well, thank you very much. Yes, ma'am?
    Ms. Gennaro. If I could just chime in for a moment.
    I wanted to say that it is really not necessary to remove 
the disability Medicare Program from the Medicare Program. That 
would be a mistake. We need to just educate people to 
understand that Medicare covers a range of needs amongst all 
peoples.
    Mr. Doggett. Thank you very much, and I hope we can do more 
than just pass a bill with a nice sounding name but really make 
some progress that will make a difference to you and to the 
many people that you represent. Thank you for what you are 
doing for people with disabilities.
    Mr. Carlisle. Thank you.
    Ms. Gennaro. Thank you.
    Mr. Blakley. Thank you.
    Mr. McNulty. Thank you.
    Chairman Shaw. I have one question for Mr. Carlisle. One of 
your recommendations for the ticket-to-work program was the 
inclusion of milestone payments for significant levels of 
progress achieved in given cases. Why are milestone payments so 
important, and what would be the impact on the number of 
providers participating if milestone payments were not a part 
of any program?
    Mr. Carlisle. To me, sir, the milestone payments are 
critically important because, more so than not in our country 
these days, private-sector rehabilitation providers are smaller 
companies. They may be one or two individuals, or perhaps a 
handful of individuals, but we are seeing the days of the large 
corporate entities which provide rehabilitation services going 
away, and, for a company to be able to really provide this type 
of service in our opinion, there needs to be some milestone 
payments along the way in the overall administration of the 
vocational rehabilitation plan. And I think that it is 
important to add for the record, we in no way see the level of 
milestone payments as being really profitable for the company, 
but basically helping to just cover their expenses, or perhaps 
a little less than that, and there are any number of companies 
in our country today that simply could not afford to spend 
thousands upon thousands of dollars with the only opportunity 
for payoff coming once the person is gainfully employed for 9 
months. It is just clear to me, as the current president of 
NARPPS from comments that I have received from our members 
around the country and those outside our organization, that, if 
a milestone payment is only occurring at the time of placement 
or after 9 months of employment, people are simply not going to 
choose to get involved in the program.
    Chairman Shaw. Thank you.
    I want to thank, again, all the witnesses, as the other 
Members have. You have contributed, particularly, with your 
personal testimony as to what you have encountered and what you 
have overcome. It is particularly important to this 
Subcommittee in the drafting of legislation. We thank each and 
every one of you.
    This does conclude the hearing. We were fortunate that we 
weren't interrupted by another vote. I appreciate all of you 
being here, and I appreciate the participation of the Members 
up here on the dais.
    Thank you.
    The hearing is adjourned.
    [Whereupon, at 12:52 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

Statement of John Rio, Corporation for Supportive Housing, New York, 
New York

    Chairperson Shaw, members of the Subcommittee on Social 
Security, my name is John Rio and I am a Project Coordinator 
with the Corporation for Supportive Housing's employment 
initiative. The Corporation for Supportive Housing, or CSH, is 
a nonprofit national intermediary founded by 3 of Americas 
leading private foundations--the Pew Charitable Trust, the 
Robert Wood Johnson Foundation and the Ford Foundation to 
increase the supply and quality of supportive housing in the 
United States. Supportive housing is a solution to homelessness 
offering people affordable housing with on-site supportive 
services including social services and employment services. An 
array of supportive services voluntarily accessed by tenants is 
a first-line strategy in helping people pursue self-determined 
goals in our housing projects.
    CSH believes that supportive housing provides not only the 
opportunity to decrease homelessness but offers tenants a 
stable platform for developing self-sufficiency. Since our 
founding in 1991, CSH has created partnerships in 9 locations 
around the country with 184 nonprofit agencies who have 
developed more than 8,000 supportive housing apartments across 
the U.S. CSH has raised over $80 million in philanthropic and 
public funding sources to help our partners build supportive 
housing and have also placed $144 million in gross equity in 
supportive housing projects totaling 2,864 units through 
syndication of Low Income Housing Tax Credits in partnership 
with the National Equity Fund.
    The tenants of supportive housing are individuals with 
histories of homelessness frequently complicated by severe 
disabilities including mental illness, substance abuse, HIV/
AIDS and other medical conditions as well as chronic poverty or 
histories of incarceration. Although of late the need for 
supportive housing among families has become apparent, most of 
the supportive housing population is single adults or non-
custodial parents. More than 50% of the supportive housing 
population are beneficiaries of the Social Security disability 
programs.
    I am sure that each of you has heard what people with 
disabilities want. It should come as no surprise that they want 
what most citizens in America wanta safe affordable place to 
live and a job that you like and that pays and, of course, 
health care.
    Within supportive housing the majority of those tenants 
receiving Social Security disability benefits are individuals 
with mental illness who face multiple barriers to employment 
including poorly integrated employment services in our 
communities across America. People with mental illness have a 
greater chance of being re-hospitalized for their illness than 
landing a living wage job! Tenants of supportive housing want 
to work and we have the technology to help them but, the losses 
people fear and experience substantially challenge our efforts 
in the Social Security disability and the Vocational 
Rehabilitation systems. Individuals with psychiatric 
disabilities should not be left out of workforce development 
systems. But they will be, if your leadership does not reform 
existing law and make good on a federal policy that helps all 
Americans work, even those with severe disabilities.
    While there are significant barriers in the employment and 
entitlement systems serving formerly homeless tenants of 
supportive housing, we think you should hear about things that 
work and show potential. In 1995 the Rockefeller Foundation 
funded an employment initiative at CSH called Next Step: 
Jobs.'' In this project 21 non-profit supportive housing 
agencies partnered with CSH to increase the rates of employment 
among individuals in supportive housing with multiple barriers 
to employment. Our research \1\ shows that supportive housing 
offers the basic critical ingredients for positive vocational 
outcomes, that is continuous case management, permanent housing 
and a culture supportive of working tenants. In the first two 
years of this project more than 1,000 tenants went to work. We 
invite you, Chairman Shaw, and members of the Committee to look 
more closely at this strategy during your inquiry.
---------------------------------------------------------------------------
    \1\ Proscio, T. (1998). Work in Progress 2; An Interim Report on 
next Step: Jobs. A report to the Corporation for Supportive Housing and 
Rog. D., Holupka, S.C., Brito, C.m., Storm, A., Hopper, K., Roy, K., 
Davidson, C. and Lester, R. (1998). Next step: Jobs Second Evaluation/
Documentation Report. June.
---------------------------------------------------------------------------
    Despite the creativity and flexibility in our 
demonstration, the disincentives in our nation's entitlement 
systems pose significant barriers to people with disabilities 
who want to work. I would like to take this opportunity to tell 
you some of what we have heard though our national employment 
initiative. I would also like to note our observations 
regarding the Work Incentives Improvement Act.
    Two dominant themes persist in the experience of both 
providers of employment services and for the tenants they help. 
First, the very nature of the Social Security work incentives 
are too complex and second, the rules do not support a safety 
net for people with long term episodic illnesses in which an 
``easy on; easy off'' access mechanism would encourage work.
    People make rational choices and, in general, people will 
prefer to work, if it is to their financial benefit and if the 
health risks of going to work are minimized. The chronic and 
intermittent nature of mental illness or HIV/AIDS mean that 
people living with these illnesses may be well enough to work 
for months or even years at a time with needed supports. At 
other times, an acute episode of illness makes it impossible 
for individuals to meet the demands of work. People with these 
illnesses (who want to work and can work) do not fit into an 
entitlement system based upon a case-open/case-closed design. 
In the system we have in place today, tenants of supportive 
housing are making the rational decision to minimize their 
health care risks and maximize their income by staying on the 
SSA rolls by either deliberately limiting their earned income 
or by not working at all. Any reform of the SSA disability 
program should make flexibility paramount in the design to 
promote employment. Such flexibility would support work when 
people with disabilities can work and provide sustenance when 
disabling conditions impair work ability.

                         Ticket to Independence

    The Ticket has been heralded as a key feature of Social 
Security Disability reform and we concur that it has the 
potential to offer people with disabilities new opportunities. 
People with disabilities believe that the Ticket will give them 
a choice of vocational rehabilitation providers whereas in the 
current system, the State vocational rehabilitation agency is 
the only provider. We support the concept of increasing choices 
and your efforts to give people with disabilities a choice in 
whom they go to for help.
    However, we foresee limitations in the Ticket program as it 
is currently constructed which are likely to dash the hopes of 
so many of us. The Ticket program is likely to only serve those 
with fewer, less severe barriers to employment and we will, yet 
again, leave behind those who need us most. The Ticket 
encourages providers to help only those who are likely to be 
able to sustain employment with the least amount of service. 
There are no provisions to direct or encourage providers to 
help those with severe and episodic impairments such as 
individuals with mental illness. This is not a program to help 
Social Security beneficiaries who are formerly homeless 
individuals with mental illness, HIV/AIDS or other chronic 
medical conditions.
    Nor does the Ticket fairly share the cost savings and 
program expenses when a vocational service provider helps a 
beneficiary work and leave the SSA rolls. Under the best of 
circumstances in which a person with an SSDI benefit of $700 a 
month leaves the Social Security cash benefits program due to 
earnings and works continuously for five years, a provider 
would receive a total of $16,800. This amounts to an annual 
payment claim of $3,360 to a provider. In FY 1997 the SSA 
reimbursed the State vocational rehabilitation agencies for 
their costs that averaged $10,700 per claim to help individuals 
with disabilities sustain work for 9 months!
    Both the milestone and outcome payment systems perpetuate 
the all or nothing feature of the SSA disability program that 
has kept people from jobs. Some beneficiaries will give up 
their cash benefits and leave the rolls but more are able to 
work with a reduced reliance on SSA cash benefits. There is no 
structure in the Ticket for beneficiaries to access their 
choice of vocational rehabilitation providers when their 
ability to work is less than what is needed to leave the rolls. 
In other words the ticket does not pay for those who through 
earned income can reduce their reliance on cash benefits but 
who cannot work at the level needed to leave the rolls 
entirely.
    The Work Incentives Improvement Act should provide the 
Commissioner of Social Security the authority to maximize the 
participation of community based vocational rehabilitation 
agencies in the Ticket program for our population.

               Work Incentives and Entitlement Counseling

    The current system of work incentives have become an 
entangled web that holds people back from working rather that 
acting as a safety net of support should a work attempt not 
succeed. The complexities of Social Security work incentives 
has become so confusing that it is very common to request 
information from that agency and receive different answers to 
the same questions. Such confusion has resulted in the fact 
that beneficiaries do not take advantage of such programs as 
the Plan for Achieving Self-Support. Two years ago there were 
some 10,000 PASS plans in effect. Today there is only 3,000 
PASS plans. We need simpler incentives and benefits counselors 
that can help people with disabilities access these incentives 
to maximize their employment potential.
    Current entitlement counseling in supportive housing 
focuses on helping tenants get on and maintain Supplemental 
Security Income and/or Social Security Disability Insurance 
benefits. Most service staff is unfamiliar with the current 
work incentive provisions and is not aware of proposed changes. 
Legislation that improves the availability of experts in work 
incentives and entitlement counseling is much needed 
legislation. From our point of view, we need to build upon the 
talents of supportive housing case managers and employment 
staff to upgrade their capabilities to help tenants manage the 
entitlement system, work more and rely less upon the Social 
Security disability program. Work incentives and entitlement 
counseling are core services needed by beneficiaries and best 
provided directly by community based organizations rather that 
the SSA.

                              Health Care

    When you ask people with disabilities the question ``Why 
aren't more people with disabilities working?'' they will tell 
you it is about health care and about losing our benefits. The 
Deputy Commissioner of SSA \2\ asked this question and was told 
``when we get cash benefits, we also get access to Medicare and 
Medicaid and we can't replace that no matter what we make. We 
are uninsured and uninsurable in the private market. And we are 
afraid that if we give up our cash benefits, we might have to 
give up our health care, as well. And if we give up health 
care, we might give up our lives. Even though many of us can 
give up the cash and earn our way, we will never be able to 
earn the kinds of services and supports we need that we get in 
Medicare and Medicaid.'' Tenants of supportive housing have 
echoed these concerns.
---------------------------------------------------------------------------
    \2\ Susan M. Daniels, Ph.D., Deputy Commissioner for Disability and 
Income Security Programs Social Security Administration, Opening 
Session, Tapping Worker Potential through Technology Conference, 
President's Committee on Employment of People with Disabilities, New 
Orleans, Louisiana, May 6, 1998.
---------------------------------------------------------------------------
    Any Social Security work incentive reform must also address 
the critical problem of health care for working disabled 
individuals. The Balanced Budget Act of 1997 included a 
provision in section 4733 that gave States the option to offer 
a Medicaid buy-in for a new category of working disabled 
participants. But, so far only the State of Oregon accessed 
this option. Why is that? There are no incentives for the 
States to step up to the plate. Local advocates will do their 
job to bring attention to the needs of people with disabilities 
who work but they will need your support to entice States to 
establish health care coverage through a Medicaid buy-in. In 
the great State of New York, Governor George Pataki expressed 
his point of view saying, ``The challenge is clear: disabled 
individuals in New York State want and deserve to work, and we 
intend to see that they succeed in doing so. We want to enhance 
access to employment for persons with disabilities, but for 
this to happen, we need to build assurances into the system so 
that persons with disabilities who collect SSI or SSDI can work 
without fear of losing their health insurance and other 
critical benefits.'' \3\
---------------------------------------------------------------------------
    \3\ Press Release, Governor George Pataki, September 14, 1998, 
Governor Seeks To Eliminate Employment Barriers For Disabled.
---------------------------------------------------------------------------
    This Committee should include in their recommendations a 
provision for health care so that people with disabilities who 
want go to work but cannot get health care insurance coverage 
(or coverage that will help them pay for treatment of their 
impairments) can participate in the workforce of America. If we 
expect States to adopt such options as Section 4733 in the 
Balanced Budget Act of 1997, your recommendations must also 
include help for the States finance their system of health care 
for working disabled individuals. Allowing States to limit 
their fiscal exposure while ramping up a Medicaid buy-in option 
that sunsets after an implementation period should carefully be 
considered. The Committee should consider limiting the number 
of persons in the State's Medicaid buy-in program or limit its 
application to certain areas of the State for a period of 3 
years before making the option available Statewide. Your 
influence will also be required to encourage the Health Care 
Financing Administration to work proactively with the States to 
efficiently and swiftly establish this health care provision.

                                Housing

    Nowhere in the work incentives discussions has there been a 
focus on the housing needs of individuals with disabilities. We 
are concerned that if we do create Social Security and tax 
based work incentives, many people with disabilities may run up 
against disincentives in the housing programs. Many individuals 
with disabilities rely on housing subsidies such as section 8 
certificates through which individuals pay up to 30% of their 
total income up to certain limits. When people with 
disabilities in special needs housing go to work not only do 
their rents go up; they also jeopardize the stability of their 
housing.
    We would like this Committee to direct the appropriate 
federal agencies to investigate what housing-based or rent-
based work incentives can be made available to working disabled 
individuals. The Quality Housing and Work Responsibility Act of 
1998 made certain work incentive provisions available to 
tenants of public housing. We would like these incentives to be 
available to individuals in homeless housing and disability 
housing programs.

                               Conclusion

    People with disabilities want and can work, but they will 
not do so if working means having less that they do now. The 
provisions you include in the Work Incentives Improvement Act 
can be the first steps toward encouraging more people to choose 
and sustain employment. S.331 and HR 1180 offers such promise 
and hope to thousands of Americans with disabilities.

    [An attachment is being retained in the Committee files.]
      

                                

                                                     March 11, 1999
Mr. A.L. Singleton, Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

Att: Congressman E. Clay Shaw, Jr., Chair, Subcommittee on Social 
        Security

Subj: Barriers Preventing Disability Beneficiaries From Returning to 
        Work

    Dear Chairman Shaw and Members of the Social Security Subcommittee

    Members of the San Francisco Bay Area Network on Disability (SF 
BAND) wish to add our voices to the many asking for change in the 
requirements of the Social Security Administration which prevent us, 
and others across the country, from gainful employment. We are 
encouraged by the strong support in the Senate of S. 331, the Work 
Incentives Improvement Act of 1999, and ask that you pass similar 
legislation in the House such that persons with disabilities may 
actually see a positive change before the end of this century!
    We are a group of over 100 persons with disabilities and their 
friends in the San Francisco Bay Area who communicate daily over the 
internet. We represent persons with disabilities who have many skills, 
who contribute much to the lives of each other and of others. We are 
fortunate in that we have computers and the requisite skills to use the 
internet to support each other, to lobby for legislation that improves 
our lives, to inform and educate ourselves about events that are of 
concern to persons with disabilities, and to inform and educate the 
nondisabled populace of our abilities and our humanity.
    Clearly among us are many who would be able to refocus such skills 
in productive, paying employment. Indeed, many business could use the 
special skills which have been honed by the exigencies of life with a 
disability and by the ability to problem-solve in ways that we have so 
clearly demonstrated. Medical science and engineering have enabled us, 
but without legislation such as you have supported with your action 
last week, we must forgo all thoughts of becoming part of the work 
force, and remain tax burdens rather than tax payers.
    We encourage you now to take the courageous actions which will help 
mainstream us as valuable and valued members of society as we move into 
the new century.

    Very Sincerely,
                             Jean Nandi, Chair,            
              San Francisco Network on Disability (SF BAND)        
                                             1529 Josephine St.    
                                            Berkeley, CA 94703-1168
      

                                

                      U.S. House of Representatives        
                            Committee on Ways and Means    
                                     Subcommittee on Health
                                                     March 11, 1999
The Honorable Clay Shaw
The Honorable Robert Matsui
Subcommittee on Social Security
Committee on Ways and Means
Washington, DC 20515

    Dear Chair and Ranking Member:

    Congratulations on holding today's hearing on barriers preventing 
the disabled from returning to work.
    I would like to request that my Statement of February--to the 
Senate Finance Committee on ``Return to Work'' legislation be included 
in your hearing record.
    Specifically, the key barrier is lack of health insurance for those 
returning to work, and improvements in Medicare and Medicaid can play a 
key role in encouraging the disabled to return to work.
    As my testimony indicates, we should give some special attention to 
those with End Stage Renal Disease. There is tremendous potential to 
help many of these patients to return to a more productive, satisfying 
life.
    Since my testimony to the Senate, I've had the chance to read an 
article from the January, 1999 Journal of the American Society of 
Nephrology entitled, ``Can Renal Replacement be Deferred by a 
Supplemental Very Low Protein Diet?'' The answer is yes-by as much as a 
year among motivated patients! We should amend this Return to Work 
legislation to give Medicare the flexibility to cover such therapies to 
delay the onset of dialysis, which would make it much easier for kidney 
disease patients to maintain employment while saving Medicare money.
    I look forward to working with you on this legislation to ensure it 
achieves the maximum impact on improving the opportunities of the 
disabled community.

            Sincerely,
                                                 Pete Stark
                                                 Member of Congress
Attachments
        Statement to Senate Finance Committee
        Article entitled, ``Catch-22 for a Transplant''
        Article entitled, ``Can Renal Replacement be Deferred by a 
        Supplemental Very Low Protein Diet?''

cc: Members of the Subcommittee on Social Security
      

                                


Statement of Hon. Fortney Pete Stark, a Representative in Congress from 
the State of California

 Please Give Some Special Attention to E.S.R.D. Patients in the ``Work 
                  Incentives Improvement Act of 1999''

    Mr. Chairman:

    I urge the Committee to give some special consideration to 
helping End Stage Renal Disease patients return to work.
    As you know, there are about 260,000 Americans on dialysis 
and another 80,000 who are dependent on a kidney transplant 
(with about 11,500 kidney transplants performed annually). 
About 120,000 dialysis patients are of working age (between 20 
and 64), yet, extrapolating from recent data, fewer than 28,000 
are working--roughly 100,000 are not in the workforce. The 
USRDS Abstract of Medical Evidence Reports, June 1, 1996 to 
June 1, 1997, reports that 38.1% of all dialysis patients 18-60 
years of age were employed full time, part time or were 
students before onset of ESRD. 22.9% of ESRD patients in the 
same age group were employed full time or part time or were 
students after the start of dialysis. It is the 15% (38.1% 
minus 22.9%) differential that is the prime hope for return to 
work efforts.
    Of the transplant patients, most (88%) are of working age, 
and about half of these are working.
    ESRD patients are extraordinarily expensive. They 
constitute about 0.5% of all Medicare patients, yet use about 
5%--about $11 billion--of the Medicare budget.
    The promise of ESRD, and especially of transplantation, was 
that it would enable people to live mainstream lives--and the 
problem of rehab/return to work has long been a theme in 
Congressional review of this program.\1\
---------------------------------------------------------------------------
    \1\ See testimony of HHS Inspector General Kusserow, in hearings 
before the House Government Operations Committee, February 23, 1982, p. 
20, when it was noted that only about one fourth of those with jobs 
before the onset of ESRD continued employment, a figure which appears 
not to have changed much over nearly twenty years. See also Ways and 
Means Oversight Subcommittee hearing of June 24, 1975. At that time, 
there were about 20,000 ESRD patients, generally clustered in the more-
employable cohort of 20 to 55 years of age, and it was estimated that 
50% of the dialysis patients and 75% of the transplant patients were 
working.
---------------------------------------------------------------------------
    Yet for many reasons, return to work has not been very 
successful in this patient population. The 1991 landmark 
Institute of Medicine study entitled Kidney Failure and the 
Federal Government explains some of the reasons (see attached).
    Section 102 of your bill provides Medicare coverage for 
working individuals with disabilities--but ESRD dialysis 
patients already have this protection. For transplant patients, 
Medicare does not cover their major health need--coverage of 
$8,000-$10,000 per year for immuno-suppressive drugs--after 36 
months.
    Clearly, we should tailor some special provisions to this 
population.
    I would like to suggest a series of ESRD return-to-work 
amendments that would save total government revenues in the 
long run. While these proposals may increase Medicare spending, 
they would reduce Social Security disability and Medicaid 
spending.
    These are just preliminary ideas, and I hope that you and 
the renal community could refine these ideas prior to mark-up.
    1) A huge percentage of ESRD patients qualify for Medicaid. 
The disease is so expensive ($40-$60,000 per patient per year) 
and the out-of-pocket costs so high that it impoverishes many. 
For transplant patients, the cost of life-saving immuno-
suppressive drugs alone can be $8,000, $10,000 or more per 
year. No wonder many are tempted to avoid actions which would 
disqualify them for help.
    As part of general Medicare policy, I have always thought 
that we should cover pharmaceuticals and, in particular, 
indefinitely cover immuno-suppressives. It is maddening to hear 
the stories of $80,000-$100,000 kidney transplants lost, 
because a patient couldn't afford the $10,000 per year of 
medicine.
    I think a good case can be made to add to this bill 
coverage of immuno-suppressives indefinitely, to encourage 
people to leave Medicaid/Disability and return to work.
    2) Some ESRD facilities do a good social work job helping 
patients return to work. Others don't seem to even try. We 
should honor and reward those centers which, on a risk adjusted 
basis, are doing the best job of rehab in their renal network 
area.
    The honor could be as simple as a Secretarial award of 
excellence and public recognition.
    The reward could be something more tangible--a cash payment 
to the facility for each patient of working age who does not 
have severe co-morbidities which the center is able to help 
return to work (above a baseline--perhaps 5% of eligible 
patients). For example, if a center had 100 working age 
patients, it could receive a $1000 payment for each patient 
above 5 who had lost employment and is helped to return to 
work. This would be a phenomenally successful investment and 
would partially compensate the dialysis center for the cost of 
vocational rehab and social work.
    3) Renal dialysis networks, which are designed to help 
ensure ESRD center quality, should be able to apply for 
designation as rehab agencies and for demonstration grants 
under this legislation.
    The law spelling out the duties of Networks has a heavy 
emphasis on rehabilitation. Indeed, it is the first duty 
listed:

          ``...encouraging, consistent with sound medical practice, the 
        use of those treatment settings most compatible with the 
        successful rehabilitation of the patient and the participation 
        of patients, providers of services, and renal disease 
        facilities in vocational rehabilitation programs;'' \2\
---------------------------------------------------------------------------
    \2\ Sec. 1881(c)(2)(A); see also (B) and (H).

    I suspect that the 17 Networks vary widely in their 
emphasis on rehabilitation. Again, the Network(s) that do the 
best should receive recognition and share their success with 
the others.
    4) Kidney failure remains a medical mystery. It often 
happens very quickly, with no warning. But for thousands of 
others, there is a gradual decline of kidney function. I am 
told by medical experts that in many cases the descent to 
terminal or end-stage renal disease can be slowed by (1) 
nutrition counseling, or (2) medical treatment by nephrology 
specialists.
    I hope that you will make it clear that the Medicaid (or 
Medicare) funds provided in this program to prevent disability 
could be used to delay the on-set of the devastatingly 
disruptive and expensive ESRD. Monies spent in this area would 
return savings many times over.
    Also in the 'preventive area,' some of the leaders in the 
renal community are reporting exciting results from more 
frequent, almost nightly dialysis. Like frequent testing by 
diabetics for blood sugar levels, it may be that more frequent 
dialysis can result in a less disrupted life and a better 
chance to contribute to the workforce. We should watch these 
medical developments and if there is a chance that some 
additional spending on more frequent, but less disruptive 
dialysis would encourage return to work, we should be 
supportive.
    5) Finally, I urge you to coordinate this bill with another 
proposal of the Administration--skilled nursing facility 
employment of aides to help with feeding. As you know, last 
summer we received a GAO report on the horror of malnutrition 
and death by starvation in some nursing homes, due to a lack of 
staffing to take the time to help patients who have trouble 
eating and swallowing and who take a long, long time to eat 
(e.g., many stroke patients). A coordinated effort by the 
nursing home industry and ESRD centers to fill this minimum 
wage type position would help nursing home patients while 
starting many long-out-of-work ESRD patients back on the road 
to work.
    Mr. Chairman, these are just a few, quick ideas. I am sure 
that experts in this field could suggest other steps to ensure 
that the ESRD program not only saves lives, but helps people 
have a good and productive life. Thank you for your 
consideration.

    [Attachments are being retained in the Committee files.]

                                  
