[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
 THIRD IN A SERIES ON SOCIAL SECURITY DISABILITY PROGRAMS' CHALLENGES 
                           AND OPPORTUNITIES

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 11, 2002

                               __________

                           Serial No. 107-92

                               __________

         Printed for the use of the Committee on Ways and Means










                       U. S. GOVERNMENT PRINTING OFFICE
86-746                         WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

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

                     Allison Giles, 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                 LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri           EARL POMEROY, North Dakota
RON LEWIS, Kentucky                  XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin


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 July 3, 2002, announcing the hearing.................     2

                               WITNESSES

Social Security Administration, Martin Gerry, Deputy 
  Commissioner, Disability and Income Security Programs..........     6
U.S. General Accounting Office, Robert E. Robertson, Director, 
  Education, Work force, and Income Security Issues..............    23
Social Security Administration, Ticket to Work and Work 
  Incentives Advisory Panel, Sarah Wiggins Mitchell, Chair.......    32

                                 ______

Blanck, Peter, University of Iowa College of Law.................    94
Consortium for Citizens With Disabilities, and International 
  Association of Psychosocial Rehabilitation Services, Paul 
  Siefert........................................................    46
Institute of Medicine of the National Academies, and Committee to 
  Review the Social Security Administrations' Disability Decision 
  Process Research, Gooloo S. Wunderlich.........................    50
International Association of Rehabilitation Professionals, and 
  Ohio State University, Bruce Growick...........................    90
National Academy of Social Insurance, Patricia Owens.............    65
UnumProvident Corp., Robert Anfield, M.D.........................    55

                       SUBMISSION FOR THE RECORD

National Association of Disability Examiners, Jeffrey H. Price, 
  letter.........................................................   125




















 THIRD IN A SERIES ON SOCIAL SECURITY DISABILITY PROGRAMS' CHALLENGES 
                           AND OPPORTUNITIES

                              ----------                              


                        THURSDAY, JULY 11, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:16 a.m., in 
room B-318 Rayburn 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

                                                Contact: (202) 225-9263
FOR IMMEDIATE RELEASE
July 3, 2002
No. SS-15

            Shaw Announces Third in a Series of Hearings on

            Social Security Disability Programs' Challenges

                           and Opportunities

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing to examine the definition of 
disability. The hearing will take place on Thursday, July 11, 2002, in 
room B-318 Rayburn House Office Building, beginning at 10:00 am.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittee and 
for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Last year, the Subcommittee began a hearing series examining the 
challenges and opportunities facing Social Security's disability 
programs. In the first hearing of the series, the Subcommittee heard an 
overview of these challenges from key stakeholders. Recommendations 
generally focused on how to decrease processing times at all levels of 
disability claims. During the second hearing, the Subcommittee examined 
the reasons for delays, complexities, and inconsistencies in the 
disability determination and appeals process, and explored 
recommendations for change.
      
    The Social Security Act was amended in 1956 to create the Social 
Security Disability Insurance (SSDI) program, which provides workers 
and their families with an income safety net should a breadwinner 
become disabled. The Social Security Administration (SSA) also 
administers the Supplemental Security Income (SSI) program, created in 
1972, which provides means-tested benefits to aged, blind, and disabled 
individuals.
      
    Under current law, disability is defined in both programs as ``an 
inability to engage in any substantial gainful activity by reason of a 
medically determinable physical or mental impairment which can be 
expected to result in death or which has lasted or can be expected to 
last for a continuous period of not less than 12 months.'' The SSA only 
pays benefits for total disability and does not pay benefits for 
partial or short-term disability. The law is implemented through 
numerous agency regulations and rulings which affect how disability 
decisions are made.
      
    Many people, including the bipartisan Social Security Advisory 
Board, the U.S. General Accounting Office, individuals with 
disabilities, and their advocates have suggested the definition of 
disability is at odds with the desires of those individuals with 
disabilities who want to work but who still need some financial or 
medical assistance. Under current law, for example, an individual must 
first prove they are unable to work to receive benefits--yet, once 
benefits have begun, increased services and new incentives such as 
those provided through recent ``Ticket to Work'' legislation, are aimed 
to help beneficiaries return to work.
      
    In announcing the hearing, Chairman Shaw stated: ``Medical 
treatment, assistive technology, and the nature of work itself has 
changed significantly since Social Security's disability programs were 
created in the 1950s and the 1970s. It's long past time for us to 
carefully and thoughtfully examine how disability is defined to ensure 
the benefits provided today and in the future continue to keep pace 
with the needs of our ever-changing society.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee will examine: (1) how the Social Security 
Administration (SSA) determines disability as defined in the statute; 
and (2) the degree to which the definition of disability in law, and 
SSA's determination of what constitutes disability, addresses the needs 
of today's workers, beneficiaries, and the intent of the SSDI and SSI 
programs.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Thursday, July 25, 2002. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Social Security in room 
B-316 Rayburn House Office Building, in an open and searchable package 
48 hours before the hearing. The U.S. Capitol Police will refuse 
sealed-packaged deliveries to all House Office Buildings.
      

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. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST 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. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.
      

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

    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. I apologize for being 15 
minutes late in starting. Today, the Subcommittee continues our 
examination of the challenges and opportunities faced by Social 
Security's two disability programs--Disability Insurance (DI) 
and Supplemental Security Income (SSI)--by focusing on the 
definition of disability.
    According to law, an individual is considered disabled when 
they are unable to ``engage in substantial gainful activity 
(SGA) by reason of a medically determinable physical or mental 
impairment which can be expected to result in death or which 
has lasted or can be expected to last for a continuous period 
of not less than 12 months.''
    While that definition would seem to outline the parameters 
of disability, in fact there are 270 pages of Federal 
regulations that discuss how to implement that law. Included is 
a complex list of impairments, how to consider age, education, 
and vocational factors, and how to evaluate pain, other 
subjective complaints, and activities of daily living.
    Although the regulations are intended to produce objective 
determinations of disability, each person's circumstance is 
unique, and disability determinations are inherently the result 
of both objective review of the evidence and subjective 
judgment. Thus, different decisionmakers may reasonably come to 
different conclusions even in similar circumstances. No wonder 
ensuring fair and consistent treatment for all claimants 
remains a key challenge for the Agency as it administers this 
complex program.
    Compounding the difficulty of implementing a fair and 
accurate definition of disability is the evolving nature of 
work. Employment opportunities for individuals with 
disabilities have expanded over the past several decades. The 
intent of the disability program has been to provide a safety 
net for individuals who cannot work because of long-term 
disability. However, new employment possibilities and the 
changes in and interaction between vocational, environmental, 
medical, and other factors have led many to question whether 
the definition of disability accurately reflects the intent of 
the program and the needs of individuals with disabilities 
today.
    Helping us sort through all of these issues today is Martin 
Gerry, the Deputy Commissioner for Disability and Income 
Security programs at the Social Security Administration (SSA); 
Robert Robertson, at the U.S. General Accounting Office (GAO); 
Sarah Mitchell, Chair at the Ticket to Work Advisory Panel, who 
is making her first appearance before this Subcommittee; and 
various consumer, academic, and private sector experts.
    President Franklin Delano Roosevelt, who signed Social 
Security into law and was himself an individual with a 
disability, turned the concept of disability on its head and we 
have been trying to catch up ever since. Evolutions in the 
workplace, society, and medicine have outpaced our progress in 
reviewing the program's definition of disability. Though 
ensuring that the definition of disability meets the needs of 
Americans is a difficult and complex task, it must be a 
priority of this Committee. American workers and their families 
who rely on the vital safety net Social Security disability 
benefits provide deserve no less.
    [The opening statement of Mr. Shaw follows:]
 Opening Statement of the Hon. E. Clay Shaw, Jr., a Representative in 
   Congress from the State of Florida, and Chairman, Subcommittee on 
                            Social Security
    Good morning. Today the Subcommittee continues our examination of 
the challenges and opportunities faced by Social Security's two 
disability programs--Disability Insurance and Supplemental Security 
Income--by focusing on the definition of disability.
    According to law, an individual is considered disabled when they 
are unable to; ``engage in substantial gainful activity by reason of a 
medically determinable physical or mental impairment which can be 
expected to result in death or which has lasted or can be expected to 
last for a continuous period of not less than 12 months.''
    While that definition would seem to outline the parameters of 
disability, in fact there are over 270 pages of federal regulations 
that discuss how to implement this law. Included is a complex list of 
impairments, how to consider age, education, and vocational factors, 
and how to evaluate pain, other subjective complaints, and activities 
of daily living.
    Although the regulations are intended to produce objective 
determinations of disability, each person's circumstance is unique, and 
disability determinations are inherently the result of both objective 
review of the evidence and subjective judgment. Thus, different 
decision makers may reasonably come to different conclusions, even in 
similar circumstances. No wonder ensuring fair and consistent treatment 
for all claimants remains a key challenge for the agency as it 
administers this complex program.
    Compounding the difficulty of implementing a fair and accurate 
definition of disability is the evolving nature of work. Employment 
opportunities for individuals with disabilities have expanded over the 
past several decades. The intent of the disability programs has been to 
provide a safety net for individuals who cannot work because of a long-
term disability. However, new employment possibilities and the changes 
in--and interaction between--vocational, environmental, medical, and 
other factors have led many to question whether the definition of 
disability accurately reflects the intent of the program and the needs 
of individuals with disabilities today.
    Helping us sort through all of these issues today is Martin Gerry, 
the Deputy Commissioner for Disability and Income Security Programs at 
the Social Security Administration, Robert Robertson at the GAO, Sarah 
Mitchell, chair of the Ticket to Work Advisory Panel who is making her 
first appearance before the Subcommittee, and various consumer, 
academic, and private sector experts.
    President Franklin Delano Roosevelt, who signed Social Security 
into law and was himself an individual with a disability, turned the 
concept of disability on its head, and we've been trying to catch up 
ever since. Evolutions in the workplace, society, and medicine have 
outpaced our progress in reviewing the program's definition of 
disability. Though ensuring that the definition of disability meets the 
needs of Americans is a difficult and complex task, it must be a 
priority. America's workers and their families who rely on the vital 
safety net Social Security disability benefits provide deserve no less.

                                 

    Chairman SHAW. Mr. Matsui.
    Mr. MATSUI. Thank you, Mr. Chairman. No, I have no 
comments. I look forward to hearing from the witnesses. Many of 
us will have to move in and out from time to time, and I hope 
that the witnesses and people will understand that, and we 
apologize in advance for that. Thank you.
    Chairman SHAW. Thank you. Well, I have already introduced 
you, Mr. Gerry. We appreciate your being here. Welcome. We look 
forward to your testimony. We have the full text of your 
testimony which will be made a part of the record, so you may 
summarize as you see fit.

STATEMENT OF MARTIN GERRY, DEPUTY COMMISSIONER, DISABILITY AND 
    INCOME SECURITY PROGRAMS, SOCIAL SECURITY ADMINISTRATION

    Mr. GERRY. Thank you, Mr. Chairman, and Members of the 
Subcommittee. Thank you for inviting me today to discuss the 
definition of disability used by the Social Security 
Administration in evaluating applicants for Social Security and 
Supplemental Security Income disability benefits.
    The Social Security Act broadly defines disability for 
adults as the inability to engage in any substantial gainful 
activity. I see that as the first key, element. Then, second, 
that inability to engage is due to a physical or mental 
impairment. So, that is the second key element. Third, that 
that physical or mental impairment has lasted or is expected to 
last at least 1 year or to result in death.
    So, the statutory definition seems to me to contain three 
basic ingredients. Based on this definition, Social Security 
Administration regulations set out a five-step sequential 
evaluation process to determine disability, and I would like to 
briefly describe the steps.
    The first step is to determine whether an individual is 
engaging in substantial gainful activity. In other words, not 
only whether they are working, but whether they are earning an 
income over a certain level. Under current regulations, an 
individual will generally be considered to be engaging in 
substantial gainful activity--if he is or she is earning more 
than $780 a month; and, in the instance of individuals who are 
blind, that amount is $1,300 a month.
    If it is determined that the individual is engaging in 
substantial gainful activity, a decision is made at the first 
step that that individual is not disabled and medical factors 
are not really considered at that point. So, at step one, you 
either move on to discuss the disability and medical factors, 
or you make the decision that the individual is already engaged 
in substantial gainful activity, and at that point they are 
ineligible regardless of the severity of the disability. That 
is key, because there are people who are very severely disabled 
who are very definitely earning above the limit, and the first 
test that I think is clearly here is the question of whether 
someone is in fact not earning at that level.
    The second step, if you conclude that there are not 
earnings above substantial gainful activity, is to determine 
whether or not an impairment exists and the severity and 
duration of a person's impairment. That is the exploration of 
the impairment in step two. At this step and throughout the 
remainder of the process, the Agency would consider all of the 
person's physical and mental impairments, both singly but also 
in combination--and Congress has been very clear about the need 
to look at this process in terms of the combination of factors.
    If the individual does not have a medical impairment, or if 
the impairment or combination of impairments is determined to 
be ``not severe``--and I will explain that in a second--then 
the individual would be found not disabled at the second step. 
The basic meaning of ``not severe'' is that the individual does 
not have an impairment that significantly limits the 
individual's capacity to perform basic work activities.
    So, at step two, there is a question of, first, is there a 
medical impairment; and, second, is it severe? The severity 
test at this step is pretty much, does it really interfere with 
the ability to perform basic work activities?
    If there is a medical impairment and it is severe, then we 
would proceed to the third step of the sequential process. At 
that step, a determination is made as to whether the impairment 
meets or equals the criteria of one of the medical listings 
that is published by the Agency in regulations. The listing of 
impairments that we publish describes impairments that are 
considered severe enough to prevent a person from doing any 
gainful activity. So, I want to distinguish that from 
substantial gainful activity. So, there is a presumption, a 
conclusive presumption in the listings, that if you in fact 
meet these requirements, then we will conclude at that point 
that you are, in fact, eligible.
    Listings are not required by the statute, but the Agency 
has been using them in one form or another since it really 
first started evaluating disability claims to screen the most 
obviously disabled applicants.
    So, at this third step, the presence of an impairment that 
meets the criteria of the listings is usually sufficient to 
establish that an individual who is not working is disabled, 
without the need to go further, and that would involve the 
consideration of the individual's age, education, and work 
experience.
    On the other hand, it is important to note that the absence 
of a listing level impairment, that is, the decision that 
someone doesn't meet a listing, does not mean that the 
individual is not disabled. In fact, the Agency determines and 
finds people disabled at subsequent steps. The purpose of step 
three is to get those people who are most obviously disabled 
identified as early as possible in the process.
    If a severe impairment does not meet or equal a listing, 
the Agency then assesses the individual's residual functional 
capacity, which roughly translates as what an individual can 
still do, taking into account his or her impairment, and uses 
that assessment in the final steps of the process, step four 
and step five.
    At step four, we consider whether the individual has the 
residual functional capacity to meet the physical and mental 
demands of his or her past relevant work. So, we look at the 
actual work history of the applicant. The question is, is there 
evidence that this individual could do the same kind of work?
    If the impairment does not appear to prevent the individual 
from meeting the demands of past relevant work, then the person 
would be found to be not disabled and the process would stop at 
this point.
    On the other hand, if that is not the case, we would move 
on to step five, and that is the final step in the process, 
which asks the question: If the impairment prevents the 
individual from performing past relevant work, it must be 
determined at the fifth and final step whether the impairment 
prevents the person making an adjustment to other work. We 
wouldn't be looking at the kind of work the individual did in 
the past, but would be looking at a much broader sense of what 
work is. As the statutory definition states, the individual 
must be not only unable to do his previous work, but cannot, 
considering his age, education, and work experience, engage in 
any other kind of substantial gainful work which exists in the 
national economy. I'm quoting the language of the statute.
    It is worthwhile to emphasize here that the work we are 
talking about does not actually have to exist in the immediate 
area where the claimant lives. So, we are not talking about job 
opportunities that may be actually available to the individual 
at the place where the individual lives. We are talking about 
the overall economy, and whether in general this person could 
work in the overall economy. So, those are the five basic steps 
of the sequential evaluation process.
    Mr. Chairman, Mr. Matsui, and other Members of the 
Subcommittee, I want to thank you again for beginning the 
public process of exploring the definition of disability for 
Social Security benefits, which I think is a very important 
activity of this Committee. I stand with the Commissioner and 
her pledge to work with the administration, with Congress, and 
with the dedicated and experienced employees of the Social 
Security Administration to make improvements in the service 
that the SSA provides applicants for disability and in meeting 
the other challenges facing the Agency. I look forward to 
working with you all to improve Social Security's disability 
programs, and welcome any questions that you might have.
    [The prepared statement of Mr. Gerry follows:]
 Statement of Martin Gerry, Deputy Commissioner, Disability and Income 
           Security Programs, Social Security Administration
Before the Subcommittee on Social Security, House Committee on Ways and 
                                 Means
Mr. Chairman and Members of the Subcommittee:

    Thank you for inviting me today to discuss the definition of 
disability used by the Social Security Administration (SSA) in 
evaluating applicants for Social Security and Supplemental Security 
Income (SSI) disability benefits. I will briefly describe the programs 
to which the definition applies and will then elaborate some more on 
the definition in the Social Security Act (the Act) and in SSA 
regulations.

Social Security and SSI Disability Programs

    The Act provides cash benefits to individuals with disabling 
physical and mental disorders under two major programs: Social Security 
Disability Insurance (SSDI) and Supplemental Security Income (SSI). 
Often, receipt of disability benefits also provides access to health 
care.
    SSDI comprises a number of disability benefits for workers and 
their dependents and survivors. Entitlement is based on contributions 
to the Social Security trust funds through Federal Insurance 
Contribution Act (FICA) taxes. Individuals who qualify for SSDI 
benefits are entitled to receive medical benefits from the federal 
Medicare program generally after they have been entitled to benefits 
for 24 months. SSDI benefits include:

           LDisability Insurance Benefits. This is a cash 
        benefit paid to workers who have not reached retirement age, 
        who are disabled or blind as defined in the Act, and who meet 
        other requirements for entitlement described below.
           LWidow's and Widower's Insurance Benefits based on 
        disability. Disabled widows or widowers of workers may receive 
        benefits if they are at least 50 years old. In general, the 
        disability must have started before the worker died or within 
        seven years after the worker's death. Surviving divorced 
        spouses with disabilities may also qualify for this disability 
        benefit.
           LChild's Insurance Benefits based on disability. An 
        unmarried, disabled child of a worker who has died, retired, or 
        is receiving disability insurance benefits may receive this 
        benefit. In general, the individual must be unmarried and 18 
        years old or older to qualify. The individual must have been 
        continuously disabled since before attaining age 22.

    The same definition of disability applies to all these benefits. 
Benefits can also be payable to non-disabled spouses and children of 
SSDI recipients.
    SSI is a means-tested program that provides a basic floor of income 
for individuals with limited incomes and resources. SSI benefits are 
paid to aged (age 65 and older), blind, and disabled individuals who 
have limited means. Individuals under age 65, including children 
(individuals under age 18) must be blind or disabled to qualify for 
benefits. The same definition of disability that applies for SSDI also 
applies for SSI benefits for adults. Children under the age of 18 have 
a different definition of disability for SSI which was enacted in 1996.
    In addition to this basic floor of income, individuals eligible for 
SSI can benefit from Medicaid health insurance coverage from the 
States.

The Social Security Act

    The Social Security Act broadly defines disability for adults as 
the inability to engage in any substantial gainful activity (SGA) due 
to a physical or mental impairment that has lasted or is expected to 
last at least one year or to result in death. Neither shorter-term 
disability nor partial disability is encompassed. The Act requires the 
Commissioner of Social Security to prescribe rules for obtaining and 
evaluating evidence and making disability decisions. The law further 
requires that initial disability determinations be made by State 
agencies, called Disability Determination Services (DDSs), following 
Federal rules and guidelines and fully financed by Federal funds.

Sequential Evaluation

    As prescribed in SSA's regulations, disability in adults is 
evaluated under a five-step ``sequential evaluation process.'' The 
steps are followed in order until a decision is made. The first step is 
to determine whether the individual is engaging in SGA. Under current 
regulations, in the case of blind individuals, the SGA earnings limit 
is set by statute, and is currently $1,300 a month. For individuals 
with other disabilities, if a person is earning more than $780 a month, 
he or she will be considered to be engaging in SGA. However, SSA does 
not necessarily count all the person's earnings. For example, we deduct 
impairment-related work expenses when we determine the amount of 
earnings to count. Both amounts are indexed annually to average wage 
growth.
    If it is determined that the individual is engaging in SGA, a 
decision is made at the first step that he or she is not disabled 
without considering medical factors. If an individual is found not to 
be engaging in SGA, the existence, severity and duration of the 
person's impairment are explored. At this step, and throughout the 
remainder of the process, we consider all of a person's physical and 
mental impairments, both singly and in combination.
    If the individual does not have a medical impairment, or the 
impairment or combined impairments are determined to be ``not severe'' 
(i.e., they do not significantly limit the individual's capacity to 
perform basic work activities), the individual is found not disabled at 
the second step. If the impairment is ``severe,'' we proceed to the 
third step, where a determination is made as to whether the impairment 
``meets'' or ``equals'' the criteria of one of the medical listings 
published in regulations by SSA.

Listing of Impairments

    The Listing of Impairments describes, for each major function of 
the body, impairments that are considered severe enough to prevent a 
person from doing any gainful activity, as opposed to any substantial 
gainful activity. The Listings are not required by statute, but SSA has 
been using them in one form or another since it first started 
evaluating disability claims, updating them as needed, to screen the 
most obviously disabled applicants. Most of the listed impairments are 
permanent or expected to result in death, or a specific statement of 
duration is made. For all others, the evidence must show that the 
impairment has lasted or is expected to last for a continuous period of 
at least 12 months.
    At this third step, the presence of an impairment that meets the 
criteria in the Listing of Impairments (or that is of equal severity) 
is usually sufficient to establish that an individual who is not 
working is disabled, without the need to consider the individual's age, 
education, or work experience. However, the absence of a listing-level 
impairment does not mean the individual is not disabled. Rather, it 
merely requires the adjudicator to move on to the next step of the 
process.

Medical-Vocational Decisions

    If a ``severe'' impairment neither ``meets'' nor ``equals'' a 
listing (which would result in a finding of disability), SSA assesses 
the individual's residual functional capacity--what an individual can 
still do despite his or her impairment--and uses that assessment in the 
last two steps of the process. At step four, we consider whether the 
person has the residual functional capacity to meet the physical and 
mental demands of past relevant work. If the impairment does not 
prevent the individual from meeting the demands of past relevant work, 
the person is found not disabled.
    Finally, if the impairment does prevent the individual from 
performing past relevant work (or if the person did not have any past 
relevant work) it must be determined whether the impairment prevents 
the person making an adjustment to other work at step five. As the 
statutory definition states, the individual must be ``not only unable 
to do his previous work but cannot, considering his age, education, and 
work experience, engage in any other kind of substantial gainful work 
which exists in the national economy. * * *''
    The statutory standard is a method of judging disability. For 
example, the law specifies that the work the person can do does not 
have to exist in the immediate area in which he or she lives, and that 
a specific job vacancy does not have to be available to him or her. 
Work in the national economy is defined in statute as work which exists 
in significant numbers either in the region where such individual lives 
or in several regions of the country.
    SSA has developed a vocational ``grid'' designed to minimize 
subjectivity and promote consistency in applying the vocational 
factors. The grid regulations relate age, education, and past work 
experience to the individual's residual functional capacity to perform 
work-related physical and mental activities. If the applicant has a 
particular level of exertion work capability--characterized by the 
terms sedentary, light, and medium--an automatic finding of 
``disabled'' or ``not disabled'' may be required when such capability 
is applied to various combinations of age, education, and work 
experience. Otherwise, we use the rules as a framework for decision 
making.

Other Definitions of Disability

    There are numerous other definitions of disability for different 
purposes. Workers compensation, vocational rehabilitation, State 
Medicaid programs, and private disability insurers each has its own 
definition of disability for its own purpose.
    One notable example is The Americans with Disabilities Act (ADA). 
Its definition of disability is different from SSA's definition. The 
purpose of the ADA is to:

        (1) provide a clear and comprehensive national mandate for the 
        elimination of discrimination against individuals with 
        disabilities;
        (2) provide clear, strong, consistent, enforceable standards 
        addressing discrimination against individuals with 
        disabilities;
        (3) ensure that the Federal Government plays a central role in 
        enforcing the standards established in this Act on behalf of 
        individuals with disabilities; and
        (4) invoke the sweep of congressional authority, including the 
        power to enforce the fourteenth amendment and to regulate 
        commerce, in order to address the major areas of discrimination 
        faced day-to-day by people with disabilities.

    In 1999, the United States Supreme Court held in a 9-0 decision 
that the pursuit, and receipt, of SSDI benefits does not automatically 
prevent the recipient from pursuing an ADA claim. The court's decision 
further noted that both ADA and SSDI claims ``can comfortably exist 
side by side'' and recognized that the two laws do not share a common 
definition of disability.

Disability Research

    One of the most valuable services SSA can provide to policymakers 
is the information they need for making sound decisions. SSA places a 
high priority on policy analysis and research that will provide the 
information necessary to evaluate and strengthen the nation's 
disability programs.
    Many experts believe that providing intervention methods to 
disabled individuals as close to the disability onset as possible 
significantly improves their chance of starting or returning to work. 
We plan on testing several models including such interventions as 
integrated service supports and collaboration with employers. We also 
plan to study the extent to which the listings are predictive of work 
ability.

Conclusion

    Finally, I thank you, Mr. Chairman, Mr. Matsui, and all the members 
of the Subcommittee, for beginning the public process of exploring the 
definition of disability for Social Security benefits. Obviously, any 
potential changes would have to be considered in terms of the long-term 
solvency of the combined trust funds. I stand with the Commissioner in 
her pledge to work with the Administration, with the Congress, and with 
the dedicated and experienced employees of the Social Security 
Administration to find the best solutions for this and other issues 
facing the Agency.
    Again, thank you for inviting me to be here today. I look forward 
to working with you to improve Social Security's disability programs.

                                 

    Chairman SHAW. Mr. Gerry, in that spirit, I have several 
questions which might be a little bit combative, but I would 
appreciate your responding to them as best as you can.
    First, that the General Accounting Office found that DI and 
SSI disability criteria have not kept pace with the advances 
and changes in the nature of work, social change, medical 
achievement, and assistive technologies. One, do you agree? Why 
has this happened, and what is SSA trying to do to fix it? Is 
there something we should do to effect the statute in order to 
fix it?
    Mr. GERRY. I think that was four questions, Mr. Chairman. 
Let me see if I can keep them in order. Without talking about 
every single listing, I think that the observation that the GAO 
report makes is generally a fair one; that is, the listings--
and I am talking now not about the statutory language or even 
the regulations in general, but the medical listings and 
vocational listings which the Agency has--have not been revised 
frequently. There have been significant periods of time without 
changes.
    Chairman SHAW. We are speaking of regulations now.
    Mr. GERRY. They are regulations, but they are not the basic 
operating regulations of the program; they are specific rules 
that we have established at step three of the process and the 
eligibility system that are usually described differently, even 
though they are technically regulations. The medical listings 
are an attempt, as I said earlier, to provide a route for 
people to fairly quickly establish that they are disabled, 
without having to go through the process, which as described in 
my prior testimony and the Commissioner's testimony, can be a 
very long process.
    So, the big advantage of the listings in practical terms is 
that if you can meet the listing or equal the listing, then you 
should have an allowance early in the process, and obviously a 
lot of days are saved at the beginning of the process. Those 
listings do attempt to provide specific guidance as to how to 
make a determination of disability, and therefore are quite 
sensitive to changes in the medical and rehabilitation 
insights. It is fair, and I think accurate, to say that over 
significant periods of time, a lot has changed with respect to 
not just the employment opportunities and supports, but also 
the medical and rehabilitation realities of people with 
disabilities. So, I think in that sense they haven't kept pace.
    We are involved right now in a process to try to keep pace. 
When the Commissioner took office, we together spent quite a 
bit of time very early in the process looking at what we have 
been doing, and we want to pursue this vigorously. I think it 
is very important to do this quickly but also to do it 
thoroughly, so that when we do issue new listings, they really 
reflect and solve the practical problems that we have had in 
actually applying the listings.
    Let me explain for a minute. There has been a tendency in 
writing listings and revising listings to look at them from a 
technical, accuracy standpoint, kind of an academic standpoint. 
I think it is important to be sure that we are technically 
accurate, but what we want to change and expand on particularly 
is their actual usability. We are engaged in a new process in 
our policymaking activity, of going out and talking to 
consumers and claimants, to advocates, to professionals who are 
giving opinions, and then to the people who actually apply our 
listings at the State level in the hearings, and even in the 
Federal courts, to try to identify where the listings are 
practically creating problems.
    We have a lot of hearings, close to 600,000 a year; when I 
came in, I asked questions about what listings, if any, are the 
subjects of those hearings? Are there particular listings that 
seem to be posing more difficulty in terms of adjudication? We 
haven't routinely kept that information and we haven't 
routinely asked the people who actually have to apply our rules 
where they are having difficulties.
    So, what we want is to do two things at the same time: We 
want to keep current with the research and be sure that we have 
a technically and scientifically accurate description, but we 
also really want to do a fairly careful effort to see whether 
what we are writing is actually useful, or if it is creating 
problems for the courts, for the hearings officers, and the 
disability examiners. So, we have put a new process in place to 
do that. That reflects, I think, an agreement with the 
proposition that, yes, we ought to update and we ought to keep 
current, but that we ought to do more than just the scientific 
side of that. Now, I know you asked me four questions. I think 
I answered two or three; I may have missed one in that.
    Chairman SHAW. Well, you answered one that I hadn't asked 
yet.
    Mr. GERRY. Okay.
    Chairman SHAW. So, I will go to the third one. Many of our 
witnesses today have suggested the definition of disability is 
too stringent, and that it should be modified to include short-
term disabilities or partial disabilities to account for the 
change in work, medicine, and technology, and the expectations 
of individuals with disabilities. What research are you 
undertaking relative to these issues, and when will you be able 
to advise the Congress as to your particular finding?
    Mr. GERRY. The Commissioner has asked me to look at the 
large question of how our disability program--which would 
include the definition as it operates--fits into the larger 
structure of Federal programs in terms of providing support to 
people with disabilities, and particularly in advancing the 
President's New Freedom goals, and the goals, obviously, that 
were reflected in the Americans With Disabilities Act (ADA).
    What makes the question a little difficult to answer is 
that the charge to me--and I am hoping to have completed this 
initial work so I can discuss it with her by the end of next 
year--isn't just to look at our program or the definitions in 
the Social Security Act, but really to ask the question of how 
what we are doing ought to fit into a larger integrated whole.
    The question of short-term disability benefits or how we 
deal with people with permanent partial disability, which I 
think is very important--we want to look beyond just the Social 
Security Administration. It may be that the best way to do that 
would be to look at some of the other agencies or programs, or 
even at the tax system, to look at as a whole how we are 
providing support to people with disabilities, to advance this 
general goal of employment and economic self-sufficiency and 
maximize it.
    So, within that context, yes, I think we are going to be 
looking at those topics. I don't want to suggest that we think 
at Social Security Administration that we are the only player 
in this. Congress has made several important legislative 
changes in the last few years, the Work force Investment Act, 
the Individuals With Disability Education Act amendments 1997, 
and, of course, the Ticket to Work legislation, all of which 
are part of what I hope will be ultimately an integrated 
approach at the Federal level. Whether we talk about benefit 
payments or whether we look at other ways to provide support, 
we are very much interested in this larger population of 
people.
    Obviously, there is a part of that population that could 
become permanent and totally disabled people if we don't act 
early enough to provide supports, and we know that there is a 
lot of work to do. For example, we are talking to the U.S. 
Department of Labor (DOL), the U.S. Department of Education, 
and the U.S. Department of Health and Human Services (HHS), 
about how we can work together to effectively serve this 
population you are describing. I know that is a long answer, 
but I don't want to leave the impression that we are just 
thinking about benefits.
    Chairman SHAW. Do you have a schedule that you can give us 
some reasonable expectation as to when you may be completing 
something that you can bring back to us?
    Mr. GERRY. I can certainly try to provide that for the 
record. I know that my understanding with the Commissioner is 
that I would be completing that process by the end of next 
year. We are already talking about this and we are already 
beginning to do some things, but I will see if I can provide 
something more precise.
    [The information follows:]

    We are beginning to look at long-term changes in the definition of 
disability. We are planning to have some options developed by the end 
of next year. In the meantime, we have several projects underway that 
will provide useful information on definitional issues. For example, we 
are developing a new approach to updating the medical listing of 
impairments used to make disability determinations. SSA will ask 
Members of the public, disability advocates, and disability 
adjudicators for their advice on the medical listings before publishing 
proposed rules. SSA's strategy is to update the listings to reflect 
advances in medicine and disability evaluation as well as to consider 
the opinions of those who are affected by the listings and those who 
implement the listings. In addition, we are currently developing 
several demonstration projects that will yield relevant information on 
our disability definition.

                                 

    Mr. GERRY. On the listings, we are working right now, 
actively, on a revised schedule for when those listings will be 
completed and I hope to have that available by late this 
summer.
    Chairman SHAW. You are going to have a negative cash flow; 
at least we have been told that this is going to come in 2008. 
What are you doing to get ready for that?
    Mr. GERRY. Well, that is part of the larger questions that 
we are looking at. Obviously, the overall solvency of the trust 
fund is an important issue for the Agency; the Commissioner has 
focused on that, and we will be reporting back on that. Part of 
that, of course, has to do with the configuration of the 
program. The projections on the trust fund have to do with the 
program as it is now structured. To the extent that Congress 
makes changes in the program, that would affect those 
projections. We are looking very much at that right now. I know 
the Administration in general is looking at the larger issues 
of solvency of the trust fund. It is not a topic that I have 
been focused on much during my first 6 months.
    Chairman SHAW. Well, is that something that we would do 
outside of a general review of the whole Social Security Trust 
Fund, or is it something that--are you going to come back with 
some recommendation as to just the DI portion?
    Mr. GERRY. I don't know of any intention for us to come 
back with a specific recommendation only on the DI portion, but 
I could look into this more and provide a better answer to you 
on the record.
    Chairman SHAW. If you would.
    [The information follows:]

    We will naturally keep the solvency of the trust funds in mind as 
we proceed with any proposed changes in the DI program. Once we develop 
proposals that we think will improve the program, however, we will not 
be deterred from bringing them forward if decisions on the reform of 
the entire Social Security program have not been completed.

                                 

    Chairman SHAW. Mr. Matsui.
    Mr. MATSUI. Thank you, Chairman. I appreciate Mr. Gerry's 
testimony. Given the fact that you raise the issue of 2008, I 
think it is a very serious issue. Six years away, we are going 
to have a cash flow problem; 2008 or so, we are going to have 
an actual real problem in the system. We have to cut benefits 
maybe down to 72 percent. It would be my sense that we should 
really begin the discussion of this at this time. I mean, he 
raised it, and we probably ought to debate this issue now in 
Subcommittee, on the Floor of the House, and take a vote on 
perhaps the President's three proposals that he came up with 
about 8 months ago now, the proposal that you offered, Mr. 
Shaw, and certainly the proposal that Mr. Armey has offered. I 
think we should vote on all five of those proposals at this 
time so that the American public will have an opportunity to 
find out how we intend to solve this 2008/2037 problem.
    Now, I think this hearing is very important, but the larger 
issue of how we deal with the unfunded part of the Social 
Security issue really has to be addressed before we can even 
talk about issues like a reevaluation of the definition of 
disability. Because right now the disability program itself 
accounts for 17 percent of all Social Security benefits being 
paid out. It is a very large sum.
    Now, if you privatize Social Security, that then could 
adversely affect that 17 percent. An additional 15 percent, as 
everyone knows, is for survivors benefits. So, about 32 percent 
of all Social Security benefits are in the form of disability 
and survivors benefits. You privatize Social Security, there is 
no question we are going to have to reduce those benefits, 
because Social Security is a pay-as-you-go system. So, you take 
16 percent of payroll and allow a person to privatize--which is 
2 percent of the payroll tax--that means there will be less 
money available for the current beneficiaries. So, the issue is 
how we are going to deal with this issue. This is a very 
critical issue, but it should come after the bigger issue of 
how we solve the problem.
    You mentioned 2008, and this is an opportunity for us to 
really debate this. It is my hope that you would at least sign 
the discharge petition so we can take these bills on the Floor 
of the House to vote on them. If not that--I mean, if you won't 
do that, then perhaps what you would do is at least have a 
hearing on your bill, take it to the full Committee so we can 
vote on it, and then take it to the Floor of the House so we 
can vote on it, so the American public will have an opportunity 
to really debate this issue before we actually do it, because 
the President says he wants to do this in 2003, the spring of 
2003. Unless the American public knows where each individual 
Member of the House and Senate intends to be on this issue, we 
could go into this thing blindly, and which is really unfair to 
the current 60,000 people that are receiving Social Security 
disability, survivors benefits, and obviously retirement 
benefits. It is just beyond my comprehension, I just don't 
understand this, how we could not discuss this, particularly in 
view of WorldCom, Enron, and what is going on with the stock 
market today. We can't talk about privatizing Social Security 
and at the same time be unwilling to discuss it in a fully 
discussed way before November, given the state of the stock 
market. I mean, if we had a privatized system today, imagine 
what some of these people would be going through.
    They are going to close the WorldCom office in my district, 
in my congressional district. We have been getting e-mails from 
80-90 people in the last couple of days, saying that they are 
going to lose their health insurance benefits, even though 
Bernard Ebbers is going to have life-time health insurance 
benefits along with his jet that he gets free, $1\1/2\ million 
a year. These people will have no 401(k) plans, they have no 
insurance. One fellow wrote me his wife is disabled, he doesn't 
know what he is going to do. They have no savings. So, we are 
talking about privatizing Social Security, and at the same time 
we are trying to pretend like we are trying to deal with the 
disability issue. I don't understand what is really going on.
    Now, I wasn't going to raise this, but since you raised the 
fact that in 2008 we are going to have a problem, I think we 
should talk about it. This is a very serious issue, and you 
raised a very serious issue and I think we need to deal with 
it.
    Now, let me ask Mr. Gerry some questions, if I may.
    Chairman SHAW. You have 26 seconds.
    Mr. MATSUI. I would be happy to discuss this with you. You 
know, you can't just show a little leg and not----
    Chairman SHAW. Well--show a little leg, what a sexist 
remark. I will give you an extra 30 seconds for that.
    Mr. MATSUI. I wish you would take this problem a little 
more seriously. It seems to me that you have got a lot of folks 
out there----
    Chairman SHAW. I didn't say anything about legs, you did.
    Mr. MATSUI. There are a lot of people out there today in 
the----
    Chairman SHAW. Mr. Matsui, I would----
    Mr. MATSUI. If I may make----
    Chairman SHAW. Okay.
    Mr. MATSUI. If I may complete my comments. Is that 
appropriate? There are a lot of folks out there that think the 
President wants to privatize Social Security. They are 
wondering what is going to happen. I think we need to discuss 
this issue. This is an issue that should be brought up now, 
particularly in view of what is happening in New York in the 
stock market. I mean, it is incomprehensible that we are not 
trying to relate these issues. It is a very serious matter 
right now. For you to not want to bring this up so we can 
debate it and go for it on the Floor so you know where Members 
are standing----
    Chairman SHAW. Would the gentleman yield? I mean, you are 
getting--I think you are--I don't mind extending your time for 
your discussion with Mr. Gerry for the purpose of this 
particular hearing. If you are going to use it to 
mischaracterize what is out there--you have seen my plan, and 
you know right well that I don't divert one dime of Federal 
Insurance Contributions Act taxes.
    Mr. MATSUI. Not in the----
    Chairman SHAW. No, I don't.
    Mr. MATSUI. In the last years you do.
    Chairman SHAW. No, I don't.
    Mr. MATSUI. It's a----
    Chairman SHAW. No, I do not.
    Mr. MATSUI. It is a claw-back. Your bill is a claw-back 
bill. It takes money out of the system to pay for the private 
accounts. I mean, it----
    Chairman SHAW. Mr. Matsui, I will be glad to give you an 
additional couple minutes if you care to question Mr. Gerry.
    Mr. MATSUI. I do have questions. Mr. Gerry, you are not 
actually working to change the definition of disability at this 
time. What you are doing is you are trying to expand on it; is 
that correct? I am just trying to understand.
    Mr. GERRY. I am not working with the purpose of changing 
the definition. I think what the Commissioner has asked me to 
do is to look at the larger question of what we are doing in 
the context of all the other Federal programs and that would 
include looking at the definition. I think it is important for 
this Committee to look at the definition. It is not that I have 
a plan to change the definition.
    Mr. MATSUI. I think what you are driving at is a very 
critical issue, but it probably should be done in conjunction--
and I know you have mentioned Labor, you are talking to HHS--
but it has to be done in conjunction with Labor and HHS because 
obviously the issue of funding, if you try to provide adopted 
technology, for example, if you try to provide health care 
benefits, if you try to provide for short-term disability 
funds, obviously that can't come out of the Social Security 
Trust Fund, unless we have some solution to it in terms of the 
unfunded liability, because what you could be doing is 
jeopardizing the entire program by expanding the definition.
    So, the money will have to come from some other source, and 
I just wouldn't want anyone to be misled into thinking that 
there is a pot of money out there and you can expand the 
definition, take care of short-term problems and, obviously, 
health care benefits for many of these people, and at the same 
time not have to deal with the funding shortfall.
    Mr. GERRY. Well, I think that is right, Mr. Matsui. We 
have, by the way, formed a partnership as part of the 
President's New Freedom Initiative with HHS, Education, and 
Labor. So, that has been going on now for several month.
    There are some things--I mean, not that I think you are 
wrong about----
    Mr. MATSUI. No, I agree.
    Mr. GERRY. Certain short-term benefits. There are some 
things we can do right now with existing appropriations to 
integrate resources that are not being effectively used. I am 
very interested, for example, in the Work force Investment Act 
and the resources under that law which ought to be going to 
help virtually the same beneficiaries who would be affected by 
the Ticket to Work.
    If you look at the definition in the Ticket to Work 
legislation and the definition in the Work force Investment 
Act, they are pretty compatible. These are people in need of 
intensive training.
    So, what we have been talking to the Labor Department about 
is a way to better use our resources together. The same thing 
with the rehabilitation program. The same thing with youth 
transition. We have a school-to-work transition mandate in the 
Individuals With Disabilities Education Act. We have a couple 
of million beneficiaries who could be directly affected 
positively in their lives if that were a successful program. 
How can we work together?
    So, I do agree with you that to set up a new benefit 
program would certainly require new funding, but that one of 
the things we can do is, working with the existing funding, I 
think, integrate things in a much more effective way than we 
have. We are working on joint demonstrations among the 
agencies, using existing resources to try to see how we can do 
that.
    Mr. MATSUI. I think we are moving in the right direction, 
as long as we do think about where the money is going to come 
from if we expand the program substantially. Thank you.
    Mr. RYAN. I wanted to talk about privatizing Social 
Security. Just kidding.
    I really have no questions at this time. I know we have a 
long list of witnesses, and I want to get to them. When I 
looked at my schedule and came down to this hearing, I thought 
it was a third in the series on Social Security Disability 
Programs: Challenges, and Opportunities. I didn't think that we 
were talking about other topics. So, I would like to see if we 
could just stick to the topic at hand, and I yield.
    Chairman SHAW. Mr. Cardin.
    Mr. CARDIN. Thank you very much, Mr. Chairman. I would dare 
say that disability issues could rank as the number one issue 
that people in my office try to respond to constituent 
inquiries on. It is complicated. I listened to your 
explanation, and I have gone through a lot of the disability 
cases that are in our office to try to understand better what 
people in my district go through in trying to deal with the 
Social Security Administration, and it is tough. It is not easy 
to figure out.
    So, I would hope that as we try to look at disability 
definitions that meet the current times--because these 
procedures were put into place a long time ago, and times have 
changed, technologies have changed, needs have changed. I would 
hope that we would just take a look at this, and come forward 
with suggestions so that we can at least put out ways in which 
we could perhaps make the system less complicated to our 
constituents and more contemporary to the current needs, 
because I do think we can do a better job than we are doing 
currently in the process that is used by SSA in reaching these 
decisions.
    I also might say, and we haven't talked about this, is that 
there is a tremendous amount of administrative resources that 
are currently being used to try to implement these definitions. 
We all would like to streamline the administrative process so 
more money can be available for the checks that actually go out 
to the people who needs this income.
    So, I would just hope that we would look at it from that 
point of view. Instead of trying to look at something that is--
make sure we don't lose a dollar to anyone who shouldn't get 
it, and so forth, that we try to look at a system that is more 
understandable and more contemporary to the needs that are out 
there.
    Mr. GERRY. I couldn't agree with you more, and I know the 
Commissioner agrees with that. I think that it is a very good 
summary of much of what she has said about what she wants to 
accomplish. I think it is a question of service and quality.
    I think the only thing I would add, because I think it was 
an excellent summary, would be that there is a direct 
relationship there between some of our rules and policies. I am 
not talking about the statutory definition, but a lot of our 
listings and the process itself. We have tended to separate 
these two things as though the steps in the process are really 
not related to what we require to be proven, but, of course, 
they are totally related. The time that it takes in that chart 
that the Commissioner presented is influenced very much by many 
of the rules that we write about what particular information 
has to be gathered and analyzed.
    So, we want to look at those connections for the first 
time, or at least with a much greater emphasis, and be sure 
that when we require some of the evidentiary requirements that 
we have, that we understand how much time is involved and how 
much work that generates, and be sure that we really need that 
information. Because I think the goal you are talking about, 
which is really the core of client services, is foremost for 
us.
    Mr. CARDIN. I appreciate that response. Mr. Chairman, I 
would just make a suggestion that it might be useful for some 
of the staff of this Committee to talk to some of the staff 
that we have in our district offices to find out the type of 
problems that we are confronting from constituents around the 
country. It differs somewhat in different regions of the 
country, but there is a consistent theme of frustration about 
the difficulty of working through the disability system. Thank 
you, Mr. Chairman.
    Chairman SHAW. You brought up a very interesting idea. 
Perhaps at some point we should have a hearing, and each of us 
will bring up one caseworker to testify before the Committee. 
That would be a very interesting idea. Mr. Becerra.
    Mr. BECERRA. Mr. Chairman, thank you very much for holding 
this third of three hearings. Mr. Gerry, thank you very much 
for being here. I think the questions that I might wanted to 
have asked have to some degree been posed, and I appreciate the 
testimony you provided. Like Mr. Ryan, I think there are some 
other witnesses. I will withhold any further questions. Again, 
thank you. I appreciate the work that you are doing.
    Chairman SHAW. Mr. Hulshof.
    Mr. HULSHOF. No questions, Mr. Chairman.
    Chairman SHAW. Mr. Pomeroy.
    Mr. POMEROY. Briefly, Mr. Chairman. I also want to thank 
you for holding this series of hearings. I have found them most 
instructive.
    The overriding concern I pull from them is it involves 
basically our internal administrative capacity to efficiently 
or minimally competently run a national disability program. I 
have heard a statistic, and perhaps, Mr. Gerry, you can speak 
to whether it is accurate or not, that three out of four 
workers have only the Social Security disability program as a 
disability protection in the event they become incapacitated 
and unable to work. Is that correct?
    Mr. GERRY. I don't know. I would be happy to provide the 
answer for the record. However, based on what I do know, that 
seems like a reasonable estimate. I don't actually know the 
facts.
    [The information follows:]

    In the context of long-term protection for the work force as a 
whole, such as is offered by Social Security Disability Insurance, it 
is accurate to say that three out of four workers have no disability 
protection other than Social Security. According to the Bureau of Labor 
Statistics National Compensation Survey (1999), 25 percent of American 
workers have employer-provided long-term disability insurance, while 36 
percent have short-term disability insurance. Professional and 
technical employees and those working in large firms are much more 
likely than other workers to have both kinds of disability insurance.

                                 

    Mr. POMEROY. What is the average disability payment? Do you 
have that?
    Mr. GERRY. Yes. The average monthly payment for a disabled 
worker is about $814 a month. For a disabled worker with spouse 
and children, the amount would go up to $1,360 a month. That is 
last year's average, but it is going to be close this year.
    Mr. POMEROY. Social insurance as a concept is one that I 
think has enormous value, and the protection that was extended 
to American families during the six decades of Social Security 
has been extraordinarily important. As people talk about 
alternative ways to design the system, the focus on maximum 
optimal hoped-for investment return seems to me to totally 
leave off the table notions of the social insurance functions 
of the disability program.
    I think that when we construct a social insurance program, 
or I mean as we evaluate the effectiveness of the Social 
insurance program, it is important to make certain that we are 
having a benefit level that meets people's needs minimally but 
does not present the moral hazard of almost inducing trying to 
obtain disability status rather than employment. At this 
benefit structure, it seems to me that we are about there. We 
meet minimum needs, but we do not incent people not to work to 
try and obtain disability status. Do you have an opinion on 
that?
    Mr. GERRY. Well, I would say that if you just looked at the 
average monthly benefit it would be misleading, because you 
also have the other things added. Health insurance, for 
example, is an enormous factor that influences people's 
decisions. There are people, for example, who would lose 
eligibility for health insurance if they worked, because they 
might well take a job that doesn't have health benefits. I 
don't mean to suggest that everybody sits and calculates to the 
last penny before they make these decisions, because I think 
there are many people who work even though it is a 
disadvantage.
    The health insurance part is an important part of that. I 
have been a lawyer for significant numbers of disabled people 
who have tried to wrestle with these questions and families 
that have tried to wrestle with them, and the health benefit 
issue is a very important one. That often is more important 
than the cash payments. So, that is the one big thing I would 
add to that, to the question of how the incentives work.
    Then second, we have not looked, I think, comprehensively 
at the question of how there are different populations of 
people within the disability community. The problem is disabled 
people are not all alike at all. So, there are some groups of 
people that need certain kinds of supports. I think this is 
where the New Freedom Initiative and the Americans With 
Disabilities Act may be crucial, and the availability of 
transportation and housing. If they are not available, which 
they sometimes are not, that may be even more of a disincentive 
than cash. So, I don't mean to argue with your premise, because 
I think you are right about the dollar amount, but I think it 
is complicated with respect to what leads people.
    I think our process right now, which takes a very long 
time, contributes to some of this. I am very concerned about 
not only the length of time of the process but the backlogs 
that we are encountering. I think the truth is that when people 
have to argue and go on for 4 or 5 years, trying to make the 
case that they are disabled, when we then talk about the Ticket 
to Work or we talk about other initiatives to try to get them 
to work, psychologically we have spent an awful long time 
having them prove to us that they can't work.
    So, I think the process, the length of time of the process, 
the complexity of the process, doesn't help in terms of people 
deciding to work or not work.
    Mr. POMEROY. I found those answers to be very interesting. 
Thank you.
    Chairman SHAW. I would like to follow up on Mr. Pomeroy's 
question with just one question, and then we will go on to the 
next panel. By how much or how far did the Ticket to Work 
legislation go toward helping those folks out that wouldn't go 
to work because they were losing their insurance, their health 
insurance?
    Mr. GERRY. I think it made a significant positive 
contribution to that.
    Chairman SHAW. Did it go far enough?
    Mr. GERRY. Well, not all of the States have obviously 
implemented all of the options that are presented. I don't 
think we know yet. I mean, to be quite honest, we are finishing 
the rollout of the first phase.
    Chairman SHAW. It would be helpful if you could give us an 
analysis of that, together with a look at each one of the 
States, because I think that was a very forward-looking piece.
    Mr. GERRY. Chairman, all of the States, or the ones that 
are in the----
    Chairman SHAW. Well, the ones that you think haven't gone 
far enough. Perhaps we can correspond with them and see what 
their problem is.
    Mr. GERRY. I will provide that for the record.
    [The information follows:]

    The Ticket to Work and Work Incentive Improvement Act of 1999 
provided several enhancements to health care for working individuals. 
The Department of Health and Human Services, through the Centers for 
Medicare and Medicaid Services (CMS), administers these health care 
provisions. SSA actively works with CMS in support of these 
enhancements. It is too early to say whether the legislation will be 
successful in preventing disabled individuals from losing their health 
insurance when they return to work and too early to judge how the 
individual States are faring in this regard. We can, however, describe 
the health care enhancements and the actions taken by the States to 
implement them. Two enhancements (section 112 Expedited Reinstatement 
and section 202 Expanded Medicare Coverage) are not State-based.

Expedited Reinstatement (Section 112)

           LIf an individual returns to work, has benefits 
        terminated, and then finds that he/she can no longer work 
        because of the previous (or a related) impairment, cash 
        benefits and Medicare and/or Medicaid can be quickly 
        reinstated. The work stoppage and application must occur within 
        five years of the prior benefit termination.

Expanding  State  Options  under  the  Medicaid  Program  for  Workers  
with




                       Disabilities (Section 201)



           LThis is an expansion of the Balanced Budget Act 
        (BBA) 1997.
             LThe BBA gave States the option to provide Medicaid 
        coverage to individuals with disabilities whose earnings were 
        too high to qualify under existing rules.
             LNet earnings had to be below 250% of the poverty 
        level.
           LSection 201 removed the 250% poverty limit on 
        earnings, so now States have the option to provide Medicaid 
        coverage to even more working people with disabilities.
           LStates can set their own income and resources 
        limits to allow working individuals with disabilities who are 
        at least 16 but less than 65 years old to buy into Medicaid.
           LStates have the option to provide opportunity for 
        employed individuals with a medical improved disability to buy 
        in Medicaid.
           LStates may require such individuals to pay premiums 
        or other cost-sharing charges.
           L21 States have CMS approved plans in place.
           L2 more have a plan pending approval from CMS.
           LThe following identifies the status of States' 
        implementation of this option of the BBA:
             LState Plans with CMS approval: Alaska, Arkansas, 
        California, Connecticut, Iowa, Kansas, Maine, Minnesota, 
        Mississippi, Nebraska, New Hampshire, New Jersey, New Mexico, 
        Oregon, Pennsylvania, South Carolina, Utah, Vermont, 
        Washington, and Wisconsin. Massachusetts has an 1115 waiver 
        plan, which is similar to the Medicaid buy-in option (21 
        total).
             LState plans pending CMS approval: Missouri and 
        Wyoming (2 total).

Extension of Medicare Coverage (Section 202)

           LEffective October 1, 2000, Medicare coverage was 
        extended an additional 4\1/2\ years for working individuals 
        with disabilities.
           LMedicare coverage continues at least 93 months 
        after the TWP for most beneficiaries compared to the previous 
        39 months.
           LSSA identified approximately 42,200 beneficiaries 
        who were eligible for this extension on October 1, 2000 and 
        mailed ``Good News'' notices in March 2000 to these 
        individuals--SSDI beneficiaries who were closest to termination 
        of their Medicare.
           LSSA made system changes, modified notice language, 
        provided training, and released operational procedures on or 
        before the effective date.
           LApproximately 52,000SSDI beneficiaries either have 
        or had Extended Medicare coverage under TWWIIA (records 
        selected from the effective date October 1, 2000 and later). As 
        of July 2002, the estimated number of potential Extended 
        Medicare coverage cases is approximately 115,000.
           LMost SSDI recipients can return to work without 
        fear of losing free Hospital Insurance for many years but still 
        have to pay monthly SMI premium unless paid for by a third 
        party).

Grants to Develop and Establish State Infrastructures (Section 203)

           LStates can be awarded grants to support 
        infrastructures that provide services to working individuals 
        with disabilities.
           LThe goal is for States to support people with 
        disabilities in sustaining employment by modifying their health 
        care systems to meet the needs of those individuals.
             LExamples of State activities: implement Medicaid 
        buy-in program; improve personal care assistance services and 
        programs; educate providers and consumers; create links to 
        employment services.
           L38 States have been awarded infrastructure grants 
        so far.
           LCMS recently solicited proposals from States to 
        develop infrastructure grants for 2003. The application cut off 
        date was June 1, 2002. Applications are pending approval.

Demonstration of Coverage under the Medicaid Program (Section 204)

           LThis allows a State to apply for approval of a 
        demonstration project under which specific individuals who are 
        workers with a potentially severe disability are provided 
        medical assistance.
           LThese projects are called the ``Demonstration to 
        Maintain Independence and Employment.''
           LThis will also allow a State to target a specific 
        population to provide services for a specified number of 
        individuals to manage the progression of their conditions and 
        remain employed.
           LFour States are participating in this project: Both 
        Washington D.C. and Mississippi for 500 individuals with HIV/
        AIDS, Rhode Island for 100 individuals with Multiple Sclerosis, 
        and Texas for 500 individuals with bipolar/schizophrenia.
           LCMS recently solicited proposals from States to 
        develop demonstration projects for 2003. The application cut 
        off date was June 1, 2002. Applications are pending CMS 
        approval.

                                 

    Chairman SHAW. Thank you very much, sir.
    Mr. GERRY. Thank you.
    Chairman SHAW. I appreciate your testimony, and I am glad 
you brought that up. The next witnesses--Mr. Gerry, you may 
want to stay around to listen to Mr. Robertson. Well, you may 
not, too; I don't know. You are invited to stay around.
    Mr. GERRY. Thank you.
    Chairman SHAW. Robert Robertson is Director of Education, 
Work force, and Income Security Issues at the General 
Accounting Office; and Sarah Mitchell, who is the Chair of the 
Ticket to Work and Work Incentive Advisory Boards, whom we have 
already given very good info to, I think, with the last 
questions that Mr. Pomeroy opened up. Welcome to both of you. 
We have your full testimony which will be made a part of 
record, and you may proceed as you see fit. Mr. Robertson, you 
are on.

    STATEMENT OF ROBERT E. ROBERTSON, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Mr. ROBERTSON. Mr. Chairman, Members of the Subcommittee, 
thank you for inviting me to chat a little bit about the Social 
Security Administration's definition of disability. I do have a 
live mike here, I hope.
    I just want to make three points this morning. The first 
point is, and I will admit right off the bat that this is 
stating the obvious, but sometimes that is a good thing to do. 
My first point is that the world has changed since the DI and 
SSI Programs were first initiated back in the fifties and 
seventies respectively. Over the years, scientific advances, 
changes in the nature of work, and social changes have 
generally enhanced the potential of people with disabilities to 
work. More specifically, medical advancements such as organ 
transplantations, assistive technologies such as advances in 
wheelchair designs, have given more independence to some 
individuals; and, at the same time, the move from a 
manufacturing-based economy to a service--and knowledge-based 
type of economy has opened new opportunities for people with 
disabilities.
    Finally, social changes have altered the expectations for 
people with disabilities. The Americans With Disabilities Act, 
for example, has fostered the expectation that people with 
disabilities can work and have the right to work.
    The potential implication of all of these changes to the 
Nation's disability programs really cut to the very heart of 
the questions that are the focus of this Committee's meeting 
this morning. In other words, to what extent do the current 
disability programs and, in particular, the criteria that 
govern the disability decisions within those programs, reflect 
these rather significant medical, economic, and social changes?
    Now, that leads to my second major point, which is simply 
that, as has been referred to earlier in this hearing, in our 
view, the DI and SSI disability criteria have not kept pace 
with these advances and changes. As you are aware, depending on 
a claimant's impairment, decisions about an individual's 
eligibility for disability benefits can be based on both 
medical and labor market criteria. SSA is in the midst of an 
effort that began in the early nineties to update the medical 
portion of its criteria; however, progress has been slow. The 
SSA doesn't expect to complete developing proposed changes 
until the end of 2003. Furthermore, even if the criteria were 
fully updated, the program as currently designed by statute and 
regulation does not require SSA employees to consider possible 
effects that new treatments or assistive technologies could 
have on the claimant's ability to work, unless a physician has 
already prescribed the treatment. As a result, treatments that 
could help restore function in some people with certain 
impairments may not be factored into the disability decision. 
Now, with respect to the labor market portion of the disability 
criteria, SSA is currently using outdated information about the 
types and demands of jobs in the economy. It currently relies 
upon a database of occupational listings that haven't been 
updated since 1991.
    Now I am to my third and final point--actually this is a 
series of points. They all fall under the general category of 
where do we go from here? How do we incorporate the medical 
advances, the labor market, and societal changes that I have 
been talking about into the program's disability criteria? The 
short answer is that some steps can be taken within the 
existing program design, while others would require more 
fundamental changes. Within the context of the current 
statutory and regulatory framework, SSA will need to continue 
to update the medical portion of the disability criteria and 
then vigorously expand its efforts to examine labor market 
changes.
    However, in addition, policymakers and Agency officials 
should look beyond the traditional concepts that underlie the 
DI and SSI Programs to reexamine the very core of Federal 
disability programs, including looking at the eligibility 
standards, benefit structures, and the return to work 
assistance. This would be done with a focus on taking advantage 
of the medical, economic, and social changes that we have been 
talking about. This would include maximizing opportunities to 
work in today's environment, while providing financial support 
when and where it is needed.
    However, before these fundamental changes can be 
considered, policymakers need critical information on various 
policy options, including what works, what needs to be 
fundamentally reoriented, and the cost of such changes. These 
hearings provide a means to explore possible program design 
changes and to identify the information and research that is 
necessary to evaluate the potential impact of these changes.
    Mr. Chairman, that concludes my prepared statement. I will 
be happy to answer questions at the appropriate time.
    [The prepared statement of Mr. Robertson follows:]
 Statement of Robert E. Robertson, Director, Education, Workforce, and 
         Income Security Issues, U.S. General Accounting Office
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me here to testify during your hearing on 
the definition of disability used by the Social Security Administration 
(SSA) in the Disability Insurance (DI) and Supplemental Security Income 
(SSI) programs. Since these programs began, much has changed and 
continues to change in the arenas of medicine, technology, the economy, 
and societal views and expectations of people with disabilities. These 
changes have generally enhanced the potential of people with 
disabilities to work as well as the kinds of jobs that are available. 
Moreover, these programs have grown. In 2001, SSA provided $73.2 
billion in cash benefits to 8.8 million working-age adults. With such 
an extensive cash outlay and such a large beneficiary population, it is 
important to use updated scientific and economic information to 
evaluate claims for disability benefits.
    Today I will discuss the results of our examination of SSA's 
efforts to update the disability criteria the agency uses to make 
eligibility decisions for DI and SSI benefits. I will focus my remarks 
on (1) the scientific advances, economic changes, and social changes 
that have occurred in recent years that relate to the disability 
criteria used in DI and SSI eligibility decisions, (2) the extent that 
DI and SSI disability criteria have been updated to reflect these 
changes, and (3) the implications of fully incorporating scientific 
advances, economic changes, and social changes into the DI and SSI 
disability criteria and program design. To develop this information, we 
reviewed agency documents, SSA's advisory board reports, our prior 
reports, and other literature. In addition, we interviewed agency 
officials and several experts in the field.
    In summary, first we found that scientific advances, changes in the 
nature of work, and social changes have generally enhanced the 
potential for people with disabilities to work. Medical advancements, 
such as organ transplantations, and assistive technologies, such as 
advances in wheelchair design, have given more independence to some 
individuals. At the same time, a service--and knowledge-based economy 
has opened new opportunities for people with disabilities, while social 
changes, reflected in the Americans with Disabilities Act, have 
fostered the expectation that people with disabilities can work and 
have the right to work. Second, we found that DI and SSI disability 
criteria have not kept pace with these advances and changes. Depending 
on the claimants' impairment, decisions about an individual's 
eligibility for disability benefits can be based on both medical and 
labor market criteria. SSA is in the midst of an effort to update the 
medical portion of the disability criteria, but the pace is slow. 
However, even if the criteria were fully updated, the program as 
currently designed does not require SSA employees to consider the 
possible effect that treatments or assistive technologies could have on 
a claimant's ability to work, unless a physician has already prescribed 
the treatment. Moreover, with respect to the labor market portion of 
the disability criteria, SSA is using outdated information about the 
types and demands of jobs in the economy.
    Finally, regarding the implications for incorporating the advances 
and changes into the programs' disability criteria, some steps can be 
taken within the existing program design and some would require more 
fundamental changes. Within the context of the current statutory and 
regulatory framework, SSA will need to continue to update the medical 
portion of the disability criteria and vigorously expand its efforts to 
examine labor market changes. However, in addition, policymakers and 
agency officials could look beyond the traditional concepts that 
underlie the DI and SSI programs to re-examine the core of federal 
disability programs--including eligibility standards, the benefits 
structure, and return-to-work assistance--with a focus on taking 
advantage of the medical, economic, and social changes. This would 
include maximizing opportunities to work in today's environment, while 
providing financial support when and where it is needed. To do so, they 
need critical information on various policy options, including what 
works, what needs to be fundamentally re-oriented, and the cost of such 
changes. To this end, approaches taken from the private disability 
insurers and other countries offer useful insights.
Background
    Established in 1956, DI is an insurance program that provides 
benefits to workers who are unable to work because of severe long-term 
disability. In 2001, DI provided $54.2 billion in cash benefits to 6.1 
million disabled workers.\1\ Workers who have worked long enough and 
recently enough are insured for coverage under the DI program. DI 
beneficiaries receive cash assistance and, after a 24-month waiting 
period, Medicare coverage. Once found eligible for benefits, disabled 
workers continue to receive benefits until they die, return to work and 
earn more than allowed by program rules, are found to have medically 
improved to the point of having the ability to work, or reach full 
retirement age (when disability benefits convert to retirement 
benefits).\2\ To help ensure that only eligible beneficiaries remain on 
the rolls, SSA is required by law to conduct continuing disability 
reviews for all DI beneficiaries to determine whether they continue to 
meet the disability requirements of the law.
---------------------------------------------------------------------------
    \1\ Included among the 6.1 million DI beneficiaries are about 1.1 
million beneficiaries who were dually eligible for SSI disability 
benefits because of the low level of their income and resources.
    \2\ Fewer than one-half of 1 percent of DI beneficiaries, and about 
1 percent of SSI beneficiaries, leave the rolls each year because they 
are working.
---------------------------------------------------------------------------
    SSI, created in 1972, is an income assistance program that provides 
cash benefits for disabled, blind, or aged individuals who have low 
income and limited resources. In 2001, SSI provided $19 billion in 
federal cash benefits to 3.8 million disabled and blind individuals age 
18-64. Unlike the DI program, SSI has no prior work requirement. In 
most cases, SSI eligibility makes recipients eligible for Medicaid 
benefits. SSI benefits terminate for the same reasons as DI benefits, 
although SSI benefits also terminate when a recipient no longer meets 
SSI income and resource requirements (SSI benefits do not convert to 
retirement benefits when the individual reaches full retirement age). 
The law requires that continuing disability reviews be conducted for 
some SSI recipients for continuing eligibility.
    The Social Security Act's definition of disability for adults under 
DI and SSI is the same: an individual must have a medically 
determinable physical or mental impairment that (1) has lasted or is 
expected to last at least 1 year or to result in death and (2) prevents 
the individual from engaging in substantial gainful activity.\3\ 
Moreover, the definition specifies that for a person to be determined 
to be disabled, 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 that exists in the national economy.
---------------------------------------------------------------------------
    \3\ Regulations currently define substantial gainful activity for 
both the DI and SSI programs as employment that produces countable 
earnings of more than $780 a month for nonblind disabled individuals. 
The substantial gainful activity level is indexed to the annual wage 
index. The level for DI blind individuals, set by statute and also 
indexed to the annual wage index, is currently defined as monthly 
countable earnings that average more than $1,300.
---------------------------------------------------------------------------
    SSA regulations and guidelines provide further specificity in 
determining eligibility for DI and SSI benefits. For instance, SSA has 
developed the Listing of Impairments (the Medical Listings) to describe 
medical conditions that SSA has determined are severe enough ordinarily 
to prevent an individual from engaging in substantial gainful activity. 
SSA has also developed a procedure to assess applicants who do not have 
an impairment that meets or equals the severity of the Medical 
Listings. The procedure helps determine whether an applicant can still 
perform work done in the past or other work that exists in the national 
economy. While not expressly required by law to update the criteria 
used in the disability determination process, SSA has stated that it 
would update them to reflect current medical criteria and terminology. 
Over the years, SSA has periodically taken steps to update its Medical 
Listing. The last general update to the Medical Listing occurred in 
1985.
    In 2000, the most common impairments among DI's disabled workers 
were mental disorders and musculoskeletal conditions (see fig.1). These 
two conditions also were the fastest growing conditions since 1986, 
increasing by 7 and 5 percentage points, respectively.
LFigure 1: Percentage Distribution of DI Disabled Workers by Impairment 
        Categories, 2000




        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
    Source: Annual Statistical Supplement to the Social Security 
Bulletin, 2001.
    In 2000, the most common impairments among the group of SSI blind 
and disabled adults age 18-64 were mental disorders and mental 
retardation (see fig. 2). Mental disorders was the fastest growing 
condition among this population since 1986, increasing by 9 percentage 
points.
LFigure 2: Percentage Distribution of SSI Adult Disabled Recipients by 
        Impairment Categories, 2000



        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
    Source: Annual Statistical Supplement to the Social Security 
Bulletin, 2001
LRecent Advances and Changes in Science, Work, and Society Have 
        Enhanced Potential among People with Disabilities
    Scientific advances, changes in the nature of work, and social 
changes have generally enhanced the potential for people with 
disabilities to work. Medical advancements and assistive technologies 
have given more independence to some individuals. Moreover, the economy 
has become more service- and knowledge-based, presenting both 
opportunities and some new challenges for people with disabilities. 
Finally, social changes have altered expectations for people with 
disabilities. For instance, the Americans with Disabilities Act fosters 
the expectation that people with disabilities can work and have the 
right to work.
Medical and Technological Advances Lead to Better Understanding and 
        Treatments
    Recent scientific advances in medicine and assistive technology and 
changes in the nature of work and the types of jobs in our national 
economy have generally enhanced the potential for people with 
disabilities to perform work-related activities. Advances in medicine 
have led to a deeper understanding of and ability to treat disease and 
injury. Medical advancements in treatment (such as organ 
transplantations), therapy, and rehabilitation have reduced the 
functional limitations of some medical conditions and have allowed 
individuals to live and work with greater independence. Also, assistive 
technologies--such as advanced wheelchair design, a new generation of 
prosthetic devices, and voice recognition systems--afford greater 
capabilities for some people with disabilities than were available in 
the past.
Changes in the Nature of Work and Economy Expand Opportunities
    At the same time, the nature of work has changed in recent decades 
as the national economy has moved away from manufacturing-based jobs to 
service--and knowledge-based employment. In the 1960s, earning capacity 
became more related to a worker's skills and training than to his or 
her ability to perform physical labor. Following World War II and the 
Korean Conflict, advancements in technology, including computers and 
automated equipment, reduced the need for physical labor. The goods-
producing sector's share of the economy--mining, construction, and 
manufacturing--declined from about 44 percent in 1945 to about 18 
percent in 2000. The service-producing industry's share, on the other 
hand--such areas as wholesale and retail trade; transportation and 
public utilities; federal, state and local government; and finance, 
insurance, and real estate--increased from about 57 percent in 1945 to 
about 72 percent in 2000.
    Although there may be more an individual with a disability can do 
in today's world of work than was available when the DI and SSI 
programs were first designed, today's work world is not without 
demands. Some jobs require standing for long hours, and other jobs, 
such as office work, require social abilities. These characteristics 
can pose particular challenges for some persons with certain physical 
or mental impairments. Moreover, other trends--such as downsizing and 
the growth in contingent workers--can limit job security and benefits, 
like health insurance, that most persons with disabilities require for 
participation in the labor force. Whether these changes make it easier 
or more difficult for a person with a disability to work appears to 
depend very much on the individual's impairment and other 
characteristics, according to experts.
Social Changes Promote Inclusion of People with Disabilities
    Social change has promoted the goals of greater inclusion of and 
participation by people with disabilities in the mainstream of society, 
including adults at work. For instance, over the past 2 decades, people 
with disabilities have sought to remove environmental barriers that 
impede them from fully participating in their communities. Moreover, 
the Americans with Disabilities Act supports the full participation of 
people with disabilities in society and fosters the expectation that 
people with disabilities can work and have the right to work. The 
Americans with Disabilities Act prohibits employers from discriminating 
against qualified individuals with disabilities and requires employers 
to make reasonable workplace accommodations unless it would impose an 
undue hardship on the business.
LSSA Has Not Fully Updated Disability Criteria to Reflect These 
        Advances and Changes
    The disability criteria used in the DI and SSI disability programs 
to help determine who is qualified to receive benefits have not been 
fully updated to reflect these advances and changes. SSA is currently 
in the midst of a process that began around the early 1990s to update 
the medical criteria they use to make eligibility decisions, but the 
progress is slow. Moreover, some changes resulting from treatment 
advances and assistive technologies are not fully incorporated into the 
decision-making process due to program design. In addition, the 
disability criteria have not incorporated labor market changes. In 
determining the effect that impairments have on individuals' earning 
capacity, SSA continues to use outdated information about the types and 
demands of jobs in the economy.
Slow Process to Update Medical Criteria Jeopardizes Progress Already 
        Made
    SSA's current effort to update the disability criteria began in the 
early 1990s. Between 1991 and 1993, SSA published for public comment 
the changes it was proposing to make to 7 of the 14 body systems in its 
Medical Listings.\4\ By 1994, the proposed changes to 5 of these 7 body 
systems were finalized. The agency's efforts to update the Medical 
Listings were curtailed in the mid-1990s due to staff shortages, 
competing priorities, and lack of adequate research on disability 
issues.
---------------------------------------------------------------------------
    \4\ Our analysis excludes SSA's changes to the childhood-related 
Medical Listings.
---------------------------------------------------------------------------
    SSA resumed updating the Medical Listings in 1998.\5\ Since then, 
SSA has taken some positive steps in updating portions of the medical 
criteria it uses to make eligibility decisions, although progress is 
slow. As of early 2002, SSA has published the final updated criteria 
for 1 of the 9 remaining body systems not updated in the early 1990s 
(musculoskeletal) and a portion of a second body system (mental 
disorders). SSA also plans to update again the 5 body systems that were 
updated in the early 1990s. In addition, SSA has asked the public to 
comment on proposed changes for several other body systems. After 
reviewing the schedule and timing for the revisions, SSA recently 
pushed back the completion date for publishing proposed changes for all 
remaining body systems to the end of 2003.\6\ The revised schedule does 
not list target dates, with one exception, for submitting changes for 
final clearance to the Office of Management and Budget.
---------------------------------------------------------------------------
    \5\ To conduct the current update, SSA gathers feedback on relevant 
medical issues from state officials who help the agency make disability 
decisions. In addition, SSA has in-house expertise to help the agency 
keep abreast of the medical field and identify aspects of the medical 
criteria that need to be changed. SSA staff develop the proposed 
changes and forward them for internal, including legal and financial, 
review. Next, SSA publishes the proposed changes in the Federal 
Register and solicits comments from the public for 60 days. SSA 
considers the public comments, makes necessary adjustments, and 
publishes the final changes in the Federal Register.
    \6\ Social Security Administration, ``Semiannual Unified Regulatory 
Agenda,'' Federal Register 67, no. 92 (13 May 2002): 34016--34038.
---------------------------------------------------------------------------
    SSA's slow progress in completing the updates could undermine the 
purpose of incorporating medical advances into its medical criteria. 
For example, the criteria for musculoskeletal conditions--a common 
impairment among persons entering DI--were updated in 1985. Then, in 
1991, SSA began developing new criteria and published its proposed 
changes in 1993 but did not finalize the changes until 2002; therefore, 
changes made to the musculoskeletal criteria in 2002 were essentially 
based on SSA's review of the field in the early 1990s. SSA officials 
told us that in finalizing the criteria, they reviewed the changes 
identified in the early 1990s and found that little had taken place 
since then to warrant changes to the proposed criteria. However, given 
the advancements in medical science since 1991, it may be difficult for 
SSA to be certain that all applicable medical advancements are in fact 
included in the most recent update.
LAlthough Changes Have Been Made, Treatment Advances and Assistive 
        Technologies Are Not Fully considered in Decision-Making
    SSA has made various types of changes to the Medical Listings thus 
far. As shown in table 1, these changes, including the proposed changes 
released to the public for comment, add or delete qualifying 
conditions; modify the criteria for certain physical or mental 
conditions; and clarify and provide additional guidance in making 
disability decisions.

 Table 1. Types of Changes Made (or Proposed) to SSA's Medical Listings
                          during Current Update
------------------------------------------------------------------------
         Type of Change                Examples           Rationales
------------------------------------------------------------------------
Revise qualifying conditions      Remove peptic       Advances in
                                   ulcer.a             medical and
                                                       surgical
                                  Add inflammatory     management have
                                   bowel disease by    reduced severity.
                                   combining two
                                   existing           Reflect advances
                                   conditions          in medical
                                   already listed:     terminology.
                                   chronic
                                   ulcerative and
                                   regional
                                   enteritis.
------------------------------------------------------------------------
Revise evaluation and diagnostic  Expand the types    The Medical
 criteria                          of allowable        Listings
                                   imaging             previously
                                   techniques.         referred to x-ray
                                                       evidence. With
                                  Reduce from three    advancements in
                                   to two in the       imaging
                                   number of           techniques, SSA
                                   difficulties that   will also accept
                                   must be             evidence from,
                                   demonstrated to     for example,
                                   meet the listings   computerized
                                   for a personality   axial tomography
                                   disorder.b          (CAT) scan and
                                                       magnetic
                                                       resonance imaging
                                                       (MRI) techniques.

                                                      Specific rationale
                                                       not mentioned.
------------------------------------------------------------------------
Clarify and provide additional    Remove discussion   Distinction not
 guidance                          on distinction      necessary to
                                   between primary     adjudicate
                                   and secondary       disability claim.
                                   digestive
                                   disorders          Clarify that the
                                   resulting in        term refers to
                                   weight loss and     joint deformity
                                   malnutrition.       due to any cause.

                                  Expand guidance
                                   about
                                   musculoskeletal
                                   ``deformity.''
------------------------------------------------------------------------
a A condition removed from the Medical Listings means that SSA no longer
  presumes the condition to be severe enough to ordinarily prevent an
  individual from engaging in substantial gainful activities. However,
  an individual with a condition removed from the Medical Listing could
  still be found eligible under other considerations in the evaluation
  process.
b The criteria for a personality disorder are met when (a) the
  individual has certain behaviors defined in the Medical Listings and
  (b) those behaviors result in at least two of the following: (1)
  marked restriction of activities in daily living; (2) marked
  difficulties in maintaining social functioning; (3) marked
  difficulties in maintaining concentration, persistence, or pace; or
  (4) repeated episodes of decompensation (as specified in the Medical
  Listings).

    Source: GAO analysis of SSA publications appearing in the Federal 
Register.

    Despite these changes, program design issues have limited the 
extent that advances in medicine and technology have been incorporated 
into the DI and SSI disability decision-making criteria. The statutory 
and regulatory design of these programs limits the role of treatment in 
deciding who is disabled. Unless an individual has been prescribed 
treatment,\7\ SSA does not consider the possible effects of treatment 
in the disability decision, even if the treatment could make the 
difference between being able and not being able to work. Thus, 
treatments that can help restore functioning to persons with certain 
impairments may not be factored into the disability decision for some 
applicants. For example, medications to control severe mental illness, 
arthritis treatments to slow or stop joint damage, total hip 
replacements for severely injured hips, and drugs and physical 
therapies to possibly improve the symptoms associated with multiple 
sclerosis are not automatically factored into SSA's decision making for 
determining the extent that impairments affect people's ability to 
work. Additionally, this limited approach to treatment raises an equity 
issue: Applicants whose treatment allows them to work could be denied 
benefits while applicants with the same condition who have not been 
prescribed treatment could be allowed benefits.
---------------------------------------------------------------------------
    \7\ SSA's regulations require that in order to receive benefits, 
claimants must follow treatment prescribed by the individual's 
physician if the treatment can restore his or her ability to work. SSA, 
however, does not consider the effects of treatment that has been 
prescribed but not received under certain circumstances, such as when 
the treatment is contrary to the established teaching and tenets of the 
individual's religion.
---------------------------------------------------------------------------
    As with treatment, the benefits of innovations in assistive 
technologies--such as advanced prosthetics and wheelchair designs--have 
not been fully incorporated into DI and SSI disability criteria because 
the design of these programs does not recognize these advances in 
disability decision making. For example, SSA does not require an 
applicant who lost a hand to use a prosthetic before the agency makes 
its decision about the impact of this condition on the ability to 
engage in substantial gainful activities.
Disability Criteria Not Updated to Reflect Labor Market Changes
    For an applicant who does not have an impairment that meets or 
equals the severity of the Medical Listings, SSA evaluates whether the 
individual is able to work despite his or her limitations. 
Specifically, an individual who is unable to perform his or her 
previous work and other work in the labor market is awarded benefits. 
SSA relies upon the Department of Labor's Dictionary of Occupational 
Titles (DOT) as its primary database to help make this determination. 
However, Labor has not updated DOT since 1991 and does not plan to do 
so.
    Although Labor has been working on a replacement for the DOT called 
the Occupational Information Network (O*NET) since 1993, Labor and SSA 
officials recognize that O*NET cannot be used in its current form in 
the DI and SSI disability determination process. The O*NET, for 
example, does not contain SSA-needed information on the amount of 
lifting or mental demands associated with particular jobs. The agencies 
have discussed ways that O*NET might be modified or supplemental 
information collected to meet SSA's needs, but no definitive solution 
has been identified. Absent such changes to the O*NET, SSA officials 
have indicated that an entirely new occupational database could be 
needed to meet SSA's needs, but such an effort could take many years to 
develop, validate, and implement. Meanwhile, as new jobs and job 
requirements evolve in the national economy, SSA's reliance upon an 
outdated database further distances the agency from the current market 
place.
LIncorporating Advances and Changes into the Disability Criteria Could 
        Have Profound Implications
    In order to incorporate the medical, economic, and social advances 
and changes into the programs' disability criteria, some steps can be 
taken within the existing program design, while others would require 
more fundamental changes. Within the context of the current statutory 
and regulatory framework, SSA will need to continue to update the 
medical portion of the disability criteria and vigorously expand its 
efforts to examine labor market changes. However, in addition, 
policymakers and agency officials could look beyond the traditional 
concepts that underlie the DI and SSI programs to re-examine the core 
elements of federal disability programs. This broader approach would 
raise a number of significant policy issues, and more information is 
needed to address them. To this end, approaches taken by private 
disability insurers offer useful insights.
Some Disability Criteria Could Be Updated Within Program Design
    Within the context of the programs' existing statutory and 
regulatory design, SSA will need to further incorporate advances and 
changes in medicine and the labor market. That is, SSA should continue 
to update the criteria used to determine which applicants have physical 
and mental conditions that limit their ability to work. As we noted 
above, SSA began this type of update in the early 1990s, although the 
agency's efforts have focused much more on the medical portion than 
labor market issues. In addition to continuing the medical updates, SSA 
will need to vigorously expand its efforts to more closely examine 
labor market changes. SSA's results could yield updated information 
used to make decisions about whether or not applicants have the ability 
to perform their past work or any work that exists in the national 
economy.
Fully Incorporating Advances and Changes Has Profound Implications on 
        Program Design
    More fundamentally, the recent scientific advances and labor market 
changes discussed earlier raise issues about the programs' basic 
design, goals, and orientation in an economy increasingly different 
from that which existed when these programs were first designed. 
Whereas the programs currently are grounded in assessing and providing 
benefits based on individuals' incapacities, fully incorporating recent 
advances and changes could result in SSA assessing individuals with 
physical and mental conditions with a focus on their capacity to work 
and then providing them with, or helping them obtain, needed assistance 
to improve their capacity to work. Moreover, reorienting programs in 
this direction is consistent with increased expectations of people with 
disabilities and the integration of people with disabilities into the 
workplace, as reflected in the Americans with Disabilities Act. We have 
recommended in prior reports that SSA place a greater priority on work, 
design more effective means to more accurately identify and expand 
beneficiaries' work capacities, and develop legislative packages for 
those areas where the agency does not have legislative authority to 
enact change. However, for people with disabilities who do not have a 
realistic or practical work option, long-term cash support would remain 
the best option.
    In reexamining the fundamental concepts underlying the design of 
the DI and SSI programs, approaches used by other disability programs 
may offer some valuable insights. For example, our prior review of 
three private disability insurers shows that they have fundamentally 
reoriented their disability systems toward building the productive 
capacities of people with disabilities, while not jeopardizing the 
availability of cash benefits for people who are not able to return to 
the labor force.\8\ These systems have accomplished this reorientation 
while using a definition of disability that is similar to that used by 
SSA's disability programs.\9\ However, it is too early to fully measure 
the effect of these changes. In these private disability systems, the 
disability eligibility assessment process evaluates a person's 
potential to work and assists those with work potential to return to 
the labor force. This process of identifying and providing services 
intended to enhance a person's productive capacity occurs early after 
disability onset and continues periodically throughout the duration of 
the claim. In contrast, SSA's eligibility assessment process encourages 
applicants to concentrate on their incapacities, and return-to-work 
assistance occurs, if at all, only after an often lengthy process of 
determining eligibility for benefits. SSA's process focuses on deciding 
who is impaired sufficiently to be eligible for cash payments, rather 
than on identifying and providing the services and supports necessary 
for making a transition to work for those who can. While cash payments 
are important to individuals, the advances and changes discussed in 
this testimony suggest the option to shift the disability programs' 
priorities to focus more on work.
---------------------------------------------------------------------------
    \8\ U.S. General Accounting Office, SSA Disability: Other Programs 
May Provide Lessons for Improving Return-to-Work Efforts, GAO-01-153 
(Washington, D.C.: Jan. 12, 2001). This report also addresses the 
reorientation of the social insurance systems of Sweden and The 
Netherlands toward a return-to-work focus. In addition, this report 
addresses the German social insurance system, which has had a long-
standing focus on the goal of rehabilitation before pension.
    \9\ In general, for the three private insurers that we studied, 
claimants are initially considered eligible for disability benefits 
when, because of injury or sickness, they are limited in performing the 
essential duties of their own occupation and they earn less than 60 to 
80 percent of their predisability earnings, depending upon the 
particular insurer. After 2 years, this definition generally shifts 
from an inability to perform one's own occupation to an inability to 
perform any occupation for which the claimant is qualified by 
education, training, or experience. It is this latter definition that 
is most comparable to the definition used by SSA.
---------------------------------------------------------------------------
    Reorienting the DI and SSI programs would have implications on 
their core elements--eligibility standards, the benefits structure, and 
the access to and cost of return-to-work assistance. We recognize that 
re-examining the programs at the broader program level raises a number 
of profound policy questions, including the following:

           LProgram design and benefits offered--Would the 
        definition of disability change? Would some beneficiaries be 
        required to accept assistance to enhance work capacities as a 
        precondition for benefits versus relying upon work incentives, 
        time-limited benefits, or other means to encourage individuals 
        to maximize their capacity to work? What can SSA accomplish 
        through the regulatory process and what requires legislative 
        action?
           LAccessibility and cost--Are new mechanisms needed 
        to provide sufficient access to needed services? In the case of 
        DI and SSI, what is the impact on the ties with the Medicare 
        and Medicaid programs? Who will pay for the medical and 
        assistive technologies and will beneficiaries be required to 
        defray costs? Would the cost of providing treatment and 
        assistive technologies in the disability programs be higher 
        than cash expenditures paid over the long-term? Will net costs 
        show that some expenditures could be offset with cost savings 
        by paying reduced benefits?

    Critical information, including various policy options, needs to be 
collected to address these and other issues. SSA's current research 
efforts could help begin to address some of these broader policy 
issues. SSA is beginning to conduct a number of studies that recognize 
that medical advances and social changes require the disability 
programs to evolve. For instance, the agency has funded a project to 
design a study that would assess the extent to which the Medical 
Listings are a valid measure of disability and has began to design a 
study of the most salient job demands in comparison to applicants' 
ability to perform work that exists in the national economy.\10\ Such 
research projects could provide insight into ways that medical and 
technological advances can help persons with disabilities work and live 
independently. Nevertheless, these studies do not directly or 
systematically address many of the implications of factoring in medical 
advances and assistive technologies more fully into the DI and SSI 
programs. More research on the cost and outcomes of various program 
changes that bring up-front help to individuals receiving or applying 
for disability benefits would be needed.
---------------------------------------------------------------------------
    \10\ In addition, SSA has (1) sponsored a project intended to 
enable SSA to estimate how many adults live in the United States who 
meet the definition of disability used by SSA and to better understand 
the relationship between disability, work, health care, and community 
and (2) funded a study to examine the impact and cost of assistive 
technology on employment of persons with spinal cord injuries and the 
associated costs.
---------------------------------------------------------------------------
    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to respond to any questions you or members of the subcommittee 
may have.
GAO Contact and Staff Acknowledgments
    For further information regarding this testimony, please contact 
Robert E. Robertson, Director, or Kay E. Brown, Assistant Director, 
Education, Workforce, and Income Security at (202) 512-7215. In 
addition, Barbara H. Bordelon, Brett S. Fallavollita, Carol Dawn 
Petersen, and Daniel A. Schwimer made key contributions to this 
testimony.

                                 

    Chairman SHAW. Ms. Mitchell, welcome.

STATEMENT OF SARAH WIGGINS MITCHELL, CHAIR, TICKET TO WORK AND 
 WORK INCENTIVES ADVISORY PANEL, SOCIAL SECURITY ADMINISTRATION

    Ms. MITCHELL. Thank you. Mr. Chairman and Members of the 
Subcommittee, good morning. My name is Sarah Wiggins Mitchell, 
and I am the Chair of the Ticket to Work and Work Incentives 
Advisory Panel. On behalf of the panel, I want to thank the 
Subcommittee for this opportunity to testify on the definition 
of disability underlying the disability programs administered 
by the Social Security Administration. I am here to represent 
the panel's interest and opinions on the topic in question. The 
definition is a key factor in determining how our country 
establishes not only eligibility for cash benefits, but also 
for health care, employment support, and many other services 
and supports for millions of people with disabilities.
    Given that the definition is used as a gatekeeper to many 
public programs, the panel certainly has a keen interest in 
this topic. Further, the Social Security Administration's 
application of the definition of disability and its internal 
disability determination process are central to the 
implementation of the new Ticket to Work and Work Incentives 
Improvement Act programs and, as such, are central to the 
advisory duties of the panel.
    Because I represent the Ticket to Work and Work Incentives 
Advisory Panel, I would like to say a few words about the panel 
and its responsibilities. The Ticket to Work legislation 
established the advisory panel within the Social Security 
Administration to advise the President, the Congress, and the 
Commissioner of Social Security on issues related to work 
incentive programs, planning, and assistance for individuals 
with disabilities and the Ticket to Work and self-sufficiency 
program established under this Act. The panel has an important 
role to play in the implementation of this new law, which 
provides new choices and opportunities for persons with 
disabilities to enter or reenter the workforce.
    The panel is a bipartisan group of 12 citizens, 4 of whom 
were appointed by the President, 4 by the Senate, and 4 by the 
House of Representatives. We represent a cross-section of 
individuals with diverse racial and ethnic backgrounds, and 
with experience and expert knowledge as recipients, providers, 
disabled veterans, employers and employees in the field of 
employment services, vocational rehabilitation, and other 
disability-related support services. The majority of us are 
individuals with disabilities, their representatives, or family 
Members. Several panel Members have had personal experience as 
beneficiaries of Social Security as well.
    The panel offers the following general suggestions on the 
disability determination process used by SSA. I will mention 
these topics just briefly now, but our written testimony 
provides more detail.
    First, early intervention. Employment support services 
under the Ticket program or other programs should begin as soon 
as possible, even before the beneficiary quits work and spends 
several months demonstrating to SSA that he or she cannot work 
at earnings levels above the SGA threshold.
    Second, higher reimbursement rates under the Ticket 
program. Under the Ticket program, providers of employment 
services will be reimbursed at a higher rate for persons in 
hard-to-serve categories. One possibility is that the 
disability determination process should incorporate a decision 
on whether the beneficiary qualifies for this higher 
reimbursement rate.
    Next, the medical improvement expected designation. Because 
the medical improvement expected designation will be used to 
limit eligibility for the Ticket program, the criteria for the 
designation should be reviewed as part of the broader review of 
the disability determination process.
    Then there is the question of partial disability benefits. 
Under the disability insurance program, a beneficiary can face 
a cash cliff; that is, the total loss of all cash benefits if 
earnings in a given month exceed a specific threshold. This 
all-or-nothing DI benefit structure, which is being reevaluated 
under the Ticket to Work program, should be considered in your 
review.
    Finally, I would like to specifically consider persons with 
mental disabilities. The disability determination process 
through which SSA implements the disability definition was 
originally designed to deal primarily with physical 
disabilities. A thorough review of the criteria for disability 
determinations to ensure equitable treatment for persons with 
mental or other disabilities may be appropriate.
    In closing, on behalf of the panel, I would like to offer 
to solicit formal public comment on the disability definition 
and the disability determination process. Comment would be 
taken as part of a public meeting conducted by the panel, by 
letter or telephone or by e-mail. We could also solicit input 
from national and international researchers and experts. All of 
the comments and input would be considered in the panel's 
public discussions and deliberations. We would then report the 
panel's major findings and conclusions to the Subcommittee in 
writing.
    Let me once again thank the Subcommittee for this 
opportunity to testify on a topic that has major implications 
for our panel's efforts to increase employment among persons 
with disabilities. On behalf of the entire panel, I want to 
assure you of our commitment to work in partnership with you, 
the administration, and the disability community on this 
important and far-reaching policy concern. Thank you.
    [The prepared statement of Ms. Mitchell follows:]
  Statement of Sarah Wiggins Mitchell, Chair, Ticket to Work and Work 
       Incentives Advisory Panel, Social Security Administration
    Good morning. My name is Sarah Wiggins Mitchell and I am the Chair 
of the Ticket to Work and Work Incentives Advisory Panel. On behalf of 
the Panel, I want to thank the Subcommittee for this opportunity to 
testify on the definition of disability underlying the disability 
programs administered by the Social Security Administration. I am here 
to represent the Panel's interest and opinions on the topic in 
question. The definition is a key factor in determining how our country 
establishes not only eligibility for cash benefits but also for health 
care, employment support and many other services and supports for 
millions of people with disabilities.
    Given that the definition is used as a gatekeeper to many public 
programs, the Panel has a keen interest in this topic. Further, the 
Social Security Administration's application of the definition of 
disability and its internal disability determination process are 
central to the implementation of the new Ticket to Work and Work 
Incentives Improvement Act programs and, as such, central to advisory 
duties of the Panel.
    Because I represent the Ticket to Work and Work Incentives Advisory 
Panel, I would like to say a few words about the Panel and its 
responsibilities. The Ticket to Work legislation established the 
Advisory Panel within the Social Security Administration to advise the 
President, the Congress and the Commissioner of Social Security on 
issues related to work incentive programs, planning and assistance for 
individuals with disabilities, and the Ticket to Work and Self-
Sufficiency Program established under this Act. The Panel has an 
important role to play in the implementation of this new law, which 
provides new choices and opportunities for persons with disabilities to 
enter or re-enter the workforce.
    The Panel is a bipartisan group of twelve citizens, four of whom 
were appointed by the President, four by the Senate and four by the 
House of Representatives. We represent a cross-section of individuals 
with diverse racial and ethnic backgrounds and with experience and 
expert knowledge as recipients, providers, disabled veterans, employers 
and employees in the fields of employment services, vocational 
rehabilitation and other disability related support services. The 
majority of us are individuals with disabilities, their 
representatives, or family members. Several Panel members have had 
personal experience as beneficiaries of Social Security.
    The Panel offers the following general suggestions on the 
disability determination process used by SSA. I will mention these 
topics briefly now but our written testimony provides more detail.

           LEarly Intervention.--Employment support services 
        under the Ticket Program or other programs should begin as soon 
        as possible, even before the beneficiary quits work and spends 
        several months demonstrating to SSA that he or she cannot work 
        at earnings levels above the SGA threshold.
           LHigher Reimbursement Rates Under the Ticket 
        Program.--Under the Ticket Program, providers of employment 
        support services will be reimbursed at a higher rate for 
        persons in hard-to-serve categories. One possibility is that 
        the disability determination process should incorporate a 
        decision on whether the beneficiary qualifies for this higher 
        reimbursement.
           LMedical Improvement Expected.--Because the MIE 
        designation will be used to limit eligibility for the Ticket 
        Program, the criteria for the designation should be reviewed as 
        part of the broader review of the disability determination 
        process.
           LPartial Disability Benefits.--Under the Disability 
        Insurance Program, a beneficiary can face a ``cash cliff''--the 
        total loss of all cash benefits if earnings in a given month 
        exceed a specific threshold. The ``all or nothing'' DI benefit 
        structure--which is being reevaluated under the Ticket to Work 
        Act--should be considered in your review.
           LPersons with Mental Disabilities.--The disability 
        determination process through which SSA implements the 
        disability definition was originally designed to deal primarily 
        with physical disabilities. A thorough review of the criteria 
        for disability determinations to ensure equitable treatment for 
        persons with mental or other disabilities may be appropriate.

    In closing, I would like to offer, on behalf of the Panel, to 
solicit formal public comment on the disability definition and the 
disability determination process. Comment would be taken as part of a 
public meeting conducted by the Panel, by letter or telephone and by e-
mail. We could also solicit input from national and international 
researchers and experts. All of the comments and input would be 
considered in the Panel's public discussion and deliberations. We would 
then report the Panel's major findings and conclusions to the 
Subcommittee in writing.
    Let me once again thank the Subcommittee for this opportunity to 
testify on a topic that has major implications for our Panel's efforts 
to increase employment among persons with disabilities. And finally, on 
behalf of the entire Panel, I want to assure you of our commitment to 
work in partnership with you, the Administration and the disability 
community on these important and far-reaching policy concerns.
    Detailed Comments: The Panel offers five comments on the definition 
of disability used by SSA:

           LThe Need for Early Intervention.--The Panel is 
        concerned about the delay in the delivery of employment support 
        services as the Ticket Program is now structured. Research has 
        shown that many apply for Disability Insurance benefits not as 
        the first option, but as the last resort. In many instances the 
        person with a disability might have been able to continue 
        working at his or her original job if provided with a key 
        support, such as health insurance, transportation, or a 
        workplace accommodation. Under the current system, such a 
        person must end employment and then attempt to qualify for cash 
        benefits, in order to be eligible for employment support 
        services. This means that months pass during the medical 
        determination before the beneficiary becomes eligible for 
        employment support services under the Ticket Program. Delays in 
        processing times exacerbate this problem. By the time of the 
        determination the beneficiary will probably have severed the 
        relationship with the previous employer. ``Employment support 
        services'' at this point may mean both finding a new employer 
        and arranging for a much broader range of supports. By 
        contrast, early intervention--providing employment support 
        services while the person is still working with the original 
        employer--will probably minimize the services needed and 
        maximize continued employment.
           LHigher Reimbursement Rates Under the Ticket 
        Program.--Under the Ticket Program, providers of job support 
        services will be reimbursed at a higher rate for persons in 
        hard-to-serve categories. For example, some with significant 
        disabilities would be considered hard-to-serve. This implies 
        that a determination must be made for each beneficiary as to 
        whether he or she qualifies for the higher reimbursement rate. 
        One possibility is that this determination would be 
        incorporated into the existing disability determination 
        process.
           LMedical Improvement Expected.--Under the current 
        disability determination process, some beneficiaries are 
        assigned the designation medical improvement expected (MIE) 
        which implies they will undergo a continuing disability review 
        (CDR). According to the Ticket Program regulations recently 
        issued, the MIE designation will also limit eligibility for the 
        Ticket Program. That is, the MIE designation now will be used 
        to determine eligibility for a program without a due process 
        mechanism in place. Because the program eligibility effects of 
        the MIE designation have expanded considerably under the Ticket 
        Program, the criteria for the designation should be reviewed as 
        part of the broader review of the disability determination 
        process. SSA is planning such a review.
           LPartial Disability Benefits.--Under the Disability 
        Insurance Program, a beneficiary can face a ``cash cliff''--the 
        total loss of all cash benefits if earnings in a given month 
        exceed a specific threshold. This cash cliff is thought to pose 
        a powerful work disincentive. It should also be noted that the 
        SSI program uses a gradual reduction in benefits, so that SSI 
        beneficiaries do not face a cash cliff. The ``all or nothing'' 
        DI benefit structure--which is being reevaluated under the 
        Ticket to Work Act--should be considered in your review.
           LPersons with Mental Disabilities.--The disability 
        determination process through which SSA implements the 
        disability definition was originally designed to deal primarily 
        with physical disabilities. Yet recent program statistics 
        document the growing proportions of beneficiaries with mental 
        disabilities. In 1999 32 percent of disabled workers under the 
        DI program had a diagnosis of mental retardation or other 
        mental disorder. In the same year, 59 percent of blind/disabled 
        SSI beneficiaries had a mental disability, similarly defined. A 
        thorough review of the criteria for disability determinations 
        to ensure equitable treatment for persons with mental or other 
        disabilities may be appropriate. We note that later this year 
        SSA plans to invite public comment on the Listings of 
        Impairments for mental illnesses.

                                 

    Chairman SHAW. Thank you. Mr. Matsui.
    Mr. MATSUI. Mr. Robertson, I want to ask you some questions 
about-- you have a rather broad approach to disability, and 
obviously adopted technology is part of it. I would imagine, 
you even mentioned somewhat the health insurance aspects of all 
this, although it is not a large percentage of it for people 
that are significantly disabled and have a permanent condition. 
Could you put this under the current Social Security program as 
it is defined? If so, what would you suggest in terms of Mr. 
Gerry, who--the previous speaker, in terms of how we should 
finance it, and whether it should come out of the current 
program or it should be financed out of HHS?
    Mr. ROBERTSON. Well, I will answer the last part of your 
question first. I don't have the answer to the question on how 
you finance it. The first part of your question gives me an 
opportunity to talk a little bit about some of the concerns we 
have had with the definition of disability. We have discussed 
them in the past, and I think it is a good opportunity to talk 
about them again. I will go a little bit beyond the definition 
of disability, to some of the processes.
    Basically, over the past few years, through testimony and 
through our reports, we have identified a number of concerns, 
starting with the definition, which is an either/or type of a 
definition--you are either disabled or you are not disabled. 
That just doesn't reflect the real world. The impact of a 
disability on a person's ability to work really ranges on a 
wide continuum. So, that is part of the definition that does 
indeed concern us.
    The other thing that concerns us--again, this goes a little 
bit beyond the definition to the process part--is that the 
eligibility determinations are all geared to determining a 
person's incapacity rather than their capacity. So, the only 
way that you, quote-unquote, win in the system is if you can 
prove that you are disabled. Basically, right now the process 
doesn't, at the very beginning, have a lot in the way of an 
evaluation of, okay, if you have certain services, if you have 
certain rehabilitation, what is the possibility of getting you 
back into the work force.
    Mr. MATSUI. Right.
    Mr. ROBERTSON. Then the final part of the process that we 
have had concerns with, and we have expressed this before also, 
is that the return to work services really don't get involved 
until after what could be a very lengthy determination process.
    Mr. MATSUI. I think you hit it on the nose when you talked 
about-- well, I don't want to suggest anyone would game the 
system, but there is an incentive to be permanently disabled to 
collect these benefits. Now, the problem I am having is--
because I agree that we need to stop this, we need to try to 
get people back in the work force if we can possibly do it. Is 
this the right forum in which to discuss that? I mean, should 
this be under the Social Security program, or should it be 
another program sponsored by HHS or the Labor Department? See, 
because I don't want anyone to be misled in the audience and 
the American public that all of a sudden, you know, through 
Social Security we are going to be able to set up a program in 
which we bring disabled people and rehabilitate them through 
adopted technology, through drug treatment--not your issue--and 
other ways. Because that is, from my understanding, and I have 
been on this Subcommittee for quite a few years and going all 
the way back to 1983, that--1982, actually--that the purpose of 
disability under the Social Security system is permanent 
disability for--and you make it up through lost wages.
    We are talking about a whole new set of issues here. I 
think that is wonderful, because I think we have been lacking 
in really trying to help people in these areas. Is this a 
proper function of the Social Security system, given our 
fundamental shortfalls coming up? Is this a legitimate issue 
from GAO's perspective?
    Mr. ROBERTSON. I am not here to comment where this 
program--what Agency this program should be in. Let me just, if 
I can----
    Mr. MATSUI. We have to. I mean, I can read an academic book 
and say, hey, this is great; but it has still have to fit 
within certain categories and certain departments. I need help 
in that respect. I mean, we can't--and I really appreciate--and 
I am not trying to be adversarial with you. We can't have you 
come up here and say we need to do all these wonderful things, 
and we say, but Social Security can't handle that. Because I 
don't want this to be used as a way to kind of wedge in, like 
we are going to promise all these benefits and it may not be 
possible, but go ahead.
    Mr. ROBERTSON. Well, I was about to agree with one part of 
what you were saying in terms of what we are talking about here 
is--ultimately, having an approach that really cuts across the 
responsibilities of many agencies----
    Mr. MATSUI. That is exactly right.
    Mr. ROBERTSON. Right now. What you ultimately would ideally 
want to end up with would be something that had a very 
integrated approach. Now, how you get there, I am not prepared 
today to talk to you about.
    Mr. MATSUI. You are absolutely right. That is why we 
probably should get the Secretary of HHS in, and some others, 
so that we can discuss how we can really implement some of the 
suggestions you have in your program. Because I think it is a 
legitimate issue, and it might even reduce the caseload of 
those people that are currently receiving disability benefits. 
Because, again, you may catch some of these people and find 
some way through rehabilitation, through some other approach.
    I mean, I agree with you that the problem we are facing, we 
have a fifties definition for 2002; but we can't all do it 
through the SSA. I mean, Mr. Gerry is under a disability when 
he tried--because he can't get involved in rehabilitative 
services. I mean, he has got a backlog of a half a million 
people.
    So, I guess that is my concern right now. I mean, somehow 
we need to bring in these other agencies. Am I correct about 
that?
    Mr. ROBERTSON. Yes, but there is the need for integrated 
services.
    Mr. MATSUI. Exactly.
    Mr. ROBERTSON. It is not just unique to the disability 
area.
    Mr. MATSUI. Right.
    Mr. ROBERTSON. You know, you go into the Labor Department, 
and they are trying to integrate work placement services among 
a number of agencies. So, this is just another of the big 
management challenges that is accompanying modern-day life, I 
think.
    Mr. MATSUI. If I may just ask one more follow-up question, 
Mr. Chairman. Are you working with--as you develop your report, 
are you working with HHS, and Labor as well, in terms of how 
they might integrate some of your thoughts into their 
Department? Because I think we ought to pursue this. I think 
HHS and Labor ought to be involved in what you are suggesting 
here.
    Mr. ROBERTSON. Whenever we do our work, you can count on 
the fact that we try to take a broad cross-look at all of the 
issues from a number of different perspectives.
    Mr. MATSUI. Great. Thank you.
    Chairman SHAW. Mr. Hulshof.
    Mr. HULSHOF. Thank you, Mr. Chairman. I want to seize upon 
the tail end of the testimony where you--and I am intrigued by 
the panel's offer to solicit public opinion or comment on this 
whole disability determination process because, as Mr. 
Robertson has--the entirety, the majority of his testimony is 
related to that conundrum that we face as far as revamping that 
disability determination. How would the panel undertake such an 
effort?
    Ms. MITCHELL. Well, I don't know whether you are aware or 
not, but actually over the past 2 years we have had public 
hearings across the country. We have also had hearings by 
teleconference and----
    Mr. HULSHOF. Not on this specific issue?
    Ms. MITCHELL. Not on this specific issue. Basically, it was 
on the Ticket to Work and on the Notice of Proposed Rulemaking 
and the regulations for the Ticket to Work. I think many 
consumers--and certainly the panel-- see this whole issue of 
the definition of disability and the Agency's internal 
disability determination process as very critical to the 
success of the Ticket program itself. It is certainly one of 
the very critical elements that needs to be discussed.
    Mr. HULSHOF. I promise this is not a loaded question. Just 
a little bit of background: As you know from the Ticket to Work 
program, back in 1998 with the former Chairman of this 
Committee, when we first began to discuss Ticket to Work, which 
was passed in 1998 but not signed into law until-- Congress 
took another run in 1999, and then President Clinton signed it 
in December. That is--for which the mission that the panel has, 
of course, is rolling it out. I spoke a couple of months ago to 
the Missouri State meeting, and they are excited about it.
    Can you give us some--here is the loaded question. Can you 
give us assurances that if you were to undertake this other 
mission of disability determination, that you would not--that 
this would not take away from your mission that you have been 
charged with by Congress?
    Ms. MITCHELL. Well, let me clarify. I mean, we would be 
seeking input on that process, but probably wanting to focus it 
around the Ticket. So that this would not be a separate charge 
for the advisory panel.
    Mr. HULSHOF. I got you.
    Ms. MITCHELL. We would be look at it insofar as it impacts 
and affects people who are using the Ticket.
    Mr. HULSHOF. Especially it is an interesting point you 
raise about early intervention.
    Ms. MITCHELL. Yes.
    Mr. HULSHOF. Perhaps it is too early to tell, and not that 
the panel has accumulated a lot of definitive information or 
data that you would like to publish. Does the panel think that 
the cost of providing early outreach would provide a 
significant savings in the long run, with less people coming to 
the disability rolls; or would they come to the rolls later in 
time? Does the panel have a sense on that?
    Ms. MITCHELL. Well, I know when we have looked at the issue 
of youth coming onto the Ticket, I think the data show that the 
earlier people have access to employment supports and services 
to enter employment, the more likely it is that they are in 
fact going to be employed and--if they get onto benefits, the 
greater likelihood is that they are going to stay on benefits.
    In one of our reports I think we tried to address the issue 
of the cost effectiveness of, for example, bringing youth on at 
an earlier age. So, I don't have all the data. We would be 
glad, I would certainly be glad to have the panel provide that 
to you. That is our underlying theory.
    [The information was not received at the time of printing:]
    Mr. HULSHOF. Good. Mr. Robertson, the record as it is being 
taken down, of course, is a verbal transcript of words that 
we--questions we ask and answers you give. At the time that you 
mentioned, I think to Mr. Matsui's question, that you would 
like to focus, or believe that the program should actually 
focus on the capacity for work rather than the incapacity to 
work, the record won't show that probably every Member that is 
up here was nodding in agreement with you, plus about half the 
spectators that are here.
    Before any changes in that regard could be undertaken, I 
would think that the Social Security Administration would need 
to have some pretty good hard data or research. Are they moving 
forward to obtain such research? If they are, are those efforts 
adequate in your view?
    Mr. ROBERTSON. I am really happy that you asked that 
question.
    Mr. HULSHOF. I have your note here that says, ``Ask me this 
question.'' No, I am just kidding.
    Mr. ROBERTSON. For a number of years, you know, we have 
been asking Social Security to come up with a comprehensive 
plan, return-to-work type of strategy. In my view, part of that 
strategy would have to be an agenda of systematic research to 
get some of the data that we say we don't have right now.
    You have picked up on this earlier, too, Mr. Chairman. 
Unless we have that agenda of systematic research that gives us 
the data we need to explore some of the options that we have 
talked about now and some of the options that we are going to 
be talking about later on, we are going to be having another 
hearing next year, and we are going to be asking the same 
questions next year, and we are going to be getting the same 
answers.
    We don't have the data today to help us make a decision. 
So, I am just 100 percent behind coming up with a real good 
research agenda that helps us explore some of the alternatives 
that we will be talking about today.
    Mr. HULSHOF. Thank you, Mr. Chairman.
    Chairman SHAW. Mr. Pomeroy.
    Mr. POMEROY. Thank you, Mr. Chairman. Very interesting 
panel. Mr. Robertson you indicate that the definitions need to 
be modernized. Is it principally along the lines of the 
preceding question to allow for more--how would you suggest 
specifically--help me understand how they need to be modernized 
and why they need to be modernized.
    Mr. ROBERTSON. It is interesting. Yesterday we brought in 
some experts in the area of disability, and we were actually 
trying to get information and get their input and get their 
insights on what issues we should be concentrating on in terms 
of targeting our resources. A couple interesting things came 
up, and they directly relate to your question.
    First of all, the definition of disability came up time and 
time again. In connection with that--and this gets to the 
answer to your question--I think there was uniform agreement 
that, really, before you start talking about how you change the 
definition of disability, what you have got to do is back up -
--and I will go back up to the microphone now. What you have to 
do is back up and say, ``Well, what do you want the program to 
do?'' Then, once you have done that, then you make your 
criteria, your definition, fit the purpose of the program.
    Mr. POMEROY. All right.
    Mr. ROBERTSON. Did that answer the question?
    Mr. POMEROY. Well, no. I mean, I am tracking you.
    Mr. ROBERTSON. Okay.
    Mr. POMEROY. I will go on to say, well, did you then have 
notions about whether the program--the thrust of disability 
benefit ought to be changed, leading them toward backing into 
the definitional examination?
    Mr. ROBERTSON. I guess I would have to--obviously, our work 
yesterday didn't go down that road; it went down a different 
road.
    Mr. POMEROY. Right.
    Mr. ROBERTSON. I would have to pretty much throw that back 
to you from the standpoint of saying, it is Congress that is 
going to determine what they want the program to do type of 
thing. To my mind, it would then be up to SSA, in cooperation 
with a number of other different organizations, to orchestrate 
whatever is necessary to give you the information on the 
implications of going down the route that you have chosen in 
terms of what the cost would be if you wanted to do something, 
what the implications on the people with disabilities would be, 
that type of thing.
    Mr. POMEROY. I am in a quandary on this. I mean, I like the 
historic role of the disability program, which is long-term 
income replacement for those completely disabled. For the most 
part, that is not going to be someone coming off of disability 
back into the work force, although we do want to incent that 
activity and facilitate it. That is where the Ticket to Work 
enters in.
    On the other hand, you moved down that road, and so you 
have more of an expansive early determination of disability; 
get them in quicker and then out quicker. You move really from 
this long-term income replacement model more to almost a 
workers comp-type short-term rehabilitation model, which is 
really a different set of goals, not traditionally part of the 
program. I am not sure we can bring that into the program. 
Those are issues, they need to be addressed somewhere, but I am 
not sure relative to this program. Ms. Mitchell, would you 
reflect on your thoughts relative to these conflicting 
considerations?
    Ms. MITCHELL. I absolutely agree with you. It is certainly 
an issue that I know we as panel Members have grappled with 
over the past year. We have not specifically taken on this 
whole issue, but we certainly intend to--and so I don't really 
have a more definitive answer.
    I think what you are raising is the dilemma, though. I 
mean, I think it clearly is. I think Mr. Robertson, you do have 
to decide what the program is to be about, what it is to do, 
then you can look at at what levels you are going to bring 
people in. For example, when you say people who are completely 
or totally disabled, that becomes definitional. Sometimes it is 
functional-- it is a functional definition.
    So, when you say completely disabled, I am not sure what 
that means. It certainly doesn't necessarily mean that an 
individual may not be able to work. The individual still may be 
able to work and be completely disabled. I see you looking very 
puzzled.
    Mr. POMEROY. Yeah, that is not--I mean----
    Ms. MITCHELL. That is the definitional problem I think that 
we get into, and why perhaps there needs to be this kind of 
hearing.
    Mr. POMEROY. Right. Definitionally, in my own mind, I would 
think disabled means you can't work.
    Ms. MITCHELL. All right.
    Mr. POMEROY. You are right. I mean, there needs some 
clarity there. I am really struck by something Mr. Gerry said 
earlier, and it is a--this doesn't relate to any of the earlier 
conflicting considerations I have, but it is another concept. 
That is, by the time you have a multiyear process of an 
individual trying to prove up their disability, we have 
psychologically made this person disabled. You know, everything 
about modern medical literature, about the relationships 
between mind and health and, you know, you can do it, versus, 
``Oh, my God, I am totally disabled,'' I think that is a really 
compelling point that he makes.
    It is a shame that we have a system that rather than 
empowers and helps, get the Ticket to Work, we give the ticket 
to permanent mental incapacity-- mental indisability, not 
incapacity--through the proof process. Your response on that?
    Ms. MITCHELL. Well, I couldn't agree with you more. It 
certainly poses the dilemma I think for the Ticket program. 
Certainly as I have gone across the country and listened to 
consumers, and as I have gone to speak to groups about the 
Ticket program, they don't understand the definitional issue. 
They don't understand the formal terminology. I tell you, 
family and Members and parents come up to me and they say, 
``How do you figure this? We just spent 2 to 3 years getting 
through a process defining my son or daughter as disabled, and 
now you are going to give me a ticket and want me to now turn 
around and say he is able to go to work and he should go to 
work.'' It is very difficult and frustrating for consumers and 
family Members--and not just them, advocates and 
professionals--to understand that dilemma.
    Mr. POMEROY. Very interesting. Thank you, Mr. Chairman.
    Chairman SHAW. Mr. Robertson, you struck a familiar chord 
in my head when you were talking about how they concentrate on 
the disabilities rather than the abilities. Then you spoke of 
the fact that they hadn't upgraded their definition of jobs 
since 1991. Have you seen any indication that they are reacting 
to your report or that they are starting to try to upgrade 
their definitions?
    Mr. ROBERTSON. We are talking about the labor market 
information here.
    Chairman SHAW. Yes, sir.
    Mr. ROBERTSON. I do believe they are aware of the fact that 
they have got a problem. They have got a dictionary of 
occupational titles that they currently use to help them in 
that part of the decisionmaking process that hasn't been 
updated since 1991, and that is a Labor Department document. 
The Labor Department is now moving on to a different data set.
    Chairman SHAW. The Labor Department is the one that is 
responsible for doing that?
    Mr. ROBERTSON. Yes.
    Chairman SHAW. Upgrading that?
    Mr. ROBERTSON. Yes. Still, but the new data set, the Labor 
Department is developing--a data set called ONET, Occupation 
Information Network-- won't have the specifics on job demands 
and so forth that were in the old data set that they were 
using. So, I know that Social Security knows that they are in 
kind of a dilemma here on how they go about updating or getting 
the updated information that they need, and they are trying to 
work that out now.
    Chairman SHAW. Going back to the point of not looking at 
someone's abilities, rather, looking at their disabilities, 
reminds me of the Committee I used to chair when we did the 
welfare reform bill, in which we actually turned welfare 
offices into employment agencies. When someone comes in now, 
instead of being told that, ``You are eligible for this,'' and 
going down the menu with them, they first of all want to say, 
``Well, how can we get you back into the job market?''
    Is there any parallel to that in SSI? Do they do anything 
as far as job search or looking for--or coordinating with your 
State or local agencies in finding these people work? Is there 
anything going on in that regard? Do they simply just come in 
and say, ``Okay, fine. You are disabled,'' or, ``You are not 
disabled,'' and that is the end of it?
    Mr. ROBERTSON. I believe that is basically kind of a State 
decision. The way it has worked out, the eligibility 
determination, as I indicated earlier, really focuses on are 
you disabled or not disabled; and do you get cash benefits 
right now? Our point has been and will continue to be that the 
early intervention with education about the services that are 
available, vocational, rehabilitation, and so forth, is the way 
to go.
    Chairman SHAW. Well, if you have a laborer that comes into 
the office that has lost a leg, and he is being evaluated, 
would he be evaluated for maybe doing an assembly job on a 
sitting basis? Would he be evaluated saying, ``Well, you can't 
go out and build houses and dig ditches anymore or do farm 
work,'' or whatever that was. How is that person evaluated?
    Mr. ROBERTSON. Well, basically Mr. Gerry went through the 
process earlier this morning. They go through that five-step 
process that ultimately, basically, makes a determination on 
whether that individual can do the work that he or she did 
previously, or any work in the Nation. They use the Dictionary 
of Occupational Titles (DOT) data to help make those last 
determinations.
    Chairman SHAW. Yes. I am not sure exactly how they would 
have done it. You have a professional person, a lawyer, doctor, 
teacher, accountant, who maybe have had a mental disorder, and 
they come in, they can do certain work, but they are no longer 
qualified to do what they did before.
    If they went to work it would be at a greatly reduced 
salary from what they had before, but it would still be above 
that $780, or whatever that figure is that Mr. Gerry gave us. 
Are they considered disabled? There is no--as I understand it, 
there is no partial disability here. You are either disabled or 
you are not. If you can't earn a certain level and go along 
with those other points that he brought out, are you disabled? 
How would that person be evaluated? Would that person be 
required to take a much lesser job than they had in the first 
place?
    Mr. ROBERTSON. Can I defer to you on that?
    Ms. MITCHELL. Oh, I am not the Social Security expert.
    Chairman SHAW. Well, I will just ask Mr. Gerry to submit 
correspondence because I think that is something important.
    Mr. ROBERTSON. Going through the five-step process.
    Chairman SHAW. I have got that written down on my book. It 
is a very subjective process, which makes it somewhat 
difficult. Are you not seeing--I am going to go back just a 
minute, and I will end with this. Are you seeing any indication 
that these people are hooked up to finding employment for 
people rather than finding reasons to give them disability?
    Mr. ROBERTSON. Not at the beginning of the process, no.
    Chairman SHAW. We are not doing that?
    Mr. ROBERTSON. No.
    Chairman SHAW. That is probably the missing piece here. Ms. 
Mitchell, we are delighted to have you. You can look forward to 
coming back and seeing us again because in September we are 
going to have a hearing devoted to the work that you do, and I 
can tell you this Committee is very proud of the work that it 
performed in creating the need for you and giving people the 
opportunity to work without fear of losing their benefits or 
having to go back through the process----
    Ms. MITCHELL. We will look forward to that.
    Chairman SHAW. Of reapplying. Thank you very much. Excuse 
me. Mr. Becerra, did you have something?
    Mr. BECERRA. Mr. Chairman, I suspect most of the good 
questions or comments were made. I would just probably add not 
having heard all of the testimony, and I apologize for having 
to slip out for a moment, that what I think the GAO has pointed 
out is that we have actually, I think as a people, as a 
society, as a government failed to truly address the needs of 
our disabled Americans. Whether we have a definition which 
talks about providing benefits to those who are disabled and 
can't work or whether we try to help Americans, given our new 
technologies, get back to work, even with a disability, the 
fact remains we have a whole bunch of Americans out there who 
aren't getting any services from us, who could go back to work 
or who couldn't. At the end of the day we are going to have to 
talk money if we want to really resolve this, whether it is to 
get some Americans back to work and not just on disability 
insurance or if we want to maintain the system and yet help the 
private sector address the needs of those who can go back to 
work.
    So, I am not sure if the questions were asked or not. The 
only thing, I would request that you perhaps provide comment if 
it hasn't already been addressed and if it has I will accept 
that as an answer, is if we do try to redefine disability so 
that we can help those who might have the potential to go back 
to work with some assistance or some retraining or some 
therapy, are we saying that the government would absorb the 
cost of providing that assistance or are we leaving it to the 
wherewithal of the individual that is disabled or classified as 
disabled to secure that assistance in order to be able to 
return to work, in which case it seems to be you are 
jeopardizing the ability of that person to receive that 
government assistance as a disabled individual under SSI. Would 
you care to comment?
    Mr. ROBERTSON. Yes I will talk to that a little bit. What 
you are doing is bringing up one of many, many, many questions 
that would be involved with any fundamental change of the 
system. It is one that we don't have answers to yet. We talked 
earlier that this is one of the reasons that SSA's research 
agenda has to be systematic. It has to be geared to examining 
some of the alternatives that we have and will be talking about 
today to give some of the answers to the questions that you are 
talking about now.
    Mr. BECERRA. It is great that you are examining the 
definition, but it is also very scary because I think you are 
going to find it is all about money and who is going to carry 
the load, because you can't talk about people going back to 
work. They have got a disability and they need some assistance 
and for the most part we are talking about people who can't 
afford to secure this assistance; that is, if they don't want 
to go back to work and they are just trying to be on the dole. 
So, I think it is most promising if we begin to accept our 
responsibilities as a society or as a government. It is also, I 
think, dangerous if we are not willing to accept the next part 
of the answer, which is to provide the resources to make it 
possible for these individuals to partake in the type of 
programs that help them get back to work if they so can. Thank 
you for your testimony. Mr. Chairman, thank you for the time.
    Chairman SHAW. Don't get up. I have another couple of 
questions.
    Mr. ROBERTSON. With the five-step process.
    Chairman SHAW. Did your findings show that the error is 
on-- obviously the data that they are using to evaluate people 
is causing errors, otherwise you wouldn't even bring it up. Is 
it erring on the side of giving disability benefits to people 
who shouldn't have them or not giving disability benefits to 
people that should?
    Mr. ROBERTSON. Well, if we are talking, number one, about 
the medical listing and the need to update the medical listing, 
it could go--that could go either way. I mean, if you----
    Chairman SHAW. Okay. How about the job data?
    Mr. ROBERTSON. That I can't comment on. I mean what we do 
know is that the DOT that they are currently using is really, 
according to the some of the labor people, based in the 
manufacturing era of our labor market. So it is old, and I 
don't know how that would play out in terms of whether that 
would err in providing more benefits or taking away benefits.
    Chairman SHAW. How about re-evaluation of people? I know 
all of our congressional offices have received calls from a 
neighbor of somebody that says, oh, he is out there doing the 
yard and he is collecting disability or he has got a job and he 
is collecting disability. I mean, we all hear those, and quite 
frankly, when I get one of those I turn it over to the SSA 
people, and I don't think they ever even look at them frankly. 
Is there any follow-up when someone has disability? Are they 
reevaluated every year or every few years?
    Mr. ROBERTSON. They have a continuing disability review 
that they go out and reevaluate folks. I believe the Inspector 
General, beyond that, has, in essence, special strike teams 
that do just exactly what you are asking. They go out and look 
for people that say they are on disability and they are out 
working in the yard or whatever.
    Chairman SHAW. Thank you. Thank you both. Our final panel, 
we have Paul J. Seifert, who is the Co-Chair for the Social 
Security Taskforce, Consortium for Citizens With Disabilities, 
and we have Gooloo Wunderlich, who is a Ph.D., Study Director, 
Committee to Review the Social Security Administration's 
Disability Decision Process; Robert Anfield, M.D., Vice 
President and Chief Medical Officer of the Customer Care 
Center, UnumProvident Corp.. We have Patricia Owens, who is a 
Board Member With the National Academy of Social Insurance; 
Bruce Growick, Ph.D., Associate Professor of Rehabilitation, 
Ohio State University in Columbus, Ohio; and Peter Blanck, 
Ph.D., Charles M. and Marion Kierscht----
    Mr. BLANCK. Kierscht.
    Chairman SHAW. Okay. Professor of Law, and Director, Law, 
Health, Policy and Disability Center University of Iowa College 
of Law. What is this, a married team? What do you have here? I 
have Charles M. and Marion----
    Mr. BLANCK. Husband and wife.
    Chairman SHAW. Husband and wife. Yes. Okay, fine. Who are 
they?
    Mr. BLANCK. They are the people that gave the money to 
endow my Chair.
    Chairman SHAW. Oh, I am sorry. Why did you put that on 
there? Well, you got them looking like they are sitting at the 
table with you. Give me a break.
    Mr. BLANCK. He is the former head of Kemper Insurance.
    Chairman SHAW. All right. That is fine, and if they were 
here, we would invite them up to the table, I am sure. However, 
they are not. We have each of your testimony, which is made a 
part of the record, and each of you may go forward as you see 
fit, and we will start with Mr. Seifert.

STATEMENT OF PAUL SEIFERT, CO-CHAIR, SOCIAL SECURITY TASKFORCE 
 AND WORK INCENTIVES IMPLEMENTATION TASK FORCE, CONSORTIUM FOR 
CITIZENS WITH DISABILITIES, AND DIRECTOR OF GOVERNMENT AFFAIRS, 
   INTERNATIONAL ASSOCIATION OF PSYCHOSOCIAL REHABILITATION 
                            SERVICES

    Mr. SEIFERT. Thank you, Mr. Chairman, Members of the 
Subcommittee, for the opportunity to testify in this third in a 
series of hearings on the challenges facing the Social Security 
disability programs, and in this hearing in particular on the 
definition of disability.
    It is widely held that the definition of disability for 
Social Security Disability Insurance (SSDI) or Title II and SSI 
is one of the strictest standards in the Western industrialized 
world, one that requires the combination of a high level of 
severity of disability combined with a very low level of 
functioning, particularly around work, in order for a person to 
become eligible and in the case of Title II remain on benefits. 
Consequently, we believe that there are several issues that 
should be addressed regarding the current definition.
    First, when considering any changes in the definition of 
disability or eligibility criteria, whether the statutory 
definition, the five-step disability determination process or 
the listings, Congress and SSA should not assume that 
mitigating supports are available. Medical and technological 
advances are making it increasingly possible for some 
individuals to work despite severe disabilities. However, we 
should be cautious when contemplating changes to the disability 
criteria because those advances are not uniformly and widely 
available to all people with disabilities who need them.
    Congress recognized, however, that some people do have 
access to those technologies and medical assistance in the 
passage of the Ticket to Work and Work Incentives Improvement 
Act 1991, and we thank you, Chairman Shaw and Mr. Hulshof, for 
your contributions in the passage of that landmark legislation.
    Obviously, it is impossible at this time to ensure that all 
the technology medications and support services necessary are 
available to all people with every type of disability, so we 
would again caution against making changes in the disability 
determination process that would assume those services and 
technologies that are available.
    The second issue we want to bring up is the definition of 
substantial gainful activity. Granted the SGA level is now 
indexed for inflation through the regulatory process; however, 
the level today is $780 per month and we at Consortium for 
Citizens With Disabilities believe that this is neither 
substantial nor gainful, and that is something that needs to be 
addressed particularly in light of the fact that there is for 
the non-blind disabled individual an SGA level of $780 but for 
blind individuals a level of more than $1,300. That is a 
discrepancy that we think should be abolished, and we support 
raising the SGA for non-blind disabled individuals to the same 
level as the blind.
    Third and finally, the disability programs were created 
with the notion that people would be unable to work for the 
rest of their lives, total and permanent disability. This 
static view of disability meant that little thought was given 
to what might happen if people returned to work after they 
became eligible for benefits.
    Consequently, in the Title II disabilities program the same 
requirements must be met to stay on the program as it took to 
qualify. This has the perverse effect of forcing people who are 
on the SSDI benefit rolls to diminish their work attempts. 
Under Title II a person can earn only $780 a month. Earning 
even $1 above that amount means that you lose every dollar of 
your DI check.
    For example, a person could have a monthly Title II check 
of $700 and a monthly paycheck of $771. If they receive a $2.50 
a week raise, 50 extra cents a day or $10 a month, they would 
lose all of their $700 SSDI check. Clearly that is not a very 
attractive economic tradeoff, and I don't think we would have 
to bring Milton Friedman in here to prove it. This policy is 
known in the disability community as the cash cliff.
    A far more reasonable approach to earnings is found in the 
SSI Program where a person loses $1 in benefits against every 
$2 they earn. Between 1987 and 2001 the number of SSI working 
beneficiaries has doubled. Ironically, one-fifth of the working 
SSI beneficiaries in March of 2002 earned above the SGA level 
compared to hardly anyone in the DI program; or approximately 
80,000 working SSI beneficiaries are working above SGA.
    This fact is made all the more stark by the fact that SSI 
beneficiaries typically are less well educated, have a less 
successful interaction with work or a weaker work history and 
are generally far poorer than their SSDI counterparts. Yet 
under the SSI rules where work is rewarded the accumulation of 
even a small amount of savings is penalized.
    The SSI asset and resource limitations ensure that people 
on SSI will remain in the economic under class. We have long 
advocated for a sliding scale in SSDI and a modification of the 
asset and resource limits under SSI so that people can both 
work and save. Again, on behalf of the Consortium for Citizens 
With Disabilities Social Security Taskforce, I thank you for 
the opportunity to testify and look forward to any questions 
you may have.
    [The prepared statement of Mr. Seifert follows:]
  Statement of Paul Seifert, Co-Chair, Social Security Task Force and 
Work Incentives Implementation Task Force, Consortium for Citizens with 
    Disabilities, and Director of Government Affairs, International 
          Association of Psychosocial Rehabilitation Services
    Chairman Shaw, Mr. Matsui and Members of the Subcommittee, thank 
you for the opportunity to testify today in this third of a series of 
hearings on challenges facing the Social Security disability program. I 
am Paul Seifert, Director of Government Affairs for the International 
Association of Psychosocial Rehabilitation Services. I am testifying 
today in my role as a Co-Chair of the Consortium for Citizens with 
Disabilities (CCD) Task Forces on Social Security and Work Incentives 
Implementation. CCD is a coalition of nearly 100 national organizations 
advocating on behalf of people with physical, mental, and sensory 
disabilities.
    Today's hearing focuses on one of the most critical and difficult 
issues facing the disability program: the definition of disability. In 
Social Security, the definition is tied in part to work because the 
disability program is meant to replace income lost due to the inability 
to work because of a disability. To be eligible for benefits in the 
Title II and Supplemental Security Income disability programs, a person 
must satisfy two criteria--they must have a medically determinable 
physical or mental impairment which is expected to result in death or 
has lasted or is expected to last more than twelve months; and they 
must be unable to perform any substantial gainful activity in the 
national economy. Section 223(d) of the Social Security Act
    The Social Security Administration uses a five-step process to make 
the disability determinations that operationalize the statutory 
definition. SSA has established a ``Listing of Impairments'' whereby a 
person who satisfies the requirements of the listing is eligible for 
benefits. For those applicants who do not meet the listings, SSA has 
established additional tests that take into account functional 
limitations, age, education, and work experience.
    It is widely held that the definition of disability for SSDI and 
SSI is one of the strictest standards in the western industrialized 
world. It requires a high level of severity of disability combined with 
a very low level of functioning in order for a person to become 
eligible for, and remain on, benefits. We believe that there are 
several issues that should be addressed regarding the current 
definition.
    While medical and technological advances are making it increasingly 
possible for some individuals despite severe disabilities to be 
successful in the work place, we should be very cautious when 
contemplating any changes to disability criteria, whether statutory or 
regulatory, based on such advances. Medical and technological advances 
have had a powerful impact on the lives of some fortunately-placed 
individuals with disabilities and, recognizing this, Congress worked 
with the disability community to develop policies and reduce barriers 
to employment for persons with disabilities. We thank you Chairman 
Shaw, Mr. Matsui, and all the members of the Subcommittee for your 
leadership in passing the landmark Ticket-to-Work and Work Incentives 
Improvement Act of 1999. However, these medical and technological 
advances are clearly not universally or uniformly available to all who 
need them. For example, an individual with a severe spinal cord injury 
may need personal assistance services to get out of bed in the morning, 
eat, bathe, dress, and get to work. These services may cost more than 
$20,000 a year and are not fully covered under Medicare and Medicaid, 
and almost never available through private health insurance.
    Therefore, it would be wrong to base eligibility for disability 
benefits using the assumption that medical or technological advances 
would be available to mitigate the functional impact of a disability. 
In fact, many of the services and supports people with significant 
disabilities need to work, such as personal assistances services, 
prescription medications, or durable medical equipment, are available 
to them only through Medicare and Medicaid. As you know, a primary way 
people with disabilities access Medicare and Medicaid is through the 
Title II and SSI disability programs.
    Obviously, it is impossible at this time to ensure that all the 
technology, medications, and support services necessary are available 
to all people with every type of disability. Until that point comes, we 
have several recommendations:
    First, as mentioned above, when considering any changes in 
disability eligibility criteria, whether to the statutory definition, 
the five-step disability determination process, or the listings, 
Congress and the Social Security Administration should not assume that 
mitigating supports are available.
    Second, the definition of substantial gainful activity (SGA) must 
be addressed. Granted the SGA level is now indexed for inflation. 
However, the base, now $780 per month, should be re-examined in 
relation to what it defines: substantial gainful activity. If $780 per 
month is all a person is able to earn, we find it hard to call that 
amount ``substantial.'' In this economy, you cannot pay rent or 
utilities and buy food for a month at that level of earnings. The issue 
may lie with the implementation of the SGA standard, rather than the 
concept of SGA. Further, there is a different SGA level for non-blind 
persons with disabilities than for blind individuals. We support 
raising the SGA level for non-blind disabled individuals to the same 
level as for those who are blind.
    Finally, the federal disability programs were created assuming that 
people with disabilities would remain unable to work throughout their 
lives. This static view of disability meant that little thought was 
given to what might happen if people returned to work after receiving 
benefits. Consequently, in Title II disability programs, the same 
requirements must be met to stay on the program as it took to qualify. 
This has the perverse effect of forcing people to diminish their work.
    For example, under the Title II disability rules a person can earn 
only $780 a month. Earning even one dollar above that amount (after the 
nine-month trial work period) means a person loses every dime of their 
disability cash assistance. For example, a person could have a monthly 
Title II disability benefit of $700 and a monthly paycheck of $771. But 
if they receive a two dollar and fifty cent a week raise, fifty extra 
cents a day or ten dollars a month, they lose all of their $700 monthly 
SSDI check. Clearly, it is not a very attractive trade-off. This policy 
is known in the disability community as the cash-cliff.
    A far more reasonable approach to earnings is found in the SSI 
program where a person loses one dollar in benefits for every two 
dollars they earn. The latest data from SSA indicate that from 1987 to 
2001 the number of working SSI beneficiaries doubled. Ironically, one-
fifth of working SSI beneficiaries earn above the SGA level compared to 
hardly anyone in the DI program; a fact made all the more stark 
considering that SSI beneficiaries typically have weaker employment 
records, are typically less well educated, and are far poorer than 
their DI counterparts. Yet, under the SSI rules where work is rewarded, 
the accumulation of even a small amount of savings is penalized. Asset 
and resource restrictions ensure that people on SSI will remain an 
economic underclass.
    We have long advocated for a sliding scale cash benefit offset in 
the Title II disability programs and we again urge Congress to remove 
this barrier to work. We recognize that SSA is required to study a 
benefit offset in Title II. Until such a policy is enacted we believe 
that a disconnect will remain between desire of beneficiaries to work 
the reality of work.
    Again, on behalf of the CCD Task Forces on Social Security and Work 
Incentive Implementation, I thank the Chairman and Members of the 
Subcommittee for the opportunity to testify and I look forward to any 
questions you may have.
On behalf of:
American Congress of Community Supports and Employment Services
American Council of the Blind
American Network of Community Options and Resources
Association for Persons in Supported Employment
International Association of Psychosocial Rehabilitation Services
NAMI--National Alliance for the Mentally Ill
National Association for Developmental Disabilities Councils
National Multiple Sclerosis Society
National Organization of Social Security Claimants' Representatives
National Senior Citizens Law Center
NISH
Research Institute for Independent Living
The Arc of the United States
United Cerebral Palsy Associations, Inc.

                                 

    Chairman SHAW. Dr. Wunderlich.

   STATEMENT OF GOOLOO S. WUNDERLICH, PH.D., SENIOR PROGRAM 
 OFFICER, INSTITUTE OF MEDICINE OF THE NATIONAL ACADEMIES, AND 
    STUDY DIRECTOR, COMMITTEE TO REVIEW THE SOCIAL SECURITY 
     ADMINISTRATION'S DISABILITY DECISION PROCESS RESEARCH

    Dr. WUNDERLICH. Good morning. I am senior program officer 
at the Institute of Medicine of the National Academies, and I 
serve as Study Director to the Committee to Review the Social 
Security Administration's Disability Decision Process. I am 
pleased to appear before you today on behalf of the Committee.
    This study is sponsored by the Social Security 
Administration. The Committee issued its final report earlier 
this month and your staff has copies of it, and I have also 
provided copies of the executive summary.
    The Committee analyzed and made recommendations on key 
areas, such as improving the disability determination process, 
developing and implementing an ongoing disability monitoring 
system, and building SSA's capacity for conducting the needed 
research for reforming the disability programs. Today I will 
limit myself to just some of the issues defining disability and 
determining eligibility as covered in our report.
    The Social Security Act defines disability for both SSDI 
and SSI and, as you know, the standards for evaluating 
disability claims are specified in SSA's implementing 
regulations. Determination of eligibility for disability 
benefits is an inherently difficult task, in the face of 
millions of claims per year decided by more than 10,000 
adjudicators at various levels of the process and high levels 
of legal challenge and political oversight.
    Faced with large workloads increases resulting from program 
growth without concomitant increases in administrative 
resources, and concerns about the numerous longstanding 
problems and complaints relating to accuracy, timeliness and 
consistency of the disability determinations, SSA leadership 
decided in the early nineties to fundamentally redesign the 
entire claims process, including the disability decision 
process. At the direction of the then Commissioner, the SSA 
crafted an ambitious research plan for developing and testing 
the various assumptions made in the redesign initiative and 
asked the National Academies to review the research plan and to 
make recommendations.
    The Committee conducted the preliminary review of the plan 
early in the study and found that it lacked the critical 
elements of a well-designed research plan. The Committee made 
several recommendations for redirection of research priorities 
and improvements in projects underway.
    After reviewing the Committee's conclusions and 
recommendation and undertaking its own internal reevaluation, 
SSA informed the Committee in late 1999 that it had decided to 
drop the development of a redesigned decision process and 
instead make incremental improvements in selected components of 
the existing process. As you all know, at this time SSA is 
concentrating on updating and improving the listings of 
impairments.
    The current effort for incremental improvements, like the 
previous redesign effort, call for comparative judgments based 
on before and after analysis. Such analysis does not appear to 
have been done by SSA. The Committee therefore recommended that 
SSA should undertake analysis of information from the current 
decision process based on criteria established at the outset in 
order to assess the validity and effectiveness of the current 
process, whether they be individual components like the 
listings or the whole process, and then the same evaluation 
criteria should be applied to any revisions developed. Without 
such a capacity, proposals for ``reform'' may be proposals for 
``change,'' but it is impossible to determine whether they are 
proposals for ``improvement.''
    The SSA's process for determining disability is not the 
only model of an adjudicatory system. As you all have heard 
already, there is a lot of pressure for SSA to redesign the 
definition and the eligibility criteria. The Committee 
recognizes the administrative difficulties involved in paying 
more attention in the disability determination process to the 
physical and social factors in the work environment, and work 
incentives involves problems. It is not that simple when you 
consider it has to be applied uniformly and consistently across 
millions of claimants. Such attention requires major shifts in 
the orientation of the programs to ways to influence the 
environment in which the applicant might work and to return-to-
work activities. The SSA needs to begin to look into how to go 
about doing this by undertaking research in this area.
    The impact of such changes on the people it serves as well 
as on the program also needs to be studied. Ticket to work 
issues have been addressed very adequately by Sarah Mitchell, 
and I won't repeat them.
    In conclusion, the Committee's report makes it abundantly 
clear that SSA has been given a difficult task and dwindling 
resources to deal with it. The situation will get worse, and 
not better, in light of the anticipated growth in demands on 
the program as the baby boom generation reaches the ages of 
increased likelihood of disabilities. The SSA needs to have 
some mechanism to systematically give thought to these issues 
and initiate appropriate research on which to base policy 
decisions. Its research up until now has not addressed the 
major fundamental issues. The SSA cannot accomplish, this 
forward looking agenda, including the recommendations that the 
Committee has included in its report, without appropriate 
resources in terms of not just dollars, but also recruitment of 
qualified research staff.
    The Committee believes that the blueprint for action that 
it has recommended in its report is worthy of full funding and 
adequate staffing support, both by the executive and the 
legislative branches of the Committee. Thank you for the 
opportunity to summarize some of the findings and 
recommendations of the committee.
    [The prepared statement of Dr. Wunderlich follows:]
   Statement of Gooloo S. Wunderlich, Ph.D., Senior Program Officer, 
 Institute of Medicine of the National Academies, and Study Director, 
  Committee to Review the Social Security Administration's Disability 
                       Decision Process Research
    Good Morning, Mr. Chairman and members of the committee. My name is 
Gooloo Wunderlich, I am a senior program officer at the Institute of 
Medicine of the National Academies. I serve as study director to the 
committee to Review the Social Security Administration's Disability 
Decision Process Research sponsored by the Social Security 
Administration and am pleased to appear before you today on behalf of 
the committee. The committee issued its sixth and final report of the 
study and I encourage you to look at it. It analyzes and makes 
recommendations in key areas such as the emerging trends in SSA's 
disability programs; improving the disability determination process; 
developing and implementing an ongoing disability monitoring system 
consisting of a periodic comprehensive and in-depth survey to measure 
prevalence and characteristics of people with disabilities and related 
factors supplemented by a small set of core measures in the intervening 
years; and building SSA's capacity for conducting the needed research 
and for reforming the disability programs. But today I will limit 
myself to the issues of defining disability covered in the report--the 
statutory definition of disability, how SSA determines disability, and 
issues in alternative approaches in defining and determining 
disability.
Definition of Disability for Social Security Programs
    There is no agreement on how to define and measure disability. The 
meaning assigned to the term depends on the purpose and uses to be made 
of the concepts. SSA's focus in both the Social Security Disability 
Insurance (SSDI) and Supplemental Security Income (SSI) programs is on 
work disability, as defined in the Social Security Act. The definition 
of disability and the process of determining disability are the same 
for both programs. The Social Security Act defines disability (for 
adults) as ``inability 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 which has lasted or 
expected to last for a continuous period of not less than 12 months'' 
(Section 223 [d][1]). Amendments to the Act in 1967 further specified 
that an individual's physical and mental impairment(s) must be ``. . . 
of such severity that he is not only unable to do his previous work but 
cannot, considering his age, education, and work experience, engage in 
any other kind of substantial gainful work which exists in the national 
economy, regardless of whether such work exists in the immediate area 
in which he lives, or whether a specific job vacancy exists for him, or 
whether he would be hired if he applied for work'' (Section 223 and 
1614 of the Act). SSA disability programs only pay for total disability 
and not partial or short term disability.
How Does SSA Determine Disability?
    Determination of eligibility for disability benefits under the 
Social Security Disability Insurance (SSDI) and Supplemental Security 
Income (SSI) programs is an inherently difficult task. To qualify for 
benefits under these programs a person must have a medically 
determinable impairment. Although the existence of a medically 
determinable impairment is a necessary condition, it is not a 
sufficient condition for receipt of benefits. The statutory definition 
makes clear that these programs deal with work disability. While many 
of the factual determinations are relatively straightforward, others 
range from the difficult to the nearly impossible as evidenced by the 
lack of agreement observed in an examination of rater reliability as 
measured by the variations within and between states in the allowance 
rates by examiners.
    SSA's disability decision process serves as a gatekeeper for 
benefits from the SSDI and SSI programs. The Social Security Act 
defines disability but the standards for evaluating disability claims 
are specified in SSA's implementing regulations (20 Code of Federal 
Regulation, parts 404 and 416, subparts P and I) and in written 
guidelines that describe a series of sequential decision points and 
criteria for determining whether or not a claimant meets the statutory 
definition of disability.
    SSA uses a 5-step sequential decision process for initial claims. 
The intent of developing the sequential decision process is to attempt 
to provide an operationally efficient definition of disability with a 
degree of objectivity and accuracy that can be replicated with 
uniformity in this mass production benefit program throughout the 
country.

          1. In the first step the SSA field office reviews the 
        application and screens out claimants who are engaged in 
        substantial gainful activity (SGA).
          2. If the claimant is not engaged in SGA, step 2 determines 
        whether the claimant has a medically determinable severe 
        physical or mental impairment.
          3. The third step also is a medical screen to allow benefits 
        to the most severely impaired. The documented medical evidence 
        is assessed against the medical criteria to determine whether 
        the impairment meets or equals the degree of severity specified 
        in SSA's Listings of Impairments (Listings). The Listings serve 
        the purpose of allowing rapid payment of benefits to claimants 
        whose presumed residual functional capacity (RFC), given the 
        severity of their impairments, would preclude work at virtually 
        any job. About 60 percent of the disability allowance decisions 
        are based solely on the Listings of Medical Impairments without 
        developing and conducting a complete in-depth functional and 
        vocational analysis.
          4. In the fourth decision step, claimants who have 
        impairments that are severe, but not severe enough to meet or 
        equal those in the Listings, are evaluated to determine if they 
        have residual functional capacity (RFC) to perform past 
        relevant work. Assessment of the RFC requires consideration of 
        both exertional and non-exertional impairments. If a claimant 
        is determined to be capable of performing past relevant work, 
        the claim is denied.
          5. The fifth and final decision step considers the claimant's 
        RFC in conjunction with his or her age, education, and work 
        experience to determine whether the person can perform other 
        work that exists in significant numbers in the national 
        economy.

    The determination in the fifth step is based on the 1978 Rules and 
Regulations, Medical-Vocational Guidelines (referred to as the  
vocational grid). The vocational grid, like the Listings, is intended 
to lend objectivity to the determination process and facilitate uniform 
administration of the vocational portion of the disability 
determination process. But the grid at this time reflects only physical 
(exertional) impairments. It does not consider nonexertional (e.g., 
mental or cognitive) impairments. The regulations also recognize that 
some claimants will have multiple impairments or environmental 
limitations (e.g., they cannot be around fumes) that are not 
effectively covered by the grid regulations. These cases must be 
decided outside the grid.
SSA's attempts to redesign the determination process
    Over the past several years many factors have contributed to the 
growth in the number of people receiving disability benefits. As a 
result SSA has been faced with large workload increases that have not 
been matched by increases in administrative resources. Concerns about 
the numerous long-standing problems and complaints relating to the 
accuracy, timeliness, and consistency of the disability decision 
process led SSA leadership to fundamentally rethink the entire process 
for determining program eligibility and improve the quality of the 
service in the disability claims process. In the early 1990s SSA 
decided to redesign the entire claims process including the disability 
decision process, and at the direction of the then Commissioner of SSA 
developed a research plan for developing and testing the functional 
assessment instruments in the disability decision process, examining 
the effect of vocational factors on decisions, exploring what is being 
done in other disability programs, and developing a prototype for a 
redesigned disability decision process. At about the same time it began 
work on developing a comprehensive national survey to fill the gap in 
information on the prevalence and characteristics of the population 
with disabilities, and factors that influence their intent to apply for 
benefits. SSA asked the National Academies to review its research plan 
and individual research projects, and the timeline for developing a new 
decision disability process, as well as the design and content of the 
survey and offer comments and recommendations on the direction of the 
research.
    Early in the study, the committee conducted a preliminary review of 
SSA's research plan and individual research projects completed and 
under way. The committee concluded that the research completed, 
underway, and planned appeared to lack the critical elements of a well-
designed research plan. It made several recommendations for redirection 
of research priorities and improvements in projects underway.
    After reviewing the committee's conclusions and recommendations, 
and undertaking its own internal reevaluation of its disability 
decision process redesign initiatives, SSA concurred with several of 
the committee's conclusions and some of the recommendations. However, 
rather than undertaking the additional research and redirection of the 
research as recommended by the committee, for various reasons SSA 
decided in late 1999 to drop the redesign of the decision process, and 
instead make incremental improvements in the selected components of the 
current sequential evaluation process to enhance quality of decisions, 
streamline the decision process, and update the medical and vocational 
rules in determining disability. At this time SSA has decided to devote 
its attention to updating and improving the Listings of Impairments.
    Medical advances in both the diagnosis and treatment of impairments 
have made updating the Listings long overdue. By the late 1990s, The 
Office of the Inspector General, the National Academy of Social 
Insurance, the General Accounting Office, and the Social Security 
Advisory Board all were expressing concern that SSA was not updating 
the Listings regularly, but was simply extending the expiration dates 
for a number of years when the Listings expired. Limited staff 
resources, the need to address new legislative mandates during the 
1990s, and the lack of adequate research on disability criteria to 
support Listings updates have been at least part of the problem.
Nead for Baseline Criteria and Analysis
    The current effort for incremental improvements like the previous 
redesign effort calls for comparative judgments. It presumes analysis 
of baseline information from the current decision process after 
establishing criteria against which to assess the validity of decisions 
from the current process and identify the specific problem areas. The 
same criteria then should be applied to any revisions developed.
    SSA conducted some baseline analyses for the claims process in 
terms of time and staff investment in processing claims and the nature 
and extent of inconsistencies of decisions. But to the committee's 
knowledge it has not conducted any such baseline analysis with 
predetermined criteria for evaluating the Listings component, or for 
that matter any other component, of the sequential determination 
process leading to the decision to redesign the system. SSA's research 
approach has focused mostly on the new decision process. The committee, 
therefore has recommended that prior to making changes in the current 
decision process SSA should establish the criteria for measuring its 
performance; conduct research and analyze the data to determine how the 
current processes work relative to these criteria; and then apply the 
same criteria to evaluate the extent to which the proposed change would 
lead to improvements. Analysis of data from such research in the 
context of the predetermined criteria would identify the nature of the 
gaps between what the program is supposed to achieve and its actual 
performance. Without such a capacity, proposals for ``reform'' may be 
proposals for ``change,'' but it is impossible to determine whether 
they are proposals for ``improvement.''
    It is also not clear to the committee what criteria were used to 
assign priorities for reviewing and updating specific Listings. It 
appears likely that the agency's agenda for reform in this area is 
being driven as much by internal and external anecdotal concerns, 
including general perceptions of which Listings are the most outdated, 
as by deliberate analysis of research findings based on predetermined 
criteria developed by SSA.
Alternative Approaches to Defining and Determining Disability
    SSA's process for determining disability is not the only model of 
an adjudicatory process that might be applied to determine disability 
benefits. Other approaches could conceive of disability benefits 
designed to assist claimants in receiving appropriate medical attention 
and vocational rehabilitation as well as appropriate income supports. 
In this model the basic goal of the program would be to move claimants 
back toward productive work and to use benefits both as a means to 
facilitate the return to work process as well as an ultimate fallback 
for those claimants whose impairments make continued work impossible. 
This is the approach used by many private disability insurers who 
manage employment-based disability plans in the United States, and it 
is the dominant model in certain foreign systems, such as those in 
Sweden and Germany.
    Recent legislation makes clear that Congress is increasingly 
interested in the ``return to work'' model and is prepared to have SSA 
experiment with some alternative strategies that might facilitate the 
pursuit of work rather than benefits. The Ticket to Work and Work 
Incentives Improvement Act of 1999 (PL 106-170) was signed into law on 
December 17, 1999. One major provision of the law establishes the 
Ticket to Work and Self Sufficiency Program, or Ticket Program. This 
provision provides that beneficiaries, after they are eligible for SSDI 
and SSI benefits, will receive a ticket (or voucher) they can use to 
obtain employment services, vocational rehabilitation services, or 
other support services from an approved provider of their choice. The 
law also expands Medicaid and Medicare coverage to more people with 
disabilities who work. SSA therefore needs to initiate a research 
program for testing decision process models that emphasizes 
rehabilitation and return to work. Also, ongoing evaluation should be 
conducted of the effectiveness of this program
    People with disabilities and their advocates also express concern 
that environmental factors are not taken into consideration in defining 
work disability. In recent years the concept of disability has shifted 
from a focus on diseases, conditions, and impairments per se to more on 
functional limitations and other barriers to work caused by these 
factors. The Social Security definition of disability was developed in 
the mid-1950s at a time when a greater proportionof jobs was in 
manufacturing and more required physical labor than today. It was 
expected therefore that people with severe impairments would not be 
able to engage in substantial gainful activity. Over the years, many 
changes have occurred: the nature of work has shifted from 
manufacturing toward service industries; medical and technological 
advances have made it possible for more severely disabled persons to be 
employed; the mix of beneficiaries has been changing; and, in recent 
years public attitude also has changed as reflected in the enactment of 
the Americans with Disabilities Act of 1990 (ADA). More attention may 
need to be paid to the environmental factors, particularly in the 
context of work disability and vocational rehabilitation.
    The committee recognizes the administrative difficulties involved 
in paying more attention in the disability determination process to the 
physical and social factors in the work environment. Such attention may 
require major shifts in the orientation of the Social Security 
disability programs to ways to influence the environment in which the 
applicant might work and to ``return to work'' activities. SSA should 
undertake research towards developing systematic approaches to 
incorporate economic, social, and physical environmental factors in the 
disability determination process; the relationship between the physical 
and social environment and work disability; and understanding the 
external factors affecting the development of work disability. SSA 
should also study the implications of such changes on the people it 
serves as well as the impact on the programs.
    If such research is fruitful, incorporating such changes in the 
Social Security disability determination process will begin to move it 
away from a heavily medically-driven approach to consideration of 
factors beyond physical, sensory, cognitive or emotional impairments 
and may ultimately involve changes in SSA's implementing regulations.
Conclusion
    The committee's report makes abundantly clear that SSA has been 
given a difficult, if not impossible, task and dwindling resources to 
deal with it. The situation will get worse and not better in light of 
the anticipated growth in demands on the program as the baby boom 
generation reaches the age of increased likelihood of disabilities. In 
its recent reports the Social Security Advisory Board has reached 
similar conclusions and has recommended major rethinking of the 
disability program.
    Little doubt exists that the current system is in need of major 
improvement. Making small changes within the current system may not 
resolve the basic problems. This is not adequately reflected in the 
agency's research agenda. SSA recognizes that the present system for 
determining program eligibility may not be sustainable in the future 
and that it must think about different orientations and different ways 
in which the task of making these decisions is accomplished. It needs 
to have some mechanisms to systematically give thought to these issues 
and initiate appropriate research.
    SSA needs better understanding of the prevalence of disability in 
the population, the characteristics of that population, the factors 
that motivate some to work and others to apply for benefits, and better 
information about the job market, and about qualifications for jobs. 
The committee has recommended major research efforts. Such research 
cannot be accomplished without appropriate infrastructure and 
resources, in terms of both dollars and recruitment of qualified 
researchers, however, SSA cannot accomplish this forward-looking 
agenda. This blueprint is worthy of full funding and adequate staffing 
support by both the Executive and the Legislative branches of 
government.
    Thank you for the opportunity to summarize the findings and 
recommendations of the committee. I shall be pleased to answer any 
questions you may have.
    [The attachment is being retained in the Committee files.]

                                 

    Chairman SHAW. Dr. Anfield.

  STATEMENT OF ROBERT ANFIELD, M.D., VICE PRESIDENT AND CHIEF 
     MEDICAL OFFICER, CUSTOMER CARE CENTERS, UNUMPROVIDENT 
              CORPORATION, CHATTANOOGA, TENNESSEE

    Dr. ANFIELD. Thank you, Mr. Chairman. My name is Dr. Robert 
Anfield, and I am the Chief Medical Officer for the Customer 
Care Organization of UnumProvident Corp.. I appreciate this 
opportunity to testify about UnumProvident's best practices as 
the leading provider of disability income insurance.
    Many of our clients include individuals small employers, 
mid-size companies and Fortune 500 corporations. I would like 
to begin today by discussing UnumProvident's view of 
disability.
    We know based on our experience that disability is episodic 
rather than being a fixed or a permanent condition. We also 
recognize that most claimants eventually recover from a 
disability and that recovery is usually incremental. In fact, 
our experience has shown that most claimants have some capacity 
for work during their recover period, and their motivation to 
return to the workplace depends on a number of social, 
vocational and attitudinal factors.
    UnumProvident designs insurance contracts that define 
disability according to our experience and offer benefits based 
on return to work transitions, and we suggest that Social 
Security also consider offering this type of incentive for 
claimants.
    UnumProvident has committed significant resources to 
actively assisting our insureds in their return to work 
efforts. Our employees include 85 board certified physicians in 
14 specialties who train claims consultants, offer medical 
reviews and consult with claimants' physicians to clarify 
abilities and customize return to work plans. We also have more 
than 300 full-time clinical and vocational consultants making 
about 235,000 early intervention calls and more than 100,000 
referrals to rehabilitation each year. In addition, we have 
over 1,000 field case management and support specialists.
    As we consider each claim we evaluate the medical data to 
determine if the claimant is functionally capable of working. 
Based on this determination, specialized resources are provided 
as appropriate to help each individual regain the ability to 
earn an income and become self-sufficient. In addition, we 
continually monitor the claimant's condition throughout the 
disability to assess ongoing medical status and work capacity.
    As a result of these services we provide, nearly half of 
our long term disability claimants are able to return to work 
within 6 months of receiving benefits. For our long-term 
disability claimants that are also receiving SSDI benefits, we 
experience a recovery rate that is more than six times the rate 
reported by Social Security.
    UnumProvident's contracts most often feature multiple 
levels of benefits based on several different definitions of 
disability employed during the life of the claim. The Social 
Security definition of disability sends an unfortunate message 
to the benefit recipient that they are totally and permanently 
disabled. It creates a mindset that discourages individuals 
from trying to return to work with the result that the claimant 
frequently continues to collect benefits indefinitely.
    Today, two factors are making return to work possible for 
many people who were previously considered permanently 
disabled. The first is medical advances such as protease 
inhibitors for AIDS patients, new treatments for coronary 
artery disease and diabetes. The second is assistive 
technology, such as computer based technology solutions, hand-
held organizers that provide memory assistance for people with 
brain injuries and voice activated workplace tools and 
specialized software that allow people to overcome impairments.
    Our experience at UnumProvident has taught us that a ``one 
size fits all'' approach to case management is usually 
ineffective. Instead we look at every claimant as an 
individual, conducting the medical analysis of each case and 
then developing an appropriate return to work plan tailored for 
the individual. Such an approach demands the appropriate level 
of medical expertise specifically designed by the in-house 
clinical resources maintained by UnumProvident. We recommend 
that the Subcommittee consider the following key areas based on 
our experience in the private sector:
    Adopt benefits that emphasize return to work. We do 
appreciate and endorse Social Security's progress in 
encouraging return to work through the ticket to work and self-
sufficiency program.
    Now it is important for Social Security to incorporate 
other return to work features and incentives such as 
transitional work funding, partial payments and proportional 
benefits, as well as rehabilitation services to further assist 
claimants in returning to work and reducing their dependence on 
cash benefit programs.
    Acknowledge that recovery is incremental. Recovering from 
an impairment is an incremental process and Social Security 
should require ongoing review and documentation throughout the 
claim process. It is important to work with the claimants 
during the recovery period to determine the level of 
functionality of which they are capable at any given stage and 
to consider the impact of medical advances.
    Offer expanded definitions of disability. The present SSDI 
definition of disability provides a disincentive for 
individuals considering returning to work. Adding more flexible 
definitions that reflect the current thinking about the nature 
of disability, how individuals recover and the changing needs 
of today's workers will encourage claimants to focus on 
becoming self-sufficient once again.
    These recommendations can significantly enhance the Social 
Security program by altering the perception of disability and 
realigning objectives to help claimants return to work whenever 
possible. While there will be initial costs incurred, the long-
term savings will prove significant. There is a dignity 
associated with a person's ability to work and great value in 
the ability to live a full and independent lifestyle.
    This philosophy and its focus on abilities is what shapes 
UnumProvident's approach to disability and the assistance we 
provide for our insureds. Thank you again for offering me this 
opportunity to testify. I will be happy to answer questions.
    [The prepared statement of Dr. Anfield follows:]
  Statement of Robert Anfield, M.D., Vice President and Chief Medical 
Officer, Customer Care Centers, UnumProvident Corporation, Chattanooga, 
                               Tennessee
    My name is Dr. Robert Anfield, and I am the Chief Medical Officer 
for the Customer Care organization of UnumProvident Corporation 
(UnumProvident). I appreciate this opportunity to share our corporate 
best practices through testimony about UnumProvident's role as the 
leading provider of disability income protection insurance.
Corporate Background and Philosophy
    UnumProvident is a publicly traded insurance holding company formed 
by the merger of Unum Corporation of Portland, Maine, and Provident 
Companies, Inc., of Chattanooga, Tenn. Our insuring companies include 
Provident Life and Accident Insurance Company; Unum Life Insurance 
Company of America; The Paul Revere Life Insurance Company of America; 
Provident Life and Casualty Insurance Company (in NY only); and First 
Unum Life Insurance Company (in NY only).
    UnumProvident has major centers of operation in Chattanooga, TN; 
Portland, ME; Columbia, SC; and Worcester, MA. Our international 
presence includes disability operations in the United Kingdom, Canada 
and Japan. In addition, the company utilizes the resources of 
subsidiaries in Pennsylvania, California and Wyoming. The single 
largest functional area within UnumProvident is our unique Customer 
Care area, which focuses on delivering expert claim management and 
empathetic return-to-work support to our customers.
    UnumProvident provides insurance solutions for a wide range of 
clients, from individuals and small employers to mid-size companies to 
Fortune 500 companies. The insuring subsidiaries of UnumProvident offer 
a comprehensive portfolio of products and services backed by our 
industry-leading return-to-work resources and disability expertise.


Individual income protection                #1
Employee benefit income protection          #1
Voluntary workplace benefits                #2
Employee benefit long term care             #3



    UnumProvident reported total revenue of $9.4 billion for the twelve 
months ending December 31, 2001. The company holds the following 
industry-leading positions in terms of in-force insurance coverage:
    We maintain this leadership through delivering on our customer 
commitments: comprehensive product solutions, return-to-work expertise, 
and highly responsive service.
How We View Disability
    I'd like to begin today by discussing how UnumProvident views the 
nature of disability. We have made a significant corporate commitment 
to understanding the science of disability. The company is a leading 
proponent of disability research, with groundbreaking work based on the 
realization that disability management goes far beyond simply verifying 
and paying claims. We continually make investments in understanding 
both the scientific and human aspects of disability at every stage of 
life so we can offer more than just a benefit check to our customers.
    We know, based on our extensive experience, that disability is 
episodic, rather than being a fixed or permanent condition, and that 
most claimants eventually recover.
    While some medical conditions do lead to total disability, many 
allow a person to work on a limited basis or safely return to work 
after a temporary period of total disability.
    We also recognize that recovery from a disability is usually 
incremental, with claimants healing and increasing their conditioning 
levels over time. In fact, our experience has shown that most claimants 
have some capacity for work during the recovery period, and that their 
motivation to return to the workplace depends on a number of social, 
vocational and attitudinal factors. Recognizing this reality, 
UnumProvident designs insurance contracts that define disability 
according to our experience and that offer benefits based on return-to-
work transitions. We suggest that Social Security also consider 
offering this type of incentive for claimants.
Supporting Return to Work Success
    At UnumProvident, we have committed significant resources to 
offering Return-To-Work (RTW) support to employers because we know that 
a RTW workplace orientation can make a tremendous difference in helping 
people stay productive or return to work. At the core of 
UnumProvident's Return-To-Work emphasis is Customer Care, our claim 
management organization, whose employees are committed to proactively 
assisting our insureds in their return-to-work efforts.
    Our company has a truly unique claim management model in which 
claims are immediately assessed and triaged to pathways based on 
expected duration and type of injury or illness, in contrast to more 
traditional geographic--or policy-based models. In addition, the 
process involves continual monitoring of the claimant throughout the 
disability duration to assess medical status and work capacity. We also 
provide specialized resources when appropriate to help each individual 
regain the ability to earn an income and become self-sufficient once 
again.
    As the disability insurance market leader, the sheer volume of work 
we manage requires a scale of operations that allows us to specialize 
in ways that give our customers access to a superior level of 
resources:

           LManagement of more than 400,000 new disability 
        claims each year, with over $3.6 billion in benefit paid 
        annually.
           L85 board-certified physicians in 14 specialties. 
        These physicians train claims consultants, offer medical 
        reviews and consult with employees' physicians to clarify 
        abilities and customize return-to-work plans.
           LOver 300 full-time clinical and vocational 
        consultants, making about 235,000 early intervention calls and 
        more than 100,000 referrals to our in-house rehabilitation and 
        other clinical specialists each year.
           L1,000 local case management and support specialists 
        through GENEX' Services, Inc., a UnumProvident 
        Corporation subsidiary. Vocational rehabilitation experts 
        providing return to work planning, development of workplace 
        accommodations, and job retraining when appropriate.

    In addition to vital income replacement during disability, 
UnumProvident offers claimants additional rehabilitation services and 
return-to-work support when appropriate, including:

           LVocational/career counseling: analysis of prior 
        work history to look for skills that would transfer to other 
        jobs, exploring vocational interests and aptitudes, vocational 
        testing.
           LIdentification of vocational alternatives: helping 
        evaluate abilities, prior training, education and experience 
        for alternate work; medical conditions that could impact 
        vocational options; and most viable employment options.
           LResume preparation and assistance with job seeking 
        skills: helping to develop a new resume if necessary, 
        preparation for interviews, assistance in developing answers to 
        possible interview questions, advice on how to approach 
        employers, and how to market skills.
           LPurchase of adaptive equipment: recommendation of 
        adaptive devices that might enable the claimant to perform his 
        or her regular occupation or other occupations. Some examples 
        might be: a different type of keyboard, a magnifying screen for 
        a terminal, a telephone amplifier.
           LJob placement: helping identify employers who have 
        prospective jobs and employer contacts, locally or nationally. 
        We might also advocate for the claimant to return to work with 
        the pre-disability employer or a new employer.
           LWorking with pre-disability employer to explore job 
        accommodations or job alternatives: contacting the claimant's 
        original employer to discuss returning to work; helping 
        identify accommodations or alternate jobs.
           LShort-term retraining: skill enhancement; computer 
        training for individuals whose skills are outdated.

    As a result of these efforts, nearly half of our new claimants are 
able to return to work within six months of receiving benefits. With 
our long term disability claimants that are also receiving SSDI 
benefits, we experience a recovery rate that is more than six times the 
reported Social Security recovery rate.\1\ UnumProvident's long term 
disability recovery rates are more than 30% higher than the industry 
average.
---------------------------------------------------------------------------
    \1\ Based on information from UnumProvident Corporation subsidiary, 
GENEX, November 2001.
---------------------------------------------------------------------------
Definitions of Disability
    Along with the changing nature of disability, the disability income 
protection industry is also evolving. Today's coverage protects wage 
earners at all income levels and in a variety of work situations, as 
opposed to policies of the past that focused primarily on high income 
specialty occupations. As a result, traditional definitions of 
disability are giving way to new approaches in determining how 
disability is defined.
    The traditional definitions of disability have included:

          1. LOwn Occupation (``own occ''), which requires total 
        disability preventing the insured from working in his or her 
        own occupation, even if the insured is able to work in another 
        occupation;
          2. LAny Occupation (``any occ''), which requires a claimant 
        to be disabled from working in any occupation for which he or 
        she is qualified;
          3. LGainful Occupation, which requires a claimant to be 
        disabled from any occupation at which the insured could earn 
        50-60 percent of former income.

             LThe ``loss of earnings''[JMF1] 
        approach included income offsets, so that the benefit for total 
        disability would be reduced in proportion to any additional 
        income, regardless of whether it came from the insured's own 
        occupation or any other.
---------------------------------------------------------------------------
    \[JMF1]\ Loss of earnings and loss of time and duties which isnt' 
mentioned here are also protection for own occupatin. They just have 
the added caveat of ``and not working in another occupation.'' I also 
think its important to note somewhere that you do get paid a benefit if 
the job you go to pays less than the original job if you can't do your 
own occupation (a proportional benefit).
---------------------------------------------------------------------------
             LThe ``loss of time or duties'' doesn't factor in 
        income that still may be coming in from the pre-disability 
        occupation. Protection for own occupation is there, simply with 
        the added caveat of ``and not working in another occupation.'' 
        If a claimant begins another occupation, it is important to 
        note that individual will be paid a proportional benefit if the 
        new job pays less than the original job if the claimant is 
        unable to perform his or her own occupation.

    These definitions often presented an either/or choice in older 
policies. Newer income protection policies offer a range of definitions 
in one integrated package. Any of these definitions may be appropriate 
to the same insured at different career stages:

          1. LAny Occ or Gainful Occ: These definitions are designed to 
        appeal to younger insureds early in their careers when skills 
        are more easily transferable to a new occupation.
          2. LOwn Occ (working or not): This definition may be 
        necessary later when skills are more specialized.

    Today it's much more important to look beyond the definition of 
total disability and ask ourselves, ``Which is more likely to occur 
following a disability: the insured returning to his or her occupation 
full time, returning part time due to disability, or beginning a new 
career?'' The answer makes clear the need for flexibility in defining 
disability to meet the differing needs of insureds in the contemporary 
workplace.
    That is why UnumProvident's contracts most often feature multiple 
levels of benefits based on several different definitions of disability 
employed during the life of the disability to make benefit decisions, 
as opposed to the one definition of disability used to determine 
eligibility for all Social Security claims.
    The Social Security definition of disability--which requires total 
disability and the inability to work in any occupation in order to 
qualify for benefits--sends a message to the benefit recipient that he 
or she is totally and permanently disabled. It creates a mindset that 
discourages individuals from trying to return to work, with the result 
that claimants frequently continue to collect SSDI benefits 
indefinitely.
    UnumProvident recognizes that while many individuals are disabled 
episodically, some claimants may have permanent impairments, such as 
loss of limbs or other severe conditions, that prohibit them from 
working. Many of them have extraordinary cost of living increases that 
can't be met with ordinary income replacement. Our definition of 
disability for catastrophic coverage does not predicate benefits on 
ability to return to work, but instead is based on the loss of two 
Activities of Daily Living (ADLs) or cognitive impairment and can pay 
up to 100 percent of pre-disability salary.
    For claimants with such palpable impairments, we provide SSDI 
advocacy support for all application and appeal levels, including 
representing UnumProvident claimants at judicial hearings and helping 
them receive SSDI benefits within 8 to 12 months, compared to the 
national average of 22 months.\2\
---------------------------------------------------------------------------
    \2\ Based on information from UnumProvident Corporation subsidiary, 
GENEX, November 2001.
---------------------------------------------------------------------------
Cases in Point
    Today, two factors are making a return to work possible for many 
people we previously considered permanently disabled: medical advances 
and assistive technology. Medical advances include the protease 
inhibitors that are extending the lives of AIDS patients; psychotropic 
drugs that increase work function for individuals with depression and 
other affective disorders; new cancer treatments; and medications to 
reduce pain in chronic disorders such as osteoarthritis and other 
muscular/skeletal impairments.
    Assistive technology is a growing field that is significantly 
helping people with impairments to return to work and includes 
computer-based technology solutions, such as hand-held organizers that 
provide memory assistance for people with brain injuries; speech 
recognition technology to compensate for repetitive motion injuries; 
screen magnifiers, screen readers and other devices to compensate for 
visual impairment.
    Increasingly we are finding that some claims thought to be long 
term in nature actually have the potential for recovery. The following 
personal stories demonstrate the impact that medical advances, 
assistive technology and return-to-work support can have on claim 
results:

           LA UnumProvident employee suffered a wrestling 
        accident at the age of 17 that left him with quadriplegia. 
        Although he has a severe condition, he has proven that physical 
        disability doesn't need to be an impediment to succeeding in a 
        high-level job with a large corporation. Today, with a Ph.D. in 
        neuropsychology, he is fully productive in his role as a 
        medical director with the help of a puff-stick and Dragon 
        Naturally Speaking 4.5 speech recognition system--technology 
        solutions made available by UnumProvident.

            LHe augments Dragon with a headset, a keyboard anchored 
        microphone, a tele-dictation system that allows him to dictate 
        long memos and receive the text in e-mail, and a scanner that 
        allows him to manage visual records and forms as PowerPoint 
        images. These assistive technology tools help him perform his 
        daily duties within the corporation.

            L``What I can do now with assistive technology is a 
        thousand times beyond what was possible 20 years ago,'' he 
        says. ``The current state of continuous-speech recognition 
        solutions in amazing, fantastic and something I could only hope 
        for as recently as three or four years ago.''

           LA 48-year old Virginia AIDS claimant who stopped 
        working in March 1996 saw his condition begin to improve in May 
        1999 as a result of new triple-drug therapies introduced in the 
        mid 1990s. A UnumProvident vocational rehabilitation counselor 
        discovered in phone discussions with the claimant that he was 
        interested in returning to work full time. The outcome is shown 
        in this letter from the claimant to the counselor:

            L``You gave me the inspiration and courage to stand once 
        again on my own feet. It was very encouraging when you told me 
        that I have the skills and potential, that I just needed to 
        polish my skills and my resume. On a regular basis, you were in 
        touch with me, asking how I was doing. By your blessings, I 
        finally achieved my destination. I got a job in ________ 
        International, Inc. Thank you very much once again for the 
        blessings, inspiration, support and courage you gave me for the 
        last nine months.''

    The growing numbers of people who are able to maintain or resume 
full and independent lifestyles--including work, whether in their 
original or a new occupation--clearly supports the need for flexibility 
in how we define disability.
    Our experience at UnumProvident has taught us that a ``one-size-
fits-all'' approach to case management is usually ineffective. Instead, 
we look at every claimant as an individual, conducting a medical 
analysis of each case and then--based on diagnosis and expected 
duration--developing an appropriate return-to-work plan tailored for 
the individual.
    UnumProvident also strives to educate and assist employers in 
planning for the return to work of employees who have been absent due 
to specific kinds of illnesses. One example is the following White 
Paper, authored by two of our Customer Care employees, which discusses 
return to work following depression:

Behavioral Health Disability: Depression in the Workplace
Renee Mattaliano, MA, CRC and David McDowell, Ph.D.
UnumProvident Corporation
Returning to Work from Depressions
    The workplace is an ever-changing panorama of policy, practice, 
politics and people. As a part of the high-performance requirements of 
the modern workplace, employees may frequently find that improvements 
in mobile technologies keep them connected to work around the clock. 
Beepers, voicemail, call forwarding, cell phones and e-mails have 
rendered us always accessible to the workplace and to those that make 
up our circle of support. There is an on-going shift to a service 
economy which some consider to be highly stressful.\3\
---------------------------------------------------------------------------
    \3\ Stephen G. Minter: ``Too Much Stress?'' Vol. 61, Occupational 
Hazards, 05-01-1999
---------------------------------------------------------------------------
    Expectations and demands from both the workplace and our personal 
lives can cause significant collisions between work, lifestyle and 
family. For many individuals depression may result. How can employers 
recognize and prevent potential mental health problems for employees 
and appropriately handle situations of depression that do occur? This 
paper will explore the challenges of depression in the workplace and 
provide sensible solutions to improve the health and productivity of 
your workforce.
Q. What are the most common psychiatric causes of occupational 
        impairment?
    A: At UnumProvident, about half of our psychiatric disability 
claims are based on depression, which is the fifth leading cause of 
disability for our long-term disability policyholders. The World Health 
Organization expects that depression will be the second leading cause 
of disability after heart disease by 2020.\4\ In fact, mental illness 
accounts for the fastest growing segment of recipients on Social 
Security Disability Income and Supplemental Security Income.\5\
---------------------------------------------------------------------------
    \4\ Constance Holden: ``Mental Health: Global Survey Examines 
Impact of Depressions,'' Science, 04-07-2000
    \5\ Author not Available: ``Encouraging Disabled to Re-enter the 
Workforce,'' Mental Health Liaison Group Congressional Testimony, 03-
17-1998
---------------------------------------------------------------------------
    Untreated depression is costly. Estimates of the total cost of 
depression to the nation in 1990 ranged from $30-$44 billion. Of the 
$44 billion figure, depression accounts for close to $12 billion in 
lost workdays each year. Additionally, more than $11 billion in other 
costs accrue from decreased productivity due to symptoms that sap 
energy, affect work habits, and cause problems with concentration, 
memory and decision-making. Costs escalate still further if a worker's 
untreated depression contributes to alcoholism or drug abuse.\6\
---------------------------------------------------------------------------
    \6\ National Institute of Mental Health: ``The Effects of 
Depression in the Workplace,'' 06-01-1999
---------------------------------------------------------------------------
Q: How can you tell if someone is depressed?
    A: The nine symptoms of depression are:

           Lloss of interest in or capacity for pleasure;
           Lweight loss or gain;
           Linsomnia or oversleeping;
           Lagitation or slowed tempo of thought and action;
           Lfatigue or loss of energy;
           Lsense of worthlessness or excessive guilt;
           Limpaired concentration or indecisiveness;
           Ldepressed mood; and
           Lpreoccupation with death.

    Five of these nine are required for the diagnosis of major 
depression, but fewer symptoms may qualify for the diagnosis of 
dysthymia or adjustment reaction with depressed mood. In fact, there 
are at least eight different formal psychiatric diagnoses that involve 
depression. It may be useful to think of depression as a state in which 
one feels defeated, has given up and feels helpless and hopeless.
Q: Are there accepted or standard treatments for depression?
    A: Yes. Because depression is one of the most common psychiatric 
illnesses and a leading cause of disability both for UnumProvident 
policyholders as well as worldwide, several organizations have 
established treatment protocols for depression.\7\ One of the standard 
guidelines has been published by the American Psychiatric 
Association.\8\ In general, these guidelines agree that for moderate or 
severe depression:
---------------------------------------------------------------------------
    \7\ Constance Holden: ``Mental Health: Global Survey Examines 
Impact of Depressions,'' Science, 04-07-2000
    \8\ American Psychiatric Association: Practice Guidelines for the 
Treatment of Patients with Major Depression (2nd Ed), April 2000

           Lmedication is a critical component of treatment;
           Lcontact between treater and patient must be 
        frequent (at least once every two weeks or more often), 
        particularly early in treatment before symptoms are reduced and 
        a person's life stabilizes;
           Lmedication dosages and types must be changed 
        regularly, every month or two, until the right dose, the right 
        medication, or the right combination of medications is found 
        that returns the patient to their baseline function; and
           Lpsychotherapy by a qualified professional must 
        accompany medication.

    Generally, the more severe or repetitive the depression, the longer 
one should remain on medication even after symptoms are significantly 
improved and the talking therapy sessions may have ended.
Q: So when people have depression, it sounds like they must be impaired 
        from working?
    A: Many people can and do continue to work while depressed and 
receiving treatment. Their performance may remain relatively 
unaffected. However, mild to moderate symptoms are indicators that 
treatment should be sought. While there may be some decline in 
performance, it may not be noticeable until the symptoms worsen or 
become chronic and have a demoralizing effect on the employee. The more 
quickly one accesses effective treatment, the more likely work 
performance will be unaffected or affected to the same extent, say, as 
a death in the family or a divorce might affect an employee. These are 
events which interrupt the regular flow of life and work, but from 
which people routinely recover their capacity to work within several 
days to several weeks.
Q: Are there ways to facilitate return to work?
    A: Yes, if your company has in-house or contracted medical 
professionals or an insurance carrier, they can assist in referral to a 
qualified professional for evaluating the person's level of impairment 
and prognosis. Proper authorization must exist for the exchange of 
information, and engaging the person's treatment provider in the 
return-to-work process is critical for success.
Q: How do you determine if performance issues are caused by an 
        underlying depressive condition?
    A: The rule of thumb is manage only the performance. As with any 
other employee you should evaluate the need for additional training, 
set clearer expectations, and suggest support through your Employee 
Assistance Program as appropriate for the situation. When and if the 
employee communicates there is a medical problem, that's when you 
enlist the help of your medical professionals or insurance carriers to 
assist in investigating the situation. Proper authorizations are 
essential. Throughout this process, the employer must remain alert to 
needs for reasonable accommodations and/or medical leaves of absence 
and continued performance management.
Q: Do persons with depression require accommodations?
    A: Accommodations may be very useful in keeping a person at work or 
helping a person return to work. Accommodations that reduce demands and 
permit time away from work for treatment can help an employee remain at 
work despite some degree of impairment.

           LYou may consider reduced work time, flexibility in 
        arranging absences, and elimination of tasks in which 
        impairments are most pronounced.
           LAccommodated schedules permitting flexible hours 
        may be helpful, since depressive symptoms are often worse in 
        the morning and gradually improve during the day.
           LIf a depressed person becomes emotional while 
        speaking with customers, you might arrange for less or no 
        customer contact for an initial period of two to three weeks 
        while medications and psychotherapy are started or adjusted.
           LIf concentration difficulties interfere with 
        detailed numerical analyses, work could be routed elsewhere and 
        the employee assigned tasks requiring less sustained 
        concentration, e.g. working from a master document to format a 
        newsletter, or working as a member of a team on a project with 
        multiple aspects.
           LWhile technology may lengthen work hours by making 
        us available to work around the clock, it can also be helpful 
        when accommodations are required. Technology that allows 
        working from home, or facilitates tracking job tasks and 
        schedules, may be a critical helpful tool in accommodating 
        home-based employees, in assisting with organization, and in 
        transitioning employees back to full duty.

    When returning from a period of psychiatric disability, an employee 
faces two general challenges: the fear of stigma, and eroded self-
confidence. Stigma involves the question of how others will react. 
``Will there be ridicule?,'' ``Whispers?,'' or ``Exaggerated 
solicitousness?'' The pessimism associated with depression, coupled 
with the effects of not working for a significant period of time, may 
affect self-confidence: The employee may wonder ``Can I still do the 
work?,'' ``Can I regain that concentration?,'' or ``I feel rusty--how 
long will it take before I feel `normal' again?''

           LGradual return to work, beginning with shorter days 
        or fewer than five days a week, may help ease the transition. A 
        similar graduated approach to work tasks, reserving 
        reintroduction of those tasks thought by the employee and 
        employer to represent the greatest challenge until some early 
        victories are won and competencies are demonstrated, may also 
        be a useful general approach.
           LOngoing support services are invaluable in reducing 
        the likelihood of relapse and reducing the chronicity of the 
        problem. These services may come in the form of continued 
        medical follow-up and/or support services through a company-
        sponsored Employee Assistance Program.
Q: How do you handle potential employee relations issues when 
        accommodations are made to help someone stay at work or return 
        to work?
    A: Depending on the symptoms presented in the workplace, the 
manager may need to explain the fact that the employee's job duties are 
temporarily changing. It is imperative that confidentiality is 
maintained; consequently, the manager should inform co-workers only of 
the facts related to the work at hand and assure them that workflow for 
everyone will be monitored closely. Any difficulties from any of the 
workers should be reported and investigated. As with all 
accommodations, time parameters should be established and monitored for 
progress.
Q: Are there ways to prevent employees from developing psychiatric 
        difficulties?
    A: One in ten Americans will experience a significant depression in 
her or his life. If we could regard depression as a common human 
problem, rather than a strange and awkward illness better not discussed 
openly, we would already have made great strides in helping foster an 
atmosphere in which people could acknowledge to themselves that they 
have a problem and seek an effective solution.
    The stigma which continues to surround emotional problems causes 
great suffering by impeding recognition and receiving medical care. The 
National Institute of Occupational Safety and Health (NIOSH) promotes 
evaluating your organization and making changes where appropriate to 
improve working conditions.\9\ Employee Assistance Programs, support 
for participation in annual depression screening clinics, reasonable 
sharing of personal difficulties, support for education about mental 
health issues, and fostering overall healthy lifestyle through wellness 
initiatives will all improve your company's ability to foster adaptive 
rather than regressive attitudes and behaviors regarding psychiatric 
illness.
---------------------------------------------------------------------------
    \9\ Stephen G. Minter: ``Too Much Stress?'' Vol. 61, Occupational 
Hazards, 05-01-1999
---------------------------------------------------------------------------
Recommendations
    We recommend that the Subcommittee consider the following three key 
areas based on our experience in the private sector:

           LAdopt benefits that emphasize a return to work. We 
        appreciate and endorse Social Security's progress in 
        encouraging return to work through the Ticket to Work and Self-
        Sufficiency Program. Now it is important for Social Security to 
        incorporate other return-to-work features and incentives, such 
        as transitional work funding, partial payments and proportional 
        benefits, as well as rehabilitation services, to further assist 
        claimants in returning to work and reducing their dependence on 
        cash benefit programs.
           LAcknowledge that recovery is incremental. 
        Recovering from an impairment is an incremental process and 
        Social Security policies should require ongoing review and 
        documentation throughout the claims process. It is important to 
        work with claimants during the recovery period to determine the 
        level of functionality of which they are capable and to 
        integrate medical advances into the continual review process.
           LOffer expanded definitions of disability. Requiring 
        a claimant to be totally disabled from any occupation as the 
        only way to qualify for benefits provides a disincentive for 
        individuals to consider returning to work. Adding more flexible 
        definitions that reflect current thinking about the nature of 
        disability, how individuals recover and the changing needs of 
        today's workers will encourage claimants to focus on becoming 
        self sufficient once again.

    These recommendations can significantly enhance the Social Security 
program by altering the perception of disability and realigning 
objectives to help claimants return to work whenever possible. While 
there will be initial costs incurred, the long-term savings will prove 
significant.
Conclusion
    There is dignity associated with a person's ability to work and 
great value in the ability to live a full and independent lifestyle. 
This philosophy--and its focus on abilities--is what shapes 
UnumProvident's approach to disability and the assistance we provide 
for our insureds.
    Statistics show that the general population does want to be active 
in society and part of the workforce. Sixty percent of Americans not 
working say that they would like to if the opportunity were made 
available.\10\
---------------------------------------------------------------------------
    \10\ Richardson, Mary, 1994. The Impact of the Americans with 
Disabilities Act on Employment for People with Disabilities. Annual 
Reviews, Public Health. 15:91-105.
---------------------------------------------------------------------------
    For those of us in the income protection insurance industry, it is 
both our job and responsibility to ensure we make that opportunity a 
reality. In closing, I want to thank you again for offering me this 
opportunity to testify. I will be happy to answer any questions now.

                                 

    Chairman SHAW. Thank you, doctor. Ms. Owens.

  STATEMENT OF PATRICIA OWENS, CONSULTANT, BOARD MEMBER, AND 
  MEMBER, DISABILITY POLICY PANEL, NATIONAL ACADEMY OF SOCIAL 
                           INSURANCE

    Ms. OWENS. Thank you for the opportunity to appear before 
you today, both for myself and from the National Academy of 
Social Insurance (NASI). My testimony is based largely on the 
work of the NASI Disability Policy Panel, of which I was a 
member.
    At the request of this Subcommittee of the 102nd Congress, 
the panel examined whether the design of the SSDI-SSI Programs 
encouraged persons with disabilities to emphasize their 
impairments rather than to get back to work. It also looked at 
ways to better link beneficiaries with rehabilitation and work 
without significantly raising the cost of the program.
    The panel made numerous recommendations to make it more 
work friendly. One of those is extending health care coverage. 
Another was the Ticket to Work. We are very happy that we were 
able to work with you and that you could use some of that 
research when you came up with the Ticket to Work and Work 
Incentives Act, Public Law 106.
    The panels report also emphasized the need for 
administrative resources in the Social Security Administration 
to carry out the definitions as they currently exist and any 
changes made in the act. I will come back to that in a minute.
    The purpose of SSDI is earnings replacement insurance--and 
this is what I want to emphasize. Earnings replacement 
insurance, public and private, limits the consequences of the 
inability to work because of disability by providing income 
support. That is very important, and I think Mr. Pomeroy had 
indicated it is really one of the features of social insurance.
    Any work disability definition, of which the Social 
Security disability program is one, contains several elements. 
The elements are: a health condition that prevents work; work 
itself, and how you define work; offsetting capacities that 
exist; and the environment in which the person works and lives. 
It is a very clear cut sort of look at determining disability 
for the inability to work.
    It is necessary that there be income replacement. Income 
replacement can be used when inability to work is clearly 
established and that inability to work cannot be removed. 
Income replacement can also be used temporarily during a 
transitional period as other remedies are explored and applied.
    There are other remedies to work disability, including 
changing or containing the impairment through health care, 
modifying work requirements, enhancing the person's 
capabilities and environment changes, and I think we have heard 
a lot about that. The point I am making here is that income 
replacement and determining work disability can be put in place 
while other things are being considered and taking place for 
this person with the disability.
    The SSDI definition of disability is very strict. It is a 
very strict definition of disability. It is stringent and 
replacement rates are frugal. It is also very generic, and I 
think that is an important thing that we need to focus on. The 
application of regulations must be systematically updated over 
time to reflect dynamic social changes, I think we have heard 
this over and over again.
    You can have a definition that is generic and static. The 
medical conditions, the work, and so forth, change and the 
administration of the definition must therefore change around 
those changes. I was very glad to hear Mr. Gerry say that. So, 
Congress has from time to time actually legislated reforms 
because of these changes.
    The NASI panel concluded that the policy should flow--and 
this is the important difference here in this testimony--the 
policy should flow from overall goals that are set up. Then 
each of the various programs underneath those overall goals 
should have its own definition of disability to fit specific 
remedies. The panel concluded that the primary goal of a 
national disability policy should be the integration of people 
with disabilities into American society, equal opportunity for 
participation, independent living, all of those pieces. So, it 
is that organizing principle under which the other programs 
need to fit. Social Security disability happens to be one of 
those.
    I would like to submit for the record Chapter 4 of NASI's 
report, which goes into the different definitions that various 
remedies have to have in order to carry out a national 
disability policy. So, different definitions are in fact 
important. The work disability definition for wage replacement 
is one of those definitions. I would also like to submit 
Chapter 5, which goes into the panel's evaluation of SSA's 
methods for assessing disability and the things you have to 
consider for that.
    [The chapters follow]

       Chapter 4--Defining Eligibility for Benefits and Services:
                  Distinguishing Programs and Purposes
    In chapter 1, the Disability Policy Panel presented a single 
conceptual definition of disability for purposes of clarifying the 
nature of work disability. This chapter presents the Panel's review of 
specialized definitions of disability that are used as eligibility 
criteria in public laws or private contracts that offer civil rights 
protection, rehabilitation, other services or income support to persons 
with impairments or work disabilities. In reviewing these definitions, 
the Panel concluded that:

           Ldifferent definitions of disability are appropriate 
        for programs that offer different kinds of services or 
        benefits;
           Lwork disability--based on loss of ability to earn--
        is an appropriate eligibility criteria for earnings-replacement 
        insurance; and
           Lthe Social Security Act definition of work 
        disability is very strict. A less strict test would 
        significantly increase the cost of Social Security disability 
        benefits.

    This chapter addresses concerns that these eligibility criteria 
differ in their definition of disability; reviews the definitions used 
for specific disability-related programs; and discusses various 
alternative definitions of disability that have been suggested for the 
Social Security program. It concludes by exploring whether programs 
with different, specific purposes and eligibility criteria--such as 
vocational rehabilitation and Social Security disability insurance 
(DI), or the Americans with Disabilities Act 1990 (ADA) and DI--are in 
conflict.
             Do We Need a Single Definition of Disability?
    A single, broad definition of disability, as illustrated by the 
conceptual model of disability adopted by the Panel, is useful in 
drawing meaningful distinctions among such disability-related concepts 
as medical condition, impairment, functional limitation and work 
disability. The conceptual definition of work disability is useful in 
clarifying its four elements--impairments, skills and abilities, tasks 
of work, and the broader environment--and therefore in considering 
various possible remedies for work disability.
    But a single legal definition of disability for purposes of 
defining eligibility for benefits and services is neither necessary nor 
desirable. A one-size-fits-all definition would be ill-suited to the 
diverse needs of persons with impairments or work disabilities. Rather, 
eligibility criteria should and do relate directly to the service or 
benefit being offered:

           LA definition of disability based on need for 
        assistance with activities of daily living (ADLs) is 
        appropriate for determining eligibility for publicly financed 
        services that assist with ADLs.
           LA definition of disability based on need for and 
        likely benefit from vocational services is appropriate for 
        determining eligibility for publicly financed vocational 
        rehabilitation (VR) services.
           LA definition of disability that encompasses all who 
        are at risk of discrimination in employment or public access is 
        appropriate for determining who is covered by civil rights 
        protection.
           LA definition based on loss of earning capacity is 
        appropriate for determining who is eligible for public or 
        private cash benefits to replace part of lost earnings.

    A mismatch between eligibility criteria and benefits that are 
offered creates inappropriate incentives and gaps in coverage for 
people seeking to gain access to the services they need. For example:

           LBasing eligibility for personal assistance with 
        ADLs on a definition of disability related to work incapacity 
        fails to cover individuals who need such assistance whether or 
        not they are working.
           LBasing eligibility for health care on a definition 
        of disability related to work incapacity is appropriate if, and 
        only if, people who work are ensured access to health care 
        through their jobs. If they cannot get health care coverage 
        when they work, then basing eligibility for health care 
        coverage on work disability leaves uncovered those who can and 
        do work.
    Consistency in disability policy is found instead in its 
overarching goals. The Panel believes the primary goal of a national 
disability policy should be the integration of people with disabilities 
into American society. That includes equality of opportunity, full 
participation, independent living and economic self-sufficiency. These 
goals are pursued through a broad landscape of systems that finance 
health care and education for the general population and various 
programs that provide disability-related goods and services, legal 
protections and earnings replacement benefits, as discussed in chapter 
1. Legal definitions of disability that are used as eligibility 
criteria for these various services, legal protections and cash 
benefits rightly differ because they target particular remedies to a 
specific need among the varied needs that people with disabilities 
have.
Legal Definitions of Disability: Different Definitions are Appropriate 
                         for Different Purposes
    The Panel reviewed a number of different definitions of disability 
that are used in public laws or private contracts. These legal 
definitions of disability are not meant to be an all-purpose definition 
of the meaning of disability. Instead, they are used as eligibility 
criteria to specify who is eligible for particular protections, 
services, or benefits provided by various public laws or private 
contracts.
    Each of the programs the Panel reviewed offers a different kind of 
remedy or benefit to people who have impairments, functional 
limitations or work disabilities. As such, each employs a different 
legal definition of disability for determining who is eligible for what 
the program provides, whether that is civil rights protection, 
rehabilitation, long-term care services or earnings-replacement 
benefits. The programs are not in conflict with one another because 
they offer different remedies or because they define eligibility for 
different remedies in different ways. Rather, taken together, they 
reflect the extraordinary diversity of both abilities and needs among 
persons who have some sort of impairment, functional limitation or 
disability.
    The variations among legal definitions and their match with the 
purposes of particular programs is illustrated by examining four 
different sets of disability policies: civil rights protection, 
vocational rehabilitation, long-term care services and earnings-
replacement insurance.
Civil Rights Protection
    The ADA defines disability for the purpose of providing legal 
remedies to those at risk of discrimination in employment or public 
access (figure 4-1). The ADA defines disability broadly for the purpose 
of identifying who is covered by the civil rights protection of the 
Act:

           L``Disability'' means with respect to an individual 
        (1) a physical or mental impairment that substantially limits 
        one or more major life activities of such individual, (2) a 
        record of such an impairment, or (3) being regarded as having 
        such an impairment.\1\
---------------------------------------------------------------------------
    \1\ 42 U.S.C. 12102(2).

  Figure 4-1. Definitions of Disability for Civil Rights Protection and
                        Eligibility for Services
------------------------------------------------------------------------
                                      Purpose of
         Program or law               definition          Definition
------------------------------------------------------------------------
Civil rights protection
------------------------------------------------------------------------
Americans with Disabilities Act   To determine who    Individual with a
                                   is protected by     physical or
                                   the                 mental impairment
                                   nondiscrimination   that
                                   and public          substantially
                                   accommodation       limits one or
                                   provisions of       more major life
                                   ADA.                activity; a
                                                       record of such an
                                                       impairment; or
                                                       being regarded as
                                                       having such an
                                                       impairment.
------------------------------------------------------------------------
Eligibility for rehabilitation services
------------------------------------------------------------------------
Vocational rehabilitation         To determine who    An individual who
 (public program)                  is eligible to      (i) has a
                                   receive VR          physical or
                                   services.           mental disability
                                                       that constitutes
                                                       or results in a
                                                       substantial
                                                       impediment to
                                                       employment and
                                                       (ii) can benefit
                                                       in terms of an
                                                       employment
                                                       outcome from
                                                       vocational
                                                       rehabilitation
                                                       services
                                                       provided.
------------------------------------------------------------------------
Vocational rehabilitation         To determine who    Cost/benefit
 (private employment-based         might be offered    analysis.
 disability insurance)             employer-financed   Employer--or
                                   VR services         insurer-financed
                                   (which are not      VR services are
                                   part of the         offered at the
                                   contractual         discretion of the
                                   employee benefits   employer/insurer
                                   agreement).         and are provided
                                                       based on their
                                                       cost recovery
                                                       potential from
                                                       the employee
                                                       returning to
                                                       work.
------------------------------------------------------------------------
Eligibility for long-term care services
------------------------------------------------------------------------
Medicaid (institutional care)     To determine who    Needs assistance
                                   is eligible for     with ADLs or
                                   Medicaid-financed   medical
                                   institutional       assessment of
                                   care, or            need for
                                   community-based     institutional
                                   alternatives.       care. Depends on
                                                       the state plan.
------------------------------------------------------------------------
Abbreviations: ADA = Americans with Disabilities Act, ADLs = activities
  of daily living, VR = vocational rehabilitation.

      
           L``Major life activities''means functions such as 
        caring for oneself, performing manual tasks, walking, seeing, 
        hearing, speaking, breathing, learning, and working.\2\
---------------------------------------------------------------------------
    \2\ U.S. House of Representatives, Americans with Disabilities Act 
1990: Report Together with Minority Views, Rpt. No. 101-485, Part 2 
(Washington, DC: U.S. Government Printing Office, 1990), p. 51.

    Regarding discrimination in employment, the ADA states that no 
covered entity shall discriminate against a ``qualified individual with 
a disability'' because of disability in regard to job-application 
procedures; the hiring, advancement or discharge of employees; employee 
compensation; job training; and other terms and conditions of 
---------------------------------------------------------------------------
employment.

           LA qualified individual with a disability is an 
        individual with a disability who, ``with or without reasonable 
        accommodation, can perform the essential functions of the 
        employment position that such person holds or desires.'' \3\
---------------------------------------------------------------------------
    \3\ 42 U.S.C. 12111.

    Employers are required to provide reasonable accommodation, unless 
the accommodation would place an undue hardship on the operation of the 
business. Undue hardship is an action that would require significant 
difficulty or expense. It is determined on a case-by-case basis.\4\
---------------------------------------------------------------------------
    \4\ N.L. Jones, ``Essential Requirements of the Act: A Short 
History and Review,'' The Americans with Disabilities Act: From Policy 
to Practice, J. West (ed.) (New York, NY: Milbank Memorial Fund, 1991), 
pp. 36-37.

    The broad definition of who is covered by the ADA is appropriate 
for the purpose of the Act, which is to offer legal remedies to those 
who face discrimination in employment or public accommodation. For that 
purpose, it is appropriate to include not only those who have 
impairments, but also those who are believed to have impairments or in 
the past have had impairments because they too may be at risk of 
discrimination.
Vocational Rehabilitation
    The Federal/state program that provides VR services defines 
disability in terms of the need for and likely benefit from the 
rehabilitation services the program offers. The Vocational 
Rehabilitation Act, as amended in 1992, adopted the ADA definition for 
setting its research, training and independent-living center goals. The 
definition used for eligibility for VR services, however, remains 
related to the need for and likelihood of benefiting from the services 
the program offers. That is:

          An individual who (i) has a physical or mental disability 
        that constitutes or results in a substantial impediment to 
        employment and (ii) can benefit in terms of an employment 
        outcome from vocational rehabilitation services provided.\5\
---------------------------------------------------------------------------
    \5\ Section 7(8)(A) of the Rehabilitation Act, as amended in 1992.

---------------------------------------------------------------------------
    The 1992 amendments modified the eligibility criteria by adding:

          it shall be presumed that an individual can benefit in terms 
        of an employment outcome from vocational rehabilitation 
        services . . . unless the designated state unit can demonstrate 
        by clear and convincing evidence that such individual is 
        incapable of benefiting from vocational rehabilitation services 
        in terms of an employment outcome.\6\
---------------------------------------------------------------------------
    \6\ Ibid., section 102 (a)(4)(A).

    The change shifts the burden of proof from the applicant to the VR 
agency in determining whether a person can benefit from VR services. 
The eligibility criteria, however, remain based on the need for, and 
prospect of benefiting from, services that VR agencies offer.
    Private employers or disability insurers also offer vocational 
rehabilitation services. The services rarely, however, are an 
entitlement or contractual obligation to the individual worker from the 
employer or insurer. Instead, eligibility for insurer-financed 
rehabilitation services is based on the cost recovery potential to the 
employer or insurer of paying for those services, so the employee can 
return to work and leave the private disability insurance rolls.
Long-Term Care Services
    Programs that provide long-term care services, while neither widely 
developed nor uniformly available in the United States, generally 
define disability in terms of limitations in performing ADLs. They 
provide institutional or community-based services to assist individuals 
with ADLs.
    The Medicaid program is the main source of public financing to 
provide individuals with very significant disabilities with long-term 
care services, such as institutional care in nursing homes for elderly 
persons or intermediate care facilities for persons with mental 
retardation (ICFs/MR). To encourage community-based alternatives to 
institutional care, Medicaid waivers have allowed states to arrange 
long-term care in the community for individuals who would otherwise 
meet the state's test of need for institutional care, if the community-
based alternative costs no more than institutional care. The Medicaid 
program has also permitted states to fund user-directed, community-
based personal assistance services.\7\ To qualify for institutional or 
community-based services, individuals must meet the state's eligibility 
criteria, which are usually based on need for assistance with ADLs such 
as bathing, eating, toileting, getting around inside the home and 
getting in or out of bed or a chair.\8\
---------------------------------------------------------------------------
    \7\ This is made possible by a regulation (42 CFR 440.170(f)) 
``that permits personal assistance services to be provided in a 
person's home by an individual, not a Member of the family who is 
qualified to provide such services, where services are prescribed by a 
physician in accordance with a plan of treatment and are supervised by 
a nurse.'' Because this regulation does not specify the amount of nurse 
supervision required, it permits states to allow a great deal of 
consumer direction in the daily management of one's personal assistance 
needs. G. DeJong and T. Wenker, ``Attendant Care as a Prototype 
Independent Living Service,'' Caring, November 1982, pp. 26-30.
    \8\ These need-for-service eligibility criteria are in addition to 
the Medicaid categorical criteria (SSI or AFDC receipt, or over age 65) 
and the Medicaid income and resource eligibility criteria.
---------------------------------------------------------------------------
Earnings Replacement Insurance
    Cash benefit programs that are designed to replace earnings from 
prior work all use a definition of disability based on loss of ability 
to work. In addition, they all have other eligibility rules that 
require a record of prior work from which contributions toward 
disability protection were paid (by the employee, the employer or both) 
and all, in one way or another, relate the amount of the benefit paid 
to the prior level of covered earnings that have been lost because of 
work disability. Various definitions used to determine eligibility for 
benefits to replace lost earnings are summarized in figure 4-2. They 
differ mainly in the range of jobs that must be considered in 
determining whether the insured individual is unable to work.

           LPrivate long-term disability insurance (LTDI) 
        contracts usually define disability in terms of inability to 
        perform one's usual occupation, although after a period of time 
        (often 2 years) the definition shifts to a stricter test of 
        inability to perform the duties of any occupation for which one 
        is qualified by training, education or experience.\9\
---------------------------------------------------------------------------
    \9\ M.W. Kita, ``Morbidity and Disability,'' Journal of Insurance 
Medicine, Winter 1992, p. 272.
---------------------------------------------------------------------------
           LPrivate short-term disability insurance contracts 
        usually define disability in terms of inability to perform 
        one's own job, which is a less strict test than the ``own 
        occupation'' test used for long-term disability insurance. The 
        job-specific test is used for short-term disability benefits 
        because it is generally assumed that the employee will be able 
        to return to his or her job after he or she recovers from 
        temporary illness, injury or maternity.
           LThe U.S. Civil Service Retirement System definition 
        of long-term disability for eligibility for disability 
        retirement pensions is similar to an occupational test in 
        private LTDI--inability to perform the employee's current 
        position or another available position in the same agency at 
        comparable pay for which the person is qualified.
           LThe Railroad Retirement System offers an 
        occupational definition of disability (inability to perform 
        their usual occupation) for workers with 20 years of service 
        and a current connection to the railroad industry. Railroad 
        workers with fewer years of service, or those who have left 
        railroad employment, can receive disability benefits from the 
        Railroad Retirement System if they meet a definition of 
        disability that is essentially the same as the Social Security 
        definition.
           LThe Social Security Act definition of long-term 
        disability is clearly the most stringent. It defines disability 
        as:

``the inability 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 which has lasted or can be expected 
to last for a continuous period of not less that 12 months . . . An 
individual shall be determined to be under a disability only if his 
physical or mental impairment or impairments are of such severity that 
he is not only unable to do his previous work but cannot, considering 
his age, education, and work experience, engage in any other kind of 
substantial gainful work which exists in the national economy . . .'' 
\10\
---------------------------------------------------------------------------
    \10\ Section 223(d)(1)(A) and (2)(A) of the Social Security Act.
---------------------------------------------------------------------------
    All of these systems have in common the purpose of providing income 
to replace part of lost earnings while the worker is unable to work as 
a result of illness, injury or work disability. Their definitions of 
disability all relate to the demands of work. They differ in terms of 
the range of jobs or job tasks that are considered in determining work 
disability. Short-term disability usually considers the worker's 
current job; insurance or pensions for long-term disability often 
consider the full range of jobs within the worker's occupational group. 
Social Security disability insurance has the most demanding standard 
because it considers the person's ability to do any work that exists in 
significant numbers in the national economy. (The Social Security Act 
definition is discussed in greater detail in chapter 5.)

The Panel concludes that work disability is an appropriate legal 
definition_or eligibility criterion_in public laws or private contracts 
that are designed to pay benefits to replace part of lost earnings from 
work.

    On the other hand, work disability is not necessarily a proper 
eligibility criterion for allocating publicly financed services or 
benefits that people need whether or not they are working, particularly 
if these services or benefits are not available to people with 
impairments or chronic health conditions who do work. Examples of 
services people need whether or not they are working include health 
care coverage and, in some cases, personal assistance services or other 
ongoing impairment-related supports.
    The Social Security Act definition, while very strict, is 
consistent with the Panel's conceptual model of work disability. Work 
disability involves the interaction among a person's medically 
determinable impairment; the environment in which he or she is expected 
to work; the tasks that constitute work the person can reasonably be 
expected to do; and his or her offsetting capacities or compounding 
limitations in performing those tasks.

         Figure 4-2. Definition of Disability for Cash Benefits
------------------------------------------------------------------------
                                      Purpose of
         Program or law               definition          Definition
------------------------------------------------------------------------
Replacement of prior earnings
------------------------------------------------------------------------
Disability insurance (OASDI)      Eligibility for     INABILITY TO WORK.
                                   benefits to         Inability to
                                   partially replace   engage in SGA
                                   past earnings.      because of a
                                                       medically
                                                       determinable
                                                       physical or
                                                       mental impairment
                                                       expected to last
                                                       12 months and of
                                                       such severity
                                                       that individuals
                                                       cannot, after
                                                       considering their
                                                       age, education,
                                                       and work
                                                       experience, do
                                                       their previous
                                                       work or other
                                                       work that exists
                                                       in the national
                                                       economy.
------------------------------------------------------------------------
Private long-term disability      Contractual         OWN OCCUPATION/ANY
 insurance                         entitlement to      OCCUPATION.
                                   benefits to         Often, for first
                                   partially replace   2 years,
                                   past earnings.      inability to do
                                                       own occupation.
                                                       Then inability to
                                                       do any suitable
                                                       occupation.
------------------------------------------------------------------------
Private short-term disability     Contractual         OWN JOB. Inability
 insurance                         entitlement to      to perform own
                                   benefits to         job.
                                   temporarily
                                   replace earnings.
------------------------------------------------------------------------
U.S. Civil Service disability     Federal employees'  OCCUPATIONAL.
                                   entitlement to      Because of
                                   disability          disease or
                                   pension.            injury, unable to
                                                       render useful and
                                                       efficient service
                                                       in the employee's
                                                       current position
                                                       or in a vacant
                                                       position in the
                                                       same agency at
                                                       the same pay
                                                       level for which
                                                       the individual is
                                                       qualified for
                                                       reassignment.
------------------------------------------------------------------------
Railroad retirement disability    Railroad workers'   Regular
 annuity                           entitlement to      disability: same
                                   monthly benefits    as OASDI. For
                                   based on            workers with 20
                                   disability.         years of service
                                                       and a current
                                                       railroad job,
                                                       inability to
                                                       perform the
                                                       worker's regular
                                                       railroad job.
------------------------------------------------------------------------
Abbreviations: OASDI = Social Security old-age, survivors, and
  disability insurance, SGA = substantial gainful activity.

      
       Alternative Definitions of Disability for Social Security
    Because the Social Security test of disability is very strict, it 
is often criticized for requiring that applicants be unable to do ``any 
substantial gainful activity'' in order to qualify for benefits. That 
is, of course, true. The Panel considered various less strict tests of 
work disability for Social Security. The appeal of such alternatives is 
that they would make Social Security more ``work friendly'' by paying 
benefits to more persons who can and do work. The drawback of such 
proposals is that they would increase the number of people who would 
qualify for Social Security disability benefits and, therefore, would 
increase the cost of the DI program.
Occupational Test of Disability
    The occupational test of disability--inability to perform one's own 
occupation--that is used in many private long-term disability insurance 
plans is less strict than the Social Security test. This test would 
allow benefits to be paid to workers who are no longer able to do their 
usual occupation, but nonetheless are quite capable of doing other 
work, including work at relatively high pay.
    The Panel reviewed a comprehensive reform proposal that involved an 
occupational test of disability for DI that would allow benefits if the 
applicant were unable to do his or her usual occupation.\11\ This 
occupational test was estimated to increase the cost of the DI program 
by about $20 billion per year (in 1994 dollars) after 10 years, or by 
roughly 50 percent.\12\
---------------------------------------------------------------------------
    \11\ A.I. Batavia and S.B. Parker, ``From Disability Rolls to 
Payrolls: A Proposal for Social Security Program Reform,'' Journal of 
Disability Policy Studies, Vol. 6, No. 1, 1995.
    \12\ Social Security Administration, Office of the Actuary, 
memorandum, ``Estimated Increase in OASDI Benefit Payments Under the 
`Batavia-Parker' Proposal To Modify the DI Program,'' September 10, 
1993.
---------------------------------------------------------------------------
Partial Disability
    Some European social insurance programs pay partial disability 
benefits. In The Netherlands, for example, if workers have a loss of 15 
to 80 percent of their working capacity, they may receive a partial 
disability pension. If such workers are employed, they are eligible for 
a fraction of the full disability pension. In Sweden, partial 
disability pensions may be paid at 25 percent, 50 percent or 75 percent 
of a full disability pension for either the universal disability 
pension or the earnings-related pension.\13\
---------------------------------------------------------------------------
    \13\ Social Security Administration, Social Security Programs 
Throughout the World--1995 (Washington, DC: U.S. government Printing 
Office, July 1995), pp. 316-17.
---------------------------------------------------------------------------
    Both The Netherlands and Sweden spend significantly more on 
disability benefits than does the United States. The United States in 
1991 spent 0.7 percent of its gross domestic product (GDP) on Social 
Security and SSI disability benefits. In contrast, The Netherlands and 
Sweden spent 4.6 and 3.3 percent of their GDP, respectively for their 
disability benefit systems that include partial disability 
benefits.\14\
---------------------------------------------------------------------------
    \14\ L.J.M. Aarts and P.R. de Jong, ``European Experiences with 
Disability Policy,'' Disability, Work and Cash Benefits, J.L. Mashaw, 
et al., (eds.) (Kalamazoo, MI: W.E. Upjohn Institute for Employment 
Research, forthcoming).
---------------------------------------------------------------------------
    In the United States, permanent partial disability benefits also 
are provided by state workers' compensation programs. Compensation for 
permanent partial disability is one of the most complicated and 
contentious aspects of workers' compensation. Broadly speaking, three 
different bases are used for determining compensation for permanent 
partial disability:

           LImpairment-based methods provide compensation based 
        on physical or mental loss of use of bodily function. This 
        method pays a specified amount for such factors as loss of 
        motion, loss of strength or loss of a part of the body.
           LWage-loss methods base the benefit on the actual 
        partial loss of earnings as a result of the permanent partial 
        impairment. The amount of the benefit is based of demonstrated 
        loss of past earning capacity.
           LEarnings-capacity-loss methods take into account 
        the impact of the worker's age, education and work experience 
        in combination with the permanent partial impairment to 
        estimate the consequences of the injury for the worker's future 
        stream of earnings.

    A recent blue ribbon panel on workers' compensation concluded that 
each of these methods has certain advantages as well as significant 
flaws. Impairment-based valuations of loss can be measured with ease, 
but the benefit is not related to the economic consequences of the loss 
for the individual worker. Wage-loss systems come the closest to the 
traditional purpose of workers' compensation, but they provide 
disincentives for workers to return to full employment if the amount of 
the benefit is related to the demonstrated partial wage loss. In 
addition, it is difficult to determine whether the wage loss 
experienced long after the injury is due to the injury or to other 
factors, such as economic conditions. Finally, assessment of earnings-
capacity loss takes account of both the impairment and its future 
economic consequences, but the assessment is highly subjective and 
often involves dispute and litigation about the valuation of future 
earnings lost due to the injury.\15\
---------------------------------------------------------------------------
    \15\ Blue Ribbon Panel on Workers' Compensation, Policy Statement 
on Permanent Partial Disability (Denver, CO: National Conference of 
State Legislatures, 1992).
---------------------------------------------------------------------------
    In brief, experience in other countries and with workers' 
compensation in the United States suggests that partial disability 
benefits tend to be costly as well as difficult and contentious to 
implement. The Panel believes that the disabled worker tax credit it is 
recommending as a wage subsidy for low-income workers with disabilities 
is a far preferable way to provide partial support to low-income 
workers whose capacity to earn is reduced, but not eliminated, by a 
disabling impairment (see chapter 7).
Veterans' Compensation Impairment Test
    The veterans' compensation (VC) system in the United States uses a 
wholly different concept for paying cash compensation. It pays monthly 
benefits to veterans whose impairments resulted from injury or disease 
incurred or aggravated while in active military service. The amount of 
compensation depends solely on the degree of impairment, rated as a 
percentage of normal function that is lost. One appeal of this approach 
is that receipt of benefits is not based on work incapacity. Veterans 
with service-connected impairments receive benefits for life, 
regardless of their future success in the labor market. Monthly 
payments range from $89 for an impairment with a 10-percent rating to 
$2,165 for a 100-percent impairment rating in 1995. Applying this 
concept to Social Security for all Americans is problematic for at 
least two reasons:

Cost versus Benefit Adequacy. The VC impairment test for paying 
compensation is much more expansive that the Social Security test based 
on ``inability to engage in any substantial gainful activity.'' Of the 
1.3 million people under age 65 receiving veterans' compensation, only 
about 9 percent are classified as ``unemployable,'' a concept similar 
to the Social Security definition of work disability. About 22 percent 
have impairment ratings of 50 percent or more.\16\ The rest have lesser 
impairments. If the distribution of impairments in the general 
population is comparable to that among veterans receiving compensation, 
then;
---------------------------------------------------------------------------
    \16\ Disability Policy Panel, Preliminary Status Report of the 
Disability Policy Panel (Washington, DC: National Academy of Social 
Insurance, 1994), table II-4, p. 44.

           LTo compensate all Americans who have an impairment 
        equal to the VC rating scale from 10 to 100 percent would cover 
        about 10 times the number of people who meet the Social 
        Security test of work disability.
           LTo compensate only those Americans who had an 
        impairment rating of 50 percent or more on the VC scale would 
        cover a population more than twice the size of the Social 
        Security beneficiary population.
           LTo pay this much larger group would require either 
        a tremendous increase in Social Security benefit outlays, or a 
        significant reduction in the current level of support for those 
        who are found unable to work, or both.

Problem of Rationale. Veterans' compensation is based on a unique 
employer-employee relationship where the Federal government is the 
employer. It has the authority to draft people into military service 
and subject them to extremely hazardous duty. While the draft has not 
been used since 1974, the government has the authority to reinstate it 
when needed. Even with an all volunteer military, there is a special 
responsibility of the Federal government to compensate people in the 
armed forces and their family Members for lives lost or impairments 
sustained in order to attract a volunteer force that is subject to the 
rigors and dangers of military service.
    This compensation concept is not based on the veteran's need for 
income support. Rather, it is based on the government's liability, as 
employer, to compensate the veteran for the harm sustained while in the 
government's employ. The amount of compensation is related to the 
degree of harm as determined by the veteran's impairment rating. It is 
not directly related to veterans' need for support either because of 
their lost earnings capacity or because of the cost of particular 
impairment-related services or supports they have to buy. In fact, the 
Federal government generally pays for those other services for injured 
veterans--such as medical care, attendant allowances, prostheses, 
equipment and rehabilitation--in addition to cash compensation for 
their impairments.
    In short, the rationale for the Federal government to compensate 
veterans or their survivors for harm sustained or lives lost while on 
active duty in the armed forces does not apply to income support for 
all Members of society.
    On the other hand, the idea of compensating for some of the 
impediments or financial costs people face because of their impairments 
is an important element of U.S. disability policy. It is not based on 
government liability, but rather on the social value of leveling the 
playingfield between people with and without impairments. Examples 
include: eliminating environmental barriers and providing job 
accommodations as called for in the ADA, providing publicly financed 
rehabilitation services and compensating for some of the added costs 
that people face because of their impairments. This ``leveling of the 
playingfield'' concept of compensation underlies the Panel's 
recommendation for a federal income tax credit for expenditures for 
personal assistance by working taxpayers with disabilities (see chapter 
8).
    Such policies that compensate for impairments by leveling the 
playingfield promote employment and full participation for people who 
have various kinds of impairments. But they are not a substitute for 
income support to replace earnings while workers are unable to work 
because of illness or disability.
   Are Programs with Different Purposes in Conflict with Each Other?
    Some observers are troubled by the multiplicity of program 
definitions of disability and are concerned that the programs involved 
have conflicting goals and work at cross-purposes. The Panel, however, 
finds that programs are not in conflict simply because they are 
designed to meet different needs of various subsets of the population 
who have impairments or work disabilities. Nor are they in conflict 
because they use different definitions of disability to target the 
different services, legal protections or earnings-replacement benefits 
that they offer.
Rehabilitation and Social Security
    Cash benefits to replace earnings are not in conflict with 
vocational rehabilitation aimed at improving an individual's skills and 
abilities to perform the tasks of work. They complement each other: 
cash benefits can provide income to meet daily living expenses while 
rehabilitation and a job search take place. At the same time, not 
everyone who receives cash benefits is a good candidate for vocational 
rehabilitation. Some who receive Social Security disability benefits 
are too ill to work. In focus group interviews, many beneficiaries 
indicated they had exhausted other options for rehabilitation or return 
to work before they applied for Social Security benefits (see the 
appendix). DI beneficiaries tend to be older than rehabilitation 
clients. While about half those who enter the DI rolls are over the age 
of 50, about half those successfully rehabilitated by state VR agencies 
are younger than age 35.\17\ Nonetheless, a subset of Social Security 
beneficiaries may be good candidates for rehabilitation and return-to-
work services. Linking beneficiaries with return-to-work services and 
providing income support while return to work is tried are 
complementary elements of disability policy. The Panel's proposal for 
issuing return-to-work tickets to Social Security beneficiaries is 
designed to improve that linkage and to expand the supply of service 
providers who can be paid to assist beneficiaries to return to work 
(see chapter 6).
---------------------------------------------------------------------------
    \17\ U.S. Department of Education, Rehabilitation Services 
Administration.
---------------------------------------------------------------------------
    The Panel also recognizes that VR services can be beneficial to 
persons who are not Social Security beneficiaries. The large majority 
of persons that state VR agencies successfully place in competitive 
employment (85 percent) are not recipients of DI or SSI benefits.\18\
---------------------------------------------------------------------------
    \18\ See table 6-2.
---------------------------------------------------------------------------
    In brief, both Social Security and VR are important elements of 
disability policy. In many cases they serve different subsets of the 
population. In other cases, individuals with severe work disabilities 
receive earnings-replacement benefits from Social Security while they 
engage in vocational training to return to work.
Social Security and the ADA
    The income support provided through the Social Security Act and the 
civil rights protection of the ADA are both essential pillars of 
disability policy, but one is not a substitute for the other. Some work 
disabilities are amenable to the solutions offered by the ADA. Others 
are not. The ADA provides legal remedies to workers who face 
discrimination in employment. Social Security provides income support 
to those who have lost their capacity to work. The two laws typically 
target different needs of the very diverse population of persons who 
have impairments or disabilities.
    The ADA bans discrimination against workers who have impairments 
but who are nonetheless able to perform the essential functions of the 
jobs they seek to hold or retain. It requires employers to make 
``reasonable accommodations'' for those workers. Whether an 
accommodation is ``reasonable'' or whether it poses ``an undue 
hardship'' on employers is evaluated on a case-by-case basis that 
depends on the circumstances of the individual, the employer and the 
employer's ability to bear the cost. Accommodations that are not 
considered ``reasonable'' for a particular employer under a particular 
set of conditions may be ``reasonable'' for another employer or when 
circumstances change.
    Research has shown that job accommodations, such as those now 
required by the ADA, have delayed the point at which ill or injured 
workers leave the work force and turn to Social Security.\19\ The focus 
group interviews in appendix A indicate that beneficiaries often had 
received accommodations before they turned to DI benefits. They left 
their jobs when they could no longer perform them even with 
accommodations.
---------------------------------------------------------------------------
    \19\ R.V. Burkhauser, et al., ``The Importance of Employer 
Accommodation on the Job Duration of Workers with Disabilities: A 
Hazard Model Approach,'' Labor Economics, June 1995, pp. 1-22; and K.K. 
Charles, ``Employer Accommodation and the Early Post-Onset Separation 
of Disabled Workers,'' unpublished paper, Cornell University, June 
1995.
---------------------------------------------------------------------------
    In general, Social Security is for workers whose impairments, in 
conjunction with their other abilities and the demands of work, are not 
usually amenable to reasonable accommodation by their current 
employers. It provides benefits that partially replace earnings when 
people are out of work and it is reasonable to conclude that the 
severity of their impairment is the cause. It is meant to do so in a 
way that enables workers to retain their dignity and self-respect while 
they cope with the human and financial losses associated with lost 
capacity to earn. Without Social Security, those who receive it often 
would be destitute or dependent on relatives or public assistance for 
support. By providing wage-replacement income, Social Security promotes 
individual empowerment and community integration. By basing entitlement 
to benefits on prior contributions and scaling benefit amounts to the 
worker's former purchasing power from earnings while working, Social 
Security promotes economic self-sufficiency.
    While Social Security is paid only to those who meet a very strict 
test of work disability, it is not necessarily paid for life. Some 
people medically recover and others may gain new skills and abilities 
that enable them to return to work and leave the benefit rolls. In some 
cases, persons who legitimately qualify for DI may, with appropriate 
accommodations in a new setting, be able to return to work. The extent 
to which society is willing and able to invest in accommodations, jobs 
and the human capital of workers with significant impairments will 
affect the numbers who turn to Social Security and the number who 
return to work and leave the benefit rolls.
    At any given time, different people need the civil rights 
protections of the ADA or earnings-replacement benefits from Social 
Security. And any particular individual may need both, though at 
different stages of his or her life or under different environmental 
circumstances.

                               Chapter 5
            Operationalizing the Social Security Definition:
                        Assessing the Assessment
    For any system of benefits or services, applicants must be assessed 
to determine their eligibility. For disability-related programs, the 
assessment must include an evaluation of disability. The assessment of 
work disability is inherently complex because work disability itself is 
not a simple concept. As discussed in chapter 1, an impairment is an 
essential element of work disability. But the assessment of work 
disability must also consider the person's residual functional capacity 
in relation to the tasks of work in the context of the broader 
environment.
    Moreover, the assessment of work disability made by different 
programs will differ according to the type of remedy or benefit 
offered. The first section of this chapter explores how the assessment 
of work disability for wage-replacement benefits differs from an 
assessment of disability for the purpose of offering rehabilitation 
services. That is, the assessment for cash benefits is concerned with 
the severity of the disability, and whether it constitutes a legitimate 
basis for paying benefits based on inability to earn. The assessment 
for rehabilitation focuses on assessing the individual's needs for 
particular kinds of services.
    The balance of the chapter is about the Social Security disability 
assessment. It begins with a review of the elements of the definition 
of disability in the Social Security Act. It then describes the 
sequential process the Social Security Administration (SSA) uses to 
determine whether an applicant for Social Security disability benefits 
meets the definition in the Act. The final sections contain the 
Disability Policy Panel's evaluation of SSA's assessment process and 
its findings and recommendations on ways to improve that process.
     Social Security Assessment Is Different from a Rehabilitation 
                               Assessment
    If the purpose of an assessment of disability is to allocate 
rehabilitation services for persons with impairments, the assessment 
might pose two questions. First, does the applicant for services have 
an impairment that interferes with his or her ability to work? If not, 
the person could be denied services because the scarce resources 
available for rehabilitation should target only persons with work-
limiting impairments, not persons who need other kinds of employment 
assistance. If the person has a work-limiting impairment, a 
rehabilitation assessment might then ask the second question: is the 
person likely to benefit from services the provider can offer? If so, 
the person would be found eligible for services. When private insurers 
or workers' compensation programs evaluate whether to pay for 
rehabilitation, the first question has already been answered in the 
affirmative because they consider paying for rehabilitation only for 
persons already found eligible for insurance or compensation payments 
based on a finding of work disability (see box 5-1).
 Box 5-1.--Cash Benefits and Rehabilitation: Distinguishing Assessments
    Many concerns the Panel has heard about the Social Security 
assessment of disability appear to reflect the view that it should be 
more like the kind of assessment that is used for determining 
rehabilitation potential or service needs.
    The Social Security assessment is necessarily different from an 
assessment of rehabilitation potential. Its purpose is not to determine 
who should be offered services or what services they should be offered. 
Rather, its purpose is to determine which applicants for benefits meet 
the definition of work disability used to award wage-replacement 
benefits.
    Private disability insurance distinguishes between assessing work 
disability for purposes of wage-replacement insurance and assessing 
rehabilitation potential. Employees covered by private long-term 
disability insurance have a contractual entitlement to cash benefits if 
they meet the eligibility criteria in the insurance contract. It 
usually requires a medical diagnosis, an evaluation of medical 
prognosis and a finding that the employee is currently unable to work. 
The insurer may then arrange for a second kind of assessment to 
evaluate the employee's rehabilitation potential. In this case, the 
decision to offer and pay for rehabilitation services takes into 
account the insurer's future benefit liability as well as the 
employee's return to work prospects. Favorable indicators for the 
insurer to invest in rehabilitation services, on a case-by-case basis, 
include the employee's prospects for medical stability and his or her 
youth, aptitude, motivation and need for vocational services in order 
to return to work.
    The Panel is recommending ways to increase access to rehabilitation 
and return-to-work services for Social Security beneficiaries. Because 
the Social Security Administration does not have the expertise or 
resources to assess rehabilitation potential, the Panel's proposal 
draws on the expertise of service providers to make that assessment and 
offer services (see chapter 6).
    When the purpose of an assessment of work disability is to allocate 
earnings replacement insurance benefits, the assessment necessarily 
focuses on the severity of the work disability. The purpose of the 
assessment is to determine whether applicants for benefits should 
receive them because of their inability to work. A review of disability 
determinations in the social insurance programs of six countries 
highlights commonality across countries in the complex assessment of 
work disability for this purpose: \1\
---------------------------------------------------------------------------
    \1\ F.S. Bloch, ``Disability Benefit Claims Processing and Appeals 
in Six Industrialized Countries: Canada, Germany, Sweden, the 
Netherlands, Great Britain and the United States,'' Occasional Papers 
on Social Security (Geneva, Switzerland: International Social Security 
Association, 1994).

           LEligibility for disability pension benefits is 
        based on a demonstrated incapacity for work due to sickness, 
        injury or disease. The purpose of these programs is to 
        alleviate the financial disruption that the loss of regular 
        earnings causes.
           LIn all countries, the disability standard is based 
        ultimately on the inability to earn. However, the formulation 
        of the standard varies: in Germany, the test is whether the 
        applicant can engage in gainful activity only irregularly or 
        can achieve only insubstantial income; in both the United 
        States and Canada, the line is drawn at the inability to 
        perform substantial gainful activity; in the United Kingdom the 
        reference is simply incapacity for work. Each of these is 
        effectively a full incapacity requirement; benefits are paid 
        only if the applicant cannot work at all, at least not at a job 
        reasonably within his or her vocational limits.
           LImpairment alone does not trigger the award of a 
        benefit; rather benefits are awarded based on the effect of an 
        impairment on an applicant's capacity for work. Moreover, proof 
        of incapacity for work, while always due to impairment, is 
        measured against an individualized vocational standard 
        appropriate for the particular applicant. As a result, 
        disability assessment procedures must be designed to identify 
        and categorize individual vocational factors such as age, 
        education and past work experience, and then to evaluate how 
        and to what extent these factors may limit the range of work an 
        applicant can be expected to perform.

    In brief, the assessment of eligibility for cash benefits in all 
countries focuses on the severity of the work disability. And the 
assessment encompasses the varied elements of work disability: the 
severity of the applicant's impairment, the tasks of work he or she can 
reasonably be expected to do, and his or her ability to perform those 
tasks. In each country's system, a particular individual may need and 
qualify for earnings replacement income and also be a good candidate 
for rehabilitation services. But the assessment of eligibility for the 
two kinds of interventions necessarily differs.
          Definition of Disability in the Social Security Act
    The statutory definition of work disability for Social Security 
benefits is both very strict and quite generic. The exact rules for 
implementing it are spelled out in regulations issued by SSA. The 
regulations are updated periodically and any changes in regulations are 
subject to public review and comment before they become final policy.
    Because the statutory definition is generic, its application in 
regulations can and should be updated over time to reflect changes in 
the broader society that have an impact on the nature of work 
disability--such as new disabling diseases, new treatments for existing 
conditions that make them less disabling than in the past, and 
environmental changes in the nature of work, the tasks that constitute 
work, and the skills required to perform those tasks. Key concepts 
defined in the law are discussed below.
    The law defines work disability generically as inability to engage 
in any substantial gainful activity (SGA). The law does not further 
define SGA, but specifies that the executive branch should prescribe 
criteria for determining when services performed or earnings derived 
from services demonstrate an individual's ability to engage in SGA.
    The definition of work disability takes account of vocational 
factors and uses a national economy test. It asks whether applicants, 
given their age, education, and work experience, can do any kind of 
work that exists in the national economy, which is further defined to 
mean work that exists in significant numbers in the region where the 
applicant lives or in several regions of the country. Because 
disability is defined in relation to the demands of work, the nature of 
what constitutes work disability should change as the nature of work 
changes. Further, the law recognizes that individuals' educational 
attainment and transferable skills influence what they can do. As 
educational and skill requirements of jobs change, the evaluation of 
the interaction between impairments and the ability to do jobs that 
exist in the national economy should also change.
    The Social Security Act specifies that a medically determinable 
physical or mental impairment that is expected to last 12 months is 
necessary, but not sufficient, for a finding of work disability. The 
condition must be considered to be directly related to the person's 
inability to engage in SGA. According to the law, it also must be 
demonstrable by medically acceptable clinical and laboratory diagnostic 
techniques.
    These elements of the statutory definition of work disability in 
the Social Security Act are brought together as follows:

           LDisability means inability 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 which has lasted or can be 
        expected to last for a continuous period of not less than 12 
        months;
           LAn individual shall be determined to be under a 
        disability only if his physical or mental impairment or 
        impairments are of such severity that he is not only unable to 
        do his previous work but cannot, considering his age, education 
        and work experience, engage in any other kind of substantial 
        gainful work which exists in the national economy, regardless 
        of whether such work exists in the immediate area in which he 
        lives, or whether a specific job vacancy exists for him, or 
        whether he would be hired if he applied for work.
           L``Work which exists in the national economy'' means 
        work which exists in significant numbers either in the region 
        where such individual lives or in several regions of the 
        country.

    ``A physical or mental impairment'' is an impairment that results 
from anatomical, physiological or psychological abnormalities which are 
demonstrable by medically acceptable clinical and laboratory diagnostic 
techniques.

           LThe Commissioner of Social Security shall by 
        regulations prescribe the criteria for determining when 
        services performed or earnings derived from services 
        demonstrate an individual's ability to engage in substantial 
        gainful activity.\2\
---------------------------------------------------------------------------
    \2\ Sections 223(d)(1)(A), 223(d)(2)(A), 223(d)(3) and 223(d)(4) of 
the Social Security Act.
---------------------------------------------------------------------------
              Sequential Disability Determination Process
    A five-step sequential process is used to determine whether an 
applicant for Social Security disability benefits meets the definition 
of work disability in the law. The sequential process is spelled out in 
regulations and is illustrated in figure 5-1. Each step in the sequence 
poses a different question about the nature of the disability. At each 
step a decision is made either to allow or deny the application or to 
move on to the next step.

           LStep 1 asks, ``Is the applicant is engaging in 
        SGA?'' If so, the application is denied.
           LStep 2 asks, ``Does the applicant have a severe 
        impairment?'' If not, the application is denied.
           LStep 3 asks, ``Does the applicant have a medically 
        determinable impairment that meets or equals the medical 
        listings?'' It refers to listings in regulations of over 100 
        medical conditions that are considered to be of such severity 
        that the condition can be presumed to constitute work 
        disability.\3\ At this step, SSA draws on medical evidence from 
        treating sources or a consultative exam (by a physician paid by 
        SSA) to document the existence, severity, duration and 
        prognosis of the person's impairment. If the applicant's 
        condition meets or equals a listed condition, benefits are 
        allowed. If benefits are not allowed at Step 3, the sequential 
        process calls for an assessment of the person's residual 
        functional capacity (RFC) to do various kinds of work 
        activities.
---------------------------------------------------------------------------
    \3\ The other evidence that supports this presumption is discussed 
in the following section and in box 5-3.
---------------------------------------------------------------------------
           LStep 4 asks ``Does the impairment(s) prevent doing 
        past work?'' The applicant's RFC is compared with functional 
        capacities required to do his or her past work. RFC is 
        classified mainly in terms of the exertional demands of jobs. 
        The current RFC assessment produces a finding that the person 
        is capable of sedentary, light, medium or heavy work. That 
        capacity is then compared with the person's prior work 
        experience to determine whether he or she can do work at the 
        exertional levels required by past work. If the person can do 
        past work, the application is denied. If the person is unable 
        to do past work, the assessment goes to Step 5.
           LStep 5 asks ``Does the impairment prevent doing any 
        other work?'' Applicants' RFCs are considered in conjunction 
        with their age, education, and work experience to determine 
        whether they can do any other work that exists in significant 
        numbers in the national economy. Their age, education and 
        transferable job skills are taken into account to determine 
        whether they have the residual capacity to do kinds of work 
        they have not done before.

    For persons with solely exertional impairments, the assessment of 
ability to do other work is aided by the ``vocational grid,'' which was 
codified in 1979 regulations and has not been updated. The grid 
dictates a decision about work disability (and eligibility for 
benefits) based on the person's age, education and transferable skills, 
in conjunction with his or her RFC to do sedentary, light, medium or 
heavy work. If the person is found able to do other work, the 
application is denied. If not, the application is allowed.
    For persons with impairments other than exertional ones--such as 
cognitive, emotional, sensory, postural (stooping, crouching, kneeling) 
or environmental (inability to tolerate fumes, dust, noise) 
impairments--the grid does not apply. It is to be used, however, as a 
``framework'' for evaluating the person's ability to do other work. If 
the grid does not apply, opinions of vocational specialists \4\ or 
vocational experts \5\ can be used as evidence that there are, or are 
not, jobs the particular individual can do.
---------------------------------------------------------------------------
    \4\ Used by state agencies in initial decisions.
    \5\ Used by administrative law judges at hearings on appeals of 
denied applications.



        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      
             Assessing the Assessment: The Panel's Findings
    In evaluating the five-step sequential process used to determine 
which applicants for disability benefits meet the Social Security Act 
definition, the Panel finds at least four objectives to be traded off 
against each other:

           Lthe accuracy of the assessment of an individual's 
        work disability (validity),
           Lthe consistency of these assessments across 
        deciders (reliability),
           Lthe perceived legitimacy or credibility of the 
        criteria as viewed by applicants and the public (credibility), 
        and
           Lthe capacity of the system to produce reasonably 
        prompt and low-cost decisions (administrative efficiency).

    Using these criteria, the Panel evaluated the sequential 
determination process and the role of medical evidence, functional 
assessment and the vocational factors--age, education and work 
experience--in that determination process.
The Sequential Process
    Each step in the five-step disability determination process 
requires a progressively more in-depth, detailed and individualized 
assessment of the applicant's ability to work. As such, the sequence as 
a whole seeks to achieve administrative efficiency by allowing or 
denying applications at early steps in the process when that can be 
done with acceptable levels of validity, reliability and credibility.
    Steps 1 and 2 are used only to deny applications. They are used to 
screen out cases that would ultimately be denied, and to do so 
promptly, to avoid the administrative burdens, costs and delays that 
applicants, disability adjudicators, private physicians and others 
experience when asked to provide medical and other evidence needed to 
make determinations at later stages in the process. As such, both steps 
rank high on administrative efficiency in providing prompt, low-cost 
decisions.
    Step 1 ranks high on validity, reliability and credibility. If the 
applicant is engaging in SGA, that is prima facie evidence that the 
person has the capacity to do so (validity). SGA is measured as a test 
of monthly earnings, which can be measured with consistency 
(reliability). And the fact that one is working is easily understood to 
be evidence of ability to do so (credibility).
    The measure of earnings that constitute SGA takes into account 
certain impairment-related work expenses or employer subsidies. These 
expenses or subsidies are deducted from earnings when determining 
whether a given level of work effort constitutes SGA. In order to 
maintain the validity and credibility of the SGA standard, the Panel is 
recommending that the level of earnings that constitutes SGA be updated 
and automatically adjusted to keep pace with the economy (see chapter 
9). With these changes, the Panel finds that the SGA test is an 
appropriate first step in the determination of work disability.
    Step 2 also ranks high on administrative efficiency. This step 
avoids the need to develop medical evidence and conduct a nonmedical 
functional assessment in cases where the person is out of work for 
reasons other than disability, such as unemployment or the person's 
choice not to work.
    Step 3 is the first step at which benefits are allowed. At this 
step, the medical listings are used as a proxy for work disability. 
They are used to presume that an applicant whose condition meets the 
medical listings meets the statutory definition of work disability.
    The presumptive validity of the listings is supported by the 
context of their use. Benefits are allowed at Step 3 if and only if the 
presumption of work disability based on the severity of the applicant's 
impairment is corroborated by other circumstantial evidence. In the 
case of Social Security disability insurance (DI), the presumption of 
work disability at Step 3 is buttressed by the following findings:

           Lthe person has significant and recent employment 
        prior to the onset of the disabling condition (as shown by 
        meeting insured status requirements, which is ascertained 
        before the disability assessment begins); but
           Lthe person has not been engaging in SGA for at 
        least 5 months (Step 1); and
           Lthe person has applied for benefits that generally 
        amount to less than half of his or her prior earnings from 
        work; and
           Lthe person has a severe medical condition that is 
        expected to last at least a year or result in death.

    Only when all these conditions are met are DI benefits allowed 
based on the presumption that an impairment that meets or equals the 
medical listings constitutes work disability.
    The use of the medical listings as a proxy for work disability has 
several advantages. The listings promote administrative efficiency 
because medical assessments are more readily available than functional 
assessments of ability to work. If properly constructed, medical 
listings criteria should be reliable and credible. They are based on 
consensus medical opinion and are defined, insofar as is possible, in 
objective terms. Because the listings are used to presume work 
disability, they are and should be set at a high threshold of 
impairment severity to achieve validity. They are designed only to 
answer the question, ``Is this applicant highly likely to meet the 
statutory test of disability, without further inquiring into vocational 
issues?''
    In the Panel's view the continued use of the medical listings 
approach is sound adjudicative practice. As discussed further below, 
however, we believe that further work needs to be done to ensure that 
the listings measure equivalent severity of presumptive work disability 
across body systems and that they are kept current in relation to 
medical practice and the demands of the work place.
LMedical Evidence Is the Foundation of the Disability Assessment for 
        Social Security Benefits
    Some have questioned the reliance on medical evidence to establish 
work disability, which by its nature is a functional rather than 
strictly a medical construct. The Panel finds nevertheless that medical 
evidence has many valuable properties in assessing work disability for 
Social Security benefit purposes. The Panel recognizes the value of 
``demedicalizing'' disability assessments for other disability-related 
purposes, such as to allocate nonmedical goods or services (see box 5-
2). However, for the purpose of assessing work disability for Social 
Security benefits, the Panel believes that any attempt to shift to a 
purely functional assessment would be a mistake--indeed a virtual 
impossibility for the reasons outlined below. At the same time, 
functional assessment is a critical part of the disability assessment.
    Medical evidence often is functional in nature. For example:

           LTreadmill tests are used to measure cardiovascular 
        functioning under work-like exertional conditions; and ejection 
        fraction tests (the proportion of the volume of the left 
        ventricle that is ejected when the heart pumps) are used to 
        measure the heart's functional efficiency.
             Box 5-2.--Medical versus Functional Assessment
    Is a functional assessment always the right way to evaluate 
disability? Whether it is the ``right'' way depends on the purpose of 
the disability assessment.
    Over the past 20 years there has been a move to ``demedicalize'' 
the assessment of disability when the purpose is to allocate nonmedical 
goods and services--such as vocational rehabilitation, assistive 
devices or personal assistance services. All of these goods and 
services are designed to improve the functioning of persons who have 
impairments. For this purpose, a functional assessment is greatly 
preferred over a strictly ``medical'' or ``impairment-based'' 
assessment for a number of reasons. Some of these reasons for 
preferring a functional assessment do not necessarily apply to the 
Social Security assessment of work disability.
    Is it used to allow or deny eligibility? First, a functional 
assessment can increase the chances that services being sought will be 
appropriately allowed. Too often in the past a medical assessment of 
the person's impairment was used to deny rehabilitation services by 
concluding that the applicant's impairment was so severe that he or she 
``could not benefit in terms of an employment outcome.'' A functional 
assessment, in contrast, focuses on persons' abilities rather than 
their impairments. Consequently, services are appropriately allowed to 
people who can benefit from services despite having significant 
impairments.
    In the Social Security assessment, medical evidence of impairment 
severity is not used to deny benefits. Rather, it is used to allow the 
earnings replacement benefits that are being sought, but only when 
other evidence buttresses the presumption that the severe impairment 
constitutes work disability (see box 5-3).
    What kinds of goods or services will be provided? Second, a 
functional assessment is associated with more consumer control over the 
kinds of goods and services that are provided, once the person is found 
eligible to receive them. For example, in developing a vocational 
rehabilitation plan, consumers' career goals and assessment of their 
own training needs are an important part of plan development. In the 
case of assistive devices, consumers' own assessment of their 
functional needs are important in selecting the type of device that 
will maximize their independence in the environment in which they live 
and work.
    Once a beneficiary is found eligible for Social Security, no 
further decision is needed about what will be provided or how it is 
used. A benefit allowance provides wage-replacement benefits that are 
prescribed by law and the beneficiary decides how it will be used.
    These reasons for strongly preferring functional over medical 
assessment for the purpose of allocating nonmedical goods and services 
do not apply in the same way to the Social Security assessment. Proper 
assessment of work disability for eligibility for Social Security 
benefits requires both medical assessment of impairment severity and 
functional assessment of ability to perform the tasks of work.

           LExercise tests are used for respiratory conditions 
        to measure respiratory function similar to treadmill tests for 
        cardiovascular conditions.
           LRange of motion tests are a form of functional 
        assessment of musculoskeletal conditions.
           LDiagnostic tests that include medical evidence of 
        functioning and symptomatology are used for many mental 
        disorders.

    Medical evidence is often essential to establish the prognosis and 
duration of a particular disease or impairment. If a condition has a 
very poor prognosis, it would be inhumane to delay a finding of work 
disability until an individual actually experienced the kind of 
functional loss that would show up on a solely nonmedical functional 
assessment. Examples of such a condition may include AIDS, neoplasms 
and other progressive diseases. If a person is not working and has a 
very poor medical prognosis, it is appropriate to allow benefits before 
the expected functional loss becomes evident in nonmedical terms--such 
as debilitation or total collapse.
    A related situation occurs when medical evidence shows that a 
health problem (such as certain cardiac conditions) would be 
exacerbated with high risk of catastrophic functional loss if the 
person returned to usual work activity. In such cases, the humane 
policy is to allow benefits based on medical evidence showing a high 
risk of catastrophic functional loss, rather than requiring the person 
to work until the catastrophe actually occurs.
    Medical findings are necessary to predict the duration of a 
particular impairment. A nonmedical functional assessment is a finding 
established at a specific point in time. Because benefits are paid only 
for impairments expected to last a year (or result in death), medical 
evidence can show that the expected duration is likely to be met, 
without waiting until death or the required duration has actually 
occurred.
    Evidence from medical sources enhances validity and credibility. 
Medical evidence can serve as a check on apparent functional 
limitations that might be motivational in nature. As such, it also 
lends legitimacy and public acceptance to the disability determination 
and the benefits that are paid. Assessments by medical professionals 
have credibility in the public's perception. While well-trained lay 
persons are quite capable of implementing rules and procedures to 
assess work disability in many situations, the medical component of the 
assessment is important for public acceptance that the judgments are 
valid and fair.
    Evidence from medical professionals enhances validity, 
administrative efficiency and credibility in other ways as well. Over-
reliance on evidence from nonmedical sources--such as neighbors, 
supervisors or co-workers--poses several risks: it may unduly burden 
the providers of evidence (a problem that has been raised by schools in 
the case of child applicants); it may weaken public acceptance that the 
evidence is, in fact, valid; and it may be viewed as an unnecessary 
violation of the privacy of the individual, whose disability 
application, at least arguably, is not the business of neighbors or 
others who may know the person. In some cases, evidence from nonmedical 
sources is needed. However, good reasons exist for allowing 
applications based on medical evidence when that evidence is 
sufficient.
    Medical evidence can, in many instances, improve the consistency 
and reliability of decisions across decisionmakers. The use of medical 
criteria enhances objectivity and consistency through the use of 
scientific findings and by, in effect, borrowing the unifying 
tendencies of medical judgment that result from medical training and 
clinical practice.\6\
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    \6\ As greater reliance is placed on evidence provided by a 
claimant's physician, rather than on evidence from a consultative exam 
by a physician employed by SSA, there may be a need for more broadly 
educating the medical community about the kinds of medical evidence 
that is used to assess work disability.
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    Medical evidence is often more readily available than are 
nonmedical functional assessments. When it is available and is adequate 
for presuming inability to work, relying on medical evidence reduces 
burdens and delays for both applicants and adjudicators, thereby 
enhancing administrative efficiency (see box 5-3).
    In summary, nonmedical functional assessments are an essential part 
of the full sequential determination process, the Panel believes that 
medical evidence is the foundation for assessment of work disability 
for cash benefits. A finding of a medically determinable impairment is 
required by the statute and it is important for the validity, 
reliability, credibility and administrative efficiency of disability 
decisions.
LFunctional Assessment Is Essential to Determine Work Disability When 
        It Cannot Be Presumed
    When medical evidence is not sufficient to presume that a person is 
work disabled, a functional assessment is needed to determine whether, 
in fact, the person is unable to engage in substantial gainful 
activity. To determine whether applicants can or cannot work requires 
assessing their residual functional capacity and comparing it with the 
demands of their past work. If unable to do past work, applicants' 
residual functional capacities are assessed in light of their age, 
education and work experience to determine whether they can do any 
other work that exists in the region in which they live or in several 
regions of the country.
               Box 5-3.--The Role of the Medical Listings
    If a person whose impairment meets the medical listings is working, 
does that mean the listings are flawed?
    Not necessarily. It has always been recognized that some people who 
have impairments that meet the Social Security Administration's (SSA) 
medical listings are working. That is not a problem, it is a success. 
President Roosevelt (who used a wheelchair) and perhaps President 
Kennedy (with Addison's disease) could be counted among those 
successes.People who work despite having impairments that meet the 
listings may have extraordinary motivation and drive. They may also 
have unique skills and specialized abilities to perform work that is 
not affected, or only marginally affected, by their impairments. For 
example, scientists, attorneys, executives and decisionmakers can still 
think, analyze, lead, direct and decide despite having significant 
physical impairments that would make it impossible for others to 
continue their jobs as construction workers, longshoremen, short-order 
cooks or hospital orderlies. Furthermore, when a person's skills are in 
high demand, an employer's view of reasonable accommodation may be more 
expansive than what would be considered reasonable for other workers 
whose skills are more easily replaced.
    In theory, SSA's disability assessment could be tightened to 
require that all applicants demonstrate that they are unable to do 
their past work or any other work that exists in the national economy. 
That would avoid making a presumption of work disability. But it would 
have a significant cost in terms of reduced administrative efficiency. 
But its greatest impact would be to rule out the theoretical 
possibility of benefit allowances--theoretical because it would 
``deny'' benefits in cases where people do not apply for them, because 
they are working. This is because the medical listings are used to 
allow benefits only when the presumption of work disability is 
buttressed by the following circumstances. The applicant:

           Lis not engaging in substantial gainful activity 
        (SGA),has not been engaging in SGA for at least 5 months,
           Lhas significant recent work experience, as 
        indicated by having met disability insured status requirements,
           Lhas applied for disability benefits that generally 
        represent less than half of his or her prior earnings level,
           Lhas a severe impairment that is expected to last at 
        least a year or result in death.
    Only when all these conditions are met are Social Security 
disability insurance benefits allowed based on the presumption that an 
impairment which meets or equals the medical listings constitutes work 
disability.
    The medical listings should be set at a high threshold of 
impairment severity--one that for most people of average ability would 
result in work disability. They should also be updated periodically to 
reflect changes in the nature of work, in environmental accommodations 
and in medical technology. If some people with specialized skills are 
working despite severe impairments, that does not mean the listings are 
flawed. Nor does it mean that everyone else with similar impairments 
should be presumed able to work and therefore be denied benefits.
    Functional assessments have valuable properties with regard to the 
validity of disability determinations. They are an actual test of work 
disability, rather than a presumption of that finding. A finding of 
disability based on functional assessment is not a lower standard of 
severity. Instead, it is a different and more direct test of work 
disability (see box 5-4). At the same time, the validity of functional 
assessments depends on how closely the functions being assessed relate 
to the demands of work that exist in significant numbers in the 
national economy. As the demands of work change, the functional 
assessment of work disability needs to be updated.
LVocational Factors--Age, Education and Transferable Skills from Prior 
        Work--Are Essential Elements of the Assessment of Work 
        Disability
    The law specifies that vocational factors--age, education and work 
experience--be taken into account when determining whether a person 
with a medically determinable impairment is, in fact, able to do his or 
her past work or any other work despite the existence of a severe 
impairment.
    The Panel believes that age, educational attainment and prior work 
experience are critical to the validity of determinations about whether 
a person is functionally able to work despite the existence of a severe 
impairment. With favorable vocational factors--such as advanced 
education--a person can work despite quite significant physical 
impairments. On the other hand, with negative vocational factors--such 
as advanced age, limited education and no transferable skills--
impairments that make workers unable to do the kind of work they have 
done in the past would constitute work disability.
    As discussed in chapter 1, the prevalence of work disability in the 
general population as reported in household surveys rises sharply with 
advanced age. And the risk of work disability declines with advanced 
education (table 1-5). While those who report a work disability in-
household surveys do not necessarily meet the strict test of disability 
in the Social Security Act, the survey data show the strong connection 
between age, education and work disability.
    The nature of a person's prior work experience is also critical in 
determining whether he or she can continue to work despite the onset of 
a significant impairment. The same impairment might constitute total 
incapacity for a whole range of jobs, yet not interfere with the 
ability to perform another set of jobs. Whether or not workers are able 
to return to their prior work has much to do with the nature of that 
work. If not able to do their prior work, their age, transferable 
skills (as measured by work experience) and aptitude (as approximated 
by educational attainment) are key factors in determining whether it is 
feasible or economically rational for individuals or for society as a 
whole to invest in retraining for new careers that require new job 
skills.\7\
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    \7\ Walter Oi observes that, in addition to the severity of the 
disabling condition, the disabled worker's expected remaining working-
age years--which are a function of the age at onset, expected duration 
of the condition and its impact on life expectancy--are key 
determinants of whether it is economically rational for the individual 
or society at large to invest in training and return to work efforts 
for the individual. W.Y. Oi, ``Employment and Benefits for People with 
Diverse Disabilities,'' Disability, Work and Cash Benefits, J.L. 
Mashaw, et al., (eds.) (Kalamazoo, MI: W.E. Upjohn Institute for 
Employment Research, forthcoming).
---------------------------------------------------------------------------
    For these reasons, the Panel finds that vocational factors such as 
age, education and transferable skills from work experience are 
essential to the validity of the assessment of work disability (see box 
5-4). It also believes that these criteria need to be updated as the 
tasks of work and skill levels required for work change.
   Box 5-4.--Objective versus Subjective Evidence of Work Disability
    There is a belief that meeting the medical listings is ``real'' 
disability. It is ``objective.'' Being allowed benefits based on 
assessment of residual functional capacity in conjunction with age, 
education and work experience is somehow viewed as ``soft'' or 
subjective. This is a misconception.
    Medical evidence adds to credibility. But, it is used to support a 
presumption of work disability, when corroborated by other evidence of 
labor market disadvantage.
    Assessment of residual functional capacity in conjunction with 
vocational factors is more valid, but it is also more labor intensive. 
As discussed in chapter 1, work disability, by its very nature, 
involves the interaction of the individual's impairment with the tasks 
of work he or she can reasonably be expected do to and his or her 
offsetting capacities or compounding limitations in performing those 
tasks. The Social Security assessment of functional capacity in 
conjunction with the applicant's age, education and prior work 
experience are necessary parts of the determination of work disability.
    In short, neither medical nor functional assessments of work 
disability are inherently more objective or subjective. Both are 
essential elements of the assessment of work disability for the purpose 
of determining eligibility for cash benefits.
              Recommendations for Improving the Assessment
    Based on its evaluation of the SSA disability determination 
process, the Panel makes several recommendations for improving this 
process. Each requires targeted research in order to implement it.
LSystematic Ways to Assess the Interaction Between Nonexertional 
        Impairments and Vocational Factors are Needed
    In response to longstanding concerns about the lack of consistency 
in disability assessment, SSA in 1979 published in regulations its 
vocational grid. The grid is used to determine disability based on the 
interaction between vocational factors and the applicant's residual 
functional capacity to perform various levels of work, which is defined 
in exertional terms--sedentary, light, medium or heavy work.
    During the last 15 years, disability applications based on 
nonexertional impairments have become more common. These include 
conditions such as cognitive, emotional, sensory, postural (stooping, 
crouching, kneeling) or environmental (such as inability to tolerate 
such conditions as fumes, dust or noise) impairments. For these 
conditions, the grid does not apply. Instead, regulations say it is to 
be used as a framework for evaluating the person's ability to work 
despite his or her impairment. According to SSA, disagreements as to 
when the grid applies, and the assessment of work capacity when it does 
not, are common causes for initial disability decisions to be reversed 
on appeal.\8\
---------------------------------------------------------------------------
    \8\ Social Security Administration, Deputy Commissioner for 
Finance, Assessment and Management, memorandum, ``The Disability 
Hearings Quality Review Process,'' October 17, 1994.
---------------------------------------------------------------------------
    The obvious question is whether the reliability of decisions on 
mental and other nonexertional impairment applications could be 
improved by developing systematic criteria--perhaps in the form of 
appropriate grids--for evaluating the interaction of specific 
categories of nonexertional impairments and vocational factors such as 
age, education and work experience. While the Panel is not in a 
position to answer this question, it believes it is an important area 
for research and policy development at SSA.
LMedical and Functional Criteria Should Be Periodically Updated to Take 
        Account of Changes in the Environment
    The definition of work disability in the Social Security Act is a 
dynamic one that can and should be interpreted in light of changes in 
the broader environment. Impairments that constitute inability to work 
should be expected to change gradually as medical and rehabilitation 
techniques change, new assistive technology becomes available and the 
nature of work changes. Advances in medical care include improvements 
in diagnostic abilities, as well as therapeutics, that may affect 
degrees of disability and other functional outcomes. As the Americans 
with Disabilities Act brings about a more accessible environment for 
persons with mobility impairments, those impairments may become a 
lesser barrier to work. At the same time, changing work demands may 
make cognitive or emotional impairments a greater impediment to work. 
Updates in the regulations--the medical listings, assessment of RFC and 
vocational factors--should be expected to gradually change to keep pace 
with the changing nature of work disability.
    Categories of impairments that account for a significant portion of 
the disability rolls, or where rapid growth has prompted concern are 
good candidates for expert review to ensure that recent experience, new 
research and state-of-the-art knowledge are incorporated into the 
Social Security assessment of work disability. For example, the mental 
impairment standards have been in place for 10 years. It would be 
timely to undertake a full review of the mental impairment standards in 
light of recent experience and research in the professional mental 
health community.
    The assessment of pain is an important element of disability 
determination for a range of musculoskeletal impairments. As required 
by Congress, SSA convened a Commission on the Evaluation of Pain, which 
reported in 1986, and a Committee on Pain and Disability of the 
Institute of Medicine, which reported in 1987. Both recommended 
research to develop pain assessment instruments, which has now been 
completed.\9\ SSA should convene an expert group to determine whether 
and how to apply what has been learned to the Social Security 
disability determination process.
---------------------------------------------------------------------------
    \9\ U.S. Department of Health and Human Services, Report of the 
Commission on the Evaluation of Pain, (Washington, DC: U.S. government 
Printing Office, 1986); M. Osterweis, A. Kleinman, and D. Mechanic, 
(eds.), Pain and Disability: Clinical, Behavioral and Public Policy 
Perspectives (Washington, DC: National Academy Press, 1987); K.S. 
Rucker, et al., ``Final Report on All Aspects of the Pain Assessment 
Instruments Development Project,'' unpublished paper, Virginia 
Commonwealth University, Richmond, VA, 1994.
---------------------------------------------------------------------------
LCriteria to Target Continuing Disability Reviews Should Be Refined
    SSA's initial determination of eligibility for benefits also 
screens those allowed benefits according to their prospects for medical 
improvement. The screen is used to diary a date for a later continuing 
disability review to determine whether medical improvement has 
occurred. According to SSA, the screens currently used are poor 
predictors of medical improvement.
    The Panel believes that research should be undertaken to refine 
these initial screens to more accurately predict cases where medical 
improvement is expected and set a date for subsequent review. That 
expectation should be communicated to the beneficiary when benefits are 
awarded to set the expectation for return to work.
    The Panel is recommending a wholly new approach to linking 
beneficiaries with return-to-work services (see chapter 6). The cost 
effectiveness of this new approach rests on having reasonably valid 
criteria to identify and screen out beneficiaries who are likely to 
medically improve and regain the capacity to return to work without 
receiving services for which providers would be compensated under this 
plan.
LResearch Is Needed to Evaluate the Consistency of the Medical Listings
    Experts on SSA's medical listings report that considerable 
variation exists among the medical listings for different body systems 
in terms of the severity of impairments that are presumed to constitute 
work disability. The medical listings for each body system--such as 
musculoskeletal, cardiovascular, respiratory, or mental conditions--
have been developed separately over the years. The listings for each 
body system are updated separately, usually by convening medical 
specialists in that particular body system to develop criteria that are 
believed to constitute work disability. To date, no systematic research 
has been done to evaluate the consistency of the presumptions 
underlying the medical listings. The Panel believes that such research 
should be undertaken and that the Disability Evaluation Study being 
developed by SSA is an opportunity to do so.
    In evaluating and updating the disability adjudication criteria, 
greater attention needs to be given to issues of specificity and 
sensitivity. In clinical practice, when a physician seeks to diagnose a 
patient's condition, specificity refers to the desire to avoid making a 
false diagnosis when the condition is not in fact present. Sensitivity 
refers to the desire to avoid missing the diagnosis of a condition that 
in fact exists. Whether the diagnostician is more concerned about 
making a false diagnosis or missing a true one depends on the 
seriousness of the condition and the dangers involved in treating it. 
For example, in diagnosing a condition for which open-heart surgery is 
the proper treatment, the physician wants to be very sure about the 
specificity of the diagnosis. On the other hand, when diagnosing the 
risk of a condition that poses great dangers for the patient (or to 
public health at large) and the treatment for which is relatively 
benign and cheap, such as preventive vaccine, the physician would 
emphasize the sensitivity of the diagnosis to ensure that all potential 
cases are treated.
    In the case of Social Security disability determinations, the 
condition decisionmakers seek to identify is inability to engage in SGA 
because of a medically determinable impairment. The intervention it 
offers is cash benefits to partially replace earnings that have been 
lost for the duration of the work disability. Whether one should be 
more concerned about ``false positives'' (allowing benefits when the 
individual might, in fact, be able to work) or ``false negatives'' 
(denying benefits when the person is unable to work) depends on value 
judgments about the negative consequences of either type of error and 
the prospects for remedying it.
    In the case of Social Security disability, inappropriate denials 
would mean that the individual would be without support from either 
earnings or disability benefits. In the absence of a generalized income 
support safety net, criteria causing wrong denials bring the risk of 
economic deprivation of those wrongly denied. These adverse 
consequences are partially mitigated by the ability to appeal the 
denial or to reapply for benefits.
    Criteria that permit inappropriate allowances could result in 
unwarranted benefit expenditures and the loss of public confidence. 
These adverse consequences are mitigated to some extent by work 
incentive provisions that encourage beneficiaries to return to work 
despite the existence of their impairments. The risk of inappropriate 
allowances is also mitigated, to some extent, by other program design 
features that make benefits an unattractive alternative to work for 
those who can maintain their earnings despite significant impairments.
    Given the cost of either type of error, it is clear that proper 
adjudication of disability applications has high social value. Research 
needs to be done to evaluate the disability adjudication criteria in 
terms of both their specificity and their sensitivity. For example, it 
is not known what proportion of individuals in the general population 
could meet the medical listings for a particular condition, yet are 
working, nor how vocational factors, such as age, education and work 
experience, or other environmental factors serve to compensate for or 
compound the work limitations posed by the medical condition. SSA's 
Disability Evaluation Study provides an opportunity to address such 
questions in a national probability survey.
    The answers to these questions are important for various policy 
reasons. In particular, there should be some consideration of setting 
standards for sensitivity and specificity for the disability criteria; 
both for the medical listings in and of themselves and for the 
sequential process as a whole, which takes account of actual 
performance of SGA, residual functional capacity and vocational 
factors.
    Research using data on actual work experience, in conjunction with 
medical and vocational characteristics--such as age, education and work 
experience--and individualized assessments of work capacity, could be 
used to evaluate the consistency of the medical listings across body 
systems and provide a systematic way to validate the criteria used to 
determine work disability for benefit eligibility. The Panel recommends 
that resources be devoted to the data collection and analysis necessary 
to complete such research.

                                 

    Ms. OWENS. Then finally, there are other remedies, and this 
Congress did, in Public Law 106, introduce a demonstration 
project where Social Security could test return to work tracks. 
They are doing a demonstration of a return to work track so 
that applicants can choose a track, rather than benefits and 
get temporary benefits and health care benefits, and so forth. 
We need to look at the results of that demonstration to see if 
that does give us more information on making change. Thank you.
    [The prepared statement of Ms. Owens follows:]
  Statement of Patricia Owens, Consultant, Board Member, and Member, 
     Disability Policy Panel, National Academy of Social Insurance
    Thank you for the opportunity to appear before you today. My 
testimony is based largely on the work of the Disability Policy Panel 
of the National Academy of Social Insurance (NASI) of which I was a 
member.
    At the request of this Subcommittee in the 102nd 
Congress, the Panel examined whether the design of Social Security 
Disability Insurance encouraged Americans with disabilities to 
emphasize their impairments as a means to securing and maintaining 
disability benefits; what changes could be made to encourage people 
with disabilities to use their residual work capacity; and how 
rehabilitation could be incorporated into the benefit programs without 
greatly expanding costs or weakening the right to benefits for those 
who cannot work.
    The Panel made a number of recommendations to make Social Security 
and SSI disability benefit provisions more ``work friendly.'' The Panel 
emphasized the importance of extending health care coverage (Medicare 
and Medicaid) to working individuals with disabilities. It devised an 
innovative ``return to work ticket'' to link beneficiaries with 
providers of return-to-work services. These recommendations were 
influential in the design of the ``Ticket to Work and Work Incentive 
Improvement Act of 1999,'' (PL 106). Finally, it emphasized that 
adequate administrative resources are essential to serve both 
beneficiaries and the public fiscal interests. I will return to this 
point in my concluding remarks.
    The Panel also concluded a comprehensive review of the definition 
of disability. The statutory definition of disability is based on the 
loss of ability to work. Establishing a work disability involves the 
interaction of four elements:

           La health condition that produces impairment and 
        loss of function;
           Lwork--the tasks that a person can reasonably be 
        expected to do for remuneration;
           Loffsetting capacities or compounding limitation in 
        performing work related tasks; and
           Lthe environment in which the person works and 
        lives.

    Income support is appropriate when work disabilities are clearly 
established and cannot by removed. Income support is also appropriate 
during transitional periods as remedies are being explored and applied. 
Remedies could include:

           LChanging or containing the impairment through 
        health care, medications, or medical restoration;
           LModifying the work requirements through job 
        accommodation or assistive technology;
           LEnhancing the person's abilities and skills through 
        education, training, or vocational rehabilitation; and
           LEnvironmental changes such as architectural 
        modification or public access improvement including 
        transportation.

    The statutory definition of work disability is stringent and 
replacement rates are frugal. The on-going challenge is to design 
benefit replacement policies that give meaningful support but still 
provide incentive to return to work if possible and, of course, are 
affordable.
    Even though the SSDI/SSI definition of disability is very strict, 
it is also generic. Thus, its application in regulations must be 
systematically updated over time to reflect dynamic societal changes 
including:

           Lmedical conditions, their impacts, and their 
        remedies;
           Lthe changing nature of work requiring new skills 
        and abilities;
           Lscientific and technological advances; and
           Lsocial and economic conditions.

    To some extent, recent legislation represents an acknowledgement of 
the changing nature of the workplace and of chronic illnesses/
impairments. For example, a demonstration project in three states, 
(Wisconsin, Maryland, and Delaware) allows for a potential beneficiary 
(who passes a screening process using the statutory definition of 
disability) to be given temporary benefits quickly. These beneficiaries 
also receive services aimed at getting them back to work. Results from 
this demonstration may help determine the impact of timely assistance 
on outcomes.
    In considering overall disability policy, the work of the NASI 
Panel concluded that policy consistency should flow from goals, not 
uniform definitions. The Panel stated, ``the primary goal of a national 
disability policy should be the integration of people with disabilities 
into American society.'' Equal Opportunity, full participation 
independent living, and economic self-sufficiency should be the goal of 
disability policy. Definitions of disability used as eligibility 
criteria for government programs should differ in order to target 
particular remedies to specific needs. For example, health care and 
income support programs may not need to share a common definition of 
disability.
    I would like to submit for the record Chapter 4 of the NASI report, 
``Defining Eligibility for Benefits and Services: Distinguishing 
Programs and Purposes.'' Among the key findings are:

           L``Different definitions of disability are 
        appropriate for program that offer different kinds of services 
        or benefits;
           LWork disability--based on loss of ability to earn--
        is an appropriate eligibility criteria for earnings-replacement 
        insurance [that SSA provides]; and
           LThe Social Security Act definition of work 
        disability is very strict. A less strict test would 
        significantly increase the cost of Social Security disability 
        benefits [because more people would qualify].''

    I would also like to submit for the record Chapter 5 of the NASI 
report, ``Operationalizing the Social Security Definition: Assessing 
the Assessment.'' The chapter outlines the panel findings on the 
sequential process SSA uses to determine disability. It assessed ot om 
terms of four overall objectives:

           Lthe accuracy of the assessment of an individual's 
        work disability (validity),
           Lthe consistency of these assessments across 
        deciders (reliability),
           Lthe perceived legitimacy or credibility of the 
        criteria as viewed by applicants and the public (credibility), 
        and
           Lthe capacity of the system to produce reasonably 
        prompt and low-cost decisions (administrative efficiency).
    The Panel found that each step of the sequential process has a 
rational rational in terms of these objectives. Any definition of 
disability used to determine eligibility should reflect these broad 
goals.
    Finally, the Panel found that adequate administrative resources are 
essential. Determining whether an applicant meets the definition in the 
law requires assembling and evaluating detailed medical evidence and 
evidence of functional capacity. This requires skilled personnel and 
resources. The Panel urged that the Administration and Congress provide 
SSA adequate administrative resources to ensure that assessments are 
done fully, fairly, and timely for all applicants.
    I will be happy to respond to any questions concerning this 
testimony or any questions you may have about comparable issues in 
private sector disability work programs with which I have had 
significant experience.
    [The attachment is being retained in the Committee files.]

                                 

    Chairman SHAW. I was just inquiring how many pages those 
chapters were.
    Ms. OWENS. I didn't read them.
    Chairman SHAW. Thank you. Dr. Growick.

   STATEMENT OF BRUCE GROWICK, PH.D., ASSOCIATE PROFESSOR OF 
REHABILITATION SERVICES, OHIO STATE UNIVERSITY, COLUMBUS, OHIO; 
     CHAIRMAN, LEGISLATIVE COMMITTEE, AND PAST PRESIDENT, 
   INTERNATIONAL ASSOCIATION OF REHABILITATION PROFESSIONALS

    Dr. GROWICK. Thank you, Chairman, and good morning. It is 
still morning. I will try to be brief, respect your time. I am 
Bruce Growick, from Ohio State University, where I train 
rehabilitation counselors, case managers, the very people that 
work for insurance companies like Unum helping individuals with 
disabilities go back to work.
    I am also the past Director of the Rehabilitation Division 
of the Ohio Bureau of Workers' Comp, and Workers' Comp in Ohio 
is somewhat unique in that it is an exclusive State because we 
have primarily a State fund that runs worker comp, analogous to 
the Social Security Administration in the way in which it 
collects premiums through payroll deductions and protects 
people against disability.
    Over the last few years, the rehabilitation services in 
Ohio and the Bureau of Workers' Comp have been deregulated and 
vended out to rehabilitation case managers, the students that I 
teach and our graduates, much like the private insurance 
company, to very good results by the way.
    I am also a past President of the International Association 
of Rehab Professionals. We have about 3,400 Members all over 
the country and elsewhere who do this very thing in terms of 
helping individuals with disabilities go back to work.
    Last, if that isn't enough, I am also a Vocational Expert 
for Social Security, and I have been doing that for about 14 
years, and I have sat in probably over a thousand disability 
hearings. So, I actually have been in hearings, the last 
adjudicatory step in that five-step sequential process where 
individuals actually have to come in before an administrative 
law judge and demonstrate the fact. If they don't meet the 
list, they have functional limitation severe enough, according 
to the medical evidence, that they can't do any of the jobs 
that are described in the DOT, that Dictionary of Occupational 
Titles, which is really our source document that the Labor 
Department produces. It is from that experience that I provide 
the following remarks.
    My basic concern is that the Social Security 
Administration, from all of my readings and all of my 
experience, is centered on benefits rather than services, and 
there is really a disconnect between having individuals go 
before a system, a rather complex and lengthy system, prove 
disability, all the while they are not receiving, many of them, 
the appropriate services to go back to work, which is the 
antithesis of what the insurance companies do.
    Now, if you run the Social Security Administration like an 
insurance company you would want to address the claimant with a 
claim for disability while providing them with the appropriate 
services. Unfortunately, that is not happening to a tremendous 
degree. As a matter of fact, when I was first hired as the VE, 
Vocational Expert, for Social Security, I was specifically told 
that I was only there to provide an opinion, to opine on 
whether that individual can go back to work as they currently 
are, not consider rehabilitation at all, and that disconnect 
continues to exist.
    The disconnect is really, I think, one of the major issues, 
and obviously it is a very complex problem that we are dealing 
with, is a very major issue inasmuch as you need to create some 
systemic changes across the Federal Government leaping from one 
agency to another. The Ticket to Work is an excellent start. I 
had the pleasure, thanks to you, 5 years ago, to testify in 
front of this Committee and we did get the Ticket to Work law 
passed. Unfortunately, a ticket to work happens after the 
claimant has already been granted disability. As mentioned by 
the Director of the Council that was created, many of our 
constituents, the individuals who apply for disability, don't 
understand why they have to go through this lengthy process and 
all of a sudden they get a ticket. The rehabilitation has to 
start up front. That is the basic premise of the industry we 
are in, the field. Rehabilitation services need to be provided 
early.
    The insurance company has done loads of studies showing the 
benefit-cost analysis of providing those services. Return on 
investment, anywhere from $8 to $25 on each dollar spent. The 
insurance companies would not be doing what they are doing if 
it wasn't smart practice, and that is in part what the Social 
Security Administration needs to do.
    I applaud you for trying to look at the definition of 
disability, the front end of the process, and one of my major 
suggestions in my written testimony is that the evaluation 
process for eligibility should also consider something for 
feasibility. There is a slight difference, and I don't want to 
try to become too academic, but the difference between 
eligibility and feasibility, eligibility from a legal 
standpoint you are eligible for benefits, which is quite 
different to say that you have residual capabilities and you 
are feasible for return to work, which is what the 3,400 
Members of our international association do. They help 
individuals with all the brandnew technology, with the benefits 
of the Americans with Disabilities Act and everything else to 
return to work.
    So, my recommendation is that up front you should have 
feasibility as well as eligibility. You might want to look at 
time-limited benefits. The horse is already out of the barn, so 
to speak. Once a person has been granted disability the Federal 
government tells me I am permanently totally disabled, end of 
story. I am receiving my benefits.
    Unfortunately, now, one last recommendation is that you do 
have the reauthorization of the Rehabilitation Act coming up 
next year, and I also had the opportunity to testify in front 
of the Work Force Development while that was--the Rehab Act was 
part of it. My recommendation is somehow take a look at what is 
happening with reauthorization of the Rehabilitation Act, the 
State-Federal system, combining those sources with Social 
Security in some way.
    The other recommendation is the new office in the Labor 
Department. The President's Committee on Employment of the 
Handicapped was moved over to the Labor Department. The Labor 
Department started, the very first time, with a lot of promise 
in terms of returning individuals to work. I think as you look 
at the Social Security system, including the definition of 
disability, you should look at leveraging what you are doing 
there with what other governmental agencies are doing so that 
you don't have these separate silos, as we call it in the 
Midwest, these resources that are not talking to one another 
and are not working together. Thank you very much.
    [The prepared statement of Dr. Growick follows:]
       Statement of Bruce Growick, Ph.D., Associate Professor of 
    Rehabilitation Services, Ohio State University, Columbus Ohio; 
  Chairman, Legislative Committee, and Past President, International 
              Association of Rehabilitation Professionals
    To the Honorable Chairman Shaw, Ranking Member Representative 
Matsui, and Members of the Subcommittee, thank you for this opportunity 
to testify regarding the present definition of disability and its 
impact on Social Security Disability programs. I am very pleased to be 
able to speak to this distinguished committee on this matter, which is 
both timely and crucial to the future success and existence of the 
Social Security Disability Trust Fund.
    I am Dr. Bruce Growick, an Associate Professor of Rehabilitation 
Services at The Ohio State University, where I teach courses, advice 
students, and conduct research in the area of rehabilitation. 
Rehabilitation as a disciple deals with the overall adjustment, 
including employment, of individuals with disabilities. I am also the 
former Director of Rehabilitation for the Ohio Bureau of Workers' 
Compensation where I ran a state-agency helping injured workers return 
to employment. Presently I serve as the Chairman of the Legislative 
Committee of the International Association of Rehabilitation 
Professionals (IARP) after having been their President in 1995. IARP is 
an international organization of 3,400 members who work in the field of 
rehabilitation, providing services to people with disabilities in 
business and industry, for insurance companies, and at home.
    Finally, and of particular interest as part of the foundation of my 
testimony today is my personal experience as a vocational expert for 
the Office of Hearings and Appeals of the SSA for the past thirteen 
years. As a vocational expert in the disability determination process, 
I am asked by the ALJs to classify the applicant's work experience, and 
to provide an opinion on their employability. As such, I have 
participated in thousands of Social Security hearings, and have been 
continually dismayed by the large percentage of individuals who apply 
for disability without receiving vocational rehabilitation. Therefore, 
in my testimony, I will address the issue of the definition of 
disability as it relates to incorporating vocational rehabilitation 
into the disability determination process, and the subsequent 
implications for the success of the Ticket to Work program.
LThe Definition of Disability: the Dilemma of Eligibility for Benefits 
        vs. Feasibility for Services
    The definition of disability as presently defined by the Social 
Security Administration creates an ``all or nothing'' climate. In order 
to be eligible for SSA, an individual must prove their inability to 
engage in any substantial gainful activity, i.e., work. This definition 
forces individuals to focus on their inabilities. For those individuals 
who have fought so hard for their eligibility, the likelihood of 
returning to work is unfortunately very small. There is no room in the 
present definition of disability to recognize the possibility of 
improvement through rehabilitation.
    Acknowledging the potential benefit of rehabilitation services, 
time-limited eligibility is an option to consider. This definition of 
disability would be appropriate for individuals who cannot perform 
their past work, but might be capable of performing other work in the 
economy. This definition would then allow for the early identification 
of individuals with rehabilitation potential and increase the number of 
returns to work. This trend is seen in the private disability insurance 
system, such as workers' compensation, and long term disability 
policies.
    If the medical condition deteriorates, then the inability to 
perform any work would result in the determination of permanent and 
total disability, and eligible for benefits. With this definition, 
rehabilitation intervention and return to work assistance can take 
place before the individual has been classified as permanently and 
totally disabled. Transforming the definition of disability in this way 
would require incorporating the assessment of rehabilitation potential 
into the disability determination system (DDS). We know from the 
statistics related to Workers' Compensation and Long Term disability 
case management that the earlier the return to work services are 
provided, the greatly the likelihood that the individual will return to 
work, if at all possible.
    Since the DDS process can take up to eighteen months to be 
completed, many individuals with disabilities have become unemployed 
and have remained unemployed in order to not jeopardize the process. As 
a result, their skills, motivation to work, and work habits begin to 
deteriorate. They begin to lose their identity as a worker and to adopt 
the identity of an individual with a disability. With a graduated 
definition of disability, early intervention through vocational 
rehabilitation can prevent this deterioration.
    You have heard from others that the concept of disability in the 
Social Security programs is out-of-step with current thinking, and I 
concur. The work and experiences of practitioners, researchers and 
disability advocates have resulted in increased knowledge about the 
barriers to employment that confront people with disabilities. From 
these experiences we have begun to recognize that the inability to work 
results from the interaction of the individual's functional limitations 
and work skills with the work environment. However, DDS continues to 
make determinations of eligibility for benefits on the basis of the 
idea that disability is ``medically determinable.'' This concept of 
``medically determinable'' disability focuses on diagnosis and not on 
the functional ability and rehabilitation potential of the individual.
    Reports by the GAO have consistently shown that return to work is 
not occurring in the Social Security system, even with the advent of 
numerous incentives and the Ticket to Work program. Rehabilitation is 
coming too late in the process, after the individual has already been 
declared disabled.
LThe Need for Rehabilitation Evaluation and Services
    As stated by others, SSA still needs to incorporate into its 
eligibility assessment process an evaluation of what is needed for an 
individual to return to work. The GAO has recommended developing a 
comprehensive return-to-work strategy that focuses on identifying and 
enhancing the work capacities of applicants and beneficiaries, and I 
strongly concur. May I respectfully recommend that the SSA consider 
using its staff to develop guidelines that will connect the application 
for disability with the automatic referral for rehabilitation services? 
In this way, the SSA applicant will be appropriately evaluated for 
return-to-work services, in addition to disability determination. There 
is currently a total disconnect between the disability determination 
process and RTW, unlike the private insurance industry where 
rehabilitation professionals are used on a routine basis to evaluate 
disability applicants for RTW potential. This process saves money for 
the insurance companies, as well individuals from disability status.
    Unfortunately, the recently passed `ticket-to-work' law addresses 
this disconnect, after the fact. Even though the law's intentions are 
laudable, the personal affects of declaring someone disabled dooms the 
process to failure. It is good that the `private-sector' is being asked 
to assist in the delivery of rehabilitation services, but this 
intervention needs to occur earlier in the process of disability 
adjudication.
    My overall recommendation to this subcommittee is to look at ways 
in which the definition of disability in SSA can be changed to include 
rehabilitation as early as possible. This disconnect between the SSA 
disability application process and rehabilitation needs to be changed 
so that the best efforts of the rehabilitation field can be 
incorporated into the disability determination process. Thank You.

                                 

    Chairman SHAW. Thank you. Dr. Blanck.

   STATEMENT OF PETER BLANCK, CHARLES M. AND MARION KIERSCHT 
    PROFESSOR OF LAW, AND DIRECTOR, LAW, HEALTH POLICY, AND 
  DISABILITY CENTER, UNIVERSITY OF IOWA COLLEGE OF LAW, IOWA 
                           CITY, IOWA

    Mr. BLANCK. Thank you, Mr. Chairman, for the opportunity to 
be here. I am also from the Big 10 like Bruce, except instead 
of being a Buckeye I am a Hawkeye. I am principal investigator 
on the large project funded by the National Institute for 
Disability Rehabilitation Research and a Member of the 
President's Committee on Employment of People with Disabilities 
and have been asked to speak on one very focused point, and 
that is that, as has been brought out today in the testimony, 
that the definition of disability under the DI programs as 
compared to the Americans with Disabilities Act they serve 
different yet important complementary national policy goals.
    Now we have heard testimony about the definition of DI and 
the incapacity to work. The ADA in contrast, we should be 
clear, is to encourage work. It seeks to eliminate 
discrimination against individuals with disabilities. The law 
defines, as you know, a physical or mental impairment that 
substantially limits a major life activity, but to be covered 
under the ADA the individual does not have to be totally unable 
to work. As a matter of fact, a person who is qualified to work 
often works with the provision of reasonable accommodations, 
and studies that I have done and studies that have been done at 
UnumProvident have shown really important cost effective 
benefits to employers accommodating workers with disabilities 
in the workplace and getting them back to work.
    So, there are different statutory purposes of ADA and the 
DI program. Primary among these differences is that when an 
individual is disabled for purposes of the DI programs it does 
not take into account the possibility of reasonable 
accommodation. So, since I am the last to go today, I will 
summarize briefly my opinions in this area and then perhaps 
give a longer time for questions to the Committee.
    Number one, a person with a medical condition obviously may 
be entitled to disability benefits under DI and still be a 
qualified person under the Americans with Disabilities Act, and 
that is simply because the person can perform particular job 
functions in a particular job perhaps with reasonable 
accommodations.
    Number two, a person may qualify for DI benefits on the 
basis of these regulatory presumptions, this five-step process 
we have heard about, that he is not able to work, and this may 
be true, even though that individual could return to work in a 
particular job with reasonable accommodations, and therefore 
these regulatory presumptions that I think has been brought out 
by the testimony of the UnumProvident doctor are really not 
related to a definition of who is a qualified individual with 
the disability for purposes of the ADA.
    Third, I think importantly, because as has also been 
brought out, disability changes dramatically over time in terms 
of severity and time. A person who is qualified to work today 
who perhaps is discharged in violation of the Americans with 
Disabilities Act can nevertheless become increasingly disabled 
and then appropriately receive disability insurance benefits.
    So, finally, for these reasons, the one point I have been 
asked to talk about today is that let's not confuse the 
definition of disability under the Americans with Disabilities 
Act with definitions under the DI programs. The ADA is much 
more specialized. It is on a case-by-case basis. Perhaps it is 
a model for some of the reasons we have heard today about how 
to think about new concepts of the definition of disability 
under DI programs. Certainly, and I think my views, by the way, 
have been endorsed by the U.S. Supreme Court in the 1999 
Cleveland v. Policy Management case, where they unanimously 
said these same sorts of points, that both of these 
definitions, can comfortably co exist. The DI definition, to 
advance the national goal of returning people to work primarily 
by providing monetary support and insurance, and the ADA 
independently is to prevent discrimination on the basis of 
disability in the workplace. Thank you, Mr. Chairman, and I 
look forward to your questions.
    [The prepared statement of Mr. Blanck follows:]
   Statement of Peter Blanck*, Ph.D., Charles M. and Marion Kierscht 
  Professor of Law, and Director, Law, Health Policy, and Disability 
       Center, University of Iowa College of Law, Iowa City, Iowa
Introduction
    Mr. Chairman, members of the Committee, my name is Peter Blanck. I 
am the Charles M. and Marion Kierscht Professor of Law at the 
University of Iowa.\1\ I am the director of the Law, Health Policy, and 
Disability Center at the University of Iowa College of Law.
---------------------------------------------------------------------------
    * For additional copies, alternative formats, copies of referenced 
materials, or other information contact Professor Blanck at The 
University of Iowa College of Law, 431 Boyd Law Bld., Iowa City, Iowa, 
52242-1113, phone 319/335-9043, fax 319/335-9098, e-mail Peter-
[email protected]. For additional information on the information 
expressed herein (and for Professor Blanck's Vita and research grants), 
see the Law, Health Policy & Disability Center website at 
www.its.uiowa.edu/law. The views expressed in this statement reflect 
only those of the author and do not represent the views of the federal 
government or any other entities.
    \1\ Ph.D. in psychology from Harvard University, J.D. from Stanford 
Law School; Member of the President's Committee on the Employment of 
People with Disabilities; former Senior Fellow of the Annenberg 
Washington Program; former Commissioner on the American Bar Association 
Commission on Mental and Physical Disability Law.
---------------------------------------------------------------------------
    I am the Principal Investigator for the National Institute on 
Disability and Rehabilitation Research (NIDRR), U.S. Department of 
Education, funded Rehabilitation Research and Training Center (RRTC) on 
Workforce Investment and Employment Policy for Persons with 
Disabilities. I have conducted research and written articles and books 
on the implementation of federal disability law and policy and the 
Americans with Disabilities Act (ADA), particularly with respect to the 
application of the reasonable accommodation provision.\2\
---------------------------------------------------------------------------
    \2\ See, e.g., Peter Blanck, The Americans with Disabilities Act 
and the Emerging Workforce (1998); Peter Blanck (ed.), Employment, 
Disability, and the Americans with Disabilities Act (2000).
---------------------------------------------------------------------------
    My testimony focuses on two related conclusions:

        L  (1) the definition of disability under the SSI/SSDI programs 
        and under the Americans with Disabilities Act (ADA) serves 
        different important yet complementary national policy goals; 
        and,
        L  (2) to further the goal of a cohesive national disability 
        policy framework, additional dialogue and study on the SSI/SSDI 
        and ADA definitions of disability are required.
          1. LThe definition of disability under SSI/SSDI and under the 
        Americans with Disabilities Act (ADA) serves different 
        important yet complementary national policy goals.

    SSI/SSDI. The Social Security Act provides monetary benefits to 
eligible participants with a disability. The definition of disability 
for an adult in the Supplemental Security Income (SSI) and Social 
Security Disability Insurance (SSDI) programs is based upon the 
individual's inability to work. Eligibility for these programs requires 
that an individual cannot perform substantial gainful activity (SGA) 
due to a medically determinable physical or mental impairment that is 
expected to either result in death or to last not less than a 
continuous period of 12 months.\3\
---------------------------------------------------------------------------
    \3\ See 42 U.S.C. 423(a)(1)(D), 423(d)(1)(A); see also Definition 
of Disability, 20 C.F.R Sec. 404.1505 (45 FR 55584, Aug. 20, 1980, as 
amended at 51 FR 10616, Mar. 28, 1986; 57 FR 30120, July 8, 1992); 
Definition of Disability for Adults, 20 C.F.R. Sec. 416.905 (45 FR 
55621, Aug. 20, 1980, as amended at 56 FR 5553, Feb. 11, 1991).
---------------------------------------------------------------------------
    The inability to work under SSI/SSDI is assessed by a five-step 
disability determination process. If a claimant is employed at SGA, the 
application is denied in the first step of the process. Other aspects 
of the disability determination process assess the applicant's 
capability to be employed--taking into account factors such as prior 
employment, age, education, and residual functional capacity through 
medical evidence and the applicant's narrative.\4\
---------------------------------------------------------------------------
    \4\ See 20 CFR Sec. 404.1520(b-f) (1998).
---------------------------------------------------------------------------
    ADA. The ADA seeks to eliminate discrimination against individuals 
with disabilities.\5\ The ADA defines disability as a physical or 
mental impairment that substantially limits one or more major life 
activities. The term ``substantially limits'' is based upon the nature 
and severity of the impairment, and the length of time the impairment 
is expected to last. To be covered by the ADA, however, an individual 
does not have to be totally unable to work. The ADA prohibits 
discrimination by covered employers against a ``qualified individual'' 
with a disability--that is, a person who is able to perform the 
essential functions of the job, with or without reasonable 
accommodations.\6\ Reasonable accommodations may include modifications 
to the work environment, policies, or procedures.\7\ Prior study has 
shown that highly individualized ADA workplace accommodations, when 
developed through the ADA's interactive process, often result in 
measurable benefits to the employee and employer.\8\
---------------------------------------------------------------------------
    \5\ See Cleveland v. Policy Management Systems Corp., 526 U.S. 795, 
802 (1999).
    \6\ Id.
    \7\ Id.
    \8\ Peter Blanck, Communicating the Americans with Disabilities 
Act: Transcending Compliance--1996 Follow-up report on Sears Roebuck 
and Co.'' The Annenberg Program, Washington, D.C. (1996).
---------------------------------------------------------------------------
    Different Statutory Difinitions Yet Copmplementary. The definition 
of disability under SSI/SSDI and the ADA thereby reflect different 
statutory purposes. Primary among the statutory differences is that 
when the SSI/SSDI determines an individual is disabled for purposes of 
its programs, it does not consider the possibility of reasonable 
accommodation.\9\ The U.S. Supreme Court has concluded in its 1999 
Cleveland v. Policy Management Systems Corp. decision:
---------------------------------------------------------------------------
    \9\ Cleveland, at 803.

          L[the difference in the SSI/SSDI and ADA definition of 
        disability] reflects the facts that the SSI/SSDI receives more 
        than 2.5 million claims for disability benefits each year; its 
        administrative resources are limited; the matter of reasonable 
        accommodation may turn on highly disputed workplace-specific 
        matters; and an SSI/SSDI misjudgment about that detailed, and 
        often fact-specific matter would deprive a seriously disabled 
        person of the critical financial support the statute seeks to 
        provide.\10\
---------------------------------------------------------------------------
    \10\ Id.
---------------------------------------------------------------------------
    In addition, unlike the ADA's individualized process, the SSI/SSDI 
administers its benefit programs under a five-step procedure containing 
presumptions about disabilities and job availability.\11\ Also unlike 
the ADA, the Court concludes that SSI/SSDI presumptions about 
disability eliminate ``consideration of many differences potentially 
relevant to an individual's ability to perform a particular job.'' \12\ 
Therefore, an individual may qualify under SSI/SSDI for program 
benefits but be a qualified individual for purposes of the ADA, able to 
perform essential job functions with or without accommodation. SSDI 
also grants monetary benefits to eligible beneficiaries who can work 
during a ``trial-work period.'' \13\
---------------------------------------------------------------------------
    \11\ Id. at 804.
    \12\ Id.
    \13\ 42 U.S.C. Sec. Sec. 422( c), 423(e)(1); 20 CFR Sec. 404.1592 
(1998).
---------------------------------------------------------------------------
    To summarize my opinions about the different yet complementary 
purposes of SSI/SSDI and the ADA:\14\
---------------------------------------------------------------------------
    \14\ For development of these views, see Brief for the United 
States and the Equal Employment Opportunity Commission as Amici Curiae 
Supporting Petitioner, in Cleveland, 1998 WL 839956 (illustrating logic 
adopted by the Court).

        L  (1) A person with a medical condition may be entitled to 
        disability benefits under SSI/SSDI and still be an ADA 
        qualified individual because that individual can perform the 
        particular essential job functions with reasonable 
        accommodations. Moreover, as the SSI/SSDI eligibility process 
        does not consider whether reasonable accommodations might be 
        required under the ADA, a person may be entitled to SSI/SSDI 
        benefits even if he could perform his prior job with reasonable 
---------------------------------------------------------------------------
        accommodations.

        L  (2) A person may qualify for SSI/SSDI on the basis of the 
        regulatory presumptions set out in the five-step eligibility 
        process that he is not able to work. This may be true even 
        though that individual is not prevented from working in 
        particular jobs. Thus, the SSI/SSDI regulatory presumptions are 
        not related to the assessment of an ADA qualified individual.

        L  (3) SSI/SSDI permits beneficiaries to receive benefits even 
        though they are presently employed (e.g., trial-work period) to 
        encourage individuals to return to work.

        L  (4) Because disability severity, type, and status change 
        over time, a person discharged from work in violation of the 
        ADA (e.g., because of the lack of a reasonable accommodation) 
        subsequently may become increasingly disabled and then 
        appropriately receive SSI/SSDI benefits.

        L  (5) The determination of reasonable accommodation under the 
        ADA cannot be transferred to the determination of disability 
        eligibility under SSI/SSDI.\15\
---------------------------------------------------------------------------
    \15\ This view is consistent with guidance set out on the subject 
by the Equal Employment Opportunity Commission (EEOC). See EEOC 
Enforcement Guidance on the Effect of Representations Made in 
Applications for Benefits on the Determination of Whether a Person Is a 
``Qualified Individual with a Disability'' Under the Americans with 
Disabilities Act of 1990 (ADA), EEOC Notice, Number 915.002, Feb. 12, 
1997, at http://eeoc.gov/docs/qidreps.html.

    As the United States stated in its amicus brief in the Cleveland 
---------------------------------------------------------------------------
case (which logic was adopted by the Court in its decision):

        L  Social security benefits and the ADA are not necessarily 
        alternative remedies between which people with disabilities 
        must choose. Rather they are complementary measures that 
        provide financial support to people with physical or mental 
        impairments who face practical barriers to work while at the 
        same time encouraging and facilitating their efforts to move 
        off the benefit rolls and return to work.\16\
---------------------------------------------------------------------------
    \16\ Brief for the United States and the Equal Employment 
Opportunity Commission as Amici Curiae Supporting Petitioner, in 
Cleveland, at 5 (emphasis added).

    The Supreme Court in Cleveland endorsed this view, stating ``there 
are too many situations in which an SSDI claim and an ADA claim can 
comfortably exist side by side.'' \17\ Together, SSI/SSDI and the ADA 
advance the national disability policy goal to aid people with 
disabilities to return to work by providing monetary support (SSI/SSDI) 
and preventing discrimination on the basis of disability in the 
workplace (ADA).
---------------------------------------------------------------------------
    \17\ Cleveland at 802-03.

          2. LTo further the goal of a cohesive national disability 
        policy framework, additional dialogue and study on the SSI/SSDI 
---------------------------------------------------------------------------
        and ADA definitions of disability are required.

    In 2002, the United States Supreme Court reiterated the important 
national disability policy objectives of the ADA in the case US Airways 
v. Barnett.\18\ The Court concluded that, unlike prior federal 
government law and policy:
---------------------------------------------------------------------------
    \18\ U.S. Airways, Inc. v. Barnett, 122 S.Ct. 1516, 1522-23 (2002).

        L  [The ADA] seeks to diminish or to eliminate the 
        stereotypical thought processes, the thoughtless actions, and 
        the hostile reactions that far too often bar those with 
        disabilities from participating fully in the Nation's life, 
        including the workplace. . . . These objectives demand 
        unprejudiced thought and reasonable responsive reaction on the 
        part of employers and fellow workers alike. They will sometimes 
        require affirmative conduct to promote entry of disabled people 
        into the workforce.\19\
---------------------------------------------------------------------------
    \19\ Id.

    The Court's enunciated goal of the ADA is to insure equal 
opportunity, full participation, independent living, and economic self-
sufficiency by individuals with disabilities in all aspects of society 
enjoyed by those without disabilities.
    Since the passage of the ADA in 1990,\20\ there has been 
unprecedented change brought to public policy that recognizes 
``disability as a natural part of life experience,'' no longer defined 
purely in a medical context but now explained by social and 
environmental barriers and facilitators.\21\ The prior paradigm of 
disability often viewed people with disabilities as ``defective and in 
need of fixing.'' \22\ The new paradigm embodies a ``disability policy 
framework,'' \23\ as articulated in the ADA, and sets forth the goals 
of ``equality of opportunity, individualization, full participation, 
independent living and economic self sufficiency.'' \24\
---------------------------------------------------------------------------
    \20\ Pub. L. 101-336, 104 Stat. 327, (1990).
    \21\ NIDRR Long Range Plan (64 Fed. Reg. 68608). See also Peter 
Blanck & Helen Schartz, Towards researching a national employment 
policy for persons with disabilities, in LR McConnell (ed), Switzer 
Monograph Series (July 2001); Harlan Hahn, Disability Policy and the 
Problem of Discrimination, 28 Am. Behav. Sci. 293, 294 (1985).
    \22\ Peter Blanck & Michael Millender, Before disability civil 
rights: Civil War pensions and the politics of disability in America, 
52 Alabama L. Rev. 1 (2000); Peter Blanck, Civil War pensions and 
disability, 62 Ohio State L. J. 109 (2001).
    \23\ See Robert Silverstein, Emerging Disability Policy Framework: 
A Guidepost for Analyzing Public Policy, 85 Iowa L. Rev. 1691 (2000).
    \24\ NIDRR Long Range Plan (64 Fed. Reg. 68578).
---------------------------------------------------------------------------
    The goals of the disability policy framework have provided 
organizing principles adopted by Congress in passage of the Workforce 
Investment Act (WIA) of 1998 and the Ticket to Work and Work Incentives 
Improvement Act (TWWIIA) of 1999, as well as in its reauthorizations of 
the Rehabilitation Act of 1973 and the Individual with Disabilities 
Education Act (IDEA).\25\
---------------------------------------------------------------------------
    \25\ Workforce Investment Act (WIA) of 1998, P.L. 105-220, 112 
Stat. 936 (1998); Individuals with Disabilities Education Act 
Amendments of 1997, P.L. 105-17, 111 Stat. 37-157 (1997); Ticket to 
Work and Work Incentives Improvement Act (TWWIIA), P. L. 106-170, 113 
Stat. 1860 (1999).
---------------------------------------------------------------------------
    These public policy achievements have moved significantly beyond 
historically imposed policy and attitudinal barriers that subjected 
persons with disabilities to lives of dependency, segregation, and 
paternalistic treatment.\26\ The ADA, SSI/SSDI, and subsequent 
Congressional actions such as TWWIIA and WIA have set out new 
expectations about the abilities of persons with disabilities to learn, 
work, return to work, and be included in the mainstream of American 
life.\27\
---------------------------------------------------------------------------
    \26\ Emerging Disability Policy Framework, 85 Iowa L. Rev. 1691.
    \27\ Id.
---------------------------------------------------------------------------
    In assessing the effectiveness of such strategies, dialogue and 
study of questions may be considered such as the following:

           LIn what ways is the ADA facilitating access to 
        reasonable accommodations, including assistive technology 
        tools, so as to enhance access to work, return to work, career 
        advancement, and job productivity?
           LIn what ways may SSI/SSDI eligibility support an 
        applicant or newly eligible beneficiary to retain meaningful 
        employment while maintaining appropriate access to financial, 
        health care, and other benefits provided by SSI/SSDI?

    NIDRR has funded a RRTC on Workforce Investment and Employment 
Policy, as well as other projects, that are seeking answers to these 
and other questions. Researchers and policy analysts are beginning to 
understand the initial implementation phase of WIA and TWWIIA, as well 
as the ongoing impact of the ADA.
    Additional study is needed to identify the characteristics of those 
who enter the workforce and return to meaningful work from SSI/SSDI 
benefit programs. Study is warranted of the economic and social factors 
that facilitate the reduced need for benefits. Dialogue and research 
are needed on issues such as the nature of hidden or attitudinal 
discrimination against individuals with disabilities in the workplace, 
and on the ways to facilitate ADA reasonable accommodations and the 
provision of assistive technology in the workplace for qualified 
individuals.\28\
---------------------------------------------------------------------------
    \28\ See Scott Burris & Kathryn Moss, A Road Map for ADA Title I 
Research, in Blanck (ed.), Employment, Disability, and the Americans 
with Disabilities Act (2000).
---------------------------------------------------------------------------
    Lastly, a recent GAO report on the effects of the SGA level 
identifies several significant data limitations that presently hinder 
valid and reliable assessment of the employment status of SSI/SSDI 
beneficiaries.\29\ These data limitations include a lack of useful 
information on the monthly earnings of beneficiaries or the 
beneficiary's engagement in a trial work period or extended period of 
eligibility. The Social Security Administration is addressing these 
issues by using enhanced means to track the wages and earnings of 
people who participate in the Ticket to Work program.
---------------------------------------------------------------------------
    \29\ SSI/SSDI Disability: SGA Levels Appear to Affect the Work 
Behavior of Relatively Few Beneficiaries, but More Data Needed, United 
States Government Accounting Office, GAO-02-224 (Jan. 2002).
---------------------------------------------------------------------------
Conclusion
    Recent U.S. Supreme Court decisions interpreting the ADA's 
definition of disability have highlighted the different yet 
complementary purposes of SSI/SSDI and the ADA. The Supreme Court has 
articulated the national policy goals of the ADA and the emerging 
disability policy framework. Congress, the disability community, 
employers, researchers, and others now must work together to implement 
SSI/SSDI programs and the ADA in ways that further these objectives.
    This common purpose is required to develop meaningful information 
about effective policy and implementation strategies that advance the 
economic independence of Americans with disabilities. The information 
learned will shape the lives of the next generation of children with 
disabilities who have experienced integrated education and who will 
become part of the competitive labor force of the 21st 
century.

                                 

    Chairman SHAW. Thank you very much. This has been very 
insightful. I was just asking Kim Hildred, our chief staff 
person here, as to when is the last time other than the Ticket 
to Work that Congress really took a close look at that and she 
said 1984. So, I guess we are just as guilty as the SSA of 
using 1991 job descriptions. So, I think that there is an 
awful, awful lot that we have gained today and learned today 
from all of you witnesses.
    Dr. Growick, I would like to thank you publicly for your 
input with regard to the Ticket to Work legislation, which is 
something that as Chair I am very proud of and I am sure every 
Member of this Committee is very proud of as well as our staff. 
Your input and contribution to that was great. Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman, and I appreciate the 
comments of all the witnesses. Let me see if I can try to 
condense the various questions that I have in my mind so I can 
try to do it all in 5 minutes and get some thoughtful 
responses.
    What I hear you all saying is that we should try to 
restructure our view of the disability insurance program so 
that we are not just trying to give someone something for a 
disability and treat them as if they can never get back to 
being functional, but to try to help them, if possible, get 
back to a stage where they are functional and therefore self-
sustaining. If that is our course, it seems that what we are 
going to probably find is that a lot of these individuals can 
probably return to some state of functionality, but will 
require quite a bit of assistance, treatment, modalities that 
are out there these days, the automation that is out there to 
try to help them.
    Who would be responsible for the cost to providing that? If 
I could ask you to be brief in that because I can then follow 
up with some other questions. Who would take on the 
responsibility for that individual to cover the cost of the 
treatment, the program, the equipment that would be necessary?
    Mr. SEIFERT. If it didn't fall to their private insurance, 
and some private disability and health insurance companies do 
provide those types of services and technologies, then it would 
have to fall to the government. We are talking about incredibly 
expensive technologies that are quite beyond the means of a 
person whose income is diminished by disability or, in the 
event that they are still working to some degree before maybe 
filing for DI, is somewhat diminished from where it was. So, 
but again it is an individualized thing.
    Mr. BECERRA. So, if there is no private insurance then you 
are probably looking at the government to cover the cost?
    Mr. SEIFERT. More than likely, and like you said, it all 
comes down to the money. If the government doesn't pay for the 
assistive technology, then it will pay for the benefits. So, it 
just depends-- if Medicaid pays for the specific technology and 
the person doesn't come under Social Security, well, then you 
have saved on one side but you have spent on the other side.
    Mr. BLANCK. There is another area, too, and that is tax 
incentives and tax credits to employers to provide many of 
these accommodations, which often are expensive but often are 
rather modest in price. In Iowa we have passed legislation 
which we are quite proud of, maybe other States have it as 
well, to have a tax credit for small employers who employ 
people with disabilities who need these sort of assistive 
technologies. It is a nice way to get people back to work, to 
encourage cost effective strategies for employers, and to 
remove it out of the governmental insurance system as well. It 
is a win-win for everybody really.
    Ms. OWENS. I want to make one point. I think that there are 
certain people of working age for whom these additional 
services and benefits will make a difference and will return 
them to work. It is also important that there be a baseline 
program for people to have wage replacement. There are a 
certain number of people who cannot go back to work and need to 
have that baseline program. Perhaps that didn't come out 
clearly in my statement.
    When you are looking at that other group of people, one of 
the things we have heard is that there are a lot of programs 
available within the government that aren't integrated. I think 
Mr. Gerry mentioned that and I think we need to take a look at 
that. How do we integrate those programs and be sure that the 
goals are the reintegration of people who can be back into 
society.
    Dr. ANFIELD. I would like to raise two points that I think 
are suggested in the testimony that I provided. One is the 
recovery rates for our long-term benefit claimants who also 
receive SSDI benefits are considerably higher than Social 
Security, and the other is since implementing the more rigorous 
stewardship of the experience, investing in the resources that 
I have described, my company has achieved a rate of recovery 
that is 30 percent higher than the industry average. This has 
been demonstrated through the mergers of three companies and 
thus is a proven model.
    Mr. BECERRA. Dr. Anfield, a quick question to you, and 
maybe you can provide something in writing if you don't have a 
response that you can give orally. Has there been a comparison 
made between what private insurance offers in terms of both the 
rehabilitative assistance or other opportunities to try to get 
back to work along with the cash benefits for the disability 
and compared that to what SSDI provides and so you have a good 
comparison?
    The other part is the clients that you have versus the 
clients that SSA gets. I would imagine that for the most part 
SSA is going to get the folks who don't have the wherewithal or 
didn't have employers who offered disability insurance, so 
they're going to have a universe that is going to be a lower 
income, a more modest income than some folks that you have been 
able to provide assistance to. Maybe I could ask you to do that 
just as a follow up, if you could do that.
    [The information follows:]

    Our company has not conducted any studies that compare the private 
insurance industry with SSDI in terms of rehabilitative assistance and 
benefit payments, but we believe the General Accounting Office has 
recently completed such a study that the Subcommittee may find helpful.
    UnumProvident and SSA share common claimants. About 86 percent of 
all Unum, Provident, and Paul Revere Long Term Disability claims beyond 
3 years have SSDI offsets. In the second quarter of 2002 the average 
monthly gross benefits (UnumProvident + SSA benefit) for recovered 
claims receiving an SSDI offset was $1,746 (thus, the average annual 
income on which wage replacement benefits were predicated is 
approximately $33,000). Our recovery rate demonstrates the 
effectiveness of our return to work model: It was 5.3 percent in 2001 
compared to 3.2 percent in 1999 (the year of the merger between Unum 
and Provident). The SSA has previously reported its SSDI recovery 
experience at a rate of one-half of 1 percent.

                                 

    Mr. BECERRA. Mr. Chairman, if I could ask one last question 
of Dr. Blanck.
    Chairman SHAW. Go ahead.
    Mr. BECERRA. Dr. Blanck, you mentioned reasonable 
accommodation, and ADA provides that, and I think that has 
worked tremendously well. Reasonable accommodations for the 
most part requires the employer to make the accommodation at 
the employer's expense?
    Mr. BLANCK. Right.
    Mr. BECERRA. If we are now looking at the possibility of 
DI, disability insurance beneficiaries into a workplace setting 
again, reasonable accomodation, are we still assuming that the 
employer covers the entire cost of that accommodation? Are we 
looking to now have the individual, the government providing 
the disability insurance to do that? How do we do it because I 
suspect that the accommodations that would be required for some 
of the folks that would be receiving disability insurance would 
be greater, and that I would think would impose a heavy burden 
on the employer to try to accommodate that individual?
    Mr. BLANCK. That is quite right and I think that is a very 
astute point. There needs to be a partnership clearly. This is 
a study for GAO to look at the net return of X numbers of 
thousands of dollars that the government might provide for an 
accommodation with the extended work life of that particular 
individual, and I think that strategy, combined with tax 
credits, is a very powerful strategy. I mean employers need 
workers. They need workers in our knowledge-based setting. It 
is clearly increasingly people with disabilities work in 
knowledge-based jobs. We are moving away from our manufacturing 
sector, and a partnership of that sort would be very effective. 
You are quite right, under the ADA the employer is obligated to 
bear the cost of that typically.
    Mr. BECERRA. Thank you all for your testimony. I think it 
is enlightening and I hope it spurs us to move in a positive 
direction. I am not sure what direction that is because, as I 
said, I have some trepidation about where it takes us if we are 
not willing to put the money behind what we say, but I thank 
you very much. Mr. Chairman, again thank you so much for having 
these three hearings. It is great.
    Chairman SHAW. Just for your information and the 
information of the people here, the General Accounting Office 
is doing a certain amount of research and they are going to 
report back to us on what is the effectiveness of some of these 
incentive plans that are out there, some programs that will 
give us some guidance. Mr. Hulshof.
    Mr. HULSHOF. Thank you, Mr. Chairman. I want to echo what 
Mr. Becerra said as far as the series of hearings we have had, 
especially even today. With one, only one, exception, everybody 
has been really focused on the topic at hand. This has been 
really so fascinating I guess to us as a Subcommittee, if we 
could somehow trumpet in a national town meeting that is 
televised, I mean these sort of issues, because I really do 
think that we are on the cusp of some significant changes and 
you all have addressed them. It also raises the challenges that 
we face, and that is what if we, Congress, could enact policy 
in a vacuum? Where would we go? Mr. Becerra has mentioned 
trepidation.
    My friend Mr. Pomeroy from North, by gosh, Dakota as he 
says, mentioned quandary of the policy. Mr. Seifert, you 
mentioned policy changes. Here we have had this program that 
has been very successful, but it has been primarily a safety 
net to provide cash benefits for individuals who can't work, 
and then we are trying to focus now on shifting that program to 
returning to work, as Ms. Mitchell is nodding back there.
    We talked about early intervention and, Dr. Growick, as you 
said very eloquently, we are moving in a direction that we can 
provide rehabilitation services in an earlier fashion. We have 
got assistive technologies. I mean, what a dynamic area this 
is. What is the right policy and that of course is, as you 
mentioned, somewhat academic exercises of policy. Then when you 
add the politics that we deal with, and I mentioned Dr. 
Growick, just, you know that, Mr. Chairman, when you came to my 
district and we had convened a field hearing, we were greeted 
with protesters as you remember. Whether it is time limited 
benefits, which is an intriguing idea, but, boy, think of the 
politics there.
    Mr. Seifert, you mentioned in your testimony support 
raising substantial gainful activity level for non-blind 
disabled individuals to the same level as those who are blind. 
Boy, there is a political issue. My constituents back home are 
still wondering why I haven't gotten on certain pieces of 
legislation to support the blind and raising it and tying it 
back into certain Social Security levels.
    So, you have got the policy and the politics, and then we 
have also heard today from--the challenges of implementation. 
We have heard from both SSA. We have heard from GAO, even these 
great ideas and great legislations that were enacted in 1999, 
and we still are talking about how do we make it work. So, 
again, I think it has just been fascinating.
    Let me zero in because I also have limited time. Mr. 
Seifert, just a couple of things. Specifically, a point that I 
find you made that is very well taken, and that is the sliding 
scale. I have a very active disabled community back home in 
Missouri, specifically in Columbia, Missouri, my home. This 
whole cash cliff or income cliff, which, when we talked about 
this and we now have this demonstration project, the sliding 
scale. I am going to ask you to be a devil's advocate. Can you 
think of any reason why we should not make this demonstration 
project the law of the land? I mean, can you think of any 
policy reason or political reason why not to have the sliding 
scale? Because I, from day one, I know we had to do the 
demonstration project, but from day one it seemed just that the 
policy should be, you know, when we have this Ticket to Work, 
that we should make this not just a demonstration project but 
it should go across the country. Are there any arguments 
against making the demonstration project uniform?
    Mr. SEIFERT. There are some who would perceive that a 
sliding scale on the DI benefit would fundamentally change it 
to a partial disability program and would entice people to 
apply. That is the argument that is advanced by some people. It 
is a facetious argument, but the people who make it happen to 
be actuaries who score it and they score it high, and so 
consequently we don't have it. It was probably the one biggest 
thing, of all the things we did in the Ticket to Work, that we 
did not fix, I mean, we crossed several jurisdictional 
boundaries in this Congress. It is implemented across several 
departments of the Federal Government. It was a huge piece of 
legislation. It enjoyed wide bipartisan support.
    The thing we didn't do in that bill was eliminate the SSDI 
cash cliff. We didn't do it because a couple of actuaries said 
it might cost a lot of money, offering not a shred of proof, 
with no evidence. In fact, from my understanding with some 
experience in the private sector, quite to the contrary, there 
is evidence that it would in fact save money. Other than their 
concerns, I can think of no reason not to do that then.
    Mr. HULSHOF. Well, again, I just thank each of you for the 
contributions you have made and the series of hearings has been 
quite enlightening and also pointing up, though, the challenges 
we continue to face, especially in this dynamic area of trying 
to help people return to work. It is not often, as I have said 
several times, it is not often that we have a group of 
individuals across the country who come to us to Congress and 
say we want to be taxpayers and yet this is the group that, as 
you know, the opportunity to work is a basic human dignity. I 
do agree that the Ticket to Work is a major step forward, 
probably the greatest thing since ADA, to help a segment of our 
population that is trying to become self-sufficient. So, with 
that, and seeing the red light on, Mr. Chairman, again my 
compliments on this series of hearings and thank the panels.
    Chairman SHAW. Thank you. I would like to associate myself 
with the comment of Mr. Becerra and the comment that you just 
had with regard to the value of this hearing. We have got a 
system that is broken. We have got to do a better job. It is 
easy to sit up here and blame others, but Congress certainly is 
to blame. We have got a cliff. The Social Security is aware of 
that. It did say it was going to cost billions of dollars. 
Perhaps we should be a little more innovative with some tax 
credits or something if they lose all their benefits, and that 
is a big problem.
    The fact that we haven't heard anything about job 
counseling at this hearing worries me. The fact that we don't 
have this program hitched up to rehabilitative services for 
those that require it is of great concern. I think we have a 
system now where we are just saying that all you have to do is 
continue to be a disabled person and not work and you will 
continue to get your benefits.
    That echoes and rings a little bit like what we were doing 
before with welfare reform. We were paying people not to get 
married, have children, and not work. Believe it or not, that 
is exactly what a lot of folks did. In this situation we make 
it very, very difficult, and I am not drawing a parallel 
between this and the broken welfare reform bill, but we are 
making it very difficult for people to break out of this and 
try to--we went a long way with the Ticket to Work. I think we 
do have to take another look at this and to be sure that some 
rehabilitative process is in place and is connected with this.
    We have got so many people doing so many things in so many 
areas, and they never see each other. Whether we have it in the 
offices administering the Temporary Assistance to Needy 
Families payments or whether they are doing--taking care of 
people that have been laid off and receiving benefits for a 
period of time. There are just so many people that are doing 
these things, and we don't seem to be doing anything in this 
area except just simply evaluating and sending out checks, and 
I think there is a lot more that we can do to help the people 
that we all want to help.
    I want to thank this panel for coming. When you get back to 
Iowa, be sure to tell Marion and Charles that we asked about 
them. I have got to tell you, it is written here as if it is a 
witness. I know I have trouble with names, but this one is your 
fault. Thank you all very much. This hearing is concluded.
    [Whereupon, at 12:40 p.m., the hearing was adjourned.]
    [Questions submitted by Chairman Shaw to the panel, and 
their responses follow:]
      
                     Social Security Administration
                                Baltimore, MD 21235
                                                    August 28, 2002
E. Clay Shaw, Jr., Chairman
House of Representatives
Ways and Means Committee
Subcommittee on Social Security
Rayburn House Office Building B-317
Washington, DC 20515
    Dear Chairman Shaw:
    1. The U.S. General Accounting Office (GAO) found that your agency 
is using outdated information about the types and demands of jobs in 
the economy when determining whether an individual is capable of doing 
other work--is this true? What efforts are underway to address this? Do 
you have research on the number and characteristics of individuals who 
might receive benefits if these criteria were updated?

    Answer:

    SSA uses the most up-to-date occupational information available 
when determining whether an individual is capable of performing work 
that exists in the national economy. Although the job information 
contained in the Department of Labor's (DOL's) Dictionary of 
Occupational Titles (DOT) has not been revised since 1991, it remains 
the most up-to-date detailed description of occupational information 
available that matches with the level of analysis used in the current 
SSA disability determination process.
    DOL has developed a new database system of occupational 
information, the Occupational Information Network (O*NET). As required 
by the Office of Management and Budget, this system is based on the 
2000 Standard Occupational Classification (SOC) system and contains 
information on approximately 950 occupational categories, as opposed to 
the nearly 13,000 separate job titles in the DOT. DOL is currently 
collecting new data from current workers through a survey process. It 
will take a number of years to update the entire database. In the 
meantime, the occupational characteristics data in the current O*NET 
database are analyst ratings derived from analysis of the component DOT 
occupations. SSA is continuing to use the data at the more detailed DOT 
level. In addition, as DOL acknowledges, O*NET is not designed for use 
in adjudicative programs and, even when complete, it will not meet 
SSA's needs. We have been working, and will continue to work, with DOL 
to address our occupational data needs, which require more detail on 
the physical demands of work, in order to compare it to an individual's 
residual functional capacity.
    For the past couple of years, DOL and SSA staff have been working 
together with individuals from the private sector (e.g., vocational 
rehabilitation representatives and those of insurance industry workers' 
compensation programs) to develop approaches that will yield 
occupational data that we can use in our programs. SSA's Associate 
Commissioner for Disability recently met with the Assistant Secretary 
for the Employment and Training Administration, the component in DOL 
that is responsible for the development of O*NET, to discuss how our 
Agencies can best work together to develop the occupational information 
and data that SSA needs. Our staffs are currently preparing a white 
paper that will form the basis for cooperation in developing this kind 
of occupational data.
    We currently have two other related projects:

    1. Job Demands: This is a Disability Research Institute (DRI) 
project intended to identify the physical and mental demands required 
to perform work. It should result in more useful descriptors for jobs. 
We plan to follow-up with another project to validate and calibrate job 
demands and to develop instruments for occupational analysis.
    2. Non-Medical Factors: This project is intended to assist SSA in 
updating its other vocational policies (i.e., not directly related to 
DOT/O*NET issues). It began with a research contract to investigate the 
effects of age, education, literacy, and skills in terms of vocational 
capacity assessments.
    We do not have information about the number and characteristics of 
individuals who might be affected if these criteria were updated. That 
would depend on how the criteria are updated.

    2. You mentioned in your testimony that you have begun looking at 
disability programs, including the definition of disability, in the 
context of other Federal programs for individuals with disabilities. 
What is the timeline for any action or results from this examination? 
What role do short-term disability or partial disability, changes in 
work, medicine, and technology, and individual's expectations play in 
this examination?

    Answer:

    Work on developing the concepts for this project has just begun. We 
are currently assessing what is known about public and private 
disability insurance program design and experience to construct a 
knowledge base for all aspects of disability insurance coverage and 
program provisions. We intend to take a comprehensive look at 
definitions of disability from both the medical and functional 
perspectives, assess the potential of current technology in mitigating 
the disabling impacts of physical and mental impairments, look at 
issues related to personal motivations and incentives to work, and 
consider the private and foreign experience with short-term and partial 
disability benefits in the context of enhancing return to work efforts. 
Since this work is just beginning, we do not have enough information as 
yet to set a firm timeframe for the completion of all the many tasks 
involved in an undertaking of this scope. We will inform you as soon as 
a workplan is adopted for this project.

    3. You stated in your testimony that SSA has formed a partnership 
with the Departments of Labor, Health and Human Services, and 
Education, as a part of the President's New Freedom Initiative. Would 
you explain this partnership, including its goals, the research SSA is 
undertaking as part of it, and its timeline for action?

    Answer:

    There are several collaborative efforts underway as part of SSA's 
response to the New Freedom Initiative:

           LDepartment of Labor (DOL) Navigators: SSA is 
        collaborating with DOL, Employment and Training Administration, 
        to conduct research into establishing within the State-operated 
        One-Stop Centers a staff position that will provide employment 
        services and expert information on SSA's employment support 
        programs. This position in DOL One-Stops is tentatively called 
        the Disability Program Navigator (DPN) or ``Navigator.'' The 
        Navigator would be responsible for addressing the needs of 
        individuals with disabilities who are seeking training and 
        employment opportunities by helping them access, facilitate, 
        and navigate the various complex Federal, State, and local 
        programs. The demonstration of this position will be performed 
        during fiscal year (FY) 2003 and FY 2004.

           LComprehensive Employment Opportunities (chief 
        executive officer) Demonstration: Under the leadership of 
        Secretary Thompson, the Centers for Medicare and Medicaid 
        Services is working together with other Federal agencies to 
        offer States the opportunity to implement a comprehensive 
        employment demonstration project. The demonstration will use 
        existing grant funds with pre-approved waivers and other 
        resources to create a coherent package that addresses the major 
        obstacles to employment. The grant announcement for these 
        demonstration projects will be published in early FY 2003 with 
        projects beginning in the second half of FY 2003 and continuing 
        for 5 years.

           LYouth Employment Strategy: Under the New Freedom 
        Initiative, the Departments of Education, Labor, Health and 
        Human Services, and SSA have formed a working partnership to 
        help children with disabilities who receive Supplemental 
        Security Income (SSA's income assistance program) improve their 
        economic status. The four agencies will be pooling their 
        resources to develop demonstration projects that would assist 
        impoverished children transition from school to employment. 
        Pilot projects will begin in early FY 2003 and a general 
        announcement of grant availability should be published in 
        Spring 2003. Projects would begin in late FY 2003 and continue 
        for 3-5 years.

           LEarly Intervention Demonstration: SSA is also 
        developing an early intervention demonstration project which 
        would provide medical and other support benefits to individuals 
        with disabilities before impairments become permanent. SSA 
        plans to use its demonstration waiver authority to offer 
        certain applicants for disability benefits the option of 
        choosing a cash stipend and return-to-work services in lieu of 
        pursuing the benefits application with the goal of returning to 
        work without coming on to the benefits rolls. This project will 
        take extensive time to plan and test operating procedures. It 
        is expected that the early test sites will be operational in 
        late FY 2003 with full implementation of a large demonstration 
        in 2005.

    4. The actuaries tell us that beginning in 2008, the disability 
insurance (DI) program outlays will exceed income. Are we to expect 
either a legislative proposal or a plan for changes that the agency 
will be making via regulation to address DI trust fund solvency? When 
will it be ready?

    Answer:

    DI trust fund solvency must be addressed within the context of the 
overall solvency of the OASDI trust funds.

    5. You mention in your testimony that SSA plans on testing several 
models including such interventions as integrated service supports and 
collaboration with employers. Also, you state that you plan to study 
the extent to which the listings are predictive of work ability. Could 
you please explain these projects more? What are the specific goals 
that you hope to accomplish with each? What is the time line for each 
project?

    Answer:

    There are several research projects, highlighted under the response 
to question #3 above, that relate to our efforts to strengthen the 
links between SSA's disability programs and employers. The key to the 
success of these initiatives is the use of the Department of Labor's 
One-Stop system to provide a single point of contact for information 
and access to all benefit programs and employment services available in 
each beneficiary's community.
    In addition to the Youth Transition, Comprehensive Employment 
Opportunities, and Early Intervention demonstrations, mentioned above, 
SSA plans to conduct research into the potential for improvements in 
the treatment of serious mental illness, particularly mood (affective) 
and anxiety disorders, as a means of enhancing the independence and 
productivity of beneficiaries with these conditions and of reducing 
their dependence on disability benefits. The research will be designed 
during FY 2003, and should be implemented in early FY 2004 and run for 
about 4 years with preliminary results available by FY 2006.
    The study on the extent of the predictability of the medical 
listings is under development.

    6. To what degree do the Listings of Impairments take into 
consideration prescribed treatment, or the availability of assistive 
technology or advanced prosthetics in determining disability? 
Recognizing these are clearly very difficult and complex issues, as 
many individuals simply do not have access to needed medicine or 
rehabilitation, are changes to the listings to address these issues 
being considered by SSA? How?

    Answer:

    The design of the disability program limits the extent to which SSA 
might assess an applicant on the basis of anticipated benefits from 
medical treatment that has not been prescribed by the individual's 
treatment source(s), and that the individual has not undergone. The law 
states that ``Nothing in this title shall be construed as authorizing 
the Commissioner or any other officer or employee of the United States 
to interfere in any way with the practice of medicine or with 
relationships between practitioners of medicine and their patients, or 
to exercise any supervision or control over the administration or 
operation of any hospital.'' Social Security Act section 216(i).
    However, program updates (i.e., revisions to the Listing of 
Impairments) do reflect advances in medical treatment and technology. 
That is one of the most important reasons we periodically update these 
criteria. Further, program rules require that we consider any benefits 
that individuals have received from medical treatment when making our 
disability determinations. Finally, we do have rules and procedures for 
assessing whether an individual willfully fails to follow the treatment 
prescribed by a treating source and these rules preclude the payment of 
benefits for any individual who willfully fails to follow prescribed 
treatment.

    7. In their testimony, GAO points out the need for SSA to reorient 
or change the direction of their disability programs from being 
centered on an inability to work to one focused on capacity to work 
with assistance given to promoting return to work. Reorienting these 
programs, however, would raise a number of issues. For example, would 
the definition of disability change, how would the programs' 
involvement with Medicaid and Medicare be affected, and would 
accessibility and costs of medical and assistive technologies outweigh 
the benefits? Are you currently looking into these issues and how?

    Answer:

    All of these issues are important in a comprehensive approach to 
the complex medical, functional, and behavioral aspects of disability 
and the programs affecting people with disabilities. Addressing these 
issues will require coordinating the efforts of several Federal 
agencies with responsibilities for these various programs and a 
commitment to resolving conflicts between the programs. SSA is working 
with the Departments of Health and Human Services, Education, and Labor 
to create a comprehensive approach to all the needs of people with 
disabilities, their service providers, and employers through the One-
Stop system nationwide. Discussions are also beginning to address the 
housing and transportation issues unique to people with disabilities to 
further strengthen program and service coordination.

    8. Some have suggested that SSA play a more active role in helping 
to provide vocational rehabilitation or employment support services for 
claimants, even before they begin receiving benefits, and providing 
time-limited benefits while individuals with disabilities are 
undergoing this rehabilitation. Could you explain the process by which 
claims are now referred to a State vocational rehabilitation office? 
Would you comment on the idea of time-limiting benefits for individuals 
who may be able to return to work quickly through rehabilitation, and 
the idea of linking the application for benefits with an automatic 
referral for vocational rehabilitation, as one of our later witnesses, 
Dr. Growick suggests? What are your thoughts on providing additional 
employment support services early in the application process, or soon 
after receiving benefits? What would you say are the pros and cons of 
providing these services? What are your thoughts on allowing SSA's 
disability program to provide more employment resources, much as the 
current welfare system operates?

    Answer:

           LCould you explain the process by which claims are 
        now referred to a State vocational rehabilitation office?

    The Ticket to Work and Work Incentives Improvement Act 1999 
repealed the mandated referral of applicants for disability benefits to 
State VR agencies. SSA Field Offices and State Disability Determination 
Services (DDS) are discontinuing the referral of beneficiaries as the 
Ticket program is rolled out. The referral process is no longer 
applicable in the initial 13 ticket States and will be discontinued in 
the remaining States as we phase in the Ticket program for those 
States. The mandatory referral requirement will end nationwide by late 
2003.
    For those States where the Ticket program is not yet implemented, 
the State DDS using criteria supplied by the State VR agency decides 
which applicants for disability benefits have rehabilitation potential 
and refers them to the appropriate State VR agency for formal 
evaluation. This occurs at the same time that the DDS determines if the 
applicant satisfies the criteria for receipt of disability benefits.

           LWould you comment on the idea of time-limiting 
        benefits for individuals who may be able to return to work 
        quickly through rehabilitation, and the idea of linking the 
        application for benefits with an automatic referral for 
        vocational rehabilitation, as one of our later witnesses, Dr. 
        Growick suggests?

    The use of time-limited benefits may work well with applicants who 
are good candidates for participating in a return-to-work program and 
have a high probability of being ready to work within a relatively 
short period of time. SSA is currently developing plans for a 
demonstration of early referral for rehabilitation and return-to-work 
services at the time of application for benefits. For applicants who 
are judged to have a high probability of being awarded benefits and who 
appear to be good candidates for return-to-work services, current plans 
would let the applicant choose to put the application for benefits ``on 
hold'' in exchange for immediate referral and evaluation for services. 
Participants would receive cash stipends during evaluation and receipt 
of services. For rehabilitation attempts that are unsuccessful, 
applications for benefits would be ``reactivated'' without penalty.
    As for automatic referral for rehabilitation services, we believe 
such a policy would be advantageous only for those with good 
rehabilitation potential. Many applicants for disability benefits are 
too impaired and/or are of advanced age and are, thus, not likely to be 
able to participate in a VR program or return to work. Also, since 
motivation to actively pursue a plan of rehabilitation is essential to 
successful completion of the plan, assessment of rehabilitation 
potential, including motivation, is an efficient means for allocating 
scarce rehabilitation services. We believe the voluntary nature of the 
Ticket to Work program, combined with the Benefits Planning, Assistance 
and Outreach network of expert advisors, is consistent with this 
approach.

           LWhat are your thoughts on providing additional 
        employment support services early in the application process, 
        or soon after receiving benefits? What would you say are the 
        pros and cons of providing these services?

    It is a truism of rehabilitation that the closer the intervention 
is to the onset of the disabling condition, the better the chances of 
successful return to work. We embrace this concept and the Early 
Intervention demonstration, referenced above, will test the 
effectiveness of intervention at the time of application for benefits. 
We are collaborating with other Federal agencies, particularly through 
support of the DOL's One-Stop program, in an attempt to identify and 
assist individuals who need services before they decide to apply for 
benefits.

           LWhat are your thoughts on allowing SSA's disability 
        program to provide more employment resources, much as the 
        current welfare system operates?

    We believe the involvement of individuals who are potential 
disability beneficiaries in return-to-work services, where appropriate, 
at the earliest feasible point after the onset of a disabling condition 
is essential for the long-term success of SSA's disability programs. 
From the perspective of impaired individuals with rehabilitation 
potential, the earliest possible return to productive activity is the 
preferred outcome after experiencing a disabling event. From a program 
perspective, early intervention is good risk management that would 
improve the cost effectiveness of SSA's developing return-to-work 
programs and reduce burdens on the disability trust fund and the 
general revenues. At the same time, SSA is only one of several Federal 
agencies with a role to play in developing and maintaining an effective 
system of return-to-work services. We are working with the DOL, DOE, 
and HHS to create a comprehensive and coordinated system of benefits 
and services across agency programs for current and potential 
disability beneficiaries.

    9. Ms. Mitchell, of the Ticket to Work Advisory Panel, suggested 
categorizing disability beneficiaries according to whether they would 
be considered ``hard-to-serve'' for employment services. What are your 
thoughts on this? What would you see as the pros and cons of this?

    Answer:

    Such classifications are problematic in part because they tend to 
advantage one group of deserving beneficiaries at a cost to other 
groups of deserving beneficiaries. Also, the Ticket to Work program has 
at its heart the concept of choice for both beneficiaries and 
Employment Networks. A better approach is to retain the voluntary 
nature of the interactions between beneficiaries and providers of 
employment services. In addition, a beneficiary's motivation to work is 
essential for successful completion of an employment services plan. 
There is no scientific way to determine motivation, and providers of 
return-to-work services are expert in assessing a potential client's 
motivation. SSA does not have within its or the DDS' field structure or 
systems the capability to make such determinations. We favor continuing 
the individualized assessments that are at the core of the Ticket to 
Work program.

    10. Would you provide an analysis of how the Ticket to Work 
legislation has helped those who wouldn't have returned to work because 
of the potential loss of their health insurance? Has this effort gone 
far enough? What else needs to be done? Please provide an analysis of 
how the Ticket to Work program is working in the current roll-out 
states, with a particular emphasis on the States you believe have not 
implemented all of the available options.

    Answer:

    SSA recognizes that continuation of health care is vital to all 
individuals with disabilities. Fear of losing health care is probably 
the biggest factor in preventing a disability beneficiary from 
returning to work. There are several Medicare and Medicaid work 
incentives that help minimize that fear.
    The Ticket to Work and Work Incentive Improvement Act 1999 (TWWIIA) 
provided several enhancements to health care for working individuals. 
The Department of Health and Human Services, through the Centers for 
Medicare and Medicaid Services (CMS), administers these health care 
provisions. SSA actively works with CMS in support of these 
enhancements.
    The TWWIIA health care enhancements include:

    Expanding State Options under the Medicaid Program for workers with 
disabilities. (Section 201)

           LThis is an expansion of the Balanced Budget Act 
        (BBA) 1997.
             LThe BBA gave States the option to provide Medicaid 
        coverage to individuals with disabilities whose earnings were 
        too high to qualify under existing rules.

    Net earnings had to be below 250% of the poverty level.

           LSection 201 removed the 250% poverty limit on 
        earnings, so now States have the option to provide Medicaid 
        coverage to even more working people with disabilities.
           LStates can set their own income and resources 
        limits to allow working individuals with disabilities who are 
        at least 16 but less than 65 years old to buy into Medicaid.
           LStates have the option to provide opportunity for 
        employed individuals with a medical improved disability to buy 
        in Medicaid.
           LStates may require such individuals to pay premiums 
        or other cost-sharing charges.
           L26 States have CMS approved plans in place.
           LThe following identifies the status of States' 
        implementation of this option of the BBA:
             LState Plans with CMS approval: Alaska, Arkansas, 
        California, Connecticut, Florida, Illinois, Indiana, Iowa, 
        Kansas, Maine, Minnesota, Mississippi, Missouri, Nebraska, New 
        Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, South 
        Carolina, Utah, Vermont, Washington, Wisconsin, and Wyoming. 
        Massachusetts has an 1115 waiver plan, which is similar to the 
        Medicaid buy-in option (26 total).

    Grants to Develop and Establish State Infrastructures (Section 203)

           LStates can be awarded grants to support 
        infrastructures that provide services to working individuals 
        with disabilities.
           LThe goal is for States to support people with 
        disabilities in sustaining employment by modifying their health 
        care systems to meet the needs of those individuals.
             LExamples of State activities: implement Medicaid 
        buy-in program; improve personal care assistance services and 
        programs; educate providers and consumers; create links to 
        employment services.
           L38 States have been awarded infrastructure grants 
        so far.
           LCMS recently solicited proposals from States to 
        develop infrastructure grants for 2003. The application cut off 
        date was June 1, 2002. Applications are pending approval.

    Demonstration of Coverage under the Medicaid Program (Section 204)

           LThis allows a State to apply for approval of a 
        demonstration project under which specific individuals who are 
        workers with a potentially severe disability are provided 
        medical assistance.
           LThese projects are called the ``Demonstration to 
        Maintain Independence and Employment.''
           LThis will also allow a State to target a specific 
        population to provide services for a specified number of 
        individuals to manage the progression of their conditions and 
        remain employed.
           L4 States are participating in this project: Both 
        Washington D.C. and Mississippi for 500 individuals with HIV/
        AIDS, Rhode Island for 100 individuals with Multiple Sclerosis, 
        and Texas for 500 individuals with bipolar/schizophrenia.
           LCMS recently solicited proposals from States to 
        develop demonstration projects for 2003. The application cut 
        off date was June 1, 2002. Applications are pending CMS 
        approval.

    Extension of Medicare Coverage (Section 202)

    One of the most significant enhancements for SSDI beneficiaries is 
the Extension of Medicare coverage (effective October 1, 2000). SSA 
took the lead in timely implementation of section 202.

           LMedicare coverage extended an additional 4\1/2\ 
        years for working individuals with disabilities.
           LMedicare coverage continues at least 93 months 
        after the TWP for most beneficiaries compared to the previous 
        39 months.
           LSSA identified approximately 42,200 beneficiaries 
        who were eligible for this extension on October 1, 2000 and 
        mailed ``Good News'' notices in March 2000 to these 
        individuals--SSDI beneficiaries who were closest to termination 
        of their Medicare.
           LSSA made system changes, modified notice language, 
        provided training, and released operational procedures on or 
        before the effective date.
           LApproximately 52,000 SSDI beneficiaries either have 
        or had Extended Medicare coverage under TWWIIA (records 
        selected from the effective date October 1, 2000 and later). As 
        of July 2002, the estimated number of potential Extended 
        Medicare coverage cases is approximately 115,000.
           LMost SSDI recipients can return to work without 
        fear of losing free Hospital Insurance for many years (Still 
        have to pay monthly SMI premium unless paid for by a third 
        party).

    Expedited Reinstatement & Health Care

    Expedited Reinstatement (Section 112) also is important. If an 
individual returns to work and finds that he or she can no longer work 
because of the previous impairment, cash benefits and Medicare/Medicaid 
(if it had been lost) can be quickly reinstated. The work stoppage and 
application for reinstatement must occur within 5 years of the prior 
benefit termination.
    The Ticket to Work program has made a good start during Phase One 
of the implementation process. Over two million Tickets to Work have 
been provided in a graduated process to eligible beneficiaries in the 
Phase One 13 States, including over 8,000 Tickets requested by 
beneficiaries for early release before release of their Tickets is 
scheduled. Through the outreach and recruitment activities of SSA and 
MAXIMUS, the Program Manager, 536 providers of services have applied to 
be Employment Networks, with 438 applications approved so far following 
contract review by SSA.
    Ticket-holders have assigned over seven thousand Tickets to 
Employment Networks and State vocational rehabilitation services, and 
seventy-five requests for payment have been received from Employment 
Networks, indicating that Ticket-holders are going to work with the 
assistance of Employment Networks. In addition to conducting Employment 
Network Opportunity Conferences and making recruiting presentations at 
other professional conferences, MAXIMUS has responded to almost 108,000 
calls from beneficiaries, interested providers of services, and other 
organizations in the 13 Phase One States. MAXIMUS has also made almost 
11,000 calls to beneficiaries, providers, and other organizations in 
these States concerning the Ticket to Work program.
    We do not consider that any options available under the Social 
Security Act and the regulations implementing the Ticket to Work 
program have been underutilized in implementing the First Phase of the 
program.

    11. Some have suggested that the $780 substantial gainful activity 
(SGA) amount for disability is too low to be able to provide an 
individual with any of the basic necessities, and that it should be 
raised to the level provided for individuals who are blind, which is 
$1,300. What do you think is the right amount that an individual should 
be able to earn before he or she cannot receive benefits?

    Answer:

    The Social Security Act provides that the Commissioner is to 
prescribe by regulation the criteria for determining when earnings 
demonstrate the ability to engage in SGA for disabled individuals who 
are not blind. Thus, the SGA guidelines are a way of measuring an 
individual's ability to work and not a measure of an individual's need 
for income. The historical relationship between the SGA amount and 
average wage growth was roughly consistent between 1961 (when the SGA 
guideline was first issued by regulation) and 1980. In 1990, we raised 
the SGA amount to $500 from $300 to coincide to some degree with the 
growth of the average wage during the eighties. The increase in the SGA 
amount in July 1999 to $700 approximately corresponded to the increase 
in the average wage since 1990. Beginning January 2001, we have indexed 
the SGA amount to average wage growth (by regulation) to maintain the 
historical relationship. We believe that this is the appropriate SGA 
amount for those people with impairments other than blindness.
    Before 1977, section 223(d) of the Act authorized the Commissioner 
to prescribe the level of earnings that demonstrate SGA for all title 
II applicants and beneficiaries and all title XVI applicants. In 1977, 
that Act was amended to provide a different criterion for setting the 
SGA level for people who are blind. The House and Senate conference 
report accompanying the Social Security amendments 1977 clearly stated 
that a different SGA amount was being established for blind persons, 
and that the conferees did not intend that the amount be applied to 
people with impairments other than blindness.

    12. Is SSA examining any options (other than the 2-for-1 
demonstration), or conducting research on ways to prevent the ``cash-
cliff'' that disability beneficiaries face? If yes, please describe 
this research, or if not, please explain why.

    Answer:

    As mentioned earlier, both the Comprehensive Employment 
Opportunities grants and the Early Intervention demonstrations will 
test various strategies that will help individuals with disabilities 
overcome the ``cash-cliff'' and mitigate the fear of losing benefits.

    13. What number and percent of workers have private disability 
insurance? What percent of workers have only Social Security disability 
insurance?

    Answer:

    It is estimated the 36 percent of the private sector work force is 
covered by some form of private disability insurance, though only 25 
percent have long-term disability coverage. SSA's Office of the Chief 
Actuary estimates that 85 percent of men and 75 percent of women who 
are working or have worked in the past are insured for disability 
insurance benefits. It is likely that most persons who have private 
long-term disability coverage are insured for Social Security 
Disability Insurance (SSDI). Thus, by deducting them from the 
percentage of all workers who have SSDI coverage, the assumption would 
be that over half of workers have only SSDI coverage for long-term 
disability protection.

                                 

                     U.S. General Accounting Office
                               Washington, DC 20548
                                                    August 20, 2002
The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515
    Dear Mr. Shaw:
    1. We all know that quality research is one of the most important 
aspects in developing any policy, and especially in determining whether 
changes are necessary, which changes to make, and how to evaluate them. 
Could you comment on SSA's research plans regarding disability, 
including how effective it is, whether they are undertaking the 
research they should, and whether they are able to do this?

    As I noted in my testimony, SSA is conducting a number of research 
projects that could begin to address some of the broader policy issues 
raised by reorienting the Disability Insurance (DI) and Supplemental 
Security Income (SSI) programs to focus upon capacities. While the 
projects may provide useful information, the studies do not directly or 
systematically address many of the issues that will need to be studied 
to address the broader implications of updating disability programs. 
SSA should identify the information it will need to build a strategy to 
further shift the disability programs toward helping beneficiaries 
maximize their work potential. This information will likely include 
data on the costs and impact on program size of various alternatives. 
Once these information needs are identified, SSA will need to develop a 
comprehensive research agenda. The research agenda should lay out in a 
systematic manner the research questions, methodologies, analysis plan, 
resources, costs, timeframes, and other pertinent factors to complete 
the research agenda and apply the results. Senior management needs to 
fully support moving in this direction. Although SSA has added 
additional staff and resources to its research planning efforts in 
recent years, our work under the recently completed assignment did not 
assess whether SSA has positioned itself with adequate resources and 
the correct skill sets to meet its research needs.

    2. Given all the changes that have happened, and are expected to 
continue, in technology, medicine, and work, do you think the criteria 
to determine disability can keep pace with these changes? If yes, how? 
What changes would need to be made?

    We fully recognize that the pace of change in our society, 
including changes brought by the rise of new information technologies, 
has been rapid and will likely continue to be so in the future. The 
pace of change can challenge any disability system--public or private--
to keep current. Nevertheless, the disability criteria that SSA 
currently uses need to be updated, especially labor market data. 
Updates will help SSA maintain public confidence and help meet its 
fiscal responsibility. As part of this effort, SSA needs to publish a 
schedule of specific strategies it will take to conduct periodic and 
on-going update efforts. A broader perspective, however, suggests that 
if DI and SSI focused more on work and individual capabilities, the 
programs would more readily stay current with scientific advances and 
labor market changes. For instance, if, in the future, beneficiaries 
have strong incentives to improve their functioning and skills level 
and have access to needed supports and services, then those who are 
able could more likely take advantage of medical advances and assistive 
technologies than do current beneficiaries. Likewise, if, under a 
refocused program, beneficiaries have strong incentives to compete in 
the labor force, then they will be more integrated with today's economy 
than current beneficiaries. Although beneficiaries may take greater 
advantage of supports, services, and opportunities afforded by today's 
labor market if DI and SSI offers stronger incentives to do so, SSA 
would still need to update disability programs in a systematic and 
comprehensive manner.

    3. You mention that the updating of the medical listings was 
stopped in the early nineties for a variety of reasons--including 
staffing resources and competing priorities. SSA recently renewed 
efforts to update the medical listings, but the completion of the 
updates has been delayed. Could you explain why these updates have been 
delayed again? Would you expect more or fewer people to be considered 
disabled and eligible for benefits once all the listings are updated?

    As SSA explained to us, SSA's acting administrator approved the 
completion dates initially submitted to us for updating the Medical 
Listings. When the new Commissioner was confirmed in November 2001, she 
subsequently reviewed the schedule and timing of revisions. As a result 
of that review, according to SSA officials, the dates were revised (in 
some cases by less than a year). We do not have information that allows 
us to assess whether the revised Medical Listings will likely lead to a 
greater or fewer number of persons deemed eligible for benefits. 
Conceivably, some applicants whose severity no longer meets or equals 
the severity of conditions in the Medical Listings could still be 
allowed benefits under the decisionmaking steps that follow the Medical 
Listings step; others may be denied benefits after completing these 
steps.

    4. The SSA is faced with a potential problem about how to assess 
whether an individual would be able to perform any work--part of the 
criteria for assessing disability. It now uses the Dictionary of 
Occupational Titles (DOT) to help assess whether an individual is able 
to work--but, this source has not been updated since 1991, and the 
Department of Labor does not plan to update it again. Instead, they 
have created a replacement, called the O*NET--but this does not contain 
all the detail about the physical or mental demands of any particular 
job. How would you recommend SSA address this problem?

    SSA needs to make updating the labor market data used in disability 
decisionmaking an important priority. SSA's options include the 
possibility of using a modified O*NET, an updated DOT, or some other 
database. To help make important decisions about which direction to 
proceed, SSA will need to continue to work closely with Labor on this 
issue. Ultimately, as disability is currently decided, SSA has a 
responsibility to use current labor market data in the disability 
determination process and as such, the agency has a responsibility in 
identifying and, if necessary, facilitating the development--perhaps by 
Labor or others--of updated labor market data. We recognize SSA's task 
is complex yet it is important for SSA to be decisive in developing a 
strategy because a workable long-term solution will likely take much 
time and effort.

    5. Some have suggested that the $780 substantial gainful activity 
(SGA) amount for disability is too low to be able to provide an 
individual with any of the basic necessities, and that it should be 
raised to the level provided for individuals who are blind, which is 
$1,300. What do you think is the right amount that an individual should 
be able to earn before he or she cannot receive benefits?

    In response to suggestions calling for a raise in the SGA level 
because it does not accurately reflect the dollar amount needed to meet 
basic necessities, it is important to note that the SGA level 
represents SSA's principal standard for determining whether an 
individual with a disability is able to work. In fact, in 1996 the 
National Academy of Social Insurance characterized the low level of the 
SGA screen as one of several provisions to mitigate an inherent 
incentive to claim disability benefits.\1\ The SGA level is used to 
help make decisions about both initial eligibility and continuous 
eligibility for program benefits. Neither the law nor regulations 
specify that the SGA level reflects a minimum dollar threshold needed 
to afford the necessities of living. It is a policy decision whether 
the Congress wishes to further define or redefine the function of the 
SGA level beyond its current purpose. In response to comparisons 
between blind and nonblind beneficiaries, we testified in the past that 
higher SGA levels were established for blind beneficiaries primarily on 
the basis of the assumption that certain adverse economic consequences 
associated with blindness are unique.\2\ Few empirical studies have 
compared the work-related experiences of blind individuals with those 
of people who have other disabilities.
---------------------------------------------------------------------------
    \1\ National Academy of Social Insurance, The Environment of 
Disability Income Policy: Programs, People, History, and Context 
(Washington, D.C.:1996). In 1996, the SGA level was $500 per month.
    \2\ U.S. General Accounting Office, Social Security Disability 
Insurance: Raising the Substantial Gainful Activity Level for the 
Blind, GAO/T-HEHS-00-82 (Washington, D.C.: March 23, 2000).

    6. Do you think it is time to view disability in the context of 
short-term and long-term? If so, why? If not, why not? What would be 
---------------------------------------------------------------------------
the drawbacks?

    There are several ways to characterize disabilities, including 
short--versus long-term, partial versus total, and cyclical versus 
permanent. DI and SSI's definition of disability requires that, among 
other things, an impairment last, or can be expected to last, at least 
1 year or result in death. We believe that assessing the merit of 
individual changes to DI and SSI, such as allowing benefits for short-
term disabilities, is best viewed in consideration of a comprehensive 
strategy to re-orient these programs. Our position has been that 
offering earlier intervention to DI and SSI beneficiaries can help 
individuals restore their capacities to return to work. Some 
beneficiaries may require short-term support, while others may require 
periodic support over an extended period of time. Of course, some 
individuals will continue to require long-term benefits. There is the 
argument that providing short-term benefits in DI and SSI could draw 
additional persons onto the rolls and raise program costs. More 
targeted research from SSA on this issue could help predict the extent 
that this might occur. Moreover, potential costs would need to be 
balanced with potential savings from reduced cash benefits accrued from 
persons leaving the rolls to return to work.

    7. It is always helpful to get the perspectives on issues from the 
private sector. In his testimony, Dr. Anfield provided some interesting 
recommendations based on his experience in the private sector. His 
three key recommendations were:

          --adopt benefits that emphasize a return to work (providing 
        transitional work funding, partial payment and rehabilitation 
        services);
          --acknowledge that recovery is incremental (work with 
        individual at every stage of recovery to determine the level of 
        functioning); and
          --offer expanded definitions of disability so that 
        individuals can focus on becoming self-sufficient.

    Can you provide your comments on each of Dr. Anfield's 
recommendations? Do you think these are valid recommendations? Will 
they work? If SSA adopts these recommendations into their policy, will 
claimants benefit?

    The general direction suggested by Dr. Anfield's recommendations is 
consistent with the recommendations that we have made in the past that 
SSA needs to put greater emphasis on return to work, including earlier 
intervention, earlier identification and provision of necessary return-
to-work assistance for applicants and beneficiaries, and changes in the 
structure of cash and medical benefits. In fact, our work has partly 
drawn from our review of private sector disability insurers, including 
the organization where Dr. Anfield works--UNUMProvident. We agree with 
Dr. Anfield's recommendation that the programs should emphasize return 
to work through the benefits structure. His second and third 
recommendations must be assessed more fully in a comprehensive 
strategy. To this end, we continue to encourage SSA to develop a 
comprehensive return-to-work strategy and identify needed legislative 
changes to make such a return-to-work focus a reality. It is in this 
context that the soundness of changes such as an expanded definition of 
disability must be evaluated.
            Sincerely,
                                        Robert E. Robertson
        Director, Education, Work force, and Income Security Issues

                                 

          Institute of Medicine, National Academies
                                               Washington, DC 20001
                                                    August 28, 2002
E. Clay Shaw, Jr., Chairman
House of Representatives
Ways and Means Committee
Subcommittee on Social Security
Rayburn House Office Building B-317
Washington, DC 20515
    Dear Chairman Shaw:
    I am responding on behalf of the National Academy of Science's 
Committee to Review the Social Security Administration's Disability 
Decision Process Research. I should state at the outset that the scope 
of the committee's inquiry and deliberations were limited to the 
contract mandate as specified by SSA. These were (1) to review the 
research plan, timeline, and all completed research projects for 
developing a new decision process for disability and offer comments and 
recommendations on the direction to the research; and (2) to review the 
scope of work for the disability survey in the request for proposals, 
and the design and content of the survey as proposed by the survey 
contractor and subsequent modifications made and make recommendations 
as appropriate. My responses, therefore, will be based on, and limited 
to, the committee's deliberations in these areas of study.
    Question 1: We've heard from many sources, including the GAO and 
the Social Security Advisory Board, that management of the disability 
program needs to be strengthened. Is the lack of research and basic 
analysis tools for disability a matter of priorities, a management 
issue, or a resource issue? Please explain.

    The Committee in its final report endorsed these concerns about 
disability policy and management that underscored the need for 
fundamental change in the Social Security disability programs. In fact, 
SSA also recognized these problems when in the early nineties it 
decided to rethink and fundamentally redesign the disability decision 
process. At that time it stated that ``the fragmented nature of the 
disability process is driven by and exacerbated by the fragmentation in 
SSA's policymaking and policy issuance mechanisms. Policy making 
authority rests in several organizations with few effective tools for 
ensuring consistent guidance to all disability decision makers. 
Different vehicles exist for conveying policy and procedural guidance 
to decisionmakers at different levels in the process. ``. . . the 
organizational fragmentation of the disability process creates the 
perception that no one is in charge of it. . . .'' (Plan for a New 
Disability Claims Process, SSA, 1994).
    After reviewing these concerns and based on its own assessment, the 
Committee concluded that SSA desperately needs a long-term, systematic 
research program to inform and guide (a) the anticipated growth in 
demands on SSA's disability programs, and (b) improvements in the 
disability determination process. For many years much of the research 
and analysis was in the same organization as program operations. 
Moreover in the past two decades downsizing adversely affected both the 
Office of Research, Evaluation, and Statistics and the Office of 
Disability Programs. It is critically important for research and 
statistics to be independent of the program operations in order to be 
able to rise above and beyond the immediate programmatic needs. At the 
same time the two organizations need to collaborate in identifying 
short-term and long-term research and analysis needs. In the past 2-3 
years SSA has taken some steps to strengthen its research and 
statistics arm. Clearly much more is needed to meet the demands for 
research and statistics in the coming years. It should be noted here 
that most Departments of the Federal government have these components 
separate and the Committee hopes that SSA will continue to do so.
    Therefore the answer to your question--Is the lack of research and 
basic analysis tools for disability a matter of priorities, a 
management issue, or a resource issue?--has to be all of the above.

    Question 2: Your Committee recommended that SSA improve its 
research in several ways, including (1) to develop criteria to measure 
performance, and evaluate the current processes and any proposed 
changes relative to these criteria, to assess rehabilitation and return 
to work decisions, and (2) to develop ways to incorporate external 
factors into the disability determination process and understand the 
effects of changes on the people they serve. If the agency were given 
the appropriate resources, does the Committee believe that the agency 
is capable and willing to conduct this research, and conduct it 
correctly?
    Yes, the Committee recommended improved and enhanced research in 
several areas including the two specified by you. In its second interim 
report issued in the summer 1998, the Committee recommended that early 
in the redesign effort, SSA should specify how it will define, measure, 
and assess the criteria it will use to evaluate the current disability 
determination process, as well as any alternative processes being 
developed. As the Committee explained, in any scientific process, the 
standards of acceptance or rejection are declared before, and not 
after, data are analyzed. Similarly in an evaluation research process, 
evaluative criteria and validation plans should be determined by the 
agency early in the research process, and not as planned at that time 
by SSA, after the prototype decision process is developed. In its 
concluding remarks the Committee urged SSA to adopt a rigorous research 
design process to develop, early in the research, objective validation 
criteria and plans to be able to make the ultimate judgments on whether 
or not the proposed changes will yield the desired results.
    Since then SSA has decided to give up the research for redesigning 
the disability determination process and informed the Committee that it 
will undertake improvements within the current system and devote its 
attention at this time to updating the medical listings. The same 
issues regarding SSA's research approach identified by the Committee in 
1998 appear to exist today, and in the absence of information to the 
contrary, the Committee has assumed that the agency again has not 
conducted such baseline analysis leading to the current activities to 
improve the existing process incrementally.
    Regardless of whether SSA attempts to redesign and develop a new 
disability determination process or leaves the current process in place 
and makes improvements within the individual components of the 
sequential process, it needs to establish objective measurable criteria 
against which the current process can be assessed. Studies should be 
conducted on the existing process and data analyzed in the context of 
the established criteria in order to identify the nature of the 
problems with the current process, and then evaluate the extent to 
which any proposed change would lead to improvement. As the committee 
has pointed out, without such a capacity proposals for reform may be 
proposals for change, but it is impossible to determine whether they 
are proposals for improvements of the present.
    Moreover, throughout the documents relating to the redesign 
research reviewed by the Committee, SSA appears to recognize the need 
to test the new disability decision process by applying standards of 
validity, reliability, sensitivity, specificity, credibility and 
flexibility, simplicity in administration, consistency, accuracy, 
timeliness, equity and fairness. Yet, to the Committee's knowledge no 
measurable criteria have been established to test the current and the 
new or updated components of the process along any of these lines.
    The Committee was encouraged to learn that SSA through its Office 
or Research, Evaluation, and Statistics awarded a cooperative agreement 
to the Disability Research Institute to undertake research for 
developing a process of validation of the Listings in order to assess 
them and to ensure that changes made actually result in improvements in 
the disability decisions. When the project is completed and 
implemented, it should help validation efforts for future revisions of 
the Listings and other components of the decision process, but no such 
input exists for the revisions currently underway or completed.
    Noting the limited resources allocated to Social Security research 
activities and the need to revitalize and strengthen the research 
programs of the Office of Research and Statistics, the Committee 
recommended in 1998 and again in its final report that SSA's research, 
statistics, and evaluation staff and its extramural program be expanded 
substantially. No amount of extramural research will replace the need 
for the agency to invest in the internal research capacity; extramural 
research places its own demands on the agency's research staff. Even 
when the external researchers are competent, the oversight 
responsibility rests with the agency for careful evaluation of the work 
to ensure the quality, adequacy, and appropriateness of the products, 
and for designing the approaches to testing and experimentation.
    The committee, therefore, believes that if the agency were given 
the appropriate resources in terms of both dollars and enhancement of 
qualified research staff on the ORES, it should be able to conduct the 
research correctly. The underlying assumption of course is that the SSA 
will give priority to conduct of such research.

    Question 3: It is appealing to look at other providers of 
disability insurance, such as the private sector and other countries, 
to see what works there. However, they often have different goals and 
the Social Security's disability program. Although SSA has begun 
programs to help individuals with disabilities return to work, wouldn't 
you say that the main goal has been that of a safety net to provide 
cash benefits for individuals who cannot work? Assuming research shows 
that these return-to-work programs are successful, would you recommend 
a change in the ultimate goal of the program? If yes, how would you 
recommend SSA undertake these changes, especially given the lack of 
success with large-scale changes to the program to date?

    You are correct in stating that various providers of disability 
benefits in the private sector and in other countries have different 
goals depending on the purposes of the programs. The Social Security 
Disability Insurance is a social insurance program; it is meant to 
serve as a safety net of last resort for those who are no longer able 
to earn because of severe disabilities.
    The Ticket to Work and Work Incentives Improvement Act 1999 makes 
clear that Congress is increasingly interested in the ``return-to-
work'' model and is prepared to have SSA experiment with some 
alternative strategies that might facilitate the pursuit of work rather 
than benefits. Under this program, however, the recipients of the 
vouchers to obtain employment and vocational rehabilitation services 
first have to be eligible for disability benefits under the current 
statutory definition and SSA's determination process, i.e., they have 
to be totally disabled. Ongoing evaluation is needed to assess the 
effectiveness of the program for the population it serves, and also in 
light of changing attitudes toward disability and work, SSA needs to 
test decision process models that emphasize rehabilitation and return 
to work and the implication on program resources and on the people the 
programs serve that impacts the lives of many people.
    The issue of changing or not changing the goal of the program was 
outside the scope of the Committee's review and deliberation. However 
we would emphasize that SSA should learn from past experience and 
undertake adequate and appropriate testing and research before making 
major changes nationally in this mass production program.

    Question 4: Do you think it is time to view disability in the 
context of short-term and long-term? If so, why? What would be the 
advantages? If not, why not? What would be the drawbacks?

    The Committee did not address the advantages and drawbacks of 
short-term and long-term disability for Social Security programs. As 
stated at the outset the Committee's tasks were very specific and our 
analysis focused on the current statutory definition of disability as 
it applies to SSA.

    Question 5: Ms. Owens stated in her testimony that in conducting 
their research into disability income policy, NASI concluded that 
determining disability should be based on the amount of earnings that 
an individual is capable of achieving. Do you think determining 
disability should be based on earnings? Why is it important to use this 
criterion or why is it not important? What should be the threshold of 
earnings to determine an individual's capacity to work?

    Determining the optimum threshold of earnings was clearly outside 
the scope of the Committee's study mandate.

    Question 6: Some have suggested providing time-limited benefits to 
individuals who may need cash assistance while they are participating 
in vocational rehabilitation services. What are your views on this 
subject?

    The Committee did not discuss this issue; it was outside the bounds 
of its contract with SSA. However, the Committee has repeatedly stated 
in its reports that SSA should conduct appropriate studies to 
investigate the feasibility and practicality of any change and then to 
analyze the data to ensure the change will be an improvement over the 
status quo as measured against objective predetermined criteria. It 
should be noted that the current law provides for retroactive 
reimbursement for vocational rehabilitation if the beneficiary recovers 
enough to leave the rolls because of substantial gainful activity.

    Question 7: It has also been suggested that SSA should refer 
claimants for vocational rehabilitation when they apply for benefits. 
What are your views on this issue? Do you believe State vocational 
rehabilitation bureaus have the resources to potentially serve such an 
influx of people?

    More than a million workers with severe disabilities annually apply 
for disability benefits. That is not a small number. Before Congress 
enacts such a change in the program it needs to consider the 
implications on financing such a program and providing adequate 
resources to vocational rehabilitation agencies to absorb the mass 
influx of clients. The Social Security Act does have provision for 
vocational rehabilitation and work incentive programs for 
beneficiaries.

    Question 8: Many advances have occurred since the disability 
programs were implemented, such as changes in the field of medicine 
regarding diagnosis and treatments, as well as technological advances 
such as synthesized voice devices. Can you provide your thoughts on the 
role remedies play relative to disability, such as advances in 
medication and assistive technology that allow individuals with 
disabilities to become less dependent on a care giver? Should these 
advances be considered in defining and determining disability? If so, 
should individuals who do not have access to these advances be 
penalized? Shouldn't all individuals with disabilities be treated 
fairly?

    As the Committee has stated in its final report, in recent years 
the concept of disability has generally shifted from a focus on 
diseases, conditions, and impairments per se to one of functional 
limitations caused by these factors. The definition of disability used 
in the Social Security disability programs was developed in the mid-
fifties when a greater proportion of jobs were in manufacturing and 
more required physical labor than today. It was therefore expected that 
people with severe impairments would not be able to engage in 
substantial gainful activity. Over the years, the nature of work has 
shifted from manufacturing toward service industries; medical and 
technological advances have made it possible for more severely disabled 
persons to be employed. At the same time the changing demands of work 
also limit employment prospects for individuals whose social and 
adaptive functioning is impaired by mental disorders. The current labor 
marketplaces emphasis on cognitive and technical skills, advanced 
education, and the ability to communicate and interact with others. 
People with disabilities, especially those with mental impairments, 
have poor employment prospects in such a market.
    In recent years, public attitude also has changed as reflected in 
the enactment of the Americans with Disabilities Act 1990 (ADA). 
Critics have suggested that SSA's definition of disability and its 
process for determining program eligibility have not kept pace with the 
changes. The Committee recognizes the administrative difficulties 
involved in paying more attention in the disability determination 
process to the physical and social factors in the work environment. 
Moreover, it might require major shifts in the orientation of the 
Social Security disability programs to ways to influence the 
environment in which the applicant might work and to ``return-to-work'' 
activities, and might ultimately involve changes in SSA's implementing 
regulations. In the face of these challenges, the Committee recommended 
that in order to develop systematic approaches to incorporate 
environmental factors in the disability determination process, SSA 
should first undertake research on the dynamics of disability; the 
relationship between the physical, social, and work environment; and 
understanding the external factors affecting the development of work 
disability.

    Question 9: The SSA is faced with a potential problem about how to 
assess whether an individual would be able to perform any work--part of 
the criteria for assessing disability. It now uses the Dictionary of 
Occupational Titles to help assess whether an individual is able to 
work--but this source has not been updated since 1991, and the 
Department of Labor does not plan to update it again. Instead, they 
have created a replacement, called the O*NET--but this does not contain 
all the details about the physical or mental demands of any particular 
job. How would you recommend solving this problem SSA is faced with?

    As indicated in your question, the Dictionary of Occupational 
Titles (DOT) is no longer being updated by the Department of Labor, 
leaving SSA with no replacement. The DOT has served as a primary tool 
for determining whether a claimant has the capacity to work. The 
Department of Labor (DOL) is replacing DOT with the Occupational 
Information Network (O*NET). The Committee expressed concerns about the 
problem and made recommendations to SSA early in the study and then 
again in its final report. It had several discussions with SSA, as well 
as with DOL staff and others on this matter. It was a subject of 
discussion at its workshop. Because of the critical importance of this 
issue and the attention given by the Committee, I am summarizing below 
from the Committee's reports.
    The Committee, in its preliminary assessment of SSA's research plan 
for redesigning the disability determination process (the second 
interim report issued in 1998), had expressed its concerns that O*NET 
as it was being developed for DOL would not meet SSA's needs and made 
recommendations toward resolving the problems. Among other problems, 
O*NET provides average rather than minimum levels of performance for 
each occupation as needed by SSA. O*NET's physical ability scales may 
be inappropriate for persons with disability. It was not clear to the 
committee how SSA planned to overcome these problems. The Committee 
also questioned how SSA planned to supplement O*NET with respect to 
contextual and other factors that are not well-covered in O*NET. There 
were no indications in the research plan that the gaps in O*NET will be 
carefully considered and no specific research to fill those gaps was 
identified. The Committee, therefore, had recommended that SSA should 
develop an interim plan for an occupational information classification 
system until a more permanent solution is found, and to explore 
entering into an interagency arrangement with the DOL to initiate a 
version of O*NET that would better serve SSA's needs to assess ability 
to engage in SGA.
    Discussions at the workshop sponsored by the Committee on Measuring 
Functional Capacity and Work Requirements (IOM, 1999) pointed out the 
problems associated with using O*NET for SSA's purposes. The DOL 
expects to use O*NET, as a comprehensive database of work requirements 
for use in job training, job counseling, and job placement for the 
department's employment and training programs and for use by individual 
state Employment Security Agencies in the extensive work that they do 
with workers who need jobs or who have recently become unemployed.
    As discussed at the workshop, although O*NET is very useful for 
DOL's purposes, SSA's purpose in defining the functional capacity to 
work for purposes of the disability legislation is very different from 
the purposes of the DOL in creating O*NET. SSA's purpose is much more 
difficult. Moreover, the labor market and occupational literature 
indicate that there are many difficult measurement problems related to 
occupation and job characteristics. Information developed by job 
incumbents is not always consistent with the information developed by 
job analysts, and the information developed by job analysts is not 
always consistent with the views of workers' supervisors. In addition, 
from the perspective of the worker--as with a disabled individual--it 
is often a bundle of capabilities that the worker brings to the job 
that makes the work experience a success or a failure.
    Workers with the same educational backgrounds have different 
skills, work ethics and orientations to work. These in turn bring a 
different bundle of capabilities to a job, and their performance is 
affected by those capabilities. In addition, the task of developing a 
set of factors that capture the essence of each occupation that makes 
practical sense is complex and difficult. Clearly, a great deal more 
careful research and experimentation is required to evaluate what 
functional capacity to work really means and exactly how it would be 
applied to persons with disabilities.
    When the Committee reviewed SSA's redesign research plan, there 
were no indications in the plan that the gaps in O*NET will be 
carefully considered and no specific research to fill those gaps was 
identified. The Committee, therefore, had recommended that SSA should 
develop an interim plan for an occupational information classification 
system until a more permanent solution is found. The committee also 
suggested that SSA enter into an interagency arrangement with the DOL 
to initiate a version of O*NET that would collect information on 
minimum, in addition to average, job requirements to better serve SSA's 
needs to assess ability to engage in SGA.
    Subsequent to the Committee's assessment of the problems in 1998, 
SSA asked its redesign contractor to undertake a comprehensive 
assessment of O*NET as a replacement data source for the current 
decision process. Although SSA did not necessarily expect this work to 
produce a resolution to the problem, it believed that it must complete 
such an analysis to move forward. This assessment surfaced several 
negative aspects of the O*NET structure and content that could lead to 
problems if SSA incorporated O*NET into the decision process. The 
contractor found that more than half of the occupational units had at 
least one domain for which the majority of descriptors were unreliable. 
A major overarching problem with O*NET is the numerical ratings. These 
ratings do not seem to be consistent across occupational units. The 
contractor's analysis found that the ratings of more than half of the 
descriptors are unreliable. Moreover, the DOT titles are grouped by 
dimensions that are unrelated to worker characteristics or requirements 
of the O*NET descriptors. Several of the 54 selected descriptors 
contain O*NET ratings with inter-rater reliabilities lower than.70.
    The contractor's report concluded that the numerical ratings on 
O*NET descriptors, and therefore on any O*NET occupational unit, 
underlie the problems of O*NET. Therefore, SSA must exercise extreme 
caution in drawing inferences about the relation between specific 
numerical values on a rating scale and specific level of required 
functioning. The report further states that the foregoing concerns 
provide sufficient evidence to warrant SSA's careful consideration of 
the quality of either analyst or incumbent ratings as conducted and 
proposed for O*NET. The report also suggests that O*NET's descriptor 
data may not be as precise as they seem, resulting in measurement 
errors as well as improper interpretation of the severity of claimants' 
impairments.
    On further inquiry regarding any progress made by SSA in working 
with DOL to bring about a resolution of the problems, the Committee was 
informed in late 2001 that SSA realizes that O*NET will not work for 
its needs without major reconstruction of the system. The Committee was 
informed at that time that SSA is taking steps toward resolving the 
problems and has reopened its dialog with DOL to explore other ways of 
incorporating information about the requirements of work into the 
decision process and is actively pursuing with DOL the issue of an 
occupational database on a national level to avoid two separate 
databases with separate funding. It was also planning to meet with the 
various associations of rehabilitation specialists, occupational and 
physical therapists, and workers' compensation analysts. Private sector 
stakeholders have organized an interdisciplinary task force. It plans 
to meet with SSA and DOL to decide what is needed and how best to go 
about getting the information. The committee has no further information 
on these activities, but hopes that they were productive.
    Clearly, without an appropriate characterization of job 
requirements that can be matched to the vocational characteristics of 
disability claimants, SSA might be cast back into the era in which it 
relied extensively on the testimony of ``vocational experts,'' or their 
written evaluations, as the way to integrate claimants' functional 
capacities, vocational factors, and the demands of work into an 
objective determination of their capacity to engage in substantial 
gainful employment. Barring some resolution, SSA will be left with no 
objective basis upon which to justify decisions concerning an 
individual's capacity to do jobs in the national economy. SSA needs to 
undertake without further delay needed research and collaboration to 
improve its ability to identify and measure job requirements for the 
purpose of determining work disability.

    Question 10: Some have suggested that the $780 substantial gainful 
activity (SGA) amount for disability is too low to be able to provide 
an individual with any of the basic necessities, and that it should be 
raised to the level provided for individuals who are blind, which is 
$1,300. What do you think is the right amount that an individual should 
be able to earn before he or she cannot receive benefits?

    The issue of what is the right amount that an individual should be 
able to earn and yet receive benefits was not discussed by the 
Committee as it was beyond the purview of the Committee.
    That completes the answers to the questions submitted to me. I will 
be happy to meet with you to discuss and/or elaborate on any of the 
issues covered in my responses.
            Sincerely,
                                       Gooloo S. Wunderlich
                                                     Study Director

                                 

               National Academy of Social Insurance
                                               Washington, DC 20001
                                                    August 16, 2002
E. Clay Shaw, Jr., Chairman
House of Representatives
Ways and Means Committee
Subcommittee on Social Security
Rayburn House Office Building B-317
Washington, DC 20515
    Dear Chairman Shaw:
    Thank you for the opportunity to respond to questions following my 
testimony before your Committee on July 11th regarding the 
definition of disability in the Social Security programs. My answers 
draw on the work of the Disability Policy Panel of the National Academy 
of Social Insurance (NASI) on which I served. Some of my replies refer 
to sections of our final report, Balancing Security and Opportunity: 
The Challenge of Disability Income Policy.

    1. You mentioned a demonstration project currently ongoing in three 
states (Wisconsin, Maryland, and Delaware) in which temporary 
disability benefits are being given. What is the status of this 
project? Do you think the goals of this project show promise? If so, 
why?

    The demonstration project was authorized under the Ticket to Work 
and Work Incentive Improvement Act 1999, which added section 234 to the 
Social Security Act. It calls for the Social Security Administration 
(SSA) to carry out demonstrations to evaluate various changes in the 
disability benefit program and authorized SSA to test interventions 
with applicants, as well as beneficiaries. The Early Intervention 
Demonstration to Return Applicants for Social Security Disability 
Benefits to Work is being designed by researchers affiliated with SSA's 
Disability Research Institute. Professor Monroe Berkowitz of Rutgers 
University is leading the design work. In collaboration with SSA, they 
will select three or four states to pilot test the demonstration early 
in 2003. A detailed report on the design plan can be found at 
www.disabilityresearch.rutgers.edu/research.htm. This is the first time 
that SSA has experimented with offering return to work services to 
applicants and I look forward to seeing the results.

    2. You stated in your testimony that in conducting their research 
on disability income policy, NASI concluded that determining disability 
should be based on the amount of earnings that an individual is capable 
of achieving. Can you provide your thoughts as to why determining 
disability should be based on earnings? Why is it important to use this 
criterion? What should be the threshold of earnings to determine an 
individual's capacity to work?

    My main point was that work disability--that is loss of capacity to 
earn a living from work--is the right concept for determining 
eligibility for wage-replacement benefits from Social Security. This 
definitional concept fits with the purpose of Social Security, which is 
to provide income to partially replace lost wages.
    The NASI Panel reviewed a range of other disability definitions. It 
concluded that different definitions are appropriate for programs that 
offer different kinds of services or benefits. For example:

           LA definition based on need for assistance with 
        activities of daily living is appropriate for determining who 
        should receive help in paying for services that assist with 
        these activities.
           LA definition based on need for, and likely benefit 
        from, vocational rehabilitation services, is appropriate for 
        deciding who should be eligible for publicly financed VR 
        services.
           LA broad definition that encompasses all who are at 
        risk of discrimination in employment or public access is 
        appropriate for defining who is protected by civil rights 
        legislation in the Americans with Disabilities Act.

    When the purpose of the program is to provide cash benefits to help 
people meet their living expenses because of they are unable to earn 
wages from work, then a definition based on work incapacity is 
appropriate.
    The Panel found that the definition of work disability used in the 
Social Security program is very strict. It is more stringent that 
definitions commonly used in private short-term, or long-term 
disability insurance. It is also more strict than definitions used in 
many public employee benefit systems for Federal, state, or local 
employees. A less strict definition of work disability for Social 
Security would allow more people to qualify for benefits and, 
consequently, would increase the cost of the program. (The Panel's 
review of other definitions is in chapter 4 of Balancing Security and 
Opportunity, which I submitted for the record.)

    3. Do you think it is time to view disability in the context of 
short-term and long-term? If so, why? What would be the advantages? If 
not, why not? What would be the drawbacks?

    Short-term disability insurance (STDI) is now provided in five 
State programs: California, Hawaii, New Jersey, New York, and Rhode 
Island. It is also offered by some employers in other States. Many 
European countries provide STDI to all their citizens.
    Short-term disability insurance has a number of advantages from the 
perspective of both workers and employers.

           LFirst, STDI provides income continuity for workers 
        when they have health problems that are a temporary impediment 
        to work. The worker retains the job to which he or she is 
        expected to return after full recovery. There is an advantage 
        to the employer and other workers in supporting sick workers 
        while they recover at home instead of ``working sick'' to the 
        detriment of the productivity, health, and safety of other 
        workers.

           LSecond, STDI provides support during the first 
        phase of what may turn out to be a long-term, or permanent, 
        impairment. The worker retains a connection to his or her 
        employer and may be able to return to a different job with the 
        same firm when the medical condition is stable.

    The NASI Panel found that many American workers lack the 
protections of short-term disability insurance. Fully 30 percent of 
private sector employees have neither formal sick leave nor short-term 
disability insurance. Another 26 percent of such workers have only sick 
leave, which typically pays for a few days or weeks--far less than the 
5 month waiting period for Social Security disability insurance.
    The NASI Panel considered a proposal to adopt universal short-term 
disability insurance in the United States, but did not recommend it 
because of its cost. The rationale for such a proposal would be 
threefold: to fill gaps in income during temporary disability; to 
promote early intervention by linking workers with return to work 
services to accommodate permanent impairments; and, it is hoped, to 
reduce reliance on long-term disability benefits. The main drawback of 
such a proposal is its cost. One study, done a number of years ago, 
estimated that such a plan would cost roughly 1 percent of earnings 
that are subject to Social Security taxes (Balancing Security and 
Opportunity, p. 24).

    4. Some have suggested time-limiting benefits to individuals who 
may need cash assistance while they are participating in vocational 
rehabilitation services. What are your views on this?

    The NASI Panel considered a policy of imposing time limits on 
Social Security disability benefits, but did not recommend it. Such a 
policy is very different from short-term disability insurance. 
Accordingly, it is not likely to have the same advantages unless other 
features of STDI are also adopted. Key differences between STDI and 
Social Security disability insurance include the following:

           LSTDI begins at the onset of disability, or after 
        sick leave has been used, without a 5 month waiting period 
        before interventions begin.
           LIll or injured workers on STDI continue their 
        connection with the current employer. A job remains available 
        for them. DI beneficiaries, in contrast, no longer have a job.
           LEmployers who provide STDI usually provide health 
        insurance as well. In 2000, just over half (52 percent) of 
        private sector employees were included in their employers' 
        health insurance plans, while about a third (34 percent) were 
        covered by short-term disability benefits (U.S. Department of 
        Labor, 2002). The health coverage continues while the worker is 
        on short-term disability benefits so that he or she has access 
        to treatment. Applicants for Social Security benefits, in 
        contrast, include people who did not have health coverage on 
        their prior job and those who lost health coverage when they 
        left their jobs.
           LThe definition of disability for STDI is less 
        strict than the Social Security test. It typically relates to 
        ``inability to do one's own job'' rather than ``inability to 
        perform any significant work in the national economy.''
           LFinally, when private sector return-to-work efforts 
        are not successful, employers or their insurers often help the 
        individual qualify for Social Security benefits. In contrast, 
        if Social Security were time-limited, there would be no other 
        safety net to turn to.

    The NASI Panel found that current Social Security policy already 
has aspects of time limits, which can set an expectation for return to 
work when that is feasible. That is, when benefits are first allowed, 
beneficiaries who have some prospects for medical recovery or return to 
work are scheduled for a continuing disability review (CDR) within the 
next 1-3 years. During that time, they may get vocational services. 
When implemented with compassion and integrity, CDR policy can set an 
expectation of recovery or return to work when that is feasible, while 
still providing continued support for those who don't recover or find 
jobs they can do.
    There are three other points I would like to make about return to 
work and Social Security disability benefits. First, the NASI Panel 
emphasized that the large majority of beneficiaries will not be able to 
return to work. It is a program for people with very severe and long-
lasting impediments to work. The title of our report reminds us of 
this, Balancing Security (for those who can not return to work) with 
Opportunity (for those who can).
    Second, it is important to measure our successes well. The return-
to-work rate varies greatly depending on the period of time being 
examined. We often hear a very low return-to-work rate of less than 1 
percent. This rate compares the number of people who return to work in 
a year with the total number of people on the DI rolls that year. But 
recovery and return to work take time.
    The Panel received special tabulations from the Social Security 
Administration that followed people who entered the DI rolls in a given 
year over the next 5 to 6 years. These data show more positive results 
about the fraction of beneficiaries who recovered or returned to work, 
as well as sobering results about others (Balancing Security and 
Opportunity, page 110). The results are attached as Table 1. Within 5 
to 6 years of entering the DI rolls:

           LJust over half (53 percent) of people were still on 
        the disability benefit rolls;
           LFully a quarter (26 percent) had died;
           LNearly a fifth (18 percent) had shifted to 
        retirement benefits; while
           LAbout 3-4 percent had recovered or returned to 
        work.

    The 3-4 percent success rate may not be as high as some would like, 
but it is better than the more common figure of less than 1 percent. 
Perhaps more important, these data show (as we would hope) that younger 
beneficiaries are the most likely to recover or return to work. When 
measured as a percent of those who were still alive and not retired, 6 
percent of all beneficiaries had left the rolls because of recovery or 
return to work. They include:

           L11 percent of those under age 40 and
           L13 percent of those under age 30.

    The 11-13 percent success rate for young adults leaving the DI 
rolls is better news than we usually hear. These data covered the 
period between 1988 and early 1994. During part of that time, SSA had 
stopped doing continuing disability reviews in order to process a 
backlog of new claims, because it lacked the resources to do both. It 
would be useful to know whether results are different now. You could 
ask SSA to provide this kind of information each year so that policy 
makers can track how changes in policy, administrative practices, and 
the broader economy affect recovery and return-to-work rates.
    This brings me to my last point. The NASI Panel urged that SSA be 
provided adequate administrative resources so that it can fairly and 
promptly decide new claims and conduct continuing disability reviews as 
called for in current policy. Failure to properly fund administration 
ill serves both beneficiaries and taxpayers.

    5. It has also been suggested that SSA should refer claimants for 
vocational rehabilitation when they apply for benefits. What are your 
views on this issue? Do you believe state vocational rehabilitation 
bureaus have the resources to potentially serve such an influx of 
people?

    It is clear that State vocational rehabilitation (VR) agencies are 
not equipped to serve all applicants for Social Security disability 
insurance and SSI disability benefits. In fiscal year 1999, VR agencies 
served about 1.2 million people and rehabilitated about 232,000 (U.S. 
Department of Education, 2001). In fiscal year 2000, SSA received about 
1.6 million applications for Social Security disability insurance and 
about 1.6 million applications for SSI benefits, most of which were for 
disability (SSA, 2001). (Some individuals may have applied for both 
types of benefit.) It is highly unlikely that VR agencies could serve 
more than twice as many people with their current resources. More 
importantly, many people who receive Social Security or SSI disability 
benefits are not good candidates for the services State VR agencies 
offer.
    The NASI Panel examined the experience of VR agencies in placing 
Social Security and SSI beneficiaries and other clients in competitive 
employment. It found that VR agencies had higher success rates with 
young adults and that many of the clients they had successfully placed 
were not received Social Security or SSI (Balancing Security and 
Opportunity, table 6-2, page 106). While some have criticized VR 
agencies for not serving more Social Security and SSI beneficiaries, 
their results with non-beneficiaries are also important. In many of 
these cases, VR agencies may be ``getting rehabilitation first'' so 
that their clients get the assistive devices and training they need 
without turning to the Social Security program.

    6. Do you believe the Listing of Impairments should be altered in 
terms of their consideration of prescribed treatment, or the 
availability of assistive technology or advanced prosthetics in 
determining disability?

    The NASI Panel concluded that listings should be regularly reviewed 
and updated in light of changes in medical technology, the nature of 
impairments, and the demands of work. This analysis is discussed in 
chapter 5 of Balancing Security and Opportunity, which I submitted for 
the record.

    7. The SSA is faced with a potential problem about how to assess 
whether an individual would be able to perform any work--part of the 
criteria for assessing disability. It now uses the Dictionary of 
Occupations Titles to help assess whether an individual is able to 
work--but, this source has not been updated since 1991, and the 
Department of Labor does not plan to update it again. Instead they have 
created a replacement, called the O*NET--but this does not contain all 
the detail about the physical or mental demands of any particular job. 
How would you recommend SSA solve this problem?

    The NASI Panel did not address this specific issue. This is a 
separate and important question. If the Committee wanted NASI to 
undertake such a study, I would be happy to propose it to the NASI 
Board of Directors, on which I serve.

    8. Some have suggested that the $780 substantial gainful activity 
(SGA) amount for disability is too low to be able to provide an 
individual with any of the basic necessities, and that it should be 
raised to the level provided to individuals who are blind, which is 
$1,300. What do you think is the right amount that an individual should 
be able to earn before he or she cannot receive benefits?

    NASI's Disability Policy Panel review the SGA threshold and 
recommended changes in it. At the time, the threshold was $500 a month. 
It had remained $500 since 1990 and had been $300 between 1980 and 
1990. We recommended that the SGA threshold be updated to the amount it 
would have been had it been indexed to keep pace with wage growth since 
the beginning of the DI program. That would have been about $760 in 
1996. We further recommended that it be indexed to keep pace with wage 
growth in the future (Balancing Security and Opportunity, pages 159-
160). Changes consistent with the Panel's recommendations were adopted 
in regulations during the nineties.
    To raise the SGA threshold to $1,300 would enable more people with 
significant impairments to receive Social Security disability benefits. 
Consequently, it would increase the cost of the DI program. The NASI 
Panel considered, but did not recommend, this change because its charge 
was to propose low-cost ways to strengthen the connection between 
disability benefits, rehabilitation, and work.

    9. It is always helpful to get the perspectives on issues from the 
private sector. In his testimony, Dr. Anfield provided some interesting 
recommendations based on his experience in the private sector. His 
three key recommendations were to:

           LAdopt benefits that emphasize a return to work 
        (providing transitional work funding, partial payment, and 
        rehabilitation services);

           LAcknowledge that recovery is incremental (work with 
        individual at every state of recovery to determine the level of 
        functioning); and

           LOffer expanded definitions of disability so that 
        individuals can focus on becoming self-sufficient.

    Can you provide comments on each of Dr. Anfield's recommendations? 
Do you think these are valid recommendations? Will they work? If SSA 
adopts these recommendations into their policy, will claimants benefit?

    These recommendations represent enlightened disability management 
in the private sector. I, too, have private sector experience in 
disability management. If these initiatives were widely adopted in the 
private sector, somewhat fewer people would turn to Social Security. As 
I mentioned earlier, workers with severe impairments turn to Social 
Security when private disability management efforts don't work or 
aren't available because employers don't provide private disability 
insurance and disability management in the first place. I would add 
that employers and private insurers have flexibility in their policies 
that is not available in public programs. In the private sector, we can 
use discretion to offer services and supports over and above those 
required in our contractual obligations to workers when we believe 
those efforts will be cost effective. Return to work investments can be 
cost-effective when workers have special skills that are difficult and 
costly for the employer to replace. Less skilled workers who are easily 
replaced by healthy, and perhaps younger and lower paid workers, are 
not as likely to receive added investments in return to work.
    As a public program, Social Security has an obligation to treat all 
applicants equally. The benefit expansions Dr. Anfield proposes are 
likely to benefit some Social Security claimants. Others would not 
benefit. The changes are also likely to increase the cost of the 
program.
    Thank you for the opportunity to respond to these questions. I will 
be happy to provide any other information that would be helpful to the 
Committee or its staff.
            Sincerely,
                                          Patricia M. Owens
                                    Member, Disability Policy Panel
                                 ______
                                 
References
Balancing Security and Opportunity: The Challenge of Disability Income 
            Policy, Jerry L. Mashaw and Virginia P. Reno, eds, (1996). 
            Report of the Disability Policy Panel, National Academy of 
            Social Insurance.

Berkowitz, Monroe, (2002). Designing an Early Intervention 
            Demonstration to Return Applicants for Social Security 
            Disability Benefits to Work, Disability Research and 
            Education Program, Rutgers University, 
            www.disabilityresearch.rutgers.edu/research.htm.

U.S. Department of Labor, (2002). Employee Benefits in Private 
            Industry, 2000, News, USDL: 02-389, July 16.

U.S. Social Security Administration, (2001). Annual Statistical 
            Supplement to the Social Security Bulletin, 2001, Tables 
            2.F5 and 2.F6.

U.S. Department of Education, (2001). Rehabilitation Services 
            Administration, Report No. 33: Persons Served (Status 10-
            30) and Rehabilitated (Status 26) and Employee Person-Year, 
            FY 1999.

Attachment


Table 1. Recovery and Return to Work Experience of DI Beneficiaries Over a 5 to 6 Six Year Period Benefit status
                      in February 1994 of persons awarded benefits in 1988, by age in 1988
----------------------------------------------------------------------------------------------------------------
                                                                                Age in 1988
                                                         -------------------------------------------------------
                                                                       Under Age 40
                 Status in February 1994                         ------------------------
                                                           Total           Under           40-49   50-59   60-64
                                                                   Total    30     30-39
----------------------------------------------------------------------------------------------------------------
Number of persons awarded DI in 1988 (in thousands)        409.1    99.8    36.7    62.9    78.5   146.9    84.1
----------------------------------------------------------------------------------------------------------------
Total percent                                                100     100     100     100     100     100     100
----------------------------------------------------------------------------------------------------------------
Still receiving DI benefits                                   53      72      74      71      69      60       0
----------------------------------------------------------------------------------------------------------------
Died                                                          26      19      15      22      27      32      25
----------------------------------------------------------------------------------------------------------------
Shifted to retirement benefits                                18       -       -       -       -       6      75
----------------------------------------------------------------------------------------------------------------
Recovered or returned to work                                                                                  0
----------------------------------------------------------------------------------------------------------------
Percent of total                                               4       9      11       7       4       2       0
----------------------------------------------------------------------------------------------------------------
Percent of those alive and not retired                         6      11      13       9       5       3       0
----------------------------------------------------------------------------------------------------------------
Source: Balancing Security and Opportunity: The Challenge of Disability Income Policy, Final report of the
  Disability Policy Panel, National Academy of Social Insurance, 1996, page 110. Special tabulations provided by
  the Office of Disability, Social Security Administration.


                                 

    [Submission for the record follows:]

       National Association of Disability Examiners
                                 Raleigh, North Carolina 27602-0243
                                                      July 19, 2002
House Committee on Ways and Means
The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
B-316 Rayburn House Office Building
Washington, DC 20515-6353
    Dear Mr. Shaw:
    The National Association of Disability Examiners (NADE) has 
reviewed with great interest the testimony presented before the 
Subcommittee on Social Security on July 11,2002. This hearing focused 
public and congressional attention on the definition of disability as 
it applies to Social Security's disability programs.
    NADE is a professional association whose members primarily work in 
the State Disability Determination Service (DDS) agencies and are 
responsible for the adjudication of claims for Social Security and 
Supplemental Security Income disability benefits. We believe that our 
immense program knowledge and our ``hands on'' experience enables our 
Association to offer a perspective on disability issues that is unique 
and reflective of a pragmatic realism.
    In our testimony before the Subcommittee on June 28, 2001, we 
stated, ``NADE does not support changing the definition of disability 
at this time'' (emphasis added). Fundamentally we believe:

           LAll who are truly disabled and cannot work should 
        receive benefits
           LThose who can work but need assistance to do so 
        should receive it
           LVocational rehabilitation and employment services 
        should be readily available and claimants and beneficiaries 
        should be helped to take advantage of them

    SSA's definition of disability has proven to be a solid foundation 
for a program that has become characterized by increasingly complex 
changes in its rules and administrative procedures. We believe that, 
with the expectation of a significant increase in the number of initial 
claim filings in the next decade, coupled with a corresponding decline 
in the level of institutional knowledge within the disability program, 
this foundation will be needed more than ever.
    However, we also believe that it is critically important that 
disabled individuals who have the capacity to return to work, should be 
identified as early in the process as possible and given the assistance 
necessary that will make it possible for them to return to work. We 
acknowledge that this may require changing the definition of 
disability. However, any change in the definition of disability will 
have a significant effect, either positive or negative, on the number 
of people who are allowed benefits. It will also have a significant 
effect on those who process the applications. We strongly believe it is 
essential that the potential impact of any proposed changes should be 
fully researched and evaluated. Because of the diversity of our 
membership and our ``hands on'' experience, we believe NADE is in the 
best position to recognize and assess the potential impact of any 
proposed changes in the definition.
    Several of the witnesses appearing before the Subcommittee noted 
that SSA was continuing to rely on outdated information in making 
decisions about the types and demands of jobs in the national economy. 
NADE previously testified to this fact before the Subcommittee. We 
concur that it is critically important that SSA should develop, and 
implement, a suitable replacement for the outdated Dictionary of 
Occupational Titles, and to do so as soon as possible.
    The current five-month waiting period would appear to present a 
major obstacle to any early return to work initiatives. Claimants who 
are awarded disability benefits under Title II must wait five full 
calendar months before they can begin to receive cash benefits. We 
believe that it will be very difficult to convince claimants, who have 
already invested a great deal of time and effort to demonstrate that 
they are disabled, to risk the loss of their benefits, even before they 
can begin to receive them, by attempting to return to work. Efforts to 
return disabled individuals to work must be coupled with recognition 
that the five-month waiting period should also be eliminated.
    Franklin Delano Roosevelt, the President of the United States who 
created Social Security, was himself, severely disabled. Yet, he chose 
to work and ten years after the onset of his disability, he moved into 
the White House. President Roosevelt did more than create the Social 
Security system. He presented us with the model for what one can 
achieve by overcoming disability and returning to work! It should 
become the goal for the disability program to provide claimants with 
the technical and financial assistance they need to return to the 
workforce.
    NADE appreciates this opportunity to present our opinion regarding 
the definition of disability and we look forward to working with you 
and the Subcommittee in the future to improve the services provided to 
America through its disability programs.
            Sincerely,
                                           Jeffrey H. Price
                                                          President

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