[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
               THIRD IN A HEARING SERIES ON SECURING THE 
                FUTURE OF THE SOCIAL SECURITY DISABILITY 
                           INSURANCE PROGRAM 

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 20, 2012

                               __________

                          Serial No. 112-SS14

                               __________

         Printed for the use of the Committee on Ways and Means


                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

78-671 PDF                       WASHINGTON : 2013 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 



                      COMMITTEE ON WAYS AND MEANS

                     DAVE CAMP, Michigan, Chairman

WALLY HERGER, California             SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas                   CHARLES B. RANGEL, New York
KEVIN BRADY, Texas                   FORTNEY PETE STARK, California
PAUL RYAN, Wisconsin                 JIM MCDERMOTT, Washington
DEVIN NUNES, California              JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
GEOFF DAVIS, Kentucky                XAVIER BECERRA, California
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
CHARLES W. BOUSTANY, JR., Louisiana  MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            JOHN B. LARSON, Connecticut
JIM GERLACH, Pennsylvania            EARL BLUMENAUER, Oregon
TOM PRICE, Georgia                   RON KIND, Wisconsin
VERN BUCHANAN, Florida               BILL PASCRELL, JR., New Jersey
ADRIAN SMITH, Nebraska               SHELLEY BERKLEY, Nevada
AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas
ERIK PAULSEN, Minnesota
KENNY MARCHANT, Texas
RICK BERG, North Dakota
DIANE BLACK, Tennessee
TOM REED, New York

                   Jennifer Safavian, Staff Director

                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON SOCIAL SECURITY

                      SAM JOHNSON, Texas, Chairman

KEVIN BRADY, Texas                   XAVIER BECERRA, California
PATRICK J. TIBERI, Ohio              LLOYD DOGGETT, Texas
AARON SCHOCK, Illinois               SHELLEY BERKLEY, Nevada
RICK BERG, North Dakota              FORTNEY PETE STARK, California
ADRIAN SMITH, Nebraska
KENNY MARCHANT, Texas



                            C O N T E N T S

                               __________

                                                                   Page
Advisory of March 20, 2012 announcing the hearing................     2

                               WITNESSES

PANEL 1:
  The Honorable Michael J. Astrue Commissioner, Social Security 
    Administration...............................................     6
PANEL 2:
  Trudy Lyon-Hart Director, Office of Disability Determination 
    Services, Vermont Agency of Human Services, on behalf of the 
    National Council of Disability Determination Directors.......    41
  Lisa D. Ekman Senior Policy Advisor, Health & Disability 
    Advocates on behalf of the Consortium for Citizens with 
    Disabilities Social Security Task Force......................    53
  Dan Bertoni Director, Education, Workforce, and Income Security 
    Issues, U.S. Government Accountability Office................    67
  Leighton Chan, M.D. Chief, Rehabilitation Medicine Department, 
    National Institutes of Health................................    87
  Nicole Maestas, Ph.D. Senior Economist, RAND Corporation.......   100

                       SUBMISSIONS FOR THE RECORD

AFGE, Statement..................................................   134
University at Buffalo Law School, Statement......................   143
NHCHC, Statement.................................................   151
Ruth Kolb, Statement.............................................   157

                        QUESTIONS FOR THE RECORD

The Honorable Michael J. Astrue..................................   118
Trudy Lyon-Hart..................................................   122
Dan Bertoni......................................................   125
Leighton Chan, M.D...............................................   129
Nicole Maestas, Ph.D.............................................   131


THIRD IN A HEARING SERIES ON SECURING THE FUTURE OF THE SOCIAL SECURITY 
                      DISABILITY INSURANCE PROGRAM

                              ----------                              


                        TUESDAY, MARCH 20, 2012

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 10:31 a.m. in 
Room B-318 Longworth House Office Building, the Honorable Sam 
Johnson [Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]

HEARING ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

               Chairman Johnson Announces the Third in a

              Hearing Series on Securing the Future of the

              Social Security Disability Insurance Program

Tuesday, March 20, 2012

    U.S. Congressman Sam Johnson (R-TX), Chairman of the House 
Committee on Ways and Means Subcommittee on Social Security, today 
announced a hearing on how disability is decided. The hearing will take 
place on Tuesday, March 20, 2012, in B-318 Rayburn House Office 
Building, beginning at 10:30 a.m.
      
    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:

      
    The disability insurance program pays benefits to those who have 
worked in the past but are determined unable to work because of a 
disability that is expected to last more than a year or result in 
death. The responsibility to make the initial finding on disability was 
assigned to the State Vocational Rehabilitation Agencies or other 
appropriate State agencies in the Social Security Act Amendments of 
1954. All 50 states, plus the District of Columbia and Puerto Rico, 
maintain fully federally-funded agencies, collectively referred to as 
Disability Determination Services (DDSs), which decide initial and 
continuing eligibility of disability claims. The DDS examiner does not 
see claimants face-to-face and must rely on relevant medical evidence 
that is provided by the claimant and/or medical sources in deciding 
whether the individual is disabled, as defined by Federal regulation 
and Social Security Administration (SSA) policies.
    In FY 2011, the DDSs received over 3.3 million initial disability 
claims, the highest in the SSA's history. Examiners completed nearly 
3.4 million initial claims, reducing the backlog of pending 
applications to 759,000, nearly 300,000 fewer claims than were pending 
at the end of FY 2010. The average processing time for initial 
disability claims was 109 days in FY 2011 and is projected to rise 
slightly in FY 2012. Over the most recent five-year period for which 
data is available, the percentage of all applications for disability 
benefits that were allowed ranged from 36-38 percent.
    The Social Security Act considers people eligible for benefits when 
they are unable ``to engage in any substantial gainful activity (SGA) 
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 twelve 
months.'' The disability has to be so severe as to prevent them from 
doing any ``substantial gainful work which exists in the national 
economy,'' whether a specific job is available or not. The disability 
must result from a physical or psychological condition that is 
``demonstrable by medically acceptable clinical and laboratory 
diagnostic techniques.'' In 2012, the level of earnings that 
constitutes performing SGA is $1,010 per month for non-blind 
individuals and $1,690 for blind individuals.
    Most claims are evaluated under a five-step sequential evaluation 
process. The first two steps screen out individuals who are currently 
working above the SGA threshold and applicants whose impairments are 
not severe. The third step compares the individual's condition to the 
``medical listings''--a regulatory list of conditions that are 
considered severe enough to prevent a person from doing any gainful 
activity. If the individual's condition does not meet or equal the 
severity of a condition in the medical listings, the examiner proceeds 
to step four, which is assessing the individual's residual functional 
capacity (what an individual can do despite his or her impairment--
including past relevant work). If the individual is found able to 
perform past relevant work, the claim is denied. If not, the examiner 
must determine at step five whether the individual can undertake other 
work. State examiners rely on medical evidence obtained from the 
claimant's health care providers, and can also consult with medical 
experts and may purchase one or more consultative examinations.
    The SSA also has several fast-track procedures for evaluating 
claims from individuals with a terminal illness, or who have certain 
especially severe conditions that are highly likely to be allowed 
(called Compassionate Allowances and Quick Disability Determinations).
    In announcing the hearing, Social Security Subcommittee Chairman 
Sam Johnson (R-TX) said, ``Americans with disabilities deserve to get 
the right decision as early as possible, but that's just not how it 
currently works. States struggle on the front lines to make sense of 
the program's complex rules to decide who gets benefits. At the same 
time advances in treatment, rehabilitation, and the workplace have 
created new opportunities for those with disabilities to return to 
work. Securing the future of the disability insurance program should 
address these challenges and opportunities while keeping the process 
fair for both claimants and taxpayers.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on how disability insurance eligibility 
decisions are made, including the definition of disability and the 
Federal-State relationship.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
Hearings.'' Select the hearing for which you would like to submit, and 
click on the link entitled, ``Click here to provide a submission for 
the record.'' Once you have followed the online instructions, submit 
all requested information. ATTACH your submission as a Word or 
WordPerfect document, in compliance with the formatting requirements 
listed below, by the close of business on Tuesday, April 3, 2012. 
Finally, please note that due to the change in House mail policy, the 
U.S. Capitol Police will refuse sealed-package deliveries to all House 
Office Buildings. For questions, or if you encounter technical 
problems, please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies 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. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    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.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman JOHNSON. Good morning.
    The hearing will come to order. Good morning and welcome to 
the third hearing in our series on ``Securing the Future of 
Social Security Disability Insurance.''
    Today, we will focus on how disability is decided. For more 
than 50 years, the Social Security Disability Insurance Program 
has provided a vital safety net for workers who have worked 
long and recently enough and who meet the definition of 
``disability.''
    When Congress created the Disability Insurance Program in 
1956, it defined ``disability'' as the ``inability of an 
individual to work due to a physical or mental impairment.''
    ``Qualified impairments'' are those that are expected to 
last for no less than one year or those expected to result in 
death.
    Over the years, the Social Security Administration has 
created complex criteria, emphasizing ``complex,'' and a time 
consuming process that is frustrating to claimants, costly to 
the taxpayer, and frequently raises questions about the 
consistency, accuracy and fairness of this program.
    Our witnesses today will tell us how claimants apply for 
disability, how the state disability determination agencies, 
which are fully funded by Social Security, decide eligibility.
    As we will hear today, deciding whether someone is eligible 
for benefits is far from easy.
    The examiners supported by medical consultants must analyze 
medical and other evidence and take a series of complicated 
steps to make their decisions.
    In the 1980s, Congress also created requirements relating 
to the opinion of treating doctors, and how pain and other 
symptoms affect the ability of an individual to work.
    A morass of policies developed to help ensure consistency 
and respond to the courts have also added to the complexity of 
the program.
    It is no surprise then that there are wide variations in 
outcomes, raising questions about whether this program is being 
administered consistently across the country, and whether 
claimants are being treated fairly.
    Further, Social Security has had an up hill climb for years 
to provide the kind of policy oversight, quality review, and 
ongoing training that massive disability workloads require.
    It has also struggled to stay current with needed updates 
to the list of medical conditions considered severe enough to 
qualify for benefits.
    While this program has served as a vital safety net to 
millions of Americans, the reality is much has changed since 
1956.
    Thanks to advances in medical care, many people with 
disabilities experience greater independence, and as a result, 
can live more productive lives.
    Legal and social changes have promoted participation by 
people with disabilities into mainstream society, and the 
nature of work has changed significantly, as we have moved from 
an economy largely defined by manual labor to a service and 
knowledge based economy.
    Yet, the ``all or nothing'' standard of half a century ago 
is often criticized as ``work disincentive,'' furthering 
dependence by those who might otherwise be able to achieve 
varying levels of self support.
    As we consider securing the future of this program, we owe 
it to the American public to ensure that the program 
effectively serves the interests of applicants, beneficiaries, 
and taxpayers.
    I now recognize the Ranking Member, Mr. Becerra, for his 
opening statement.
    Mr. BECERRA. Mr. Chairman, thank you very much for calling 
this, the third hearing in our series examining the Social 
Security Disability Insurance System.
    I want to just begin by mentioning that Social Security 
disability is an earned benefit. It is not something that you 
just get. You have to have paid into the system, which means 
you have to have worked and paid into the system, and you must 
have suffered a work ending disability to be able to qualify.
    Even so, the requirements for receiving benefits are very 
tough. You mentioned that. Only the very sickest and most 
disabled Americans qualify.
    The majority of Americans with disabilities do not meet 
Social Security's strict eligibility standard. To qualify, 
applicants must submit detailed medical and other evidence 
demonstrating that they are either dying or too sick or 
disabled to work at all, and that their condition will last 
more than a year.
    Moreover, in deciding whether someone cannot work, SSA 
considers not just an individuals' previous job or occupation, 
but whether he or she can assume any job in the nation's 
economy that that individual could do despite the person's 
medical condition.
    Individuals who do not meet these criteria are not eligible 
for disability assistance from Social Security.
    Evaluating whether an individual is so sick or disabled 
that he or she cannot work is a difficult task, involving 
complex evaluations of medical evidence and other factors.
    DI benefits are not generous. A typical worker receives 
about $13,000 a year. Because they are either too sick or too 
disabled to work at all, those benefits translate into a life 
line for many of those Americans and their families.
    We owe it to these Americans to pay their benefits when 
they need them. Let's remember one in seven beneficiaries of 
these disability benefits dies within a year of being awarded 
benefits.
    We owe it to all Americans and workers who pay into the 
Social Security system to safeguard their contributions and pay 
only benefits to those who meet the strict standard.
    Social Security's operating budget is lower today than it 
was in 2010, because of decisions made in this Congress in what 
to appropriate and how much to appropriate to the different 
agencies.
    That, to me, is alarming, at a time when Social Security is 
increasing its workload because of the economy, because of the 
number of individuals aging into the system. We are finding 
that the Department's budget or the Administration's budget is 
actually shrinking in its ability to meet the needs.
    That, I believe, is distressing.
    As I have said before, I think we owe it to the hundreds of 
millions of Americans who pay into the system or who receive 
benefits to hold hearings specifically on these critical 
decisions on budgets for the Social Security Administration.
    Americans' contributions into the Trust Fund are what pay 
for Social Security's operating expenses. Budget cuts have real 
consequences now and in the future for Social Security and its 
recipients.
    Initial disability claims, the topic of this hearing, are a 
good example. With an aging population and the worst recession 
since the Great Depression, the Social Security Administration 
receives over three million applications for disability 
benefits a year, an average of nearly 13,000 claims a day.
    Right now, it takes SSA an average of 111 days to make a 
decision on a disability application.
    Due to budget cuts, SSA has been operating under a hiring 
freeze, which means there are fewer workers to process claims, 
assist the public, and safeguard the Trust Fund than there were 
in 2011.
    The state DDS offices which evaluate applications have lost 
more than ten percent of their staff compared to last year. 
This is the equivalent of about 2,000 skilled workers, many of 
whom had years of experience.
    As a result, the amount of time it takes to make the 
decision on an application is rising, as is the backlog of 
people waiting for a decision, which is currently about 750,000 
disabled individuals.
    Mr. Chairman, this is an important hearing. I believe that 
we must continue to take a close look at how the system 
operates. We have to make sure the benefits are there for those 
who need them, and I am glad that we are holding this in a 
series of hearings on the Social Security Administration, and 
in this case, on the disability program.
    With that, I yield back the balance of my time.
    Chairman JOHNSON. Thank you, Mr. Becerra.
    As is customary, any member is welcome to submit a 
statement for the hearing record.
    Chairman JOHNSON. Before we move onto our testimony today, 
I want to remind our witnesses, all of them, to please limit 
your oral statements to five minutes.
    However, without objection, all the written testimony will 
be made part of the hearing record.
    We have two panels today. Seated at the table is our first 
panel witness, the Commissioner of Social Security, Michael 
Astrue.
    Welcome, Commissioner. You may proceed.

 STATEMENT OF MICHAEL J. ASTRUE, COMMISSIONER, SOCIAL SECURITY 
                         ADMINISTRATION

    Mr. ASTRUE. Thank you, Mr. Chairman.
    Chairman Johnson, Ranking Member Becerra, and Members of 
the Subcommittee, thank you for this opportunity to talk about 
our disability programs.
    These programs have become more complex and more people 
depend on them. Over the past five years, we have improved 
service despite limited resources and the huge influx of new 
disability claims.
    In addition to our core work, we have seen a drastic rise 
in our non-program work. Increasingly, our waiting rooms are 
filled not with people looking for help with retirement or 
disability, but with people needing verifications so they can 
qualify for Federal, state or local programs, or for 
employment.
    Together, we need to figure out how to keep improving 
services as the population expands and baby boomers age.
    To succeed, we need experienced employees, up to date 
technology, and streamlined policies. We must make more and 
smarter investments in technology in order to best use our 
declining resources.
    Toward this goal, we are providing people with convenient 
online options. We are close to testing an uniform case 
processing system for DDSs.
    We are using electronic tools to help us better decide and 
document cases to improve quality. We are using technology to 
identify more and more cases for fast tracking, and we are 
moving from pilots to permanent process with health IT, which 
has the potential to make dramatic improvements, both in 
quality and efficiency.
    These IT investments demonstrate that we understand that we 
can no longer do business as usual.
    Nevertheless, technology alone cannot make disability 
determinations. The complexity of the disability programs 
requires skilled employees to make those decisions.
    Unfortunately, after two straight years of less funding 
than we had in Fiscal Year 2010, we will have lost 7,000 
experienced employees who we cannot afford to replace.
    Rather than spend time on initiatives we cannot fund, we 
have focused on program simplifications. Some of these ideas we 
have implemented on our own. On others, we need your help. With 
your support, we can make other smart changes.
    The President's Fiscal Year 2013 budget includes a 
legislative proposal, the Work Incentives Simplification Pilot, 
or WISP, which has great potential to encourage persons with 
disabilities to return to work.
    For several years prior to 2009, we received about 2.6 
million initial disability claims each year. Since 2009, that 
level has increased dramatically to last year's nearly 3.3 
million disability claims.
    To deal with this sharp increase, we added capacity to our 
DDSs and flexible national resources to help us quickly 
reallocate additional support to the most stressed states.
    The dedication of our DDS staff and support from our 
Federal resources has helped us keep pending disability claims 
considerably lower than our original projected levels.
    Furthermore, our average processing time of 104 days, and 
that includes both the field office and the state DDS time, is 
near a record low since we began using that combined measure.
    Social Security remains a sound investment. We have 
drastically reduced the time claimants wait for a hearing 
decision.
    In Fiscal Year 2011, we cut the average wait for a hearing 
below one year for the first time since 2003. Wait times are 
also down in field offices and our 800-number.
    Through the hard work of our employees and technological 
advancements, we have kept our administrative costs very low.
    Moreover, we have increased employee productivity by about 
four percent in each of the last five years. Few if any 
organizations, public or private, have similar accomplishments.
    We are proud of these accomplishments, and appreciate your 
confidence in us.
    The scope, sensitivity, and complexity of our programs 
requires well-trained people on the front lines and in key 
support roles. We simply cannot continue to lose so many 
employees and keep up.
    That challenge requires a complicated and ongoing 
conversation with Congress, which is why we are so pleased to 
participate in today's hearing.
    Before I conclude, I want to give you also an update on the 
Social Security Death Master File, which I testified about last 
month.
    After working closely with OMB and interested Federal 
agencies, I am pleased to announce that we have provided the 
Subcommittee with our proposed legislative specifications 
designed to limit access to the Death Master File in order to 
reduce identity theft.
    The Subcommittee's leadership on this important issue has 
guided our work and we are grateful for it.
    Thank you. I will be happy to answer any questions you may 
have.
    [The prepared statement of The Honorable Michael J. Astrue 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you. I appreciate your testimony. 
As is customary for each round of questions, I will limit my 
time to five minutes and ask my colleagues to also limit their 
questioning time to five minutes.
    Commissioner, determining whether someone meets or equals 
the medical listings is a critical step in deciding disability. 
Advances in medical science and treatment are constant.
    I was disappointed to learn from GAO's testimony that some 
of the listings have been extended repeatedly for the last 19 
to 33 years, without updates.
    In fact, two of the listings including those for mental 
impairment, which count for 21 percent of all claims, have not 
been comprehensively revised for more than 27 years.
    How in the world could updating these listings take that 
long? Nineteen to 33 years?
    Mr. ASTRUE. Well, it should not, Mr. Chairman. Very early 
in my tenure, I made it a priority to change that long-standing 
practice in the Agency.
    On my management initiative, not because Congress said so, 
not because OMB said so, not because GAO said so, I set the 
standard for the Agency of trying to be on a five-year cycle 
going forward, in terms of updating our medical regulations.
    I worked in biotech for almost 15 years. I know how 
important it is to have updated medical information.
    I think quite frankly GAO's comments were a bit unfair. We 
did this on our own initiative. We have updated, if I remember 
correctly, eight of the 14. We are making very good progress on 
the others.
    We will not in all likelihood quite hit five years, 
depending on when you decide those five years start. It might 
be five and a half years.
    Considering there was catch up, as you yourself pointed 
out, the regulations had not been updated in 33 years, it will 
be easier and faster in the future when you only have to update 
for three to five years of medical advancement, instead of 
going over 33 years, which is what we have been doing.
    We have been trying to do this the right way. We have been 
trying to do this with a high degree of consensus, with 
participation from NIH, with patient advocacy groups. We have 
had relatively little complaints about this process.
    I think we have done this extremely well from a quality 
point of view. We are doing it extraordinarily quickly by 
historical standards. I do not really think GAO has anything to 
complain about at all.
    Chairman JOHNSON. Do you have one or two people that look 
at that all the time?
    Mr. ASTRUE. We have a person who does nothing but manage 
the regulatory process, named Paul Kryglik. He is overseen by 
our Deputy for Retirement and Disability Policy, David Rust. We 
have a lot of people working on this.
    Could I do it faster if I had more people? Yes. We are 
doing the best we can with what we have.
    Chairman JOHNSON. In their testimony, GAO says ``Social 
Security has made several changes that hold promise for needed 
updates.''
    Yet, GAO also raises questions about whether the new 
process will work. What changes are you making and are you sure 
they will work?
    Mr. ASTRUE. Well, if I understand, they have embraced the 
five year goal. That came from me. That comes from my 
management oversight of my people.
    I think in general they are doing a terrific job. I am not 
quite sure. There was a certain vagueness to the GAO criticism 
there, so I do not really quite frankly understand what it is 
they are complaining about.
    Chairman JOHNSON. Well, they have to complain.
    [Laughter.]
    Mr. ASTRUE. It is Washington. Silly me. I forgot.
    Chairman JOHNSON. To assess the functional demands of 
specific jobs, Social Security has long relied on the 
Dictionary of Occupational Titles maintained by the Department 
of Labor.
    Labor decided to replace this with a new system to track 
occupations, the Occupational Information Network, known as 
``O*NET.''
    According to GAO's testimony, Social Security decided O*NET 
was not detailed enough and would not be able to withstand 
legal challenges. As a result, Social Security, according to 
what we know, is now developing its own informational system 
for a cost of $108 million by 2016.
    Worse, the estimate does not include the cost of 
implementing or maintaining a system, which according to Mr. 
Bertoni's testimony, could be significant, based on other 
agencies' experiences.
    Tell me why Social Security cannot use Labor's system 
instead of asking taxpayers to pay again to develop a separate 
system?
    Mr. ASTRUE. Well, quite frankly, the statute does not allow 
us to do it. O*NET does not have the specificity that the 
statute requires in order to make the individualized 
determinations that we need.
    The Dictionary of Occupational Titles, which was developed 
in 1938, was always at best an imperfect fit. It was not 
designed for us. It just happened to be convenient and there 
was some overlap.
    O*NET is by comparison to the DOT very superficial and 
designed for--it is further away from our purposes than the DOT 
is.
    We have brought in outside experts to advise us on this. 
Except for a few consultants who thought they could make money 
off this, no one has looked me in the eye and said 
Commissioner, you can just substitute O*NET for DOT.
    That is simplistic and a simply wrong approach to something 
that is very complicated and important.
    I think this Agency and a lot of Washington has had their 
heads in the sand about our vocational guidelines for a long 
time.
    The last update on this was 1991, and that was a 
superficial update. This has been a tool that needed work for a 
long time, no one was doing it.
    I am not going to benefit from this. We have diverted a lot 
of resources into this, despite all the pressures to deliver in 
other areas, because it is critically important for the long 
term future of the disability program, just as important as it 
is to be up to date on medical, it is important to be up to 
date for vocational, and there is no other way to do it than 
grind it out and do the hard work to do it right.
    Chairman JOHNSON. Well, ask Labor to give you some money 
for it then.
    Mr. ASTRUE. Mr. Chairman, I have had this conversation with 
some committee staff, not on this committee. There is a 
perception that is wrong, that there is this huge pool of 
untapped resources over at Labor.
    Labor decided basically to get out of this business a long 
time ago, even O*NET is done largely by contractors.
    We have tried to work with Labor as best we can. We have 
invited them into the process. There is this misconception that 
there is this huge untapped pool of expertise at Labor that we 
are not trying to take advantage of. That is simply not true.
    Chairman JOHNSON. I am just worried about the cost. Mr. 
Becerra, would you care to question?
    Mr. BECERRA. Thank you, Mr. Chairman.
    Commissioner, thank you for being here. Thank you, by the 
way, for the work on the DMF, on that file. All those records 
of deceased individuals that have been used by people to invade 
people's privacy and steal their identity, the work you are 
doing, I think, will benefit many, many people, and we thank 
you for that.
    The faster we can get to that, the better. If we can help 
you as you go around to the other departments and agencies to 
try to make sure everyone works under the same standards, so we 
do not have people's death records being revealed and used by 
others for the wrong reasons, the better off, I think, all of 
us will be.
    Mr. ASTRUE. It took a little while, but I think the 
agencies are aligned now. We support this proposal. What we 
need now is the Congress to move.
    I would turn it around on you a little bit. We want to help 
you. I think there is bipartisan support, which is a little 
rare in this city right now, for doing something in this area.
    I think it would be a great thing if we could find a way to 
all work together to try to make sure this bill still passes 
this year.
    Mr. BECERRA. It may surprise you, Commissioner, but I think 
the Chairman would agree with that statement and I would, too, 
that there can be bipartisan support on that particular issue. 
I hope we are able to work with you to make something happen 
soon to protect people's identity.
    You mentioned earlier that your caseload has increased on 
the disability side. What were the numbers?
    Mr. ASTRUE. It is up to about 3.3 million.
    Mr. BECERRA. As opposed to what?
    Mr. ASTRUE. To 2.6, 2.65 before the recession hit.
    Mr. BECERRA. In the last two or three years, you have 
increased by almost a third, 25 percent?
    Mr. ASTRUE. We are taking in roughly 600,000 to 650,000 
more cases than what the actuaries were projecting we would 
have in this time period before the recession hit.
    Mr. BECERRA. You were already going to increase because of 
the size of the baby boom population that was going to start 
working its way into the Social Security system, whether 
through disability or retirement, but on top of that, with the 
recession, double whammy.
    Now, more people than you expected are coming into the 
system.
    Mr. ASTRUE. Triple whammy. We have a lot more retirement 
applications because desperate older Americans are applying for 
retirement in higher numbers than we projected.
    Because we are doing so much verification for other 
Federal, state and local programs, which people are using more 
because of the recession, those workloads have gone up as well.
    Mr. BECERRA. I am looking at your written statement on page 
two where you talked about the budget. You said toward the 
bottom there of page two, ``Our Fiscal Year 2013 budget request 
is lean.''
    You go on to say ``While we will achieve goals associated 
with these priorities, we simply cannot do all of the work we 
are required to do. We expect to lose over 3,000 employees in 
Fiscal Year 2012, the current year, and over 2,000 more in 
Fiscal Year 2013, on top of more than 4,000 employees we 
already lost in Fiscal Year 2011, a total loss of more than 
9,000 Social Security and state disability determination 
services employees in just three years.''
    While your caseload is rising, you are losing valuable and 
experienced personnel, and your budgets are shrinking.
    Your current budget from Congress is about $1 billion lower 
than what you requested, and it is lower than what it was in 
2010.
    By the way, working men and women are contributing to the 
Social Security system every day through their paycheck 
contributions, so it is not that there is not the money there 
for Social Security to do its work because everyone who sees 
that paycheck deduction, that FICA tax deduction, knows they 
are paying for Social Security.
    If Congress is short changing your budget, are you able to 
keep up with these caseloads?
    Mr. ASTRUE. The answer is we have done a remarkable job up 
to this point in keeping up, and it is because of 
simplification, great work by the employees, a lot of things.
    We cannot keep this up indefinitely. I want to make sure 
that all of you understand that we are probably four to six 
months away from moving significantly backwards in most of our 
major service metrics.
    Even if we keep up the four percent increase in 
productivity, which is an extraordinary achievement, and I am 
not sure we can do that, but even if we do, it is not going to 
be enough to compensate for all the people that we are losing 
so quickly.
    Mr. BECERRA. Longer waits to get your determination on your 
disability, longer waits to be able to apply for retirement 
benefits, longer waits to receive your surviving spouse 
benefits.
    Probably more mistakes, because we know the longer a case 
sits, the more likely errors will be made in the 
determinations, so it seems like some folks in D.C. are being 
penny wise but very pound foolish when it comes to services 
that most Americans have paid for.
    I hope you will continue to sound the alarm and get us the 
information that will help us make the right decisions so that 
we do not short change our seniors and all those Americans who 
paid into the system for Social Security, whether disability, 
retirement, or surviving benefits.
    I thank you, Commissioner, for being here.
    Mr. ASTRUE. Thank you, Mr. Becerra.
    Chairman JOHNSON. Commissioner, I want to just set the 
record straight. This year, Social Security received an 
increase in its budget despite a 1.5 percent decrease in an 
overall discretionary cap.
    In fact, while Social Security is subject to the same long 
term domestic spending caps enacted in the Budget Control Act, 
that same bill gave Social Security an additional $11 billion, 
from 2012 to 2021, over the budget caps, to increase continuing 
eligibility reviews in its DI and SSI programs.
    This year's appropriation bills were supported equally by 
both parties, including the President, the Democrat led Senate, 
Ranking Member Levin and Ranking Member Becerra.
    Even the President's Fiscal Year 2013 budget requested $753 
million below your request of $12.5 billion.
    The fact is our nation faces a sea of red ink that will 
break the back of our great nation unless we act now to get our 
fiscal house in order.
    The Federal Government has to live within its means, just 
like families do. That means doing more with less.
    Mr. ASTRUE. Mr. Chairman, I understand the fiscal needs, 
and certainly we live with whatever judgments Congress makes.
    Let me be clear, because I am not sure it was clear from 
your statement, our appropriation is smaller two years in a 
row. We had less in 2011 than we did in 2010 and we have less 
in 2012 than we did in 2011.
    Chairman JOHNSON. You reduced your force, too, have you 
not?
    Mr. ASTRUE. Substantially.
    Mr. BECERRA. Mr. Chairman, since we are out of order, if I 
could just comment as well.
    Chairman JOHNSON. Go ahead.
    Mr. BECERRA. Thank you. I think we also have to remember 
that Congress forced the Social Security Administration to use 
its reserves to try to continue to perform at a higher level.
    Those reserves were meant to help deal with any number of 
important activities that the Social Security Administration 
must perform. Those reserves are now gone, so while----
    Mr. ASTRUE. Most of those were rescinded. We used some, but 
the majority of them were rescinded.
    Mr. BECERRA. Congress stripped them away from you. Not only 
are you receiving less money in your budget, but money was 
taken away from you that you would have otherwise have used for 
good purposes.
    Mr. Chairman, let's be clear. We can try to paint this 
however we wish, and we should do hearings on this particular 
issue on the budget, because Americans have paid for the 
administration of the Social Security programs.
    This is not one of those areas where because we are in 
fiscal red ink that the Social Security Administration should 
suffer the consequences, because to this point today, Americans 
through their taxes have contributed more to Social Security 
than they have spent.
    Therefore, we should not find that this agency, which does 
tremendous work for tens of millions of people, should all of a 
sudden have to make cuts to its services because it is getting 
short changed by a Congress for deficit spending unrelated to 
Social Security.
    I think it is important, Mr. Chairman, that we continue to 
do these hearings, but as the Commissioner just said, there are 
consequences.
    Chairman JOHNSON. I believe it is your Administration that 
cut back two percent.
    Mr. BECERRA. We can have those conversations later. Let's 
just agree on a bipartisan basis that we will not make cuts to 
Social Security that have no place when Americans have 
contributed to the system to pay for the services and the 
administration.
    Chairman JOHNSON. Thank you, Mr. Becerra. Mr. Berg, you are 
recognized.
    Mr. BERG. Thank you, Mr. Chairman.
    Moving on to a different area, Commissioner Astrue, I 
understand the statutory definition of ``disability,'' Social 
Security has a regulatory framework and listing of impairments 
considered severe enough to prevent an individual from working.
    I have a few questions relating to the medical listings of 
impairments. First, would you say that these listings rely on 
objective medical findings and are less subjective to the 
judgment of the DDS examiner?
    Mr. ASTRUE. Yes. I think that is generally the notion. If 
we think something is clear enough we can do a listing for it, 
in other words, create a presumption. Invariably, there are at 
least substantially objective criteria that go into that. I 
would not want to say there is no subjective element, but it is 
substantially objective.
    Mr. BERG. A higher standard from your point?
    Mr. ASTRUE. Yes, I think that is generally right.
    Mr. BERG. I know you have invested personally a lot of time 
and effort into the development of compassionate allowances.
    Mr. ASTRUE. Yes.
    Mr. BERG. How do compassionate allowances differ from 
conditions in listings set forth by the regulations?
    Mr. ASTRUE. It is basically an expansion of the concept. 
What we do is we have gone--the listings historically would 
only apply to fairly common diseases and conditions, and what 
we found is we were making a lot of mistakes in the aggregate, 
in sort of rare diseases and conditions.
    The notion was on a one time effort, we went through to try 
to identify those diseases and conditions that pretty much by 
definition make you disabled.
    Now because we are electronic, we have the ability to pull 
those out at the front end and just allow them, which is what 
we do. I think it is about ten days now.
    They are basically an extension of the philosophy of the 
listings. I think the differences are we have moved to much 
smaller diseases and conditions than what we would historically 
recognize.
    We have pulled them out electronically in the system, and 
we have set up procedures in the DDS so they are triaged at the 
front end, so it is a very short amount of time for a decision.
    Mr. BERG. You have a more streamlined processing procedure?
    Mr. ASTRUE. Right.
    Mr. BERG. Last, I have heard from constituents in North 
Dakota. They are asking about the disability listing for 
Huntington's Disease.
    How do you decide to add a new listing?
    Mr. ASTRUE. Well, what we try to do is we look not only at 
the medical literature in detail, but we try to speak to the 
patient groups. Increasingly, we have a very broad and very 
productive partnership with NIH.
    With Huntington's, I guess I will jump on one of our 
announcements, so on April 11, we are going to be announcing 
that we are adding juvenile Huntington's to the compassionate 
allowance list. That is a first step.
    I have met with a Huntington's group. I think the dilemma 
there is trying to figure out where to draw the lines. I think 
we think we can do it, but actually, it is one of those rare 
cases where it is harder because of technology.
    Now with genetic tests, where a lot of people are getting 
diagnosed at a very young age, you cannot give benefits 
consistent with the statute, just with the genetic test that 
says you have Huntington's.
    Historically, it took so long to diagnose Woody Guthrie. By 
the time they knew Woody Guthrie had Huntington's, he was long 
gone, and obviously disabled.
    Now with the new technology, we have to figure out exactly 
what symptoms of people with Huntington's make them unable to 
work. We have not finished that process, but we are fairly 
optimistic that we are going to be able to do that.
    We have been in contact with both NIH and with the patient 
groups. That is in the neurological listings. My guess is we 
will have an NPRM out on that probably early next year, would 
be the likely schedule.
    Mr. BERG. Thank you, Mr. Chairman. I yield back.
    Chairman JOHNSON. Mr. Marchant, you are recognized.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    Commissioner, last week in our district work period, I 
spent most of my time visiting with senior groups. In the 
conversation, usually in the question and answer section 
afterwards, in every instance, I had a senior that raised their 
hand that said they knew someone or some family that they were 
confident was receiving disability benefits that they felt like 
that person was defrauding the Social Security System.
    In response to that question, I would use your statistic, 
that there are 600,000 to 700,000 new claimants more than, was 
it ten years ago?
    Mr. ASTRUE. Three years ago.
    Mr. MARCHANT. Three years ago. That response brought on the 
question is the Social Security Trust Fund solvency threatened 
by the 600,000 to 700,000 more claimants.
    The general attitude is there is a fear among people who 
have worked their entire life and that this program, the 
disability program itself is threatening the entire integrity 
of the Trust Funds.
    Can you address that for me?
    Mr. ASTRUE. Sure. There is a mythology in a lot of 
quarters, and the media feeds this from time to time, that the 
system is ripe with fraud. That is simply not true.
    Is there fraud? Well, sure. With a system this big and with 
standards this complicated, is there some small level of fraud? 
Yes. I think the level of fraud is much smaller than in most 
government programs. I think it is some fraction of one 
percent.
    We do everything that we can to try to root those out, but 
I think what you have to be aware of is that increasingly, 
particularly as our society's and Congress' definition of 
``disability'' has expanded, there are people who are 
legitimately disabled who do not look that way to their 
neighbors, and their neighbors make unfair conclusions. You see 
this with people with a variety of mental conditions. You see 
this fairly typically, for instance, with people with early 
Alzheimer's.
    We even had a case with one of our own medical examiners 
who saw someone with early Alzheimer's and just ridiculed the 
person. I apologized in a public hearing for the way one of our 
own people reacted.
    I think people are sometimes very quick to assume fraud 
when in fact what they are seeing is a non-apparent disability.
    Mr. MARCHANT. What about the issue of these claims 
threatening the solvency of the Trust Fund?
    Mr. ASTRUE. My view is the level of fraud is so low that it 
is a rounding error in terms of the solvency of the system.
    Mr. MARCHANT. Setting fraud aside, what about the increased 
number of cases, with the 1.8% total payroll deduction. Are 
there statistics out there that say the 1.8% raises this much 
money, and this much money is coming out of the system?
    Mr. ASTRUE. That is a good question. Something that should 
give you confidence in the integrity of the system, with the 
recession related claims, which economists and others would say 
typically would not meet our standards, if the system has 
integrity, then the allowance rates should drop.
    Our allowance rates have dropped during the recession, both 
at the DDSs and even more dramatically at the hearings and 
appeals level, because we are seeing more claims that are not 
meritorious.
    The increase in claims is not a result of any significant 
change that we have made or that you have made.
    Eighty to 90 percent of the change probably, and we will 
supply more information to you about the record, is entirely 
predictable, has been predictable for decades.
    It is what the Office of the Actuary has been telling the 
Congress would happen because people basically, with my 
profile, aging baby boomers, are in their disability prone 
years.
    The amount of disability allowances we are seeing are 
relatively close to what the Agency, CBO and other experts have 
been predicting for a long time.
    [The insert follows,The Honorable Michael J. Astrue 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. MARCHANT. Thank you, Mr. Chairman.
    Chairman JOHNSON. Thank you, Mr. Marchant. Mr. Smith.
    Mr. SMITH. Thank you, Mr. Chairman. Thank you, Commissioner 
Astrue, for coming here today and certainly for your service.
    Mr. ASTRUE. Thank you.
    Mr. SMITH. I appreciate the Social Security 
Administration's efforts obviously to expedite cases through 
the quick disability determination process. Obviously, I 
believe it is important we find ways to move the easily decided 
cases through the system more quickly.
    Can you speak to the safeguards that you might have in 
place to ensure that the system still cannot be gamed perhaps 
amidst the fast track that we know probably needs to exist?
    Mr. ASTRUE. That is a very fine question. None of this 
happens on automatic pilot. As fast as this is, there is still 
a full medical review. Not necessarily a full vocational 
review, if it is not necessary, for instance, for a 
compassionate allowance.
    For QDD cases, there is still a medical/vocational 
analysis. It is just put up at the top of the queue.
    We confirm all these medical analyses. We do not take the 
representation of the claimant as definitive.
    I think it is a system with a lot of integrity.
    The other aspect to integrity that I think is important, it 
is not statutory, not regulatory, but something that I think 
you should know about and be concerned about for the future, is 
again, at a management level, we have set the threshold for the 
QDT cases, 95 percent probability or more of allowance.
    There has been occasional internal and external pressure to 
lower that. What I would tell you is if you lower that, you 
start damaging the integrity of the system.
    It might look good in the short run, but I think you start 
damaging something that works really well, and I think the 
discipline of making sure that only the most likely cases are 
compassionate allowances or QDTs is an important one, but by 
doing it the right way, we are up to almost six percent, I 
think, of the cases decided in that way. I think by the end of 
next year, we will probably be at seven percent.
    It will start flattening. There is a natural end to it. I 
think if you water down the system, you start damaging 
something that is really important for disabled people.
    I hope in the future you will protect the integrity of the 
system and ask the Agency in the future to maintain that 95 
percent threshold.
    Mr. SMITH. Thank you. Shifting gears a little bit, in terms 
of the hearings' backlog, you committed to eliminate the 
backlog and reduce the average time it takes, and there has 
been some progress made obviously.
    The productivity by ALJs has increased, the backlogs have 
been reduced, and waiting times for the hearing decision are 
down from over 500 days in 2008 to 345 days in 2011. Some 
progress.
    Conditions sometimes change perhaps, but in the 2013 budget 
request, I know hearings pending and hearing wait times will 
continue to decline, looking at that request, and yet the 
workloads pending and wait times will increase.
    Social Security has always worked to make the right 
decisions as soon in the process as possible. Can you speak to 
that and how the budget request reflects the numbers?
    Mr. ASTRUE. Sure. You know, at some point as much as we 
have tried to lay out a plan for what we can do, it is 
contingent on a couple of things.
    It is contingent on adequate funding from the Congress. It 
is contingent on an adequate supply of judges supplied by the 
Office of Personnel Management. Those are the two key 
variables.
    At some point, as the budget gets tighter, we are going to 
have to make hard choices about whether we back off from the 
goal that we set for ourselves, and I think that is on the 
table for next year. I hope not.
    My view is we have done, I think, a much better job than I 
think most Members of Congress expected five years ago when we 
started this process.
    If you had said to me at the time, Commissioner, can you do 
this, oh, and by the way, you are going to have the worst 
recession since the Great Depression, and you are going to have 
budget cuts for two straight years, are you still going to be 
able to do this, my answer would have been no, Congressman, I 
cannot do it.
    We are here. We have made great progress.
    The question of whether we can get from approximately 345 
days to 270 days in the next year and a half will turn a lot on 
the funding situation.
    When I was General Counsel of HHS, I had in my closet a 
cartoon wall. My favorite was a lawyer looking at a client. He 
looked at the client and said, ``Well, how much justice can you 
afford?''
    That is basically where you are. If you want justice, if 
you want 270 days, then you can get that, but you have to 
support the budget to get there.
    Mr. SMITH. Okay. Thank you, Mr. Chairman.
    Chairman JOHNSON. The time of the gentleman has expired. 
Mr. Tiberi is recognized.
    Mr. TIBERI. Thank you, Chairman. Thank you, Commissioner, 
for your service. Thank you for being here.
    I want to make just a couple of points and then ask a 
question. One of the best things that Social Security has ever 
done is provide those of us who pay into Social Security, and 
yes, congressmen pay into Social Security, even though there is 
a long-standing myth that we do not, when I get my statement, 
and I got my statement last summer, the notice that says I am 
going to get this much money based upon quarters that I have 
put in, and what I have paid in, but then a little asterisk 
that says ``If nothing is done by the time you are scheduled to 
turn 67,'' it does not say 67, but by the time you are ready to 
retire at full retirement age, ``you will only get 77 percent 
of your benefit.''
    I think that is great. I think that illustrates that there 
is a problem with the future of funding Social Security, not 
just for me, but for my four daughters, if we do nothing.
    I think that is a great service, and I would hope you would 
highlight that better, and obviously we are here talking about 
the disability fund, which according to the Congressional 
Budget Office, is in worse shape than the retirement fund.
    In my office, I had a case worker who has been doing Social 
Security long before I got elected to Congress, who was working 
for my predecessor.
    He says anecdotally that he can count on three out of every 
four constituents who come in to our office to seek help will 
ultimately get denied initially, and then will go to an appeal. 
A majority of those anecdotally in our office who go through 
the appeal process will ultimately get awarded.
    In relation to that context that I just gave you, when you 
have numbers that have been provided to us that it takes about 
$1,050 to process a DDS claim on average initially up front, so 
it is a little over $1,000, that claim is processed in a little 
over 100 days, through our office at least, most of those are 
denied initially.
    Then they go to an appeal. That appeal through a judge 
costs about three times as much, three times as long.
    In view of those numbers, and those are national numbers, 
in addition to what we see in our office in terms of the time 
frame, is there an inconsistency in this process?
    Do we need to look at what the DDSs are doing versus the 
appellate process to make that system maybe more efficient? Are 
they not trained the same?
    Is there some sort of breakdown between the initial process 
and the appeal process? Can we streamline this process to make 
it more cost effective, more timely?
    Mr. ASTRUE. I am tempted to answer yes to most of those 
questions, but let me say this.
    Different iterations of that question we have been dealing 
with for a long time. I do think we have made some significant 
progress.
    Compared to five years ago, quality in the DDSs is up 
substantially. We have additional quality initiatives or 
quality related initiatives in the pipeline.
    The most important one is that we are moving from a 
fragmented, antiquated 54 siloed IT system to a state-of-the-
art unified system that builds in the best practices that we 
know work.
    The most important one is something called eCAT, which uses 
basic artificial intelligence techniques to prompt examiners 
with everything they need to know when something comes up 
relevant, if multiple sclerosis comes up or rheumatoid 
arthritis comes up, whatever, it tells them everything they 
need to know.
    In fact, it requires for quality reasons documentation of 
certain things if our rules require it, in essence, to prevent 
examiners from taking shortcuts.
    The quality is getting better in the DDSs, and I think they 
have done a great job.
    It is also helping the fast track that Mr. Berg and others 
have mentioned, it has been a big help in terms of quality.
    When I came in and there was some resistance to doing the 
compassionate allowances, we did a retrospective study, and we 
found that on the things that were on my list, our error rate, 
which at that point was about six percent in the DDSs, it is 
probably about 20 to 40 percent, and most of them were closer 
to 40 percent.
    Picking out those rare things and giving precise guidance, 
those things help.
    By definition, you are going to see the close cases. Ohio 
may be a little worse than some other states. Ohio is one of 
the states that did a lot of furloughs. That damaged morale, 
increased turnover, aggravated backlogs, meant more acrobatics 
in terms of staffing and higher costs to get things done.
    It may be a little worse in Ohio at the DDS because of 
that. I think it is moving in the right direction now.
    One of the things you should be real happy about, one of 
the real success stories, is five years ago, Columbus was 
probably one of the sixth worse hearing offices in terms of 
backlog in the country, made enormous progress, about 500 days 
off the wait time.
    You should particularly go and thank the new Chief Judge 
over there, Judge Allen. This is one of those cases where one 
person with backbone and management talent has made an enormous 
difference.
    Mr. TIBERI. Great point. I appreciate that. You are right 
about that.
    The only thing that is depressing for me is when my case 
worker has to tell people up front that you know what, you are 
probably going to get denied when you initially apply because 
that is what usually happens. That is kind of unfortunate.
    Mr. ASTRUE. Statistically, it is about one in three. I know 
it feels differently, I think because you do not get a 
representative sample----
    Mr. TIBERI. That is probably true.
    Mr. ASTRUE. In hearing offices. It is about one in three at 
the DDSs, and right now, the allowance rate is about 50/50, it 
is about 51 percent are allowed on appeal.
    Again, some of that is rational. People who are severely 
ill, that is not a static situation, particularly if the time 
lines stretch out, their situation changes.
    The obligation of our people on the way is not to decide 
whether the previous decision was right, but to look at it 
fresh and new.
    It is not necessarily inconsistent. Sometimes it is.
    Mr. TIBERI. Thank you.
    Mr. ASTRUE. It is not necessarily inconsistent when an ALJ 
comes to a different decision from an examiner.
    Chairman JOHNSON. The gentleman's time has expired. Mr. 
Becerra, you are recognized for 30 seconds.
    Mr. BECERRA. Thank you, Mr. Chairman. By the way, 
Commissioner, thank you very much for your visit to Los Angeles 
and the offices that we have there in Los Angeles, and the work 
you are doing with them.
    Just a quick point, maybe we can follow up because we need 
to move on. I know you have instituted a new policy that will 
withhold the names of the administrative law judge to Americans 
who are filing their claims or to their representatives, as 
they try to move through the appeal process. I know there is 
some concern as to whether or not some folks are trying to 
judge shop who will conduct the hearing for that appeal.
    I think it may have been overly broad in its approach in 
targeting both in-person and video hearings. It sounds to me 
like the concern with judge shopping may be more related to 
video hearings than the in-person hearings.
    I am hoping that maybe we can talk further. I do not think 
that what we want to do is end up with more errors in the 
decision making, and a more arduous process for folks who do 
not have a lot of money.
    I know what we want to do is make sure the appeals process 
works in the most efficient and adequate way forward, and 
perhaps we can talk about that.
    Mr. ASTRUE. Always happy. You have my number, call any 
time.
    Mr. BECERRA. Thank you so much. Thank you, Mr. Chairman.
    Chairman JOHNSON. Commissioner, thank you for being here. 
You are doing a great job.
    Mr. ASTRUE. Thank you. I appreciate all the support from 
members of this committee. It does make a huge difference for 
us in a lot of big and small ways. Thank you for what you do as 
well.
    Chairman JOHNSON. Thank you. We will now proceed to our 
second panel. You will be excused. Thank you, sir.
    Our witnesses that are taking their seats at the table are 
Trudy Lyon-Hart, Director, Office of Disability Determination 
Services, Vermont Agency of Human Services, on behalf of the 
National Council of Disability Determination Directors.
    Lisa Ekman, Senior Policy Advisor, Health & Disability 
Advocates, on behalf of the Consortium for Citizens with 
Disabilities Social Security Task Force.
    Dan Bertoni, Director, Education, Workforce and Income 
Security Issues, U.S. Government Accountability Office.
    Dr. Leighton Chan, Chief, Rehabilitation Medicine 
Department at the National Institutes of Health.
    Dr. Nicole Maestas, Senior Economist, RAND Corporation, all 
the way from Santa Monica, California.
    Ms. Lyon-Hart, welcome. Please go ahead. You are 
recognized.

 STATEMENT OF TRUDY LYON-HART, DIRECTOR, OFFICE OF DISABILITY 
 DETERMINATION SERVICES, VERMONT AGENCY OF HUMAN SERVICES, ON 
  BEHALF OF THE NATIONAL COUNCIL OF DISABILITY DETERMINATION 
                           DIRECTORS

    Ms. LYON-HART. Chairman Johnson, Ranking Member Becerra, 
and Members of the Subcommittee, I am Trudy Lyon-Hart, 
President-Elect of the National Council of Disability 
Determination Directors, NCDDD, and Director of the Vermont 
Disability Determination Services.
    Thank you for this opportunity to testify on behalf of the 
administrators of the Disability Determination Services, the 
DDSs, of the states and the District of Columbia.
    Collectively, we direct the work of over 14,000 employees, 
processing nearly 4.8 million disability cases a year, 
including initial claims, reconsiderations, and continuing 
disability reviews, CDRs.
    DDSs make determinations with high accuracy, ensuring that 
over a million deserving disability applicants get benefits 
quickly each year.
    In any given year, over 70 percent of the allowance 
determinations in the disability program are made at the DDS 
level, with no need for an administrative law judge hearing.
    DDS accuracy, speed and volume are notable considering the 
program's complexity. Adjudicators must obtain health care 
records and detailed descriptions of daily activities and work 
history, arrange for consultative exams if needed, analyze 
reams of electronic evidence, in the process evaluating 
symptoms, weighing different medical opinions, assessing 
medical severity, and determining individuals' remaining work 
capacity.
    Social Security and the DDSs have historically worked 
together to provide the American public with prompt, accurate 
and cost effective service.
    However, our ability to continue to do so is now 
increasingly threatened. Funding in the Fiscal Year 2012 budget 
will not cover all the cases the DDSs will receive.
    The deeper cuts scheduled to occur in 2013, as part of the 
Budget Control Act, will dramatically worsen the situation.
    In early Fiscal Year 2011, SSA imposed a hiring freeze 
extending even to replacement hiring. Since then, the DDSs have 
lost over 2,000 employees. Three-quarters were examiner losses, 
a lost capacity of over 900,000 case determinations a year.
    Already many thousands of cases are delayed in growing DDS 
backlogs.
    Recently, with release of the Fiscal Year 2012 budget, SSA 
authorized 200 DDS hire's nationally. These hire's, while 
appreciated, are a drop in the bucket.
    With the DDS situation so fragile, further increase in our 
medical CDR workload is a concern. We would need both 
additional funding and advance hiring.
    Our pipeline of disability examiner trainees has been empty 
for a year and a half, and examiners are not quickly 
replaceable. It takes a minimum of several years of training 
and mentoring before they have the knowledge and skills to 
handle all cases, especially CDRs.
    For as long as they can, the DDSs will continue to keep 
cases moving and meet workload targets. DDS staff are highly 
skilled and extremely elastic.
    In the short term, we have shifted some support resources 
to case processing, but this is not sustainable.
    With insufficient funding for the incoming cases, continued 
attrition, and only minimal replacement hiring, the DDSs will 
reach a tipping point with backlogs and case delays.
    Policy changes would make the process more efficient. NCDDD 
continues to recommend consistent application of policy across 
the nation and across all appeal levels.
    Our written testimony includes recommendations in such 
areas as policy simplification, enhancement of technology 
tools, expansion of the medical listings, expansion of single 
decision maker authority, and reinstatement of the 
reconsideration in the ten prototype states.
    Last year alone, the DDSs allowed over 92,000 claimants at 
the reconsideration step, an invaluable service.
    SSA and the DDSs have a long history of accomplishment 
working together to provide high quality service and careful 
program stewardship.
    This relationship has never been more important. 
Collaborative strategy is crucial if we are to find ways to 
continue the service on which the American public relies.
    Policy changes and technology tools can further improve 
program efficiency and consistency, but the foundation must be 
adequate in funding and highly trained staff.
    On behalf of NCDDD, thank you again for the opportunity to 
provide this testimony, and I would be happy to answer any 
questions you have.
    [The prepared statement of Ms. Lyon-Hart follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, ma'am.
    Ms. Ekman, welcome. Please proceed.

  STATEMENT OF LISA D. EKMAN, SENIOR POLICY ADVISOR, HEALTH & 
   DISABILITY ADVOCATES, CHICAGO, ILLINOIS, ON BEHALF OF THE 
CONSORTIUM FOR CITIZENS WITH DISABILITIES SOCIAL SECURITY TASK 
                             FORCE

    Ms. EKMAN. Thank you. Chairman Johnson, Ranking Member 
Becerra, and Members of the Subcommittee, thank you for this 
opportunity to testify at this very important hearing.
    My name is Lisa Ekman. I am a Senior Policy Advisor for 
Health & Disability Advocates. I testify today on behalf of the 
Consortium for Citizens With Disabilities Social Security Task 
Force.
    The Social Security Disability Insurance or SSDI Program, 
provides vital economic security and access to health care for 
individuals whose impairments are so severe that they preclude 
work.
    The importance of SSDI to people with disabilities cannot 
be overstated. I would like to begin by sharing the stories of 
two SSDI beneficiaries with you, and tell you a little about 
the difference of SSDI being in their lives.
    First, there is the story of Angelice P. Angelice was 
diagnosed with Type I Diabetes as a teenager. She went to 
college and she worked for many years.
    Two years ago, when she was 36, she had to be hospitalized 
for diabetes related complications. Angelice spent a long time 
in the hospital, due in part to the fact that she continued to 
work when she should have stopped because it was aggravating 
her diabetes.
    As a last resort, Angelice applied for benefits while she 
was in the hospital. Due to the severity of Angelice's 
diabetes, she was approved for SSDI benefits.
    Angelice came very close to becoming homeless when she 
could not work due to her diabetes. Fortunately, she was able 
to keep her apartment but only because a charity helped support 
her and pay her rent.
    She received a quick decision regarding her eligibility and 
because of SSDI, she was able to keep her home.
    Angelice receives just around the average SSDI benefit of 
just over $1,000 per month. Her rent is $550. Her SSDI allows 
her to live in her home, but she squeaks by. Without SSDI, she 
would be homeless.
    It is with sadness that I tell you that last night, 
Angelice passed away due to diabetes complications, but in the 
two years that she received SSDI, it made a tremendous 
difference in her life.
    There is also the story of Henry H. Henry is in his 60s and 
has severe cardiac problems. He was working in the insurance 
industry for a long time, but was not able to keep his job due 
to his heart condition.
    Henry spent all of his savings and cashed out his 401(k) 
before he applied for SSDI benefits.
    When he filed his application as a last resort, he was 
homeless and living in his car. He lived there for about a 
year.
    Once his SSDI benefits were approved, Henry was able to 
secure housing again and has not been homeless since.
    Given the importance of SSDI to people with disabilities, 
like Angelice and Henry, I want to highlight three key points.
    First, providing the Social Security Administration or SSA 
with an adequate administrative budget is essential to accurate 
and timely initial processing of SSDI claims.
    Second, the current definition of ``disability'' and 
structure of the SSDI program are appropriate and should not be 
changed.
    Third, SSA does a good job of administering the program, 
but improvements could be made.
    First, as has been discussed quite a bit during the 
Commissioner's testimony, SSA requires an adequate 
administrative budget to effectively administer the SSDI 
program and complete initial disability determinations in an 
accurate and timely manner.
    We were pleased to see the progress SSA was able to make 
during Fiscal Years 2008 and 2010 in reducing the time for 
people with disabilities to receive their disability 
determinations.
    Unfortunately, as discussed, SSA has received no increase, 
although debate whether there was a decrease, no increase in 
their funding since 2010, and we are likely to see an increase 
in the processing time for initial disability applications 
because the funding, as discussed, is completely inadequate to 
keep up with SSA's workload.
    Second, because the intent of the SSDI program is wage 
replacement and to provide income support for individuals who 
do not have the capacity to engage in substantial gainful work, 
the current definition of ``disability'' is appropriate.
    The definition is strict, providing benefits only to 
individuals with the most significant impairments.
    However, keep in mind that just because an individual has 
an impairment, it does not mean they will be eligible for 
benefits. Neither Angelice nor Henry would have been eligible 
for benefits if their impairments were less severe and did not 
prevent them from working.
    Third and finally, both SSA and the state disability 
determination services do a good job of administering the SSDI 
program, especially given the resources they have available.
    However, we encourage SSA to make some modest changes to 
ensure that medical evidence is fully developed early in the 
process so that unnecessary delay and unnecessary and costly 
appeals can be avoided.
    Such modest changes include providing more assistance to 
claimants earlier in the process, providing better guidance to 
doctors and other professionals regarding what evidence SSA is 
looking for, and by providing additional and improved training 
to disability evaluators.
    Our written testimony contains additional recommendations.
    Thank you for the opportunity to testify, and I look 
forward to answering any questions you might have.
    [The prepared statement of Ms. Ekman follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, ma'am.
    Dan Bertoni, welcome back.
    Mr. BERTONI. Thank you.
    Chairman JOHNSON. You are recognized.

 STATEMENT OF DAN BERTONI, DIRECTOR, EDUCATION, WORKFORCE AND 
 INCOME SECURITY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. BERTONI. Mr. Chairman, Ranking Member Becerra, Members 
of the Subcommittee, good morning.
    I am pleased to discuss our preliminary findings on the 
Social Security Administration's efforts to modernize its 
disability criteria.
    Last year, SSA paid nearly $170 billion to about 12 million 
beneficiaries and independents, and given the size and cost of 
its programs, the Agency needs current criteria to assess 
whether an applicant's medical condition affects his or her 
ability to work.
    In 2003, we designated SSA's disability programs high risk, 
in part, because its criteria for determining medical 
eligibility did not reflect advances in medicine and 
technology, and its occupational information did not reflect 
changes in the labor market.
    My statement today addresses SSA's most recent efforts to 
update its medical listings and develop its own occupational 
information system, to better reflect the existence of jobs in 
the national economy.
    In summary, the Agency has made several changes to improve 
the timeliness and effectiveness of its medical listings 
updates, such as adopting a two tier system that first includes 
a comprehensive review of all disorders in a body system and 
making appropriate revisions; then, on an ongoing basis, 
conducting subsequent targeted reviews of that body system, 
focusing only on a limited number of conditions.
    To date, the Agency has completed comprehensive reviews for 
eight of 14 body systems, and has moved to the targeted phase.
    In 2010, they also established a five year cycle time for 
updating its listings to ensure more systematic consideration 
of advances in the treatment and evaluation of conditions.
    The Agency also contracted with the Institute of Medicine, 
and has acted on several of their recommendations, such as 
creating a standing committee to review and provide advice on 
the listings.
    However, SSA still faces challenges keeping its listings up 
to date, and has yet to complete comprehensive revisions for 
six body systems, which in many cases, have been ongoing for 
decades.
    Moreover, despite multiple extensions, four body systems 
will expire in 2012, and it is uncertain whether SSA will 
complete the required reviews.
    The Agency has also experienced delays with its targeted 
reviews, and slippage in its plans to conduct post-
implementation evaluations of previously revised listings.
    SSA has noted that challenges in this area are mainly due 
to limitations in the number and expertise of staff needed to 
update the listings, and complexity of the regulatory process.
    As you know, the Agency has begun an ambitious project to 
develop its own occupational inventory database by 2016, which 
will replace an outdated system it currently uses.
    In 2008, SSA took steps to guide the development of this 
occupational information system or OIS, to capture both the 
physical and mental demands of work to better support its 
disability decisions.
    Accordingly, SSA established an advisory panel of external 
experts tasked with making recommendations on developing a 
system, and held initial meetings with outside experts and 
other agencies that collect occupational information to gain 
insight into sampling methods and other challenges.
    Last year, the Agency issued a research and development 
plan detailing activities necessary to complete this phase by 
2016, at a cost of $108 million.
    To date, they have made progress on several fronts, 
including using its own administrative data to identify the 
most frequently cited occupations and functional and vocational 
characteristics of its applicants.
    However, due to staffing constraints, several planned 
initiatives have slipped, and officials know that further time 
line adjustments are likely.
    To offset this challenge, SSA has used consultants with 
specialized expertise and is working with OPM to obtain 
additional staff skilled in industrial organizational 
psychology on a part time basis.
    Finally, in the course of our work, we have identified some 
gaps in SSA's approach, such as insufficient documentation 
supporting SSA's research and development cost estimate, and 
the absence of any information on total cost of the project 
over time.
    We will continue to pursue these and other issues as our 
work progresses, including how SSA is managing the OIS against 
best practices, and ensuring that the project schedule reliably 
estimates key activities and length of time they will take.
    Finally, we plan to review any risk analyses conducted by 
the Agency, as well as mitigation plans to address identified 
risks, including how this complex project will proceed should 
funding be reduced.
    Mr. Chairman, this concludes my statement. I am happy to 
answer any questions you or other Members of the Subcommittee 
may have. Thank you.
    [The prepared statement of Mr. Bertoni follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, sir.
    Dr. Chan, you are recognized, sir.

  STATEMENT OF LEIGHTON CHAN, CHIEF, REHABILITATION MEDICINE 
           DEPARTMENT, NATIONAL INSTITUTES OF HEALTH

    Dr. CHAN. Chairman Johnson, Ranking Member Becerra, and 
Members of the Subcommittee, I am honored to have the 
opportunity to appear before you today to testify about NIH's 
collaboration with the SSA.
    The SSA approached NIH in late 2007 for advice on new 
assessment methods that might inform their disability 
evaluation process. The NIH Clinical Center's Rehab Medicine 
Department agreed to help, and based our work on widely adopted 
contemporary disability concepts.
    Our collaboration has been facilitated by an interagency 
agreement that was initiated in February 2008. I want to note 
this area we are talking about today is just one of many 
factors that SSA takes into account in their statutory role to 
ensure that the Agency's disability evaluation standards 
reflect appropriate medical and vocational information.
    Currently, the SSA disability determination process is 
linked to a claimant's diagnosis or their impairment. However, 
a diagnosis or impairment may no longer be so closely connected 
to an individual's ability to work, as it has been in past 
years.
    The concept of disability has evolved over the last few 
decades, and this evolution has now culminated in an 
international agreement.
    In 2001, the World Health Organization adopted a landmark 
standard called the ``International Classification of 
Functioning Disability and Health,'' or the ICF.
    The ICF has been endorsed by all 191 WHO members, including 
the United States.
    The ICF considers disability to be the result of not only a 
person's diagnosis but also two other very important factors, 
the impact that diagnosis has on their ability to function and 
the environmental demands placed on them in their workplace.
    It is this ICF theoretical construct that really informs 
our collaboration with SSA.
    Our work with the SSA has several components. One of the 
most important projects is the direct attempt to create a 
rapid, reliable, and objective functional assessment tool that 
SSA could use one day in real time.
    To do this, we have engaged colleagues at Boston University 
to help us develop a series of computerized functional 
assessments that utilize something called ``Item Response 
Theory and Computer Adaptive Testing'' or IRT/CAT.
    The scientific evidence validating IRT/CAT instruments has 
been available for decades. If you have recently taken the SAT 
or GRE or LSAT, you have taken an IRT/CAT test.
    The theory is really quite simple. If you want to assess an 
individual's capabilities regarding a single characteristic, 
let's say their ability to lift 300 pounds, and you need to 
know that in one pound increments, well, you could ask 300 
separate questions. That would give you a very precise 
estimate, but it would take some time.
    Item response theory utilizes information gathered in prior 
questions to determine what questions should come next.
    For instance, you might ask that same individual can you 
lift 50 pounds. If the answer to that question is yes, the next 
question might be can you lift 100 pounds. If the answer to 
that is no, the next question might be can you lift 75 pounds, 
and so on.
    By asking five or six questions rather than 300, you can 
determine how much that person thinks they can lift.
    IRT/CAT tests have a significant advantage to the SSA, in 
addition to administering them to claimants, the SSA might also 
apply these same tests to clinicians to obtain their functional 
assessment of the claimant. This information could add an 
important perspective to a person's disability claim.
    Our team is currently in the process of creating two 
initial IRT/CAT instruments. They will assess a claimant's 
interpersonal interaction skills and their mobility.
    These two topics were selected because of the high 
relevance they have to SSA's current applicant pool.
    For these topics, assessment questions have been developed 
and the calibration tests are being completed. We will 
calibrate the tests not only to SSA claimants but also to the 
population as a whole, after which we will put together the 
IRT/CAT instruments themselves.
    An RFP or Request for Proposal is currently posted for the 
development of four additional IRT/CAT instruments that will 
cover all the remaining topics in the ICF related to work 
disability. These topics will likely include self care, 
communication, learning and applying knowledge, and general 
tasks and demands.
    We hope to have much of the initial work for all six IRT/
CAT instruments completed by 2016.
    Mr. Chairman, this completes my prepared remarks. Once 
again, thank you for the opportunity to testify today and 
provide an overview of our work with the SSA. I will be happy 
to answer any questions.
    [The prepared statement of Dr. Chan follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, sir.
    Dr. Maestas, welcome. Please go ahead.

STATEMENT OF NICOLE MAESTAS, SENIOR ECONOMIST, RAND CORPORATION

    Dr. MAESTAS. Thank you, Chairman Johnson and Ranking Member 
Becerra, for this opportunity to testify.
    I will address my comments to the question of consistency 
in the initial disability determination process drawing on 
recent RAND research.
    DDS case examiners are called on to evaluate and weigh many 
aspects of complex cases against extensive medical and 
vocational criteria in a dynamic medical environment.
    They have heavy caseloads, and although they may consult 
with physicians, they are not themselves trained physicians. 
Moreover, as the SSDI caseload has grown, the composition of 
applications has shifted toward impairments with greater 
diagnostic uncertainty.
    Chief among these are musculoskeletal and mental 
impairments, which now comprise 59 percent of all applications.
    Given these factors, some variation in decision outcomes 
across DDS examiners is expected. Nonetheless, it is worth 
trying to minimize the extent of variation as much as possible.
    In our analysis of initial disability determinations 
recorded in SSA's disability operational data store in 2005 and 
2006, we find a notable degree of variation in initial outcomes 
across DDS examiners within the same office.
    This variation cannot be explained by differences in the 
mix of cases they evaluate. We find that after adjustments for 
case mix, one-third of examiners have allowance rates more than 
six percentage points above or below the average allowance rate 
in their DDS, and as many as five percent of examiners have 
allowance rates more than 12 percentage points above or below 
the average.
    As a result, for many applicants, whether they are allowed 
or denied benefits depends upon the examiner to which their 
case is assigned.
    While most examiners have initial allowance rates near the 
average for their DDS office, some do not. This means that most 
applicants would receive the same initial determination if 
their application had been assigned to a different examiner in 
the DDS office, but even so, due to the examiners who are not 
near the average, we estimate that as many as 60 percent of 
applicants could have received a different initial 
determination from at least one other examiner in the DDS 
office, had they been assigned to that examiner instead.
    The magnitude of this measure is driven by the examiners 
who have the lowest and highest allowance rates in a DDS 
office.
    For example, if we remove from our calculations the top and 
bottom one percent of DDS examiners, those with the highest and 
lowest allowance rates, then the percent of applicants whose 
initial decision depends on the examiner they are assigned to 
would fall by half, from 60 percent to 28 percent.
    As you would expect, the appeals process significantly 
dampens the effect of examiner variation. In our administrative 
data, nearly two-thirds of all initial denials are appealed and 
75 percent of these are eventually overturned.
    Once we account for appeals, we estimate that only 23 
percent of applications could have received a different 
ultimate outcome, that is accounting for appeals, had they been 
assigned to a different examiner, and if we again remove the 
highest and lowest examiners in an office, this number falls to 
11 percent.
    These figures illustrate two points. First, although most 
examiners have allowance rates that are near the average for 
their DDS office, many have allowance rates that are notably 
below or above their office average even after adjusting for 
differences in case mix.
    Because an applicant could potentially be assigned to one 
of these examiners, applicants face significant uncertainty as 
to whether their application will be initially allowed or 
denied.
    Improving consistency across examiners would significantly 
reduce this uncertainty about initial outcomes.
    Second, it bears emphasizing that these statistics are not 
estimates of the fraction of applicants who should have been 
denied. Rather, they identify the size and characteristics of 
the group that would be most affected by changes in the 
policies and procedures used in initial disability 
determinations.
    This group disproportionately includes younger claimants, 
claimants with very low earnings histories, and claimants with 
mental impairments.
    At present, the variation in examiner allowance rates and 
the high probability of having an initial denial overturned on 
appeal means it is usually worthwhile for denied applicants and 
their attorneys to pursue appeals.
    The appeals process, as you know, is costly. From the time 
the initial DDS application is filed to the time a final 
determination is made, an applicant may not earn more than 
$1,000 a month in paid employment since this would exceed the 
SGA threshold and result in denial of benefits.
    In our administrative sample of SSDI applicants who 
received decisions, initial decisions, in 2005, the average 
time from SSDI application to final determination exceeded one 
year.
    While those who did not appeal waited an average of only 
four months, those who did appeal waited an average of two 
years before receiving a final determination. That is after 
exhausting all appeals.
    Time spent out of the labor force while seeking benefits 
may have detrimental effects on employability. Indeed, we find 
that longer application processing times reduce the employment 
of SSDI applicants in the years after their initial decision.
    Our calculations suggest that the SSDI determination 
process itself reduces the post-application employment of 
denied applicants by an average of 3.6 percentage points in 
years two and three after the initial determination, and 
similarly, reduces the average employment of allowed applicants 
by five percentage points.
    In sum, by reducing the variation in initial 
determinations, we would improve the targeting of the SSDI 
program. That is we would increase the chances that people who 
truly qualify receive benefits and reduce the chances that 
those who do not truly qualify receive benefits.
    To the extent the decision thresholds could be better 
aligned between the initial and appellate phases, the share of 
those initially denied applicants who decide to appeal would 
likely decline, and the detrimental effects on future 
employment potential would be reduced.
    Thank you.
    [The prepared statement of Dr. Maestas follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman JOHNSON. Thank you, ma'am. Did you listen to Dr. 
Chan? Did you agree?
    Dr. MAESTAS. I did. I was actually quite excited by what I 
was hearing.
    Chairman JOHNSON. Dr. Chan, you testified about the 
collaboration between Social Security and the National 
Institute of Health and Boston University to develop your 
computer tests.
    Are you saying by taking a test, Social Security can 
credibly assess a claimant's ability to function in a matter of 
minutes?
    Dr. CHAN. I think the techniques and the procedures behind 
IRT/CAT instruments are well validated. They have been utilized 
in educational arenas for quite some time. We have been using 
them in health care for quite some time.
    They are remarkably powerful and insightful tools that can 
be done very, very quickly, particularly in the area of 
functional assessment.
    Chairman JOHNSON. Can people fake them?
    Dr. CHAN. Well, you know, our job really was to look at 
functional assessment, to determine a technique for functional 
assessment. Clearly, there is no functional assessment tool 
that would be completely immune to gaming.
    On the other hand, there are, I think, several aspects to 
IRT/CAT that are really beneficial in this area.
    The first would be that the IRT/CAT instruments themselves 
are comprised of dozens if not hundreds of questions that would 
be very difficult to memorize, and indeed, very difficult to 
figure out the order those questions might come in.
    Second, we could also give the same assessment tools to the 
claimant's clinicians, and that would provide very interesting 
information, and I think useful for SSA in validating certain 
things.
    In addition, we would be applying these tests to millions 
of individuals, so we would probably have some really wonderful 
baseline data looking at what a normal response pattern would 
be, so individuals who have aberrant response patterns 
potentially could be identified.
    Chairman JOHNSON. It just takes one person to do the test?
    Dr. CHAN. Yes. Mostly, it would be claimants who would be 
doing the tests, but for those individuals----
    Chairman JOHNSON. I understand that. The person 
administering the test.
    Dr. CHAN. Oh, on the testing side. In general, these are 
computer administered tests.
    Chairman JOHNSON. One person can do them?
    Dr. CHAN. Yes, a person could do it by himself, if that is 
what you are asking.
    Chairman JOHNSON. Do they have to be trained?
    Dr. CHAN. We sort of tailor these tests so they are at a 
relatively low and easy level. Obviously, we need to do that so 
that a broad range of individuals----
    Chairman JOHNSON. That is the kind of test we need up here.
    [Laughter.]
    Chairman JOHNSON. Do you agree with that, Doctor?
    Dr. MAESTAS. I think this sounds quite promising.
    Chairman JOHNSON. Thank you. Mr. Becerra, you are 
recognized.
    Mr. BECERRA. Thank you, Mr. Chairman. I cannot get quite as 
excited on the numbers, but it sounds like the two of you put a 
great deal of numbers in, and I am glad it raises your blood 
pressure a bit to see we might have some opportunities.
    I do think as you say, quite promising, Dr. Maestas, that 
we might have other ways to try to validate the process.
    What I take from what every one of you have said is this 
ain't easy to do. In many cases, you are making judgments 
because you are looking at folks who are maybe right on the 
edge, could they work, and not just in their current 
occupation, but in some capacity whatsoever, and it is 
sometimes not an easy call to make.
    What we are trying to do is make the system as efficient 
and standardized as possible, so that way when folks have to 
make the decision, they are not guessing. They should be 
collecting the information as early as possible to try to help 
these determiners, those who make the determinations, to have 
all the information and evidence they need.
    Certainly, we have to make sure that we continue to push 
the SSA to have the tools in place that let them effectively 
make those judgments. We are talking life and death, as I think 
Ms. Ekman made clear, in most cases.
    I am troubled that what we are hearing is SSA is having to 
try to do all of this with less and less money.
    Ms. Lyon-Hart, you mentioned SSA is already struggling. You 
have already seen a number of these folks who make 
determinations gone.
    Have you been losing folks with little experience or lots 
of experience?
    Ms. LYON-HART. It is a mix. Just as the baby boomers are 
getting more disabled, they are also leaving our offices. I 
would say it is probably heavy on the--I do not know the exact 
numbers, I can get them for you probably with some polling of 
my members, but what I hear is they are losing experienced 
examiners.
    Mr. BECERRA. It is not as if when you do a hire, you 
automatically compensate for the loss of that seasoned 
examiner.
    Ms. LYON-HART. Correct.
    Mr. BECERRA. This worries me because we were making 
progress. We were getting the wait time down, the backlog down.
    I believe, Ms. Lyon-Hart, you also mentioned that the 
longer a case sits, the greater the chance we are going to make 
some mistakes with it, or it is going to become more difficult 
to adjudicate.
    Ms. LYON-HART. It was not me that testified we would make 
more mistakes, but it definitely takes longer. You end up 
refreshing the medical evidence and getting more information. 
It becomes more complicated the longer it sits.
    Mr. BECERRA. What I take from everything you are saying is 
that we have to continue to find the tools to let us make these 
assessments, to try to avoid the outlier decisions, whether in 
denial or granting the benefits, so that we have more 
consistency, but at the same time, do not tie the Social 
Security Administration's hands behind its back as it is trying 
to move forward with an increasing caseload of individuals who 
are filing for claims.
    We want to make sure that those who deserve it get it, and 
at the same time, we want to make sure that those who do not 
deserve it do not clog the system for those who are waiting to 
get the benefits they have earned.
    Ms. Ekman, you brought up some real cases. I think it is 
important to know that we are talking about real people who are 
affected, who paid into the system, who are now applying for 
those benefits that they worked to have.
    What is your sense out there in the community of folks who 
are on the verge of securing these disability benefits or 
believing they may be on the verge of having to apply for these 
disability benefits?
    Is there some concern about where we may head in the 
future?
    Ms. EKMAN. Thank you for the question, Congressman Becerra. 
I am not sure for the people who are going to be applying for 
benefits, that is a concern. They are concerned about how do I 
pay my rent, how do I get my medication.
    Mr. BECERRA. Good point.
    Ms. EKMAN. I think for advocates, there is a huge concern 
that the longer the Social Security Administration and the 
state DDSs remain under funded, the worse the conditions will 
get. The longer people will have to wait.
    It is not an overstatement to say that people die while 
they are waiting for a disability determination.
    There is definitely a sense that we need to provide 
adequate resources to SSA and the DDSs to ensure that they can 
make accurate and timely decisions so that people who 
desperately need the benefits can get them.
    Mr. BECERRA. One final question. I know the Social Security 
Administration in an effort to try to concentrate the resources 
it has on those services that are most important had to make 
other decisions which are tough.
    They are closing offices at earlier hours. They are less 
able to respond to people who are applying for retirement 
benefits so they can deal with those seeking disability 
benefits.
    Ms. Lyon-Hart, do you think at some point it is going to 
become very obvious to the average American who is getting 
ready to apply for his or her Social Security benefits that 
there is a problem with Social Security because its budget is 
being so short changed?
    Ms. LYON-HART. I do think it will be obvious if it is not 
already.
    Mr. BECERRA. Thank you. I thank you all for your testimony. 
I hope that research can produce some real results sooner than 
later so we can apply those.
    Mr. Chairman, I thank you for bringing these witnesses.
    Chairman JOHNSON. Thank you. Mr. Berg, you are recognized.
    Mr. BERG. Thank you, Mr. Chairman.
    I just have one question. Dr. Maestas, when someone is 
seeking disability insurance, it takes a long period of time. 
There is a detrimental effect on their skills during this 
period, and their ability to be employed.
    My question is if you could tell us a little bit more about 
these findings in your research that looks at that, and also 
what is it we can do about that.
    Dr. MAESTAS. It has been known for some time that many SSDI 
recipients have some employment potential. We are not talking 
about full time employment potential at the level of their pre-
disability earnings necessarily, but those effects are rather 
large.
    For example, we estimate that had many beneficiaries, and 
these are the relatively healthy of the disabled beneficiaries, 
had they not received benefits, their employment rate could 
increase by as much as 28 percentage points.
    Again, not the full time employment capacity. If you look 
at annual earnings, it is an increase in annual earnings of 
about $3,700.
    For many people, this will not rise above the SGA 
threshold, although for many people, it would.
    What this new research is saying is in addition to these 
effects of benefit receipt on employment potential and 
employment capacity, there are additional effects coming from 
the process itself that keeps people waiting.
    We have been able to disentangle these two components to 
get an estimate of the decay in employability that arises with 
every month that somebody waits for a final decision.
    The problem is not the initial decisions, per se. Those 
occur relatively quickly. The problem is when someone gets a 
denial, and of course, most people do get a denial from the 
initial determination process, they go on to appeal.
    The appeals process takes them into this waiting game that 
goes on a very long time. If they are denied at the ALJ level, 
many of them go on to pursue appeals at higher levels.
    It is well known in economics that as people stay out of 
the labor force, and of course, these people have to stay out 
of the labor force while they are pursuing an appeal because 
otherwise, they would be denied, employability declines. Skills 
depreciate. Employment networks erode. Investments in the 
latest information and technologies are not made.
    Mr. BERG. What do we do about it? What is the solution?
    Dr. MAESTAS. It is a hard problem, admittedly. We have to 
shorten processing times. We have to shorten waiting times.
    It is not only about--the Administration has made good 
attempts in this area to actually shorten times by reducing 
backlogs and the like.
    Part of the problem, what I would like to draw attention to 
here, is that too many people perceive that an appeal is 
worthwhile.
    If we could better align the decision thresholds that are 
used in the initial phase and the appellate phase, then we 
would not have a system where everybody believes they need to 
appeal to get the right decision outcome.
    Mr. BERG. We tend to have an automatic appeal when there is 
a denial.
    Dr. MAESTAS. Exactly.
    Mr. BERG. Which extends that period, extends that cost. 
Obviously, when someone is out of the workforce, it is hard for 
them to get back in, regardless of what the outcome is at the 
end of the appeal process.
    Dr. MAESTAS. The rules, of course, do require a five month 
waiting period.
    Mr. BERG. Thank you. Thank you, Mr. Chairman. I will yield 
back.
    Chairman JOHNSON. Thank you. Mr. Marchant?
    Mr. MARCHANT. Thank you, Mr. Chairman.
    I have a couple of process questions. We talked a lot today 
about baby boomers and they are entering the system as disabled 
beneficiaries.
    Once a person reaches the threshold of age 62 and they have 
the ability to go on early retirement, what is the process a 
person would go through once they have reached that threshold 
but they do not want to take early retirement, but then they 
apply for Social Security disability?
    Then they are denied initially, and then they are given a 
waiting period that might take them past the time whereby they 
would enter the system at age 65 in full retirement.
    How are you handling people that are entering with those 
kinds of problems? I am not sure who to direct that question 
to, but perhaps somebody that has some every day experience.
    Ms. LYON-HART. Actually, I am just going to speak up to say 
that I am probably not the person. We really need to know from 
Social Security, because that kind of decision happens in the 
field office.
    I do know that you can have sort of a simultaneous early 
retirement and disability applications going at the same time, 
but I cannot tell you exactly how that works.
    Obviously, you would not double dip, but that kind of thing 
simultaneous applications does occur. I would hesitate to 
answer the question.
    Mr. MARCHANT. If the person was 62 years old and they 
applied for total disability and the total disability benefit 
was $1,100 a month, and they were able to receive early Social 
Security benefits, they cannot receive Social Security 
retirement benefits and receive Social Security disability 
benefits as well.
    This whole perception of the system being weighted down and 
broken because of all the baby boomers that are entering the 
system because they are retiring and more and more of them are 
becoming disabled, there seems to be a point at which that 
would flatten out because they would either go into early 
retirement or into permanent retirement. You would not be 
receiving both at the same time, would you?
    Ms. LYON-HART. No, you would not receive both at the same 
time. I misspoke.
    Mr. MARCHANT. Dr. Maestas.
    Dr. MAESTAS. I can speak to that a little bit. They would 
not receive both at the same time, but of course, the early 
retirement benefit is an actuarially reduced benefit, and the 
disability benefit is not.
    They would receive a higher benefit if they are awarded 
disability benefits, and then at their full retirement age, 
they just convert into the regular retirement program, but 
maintaining that higher benefit level.
    Mr. MARCHANT. Are any of these things taken into 
consideration when the initial claim is made? It would be a 
very small cost for a person to have a combination of partial 
disability benefit and an early retirement benefit, and why 
would someone wait one, two or three years and appeal their 
claim if they are going to reach the threshold of retirement 
anyway?
    Yes, ma'am?
    Ms. EKMAN. Thank you, Congressman. A person--as Dr. Maestas 
said, if I am 62 and I go and apply for retirement benefits, I 
am going to receive a reduced benefit. That will happen for as 
long as I receive benefits.
    As an individual, I am entitled to get disability benefits 
until I reach my full retirement age, which I would point out 
is now 66 for people who are retiring now, and will go up to 
67.
    It is a big disadvantage to me in terms of my income if I 
applied for retirement at that point.
    In the SSA evaluation for disability, there is a piece that 
takes age into account, in the vocational guidelines.
    That is considered from that perspective when someone comes 
in and applies, but it is up to the individual to decide 
whether they want to apply for early retirement or disability, 
and if it is an individual who has a disability, it is in their 
best interest to apply for disability because their benefit 
will be at the higher level, as opposed to reduced for the 
remainder of their life.
    Mr. MARCHANT. Okay. Thank you. Thank you, Mr. Chairman.
    Chairman JOHNSON. You bet. Mr. Becerra, do you have a 
clarification question?
    Mr. BECERRA. Yes. I just wanted to be sure. Dr. Maestas, I 
think during some questioning by Mr. Berg, when you were 
talking about the appeals process, I think you may have 
mentioned there is an automatic appeal.
    There are not any automatic appeals, although a lot of 
claimants ultimately do file for appeal, but there is no 
automatic right to appeal a case to a higher level.
    I just wanted to clarify that. That is the case; correct?
    Dr. MAESTAS. The appeals channel is open to everybody, but 
there is no automatic appeal. They decide themselves whether or 
not to pursue an appeal.
    Mr. BECERRA. Right. In other words, it does not go to 
appeal immediately if the decision is against you. You have to 
actually----
    Dr. MAESTAS. You have to initiate the appeal.
    Mr. BECERRA. Correct.
    Chairman JOHNSON. Their lawyer decides.
    Mr. BECERRA. Ms. Ekman.
    Ms. EKMAN. If I could also just clarify, I do not have the 
exact number in front of me, but will be happy to get that to 
you, but a significant portion of people who are denied at the 
initial level choose not to continue on appeal.
    I think that is an important point, that we are not getting 
100 percent appeals of denials.
    Mr. BECERRA. That is my understanding as well. If you could 
provide those numbers to the Committee, I think that would be 
helpful.
    Dr. MAESTAS. I have those numbers from our data. It is two-
thirds, almost two-thirds, 65 percent that do pursue an appeal 
of the initial denial, as of 2005/2006.
    Chairman JOHNSON. They do appeal?
    Dr. MAESTAS. One-third do not.
    Mr. BECERRA. If you could provide those numbers, that would 
be great.
    Dr. MAESTAS. Those are in my testimony, in the written 
remarks.
    Mr. BECERRA. Thank you. Thank you, Mr. Chairman.
    Chairman JOHNSON. Thank you. Again, I want to thank you all 
for being here and your testimony.
    I look forward to continuing this discussion on ways to 
secure the future of this vital program at our next hearing, 
which will focus on what happens when someone appeals a denied 
claim.
    I want to thank you all again for being here. We appreciate 
it. Great time to see the trees outside. You have perfect 
timing.
    With that, the Subcommittee stands adjourned.
    [Whereupon, at 12:14 p.m., the Subcommittee was adjourned.]
    [Questions for the Record follow:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    [Submissions for the Record follows:]

                            AFGE, Statement 

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              University at Buffalo Law School, Statement

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            NHCHC, Statement

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 
