This post has been edited to correct an error and to expand on ALJ decisions.
Senators Orrin Hatch (R-UT) and Tom Coburn (R-OK) are worried. They’re all sick and nervous about the Social Security Disability (SSDI) program. According to Senator Coburn, the “growth in this program has been horrendous.” The specific worry which is causing them to have the heebie jeebies is that some people may be using the program, again according to Senator Coburn, as “an extension of unemployment benefits.”
This delusion has caused them to request a meeting with Social Security Administration Inspector-General Patrick O’Carroll, Jr. They reportedly want him to look into why the number of people receiving SSDI benefits has increased and the “morphing of SSDI into long-term unemployment compensation at taxpayer expense.” Their words.
Let’s see if we can calm the Senators’ anxieties just a little bit.
First of all, there is a real problem here, but it one that the Social Security Administration has planning for for many years. The baby boom cohort (those born between 1946 and 1964), some 75 million people, is aging. The number of workers in the baby boom cohort is about half of the entire civilian labor force. The oldest of them (those born between 1946 and 1949) can file for early retirement now. Many have already done so.
The big bulge between 1946 and 1964, which is in blue, is the baby boom cohort. As I just said, they are approaching retirement age now. This is not a secret and never was.
In the early 1980s, a Republican President and a Democratic Congress, realizing that something had to be done, compromised and passed a series of amendments which were designed to guarantee long term solvency of Social Security. Please see my post Cuts To Social Security – It’s Been Done Before for details. I agree that the tone of that post is a little negative. I am beginning to see that the negotiators actually did a pretty good job. One intended effect of those amendments was a huge increase in the trust funds, which was meant to pay for the baby boomers when they retired, or became disabled prior to retirement. The last baby boomer will reach full retirement age (which will be age 67 by that time, under current law) in 2031. The Old Age And Survivors Insurance (OASI) Trust Fund will run out in 2036 or 2037, having served its purpose. Unfortunately, after the trust fund runs out, there will only be enough income coming into Social Security to pay about 75% of benefits due. Action does need to be taken to protect the beneficiaries who will be on the rolls at that time. The sooner Congress and the President take action, the easier it will be. I disagree very strongly with Senate Majority Leader Harry Reid, who said a couple of months ago that now was not the time to try and fix something that won’t happen for twenty-five years. He is wrong. If we wait until the trust fund is nearly or entirely gone, fixing things will be very expensive and will cause immediate and severe pain to a lot of Americans.
As I said, the negotiators did a pretty good job, but it was impossible for them to achieve a perfect result. It was impossible to predict, from the vantage point of 1983, what the economy would be like nearly 30 years later. They had no way to know just how irresponsible President George W. Bush and the Congress, which was under Republican control during the first six years of the Bush presidency, would be. Nor could they have foreseen the near collapse of the US economy and the resulting high and intractable unemployment we have had since then.
About 13.9 million people are unemployed and receiving unemployment benefits. These workers comprise 9.1% of the overall labor force. Neither these unemployed workers nor their non-existent employers are paying any FICA taxes into the trust funds, which forces Social Security to cash in its Treasury securities to a greater degree than the 1983 negotiators planned for. The Treasury Department has to repay Social Security upon demand. This is getting much harder now, because of all the political haggling over the budget deficit and the national debt.
When George W. Bush became president on January 20, 2001, the national debt was about $5.7 trillion. When he left office eight years later, the national debt was $10.6 trillion. Most of this increase was due to four things Bush and the Congress did from 2001 through 2006 – the Bush-Era Tax Cuts, the war in Afghanistan, the war in Iraq, and Medicare Part D. None of these things were paid for; they were just stuck onto the deficit. And they are the gift that keeps on costing. The Bush-Era tax cuts continue to add $370 billion per year to the annual budget deficit. Medicare Part D adds about $150 billion per year. The various wars the US is involved in now add about $120 billion per year. Before the draw-down in Iraq, this amount was higher. Another 2 1/2 years of these costs, the Bush Wall Street bailout, and the Obama Stimulus package, and we arrive at the current national debt of $14.3 trillion.
It is important to point out that the four Social Security trust funds (OASI, DI (Disability Insurance), HI (Health Insurance (Medicare Part A)) and SMI (Supplemental Medical Insurance (Medicare Part B)) together comprise about $2.95 trillion. This money has all been invested in Treasury securities, as the law requires, which, in effect, means it was loaned to the Federal government. This money is already part of the overall national debt. Now that all four programs are paying out more than their income, the government is obligated to repay what it borrowed from the four trust funds. They can do this one of three ways, increasing taxes (either FICA or other taxes), particularly on the rich and on wealthy corporations, cutting benefits, or borrowing other money from somewhere else (which is revenue neutral as far as the national debt is concerned, but not a good thing to do.) The only option that Republicans will consider is cutting benefits, which will do absolutely nothing to reduce the national debt, but will reduce pressure on the government to repay what it has borrowed. This is the real reason for Senator Coburn’s and Senator Hatch’s anxiety. If they can throw some people off SSDI or make it even harder to get SSDI at in the first place, they will be much happier.
But what they are using as basis for their argument is just a variation of Big Lie #3. Their twist on this is that workers who have been unemployed for a long time and whose benefits have run out or are about to are somehow just switching to SSDI. The two programs are entirely different. UIB pays temporary benefits to workers who have become unemployed through no fault of their own. SSDI is only paid to people who meet SSA’s definition of disability, which means they have have a medically determinable physical or mental impairment, which has lasted or is expected to last for at least a year or result in death, and which prevents them from engaging in substantial work.
As I mentioned earlier, the two Senators are concerned about the “horrendous growth” in the number of disability beneficiaries. They are also concerned that the percentage of disability beneficiaries has risen from 13% of the total number of beneficiaries in 2003 to 17% in 2009. We can assuage their anxiety but unfortunately not their hypocrisy or use of Big Lie #3.
Many people in their 40’s, 50’s, and early 60’s begin to develop disabling conditions, which they ignore and keep working. Let’s call them Group A. Others can no longer work, and file for disability. Let’s call them Group B. Both groups are increasing in number as the baby boomers age. This year, boomers range from age 47 through age 65. Roughly half the labor force are baby boomers and the other half are younger. Most people older than the baby boomers have already retired and are collecting their benefits.
When the 1983 Amendments were passed, the negotiators were aware that the number of people in groups A and B would increase in the early 21st century. Between 1983 and 1999, the allocation of FICA taxes between the OASI and DI trust funds fluctuated considerably. Finally, in 2000, the allocation settled at the current rates of OASI at 5.3% and DI at 0.9%. In 1984, the portion allocated to the DI trust fund was 0.5%. With the steady increase in the number of workers in Group B, the number of disability claims has increased. This was anticipated. In a few years, the percentage of the overall beneficiary universe who receive SSDI will begin to decrease as more and more boomers become eligible for and filed for retirement.
The Group A people were not as well anticipated. I would expect that anyone in Group A who lost his job has filed for disability. But filing for SSDI is a long way from being approved. Currently about 65% of initial disability claims are denied. The majority of cases appealed to the first level, reconsideration, and the third level, Appeals Council review, are also denied. At the second level of appeal, a hearing before an Administrative Law Judge (ALJ), about 70% of denials are reversed to allowances. The chart below is based on a 2001 study but the approval/denial ratios are still about the same.
The Senators, in their letter, said they were concerned that some judges were approving appeals at unrealistic rates. They said, “Given the looming collapse of (the Social Security Disability Income program), it is imperative that disability claims are properly examined to ensure that only those who are lawfully entitled to benefits receive them.” Apparently, the triggering factor for the Senators’ letter was a story in The Wall Street Journal about a judge in West Virginia who approves nearly every one of the appeals he hears from people who were first denied disability benefits.
This is a link to a table showing the the denial rate for all 1,413 ALJs who issued decisions from 2005 through 2008. The average denial rate was about 28%, which means that the rate of reversal to an allowance was about 72%. About half of the ALJs exceeded this average reversal rate and about half were under it. Are Social Security’s Administrative Law Judges fair? The table is sortable; see for yourself.
I have sorted the data in deciles, each corresponding to a 10% denial rate. You can see from this table that nearly half of the ALJ’s have denial rates within about 10% of the average denial rate (the actual count from 18% through 37% is 620.)
|Decile Percentage||# ALJ||# Decisions||# Denied|
|0.0 – 9.9%||191||191704||11000|
|10.0 – 19.9%||269||365757||56141|
|20.0 – 29.9%||345||431089||109002|
|30.0 – 39.9%||299||392309||136392|
|40.0 – 49.9%||167||203820||90849|
|50.0 – 59.9%||87||106675||57661|
|60.0 – 69.9%||24||29283||19075|
|70.0 – 79.9%||14||14973||11117|
|80.0 – 89.9%||2||1418||1144|
|90.0 – 100%||4||634||591|
Why the large disparity? One poster on a discussion forum devoted to ALJ improvement put it this way:
The disparity is easily explained. This is a quasi legal inquiry and lawyers/judges view the facts and regulations through their own lens. The biggest example is how one group finds a right to abortion in the Constitution, another doesn’t. Same document, no?
Some lawyers/judges read the regulations more narrowly than others that leads to the disparity. The most egregious fringe elements probably have some other concerns, but generally the lawyer/judge that allows 75% simply views the regulations in a more claimant favorable light (social support), as a matter of legal interpretation, more or less. The 30% allowance attorney/judge has a less claimant favorable interpretation (taxpayer protection and/or greater demand of a work ethic) of the relevant regulations, even assuming the same facts. That is the nature of the law, and when you do 100,000 cases it is just a little more evident.
Like judges everywhere, they work from their interpretation of the law. Another factor is that the ALJ is the only decision maker who actually sees the applicant face to face. Initial claims and reconsideration decision makers, who are state employees who make these disability decisions never see the applicant. They are also bound by what SSA says the law and implementing regulations mean. The ALJs are not. The Appeals Council exists to insure that the ALJ’s decision was legally sound and supported by evidence contained in the case file.
The Senators also commented on the Social Security Administration requirement to do regular reviews to ensure those collecting the payments still deserve them. But the agency’s inspector general estimated that the backlog of Continuing Disability Reviews would reach 1.5 million this year and that more than $1 billion may be paid out to people who don’t deserve the benefits. Of course, both Senators support cutting SSA’s funding and staff to 2008 levels, which will slow everything down, including Continuing Disability Reviews.
Lastly, Senator Coburn had a touching personal anecdote which he included in the letter. He hired a man in his hometown of Muskogee to do some yard work. The man told him that he was collecting Social Security disability payments. What does this prove, anyway? The man did a little casual labor. Unless this is his business, in which he performs significant services and receives substantial compensation, it is completely immaterial. Another point to consider. Coburn doesn’t say what the man’s disability was. It could have been mental, or metabolic, or be a chronic condition. Nothing in what Coburn said about this man indicates that he is receiving SSDI benefits incorrectly. It’s like Ronald Reagan’s welfare queen and her Cadillac.
To close, I will repeat something former Representative Alan Greyson (D-FL) said during the health care debate, changing just a couple of words to fit the current situation.
The Republican Plan For Saving SSDI
1. Don’t become disabled,
2. If you do become disabled…