BOB REISCHAUER, Urban Institute: Let me welcome you all here to the First Tuesday for November. I'm Bob Reischauer, the president of the Urban Institute. And the First Tuesday forums are public forums that we hold monthly, at which we showcase an interesting piece of analysis or research that's going on at the Urban Institute and get individuals with varying perspectives and expertise from the outside to build on what we have done, comment on what we have done, tie what we have done to their worlds and the policy process.
Today we are assembled to discuss some of the issues surrounding the disabled population in America and the efforts that have gone on over the last decade or so to more fully integrate them into the employment and social aspects of American life, as best as can be done. We are releasing today a paper by Dave Wittenburg and Melissa Favreault at the Institute on these topics. It's on our website as well, and I think it's in your packet, and we look forward to your comments and analysis of what we have done. We always appreciate feedback on the research that goes on here at the Institute.
I am going to introduce the panel that we have here in the order that they will speak and then turn things over to the moderator.
First is Dave Wittenburg, who is a senior research associate here at the Urban Institute, an economist by training who has worked for the last few years on issues related to the Social Security Administration's disability programs and employment of individuals with disabilities. He also has done work on other safety net programs: welfare, food stamps, unemployment insurance, and so on.
Dave will be followed by another Dave: Dave Stapleton, another economist and the director of the Cornell Center for Policy Research in Washington. For the past three decades, Dave has been studying/analyzing programs for people with disabilities and the relationship of these programs to employment and economic independence. He is the co-director of the Cornell Research Rehabilitation and Training Center on Policy Research for Employment of People With Disabilities, and he is co-editor with Richard Burkhauser of "The Decline in Employment of People With Disabilities: A Policy Puzzle."
Following Dave, we have Mark Nadel, who is associate commissioner of the Office of Disability and Income Assistance Policy at the Social Security Administration. Mark is responsible for providing policy analysis of disability insurance and SSI programs in SSA. He previously spent many years at the General Accounting Office, where he worked on welfare reform, child welfare issues, public health, and health insurance issues. Mark is a political scientist.
Last but not least, we have Sue Suter, who has been a leader in this area for many years and held many important positions, including president of the Center for International Rehabilitation and deputy director of the U.S. Department of Health and Human Services' Office of Disability, and the commissioner of the Department of Education's Rehab Services Administration, and last but not least president of the World Institute on Disability. She is a clinical psychologist by training.
We're extremely fortunate to have as a moderator for today's discussion Dick Thornburgh, who is a member of the Urban Institute board, although that's probably not the first thing that comes to mind when people mention Dick Thornburgh's name. He was of course governor of Pennsylvania for two terms, I believe the first Republican in history—maybe the only Republican in history—to serve two terms in the state of Pennsylvania. He was undersecretary of the United Nations early in the 1990s, but also was, as all you know, attorney general for the U.S., and in that role he was very influential in getting enacted the Americans With Disabilities Act. He also has had a long interest and concern about issues of disability and has served as the vice chairman of the World Committee on Disability and as the vice president in... well, excuse me.
And I should also mention that we're very fortunate to have in the audience Ginny Thornburgh, who also has had a long and serious interest in these issues, and hope she will speak up during the question and answer period.
With that, let me turn it over to you, Dick.
DICK THORNBURGH, Kirpatrick and Lockhart: Thank you, Bob, very much. I appreciate the chance to be here today. Bob, in introducing this panel, said that he had assembled a group with varying perspectives and expertise. Your moderator is very long on perspective and very short on expertise, and therefore, like a lot of you who are here, I am more curious to hear this discussion and draw some conclusions from the true experts that we have here than anything else. My perspective results from being a parent of a son with a disability and an advocate for persons with disabilities over the last 30 or 40 years, and as Bob mentioned, having the great and good fortune to be attorney general of the United States during the time that my President Bush was pushing for the passage of the ADA.
I think it is somewhat disturbing to those of us who championed the ADA and have pursued its goals in the intervening now 13 years plus to have seen an effort that was based in an effort—a goal of empowering people with disability—questioned in terms of possible unintended results. I remember having to sell the ADA to some skeptical members of the Congress during its path to passage as being a different kind of civil rights bill, one that did not rely upon quotas or set asides or preferences, but was indeed designed to empower people with disability to participate in the mainstream of American life in many regards. And I think the paradox is that we are now being at least summoned to consider the possibility that the ADA and certain of its provisions have proved to be counterproductive in empowering people in the workplace.
Surely, the figures with regard to employment opportunities for people with disabilities since the passage of the ADA are discouraging. The National Organization on Disability Harris Poll in the year 2000 showed that only 32 percent of persons of disability of working age and non-institutionalized were in the workforce. It also showed that the other 68 percent that was not in the workforce—fully three-quarters of them would prefer to be in the workforce, and this raises some of the profound questions that will be dealt with by our experts today.
I think I am at least skeptical of the motion that by removing the anti-discrimination requirements and the requirements for accommodation in the workplace from the demands of the ADA, we will improve the lot of people with disabilities and their opportunities to engage in a meaningful way in our economy. Nonetheless, I am only skeptical, and I will listen with great interest to the observations made by our true experts today as they examine this phenomenon. I'm particularly interested, I might as well warn my panel of experts here, in having them flesh out for us a little bit some of what has been called for in the material prepared for today's program as radical changes, other than gutting the ADA, and also to flesh out a little bit more fully for us the notion of temporary options that might be available to ease the quandary that we find ourselves in.
You will hear very little from me henceforth, only to act as a traffic cop and impresario to move this discussion along. And I want to thank you all for your interest, obvious interest, in being here today, and we will move right into our program. Our leadoff hitter is Dave Wittenburg of the Urban Institute, who will give us an overview of public policy toward people with disabilities, and we will move right along. David?
DAVID WITTENBURG, Urban Institute: Thank you very much for that introduction, and I just want to begin by saying that I think this is an enormously exciting opportunity to talk about disability policy issues with a very broad policy audience.
I have generally found, in news outlets and at research conferences, other programs such as Temporary Assistance for Needy Families (TANF) and food stamps tend to get far more publicity in serving low-income adult populations than disability programs. As an economist, this is a very interesting phenomenon given the amount of money we spend on the two major Social Security disability programs, which include Supplemental Security Income (SSI) and Disability Insurance (DI) —the expenditures on those programs are more than double the amount spent on TANF and food stamps combined. Further, when you take a look at the caseloads for other programs, you have seen that the caseloads have either leveled off or have been dropping in recent years, while when you look at the Social Security disability programs, you have seen a fairly steady increase over the past several decades. When you add in the fact that Medicaid and Medicare, which are linked to SSI and DI participation, as well as other specialized systems that are linked to Social Security Disability Program participation, it seems like you have got a very, very interesting public policy problem. Yet when it comes to disability programs, we often think of them as separate, and a key question is why are we thinking of these programs as a separate component of the safety net? And I think part of the issue is, at least when these programs were set up, policymakers considered the population of people with disabilities somehow different and separate and deserving of cash support from other low-income populations.
In the paper that Bob Reischauer talked about, entitled "Safety Net or Entangled Web?" which is available in each of your packets, Melissa Favreault and I start looking at these issues and argue that it's time to start thinking about the Social Security disability programs as a major, integral part of our safety net for all low-income adults, particularly given the incidence of health limitations within that population.
As an example, we used data from the Urban Institute's National Survey of America's Families to show that 30 percent of those in the low-income population report some type of work limitation, and another 23 percent report some type of severe mental difficulty. Further, some earlier studies have documented that low-income adults participating in other programs, including TANF as well as general assistance, have moved from these programs in recent decades and on to federal disability programs. So from a public policy perspective, it really is time to bring in Social Security programs as something that's not different and separate from the safety net.
My goal today is to convince you of the magnitude of the issues and the need for a more coordinated approach to disability policy. I'm not going to offer any simple answers because, quite frankly, there aren't any. In fact, some of the answers might be quite costly. Nonetheless, I think there are important gaps to discuss that we need to address in order to improve policy for people with disabilities.
With that said, let me start by talking about what the major programs are. The two major cash disability programs are SSI and DI, which provide $85 billion in cash transfer benefits to approximately 8 million people, adults with disabilities and their families. Both SSI and DI replace lost income due to a disability. The one thing that's particularly important for my discussion, both have the same application process that require an individual to show a complete inability to work to qualify for benefits. SSI is targeted to low-income adults, while DI is a social insurance program similar to the retirement program for workers with disabilities.
Let's talk about the application process for a second. The disability assessments are very, very complex, that SSA needs to make in order to determine whether somebody is eligible for benefits. In general, the wait time for application is three months for an SSI application and even longer for a DI application. Further, the wait time is even longer for many applicants for these programs because many initial applications are rejected and appealed to a higher level. For some, the wait time can last several years and involve expensive litigation.
Once on the rolls, people are likely to participate for a lifetime. One SSA study projected that the average SSI recipient aged 30 years old can expect to participate in SSI for 20 years, and the most likely reason for them leaving the rolls? Death or aging into the elderly portion of the SSI program. Medical reasons prohibit many people from leaving these rolls, though there are some strong work incentives that probably prohibit some from leaving the rolls, which include high implicit marginal tax rates on earnings and a potential loss of health care benefits if earnings exceed a certain threshold.
Other policies. You heard Mr. Thornburgh talk about the Americans With Disabilities Act, and in recent years there has been an important transformation in how policymakers view disability and the importance of incorporating people into the mainstream. And the ADA was the start of that, which was instituted in 1990. The ADA essentially provides civil rights protections and requires employers to provide important accommodations. More importantly, the ADA was a cultural phenomenon that recognized that we need to integrate people with disabilities into the mainstream. It was really a change in the way policymakers and the public started considering disability policy. Other policies have come and gone since the ADA, including the New Freedom Initiative, that have further underscored the importance of promoting employment for the population of people with disabilities.
So what is the key problem that this panel is trying to address? Well, one of the major issues is the SSA application process itself. It essentially sets up a system where—or set a path where a person must make a decision to either follow a disability path or a work path. On the disability path, as soon as you start applying for SSA disability benefits—either SSI or DI—there are no temporary options for cash support, for health care support, or rehabilitation support; it's an all or nothing proposition. Or you can go down the work path without those types of supports, so it's a very difficult choice we're asking people to make. Those with work histories have more choices. They potentially could receive workers' compensation or might be eligible for unemployment insurance. But for low-income adults, the options are particularly limited, especially for those who experienced disability onset during childhood or outside of a job situation.
What is the message we are sending people with disabilities? And this was a question that I asked a group of people with disabilities up in Long Island, what they thought of disability policy. Is it on the one hand the spirit of the ADA that recognizes that people with disabilities not only can but should work, or is it on the other hand kind of the view of our disability safety net, which people have to show an inability to work to qualify for benefits?
I believe that these lead to some important gaps in the safety net, and Melissa Favreault and I detail some of these issues in our paper. But to just briefly go through them, one—first, there is the obvious mixed message. For SSA programs, the emphasis is on inability to work. For ADA, it's on ability to work. Two, there is the lack of temporary options. The current benefit structure of SSA programs creates an all-or-nothing decision: you're in or you're out. Once you apply, it's hard to leave. Three, there's a lack of integration among federal and state disability policy. Disability policy is seldom coordinated with state cash transfer programs or other important services at the state level, including mental health treatment programs and mental retardation and developmental disability programs.
Three factors make these issues particularly pressing and hopefully will stimulate some conversation today. First, SSA programs are expanding at a somewhat alarming rate and are putting pressure on the trust fund as well as the general fund. Second, state budgets, which we constantly read about in the newspaper, are being squeezed, especially by programs that are very valuable to people with disabilities, including Medicaid. And finally, as Dave Stapleton will discuss, employment rates are declining at an alarming rate, which should be a particular concern to those who are interested in promoting independence for people with disabilities.
DICK THORNBURGH, Kirkpatrick and Lockhart: Thank you, Dave. We now turn to Dave Stapleton, who we hope, as advertised, will give us an overview of the employment trends in the disability population.
DAVID STAPLETON, Cornell Center for Policy Research: Sure, happy to do that. As you will see from my talk, I'm a believer in incentives and I'm a little bit concerned now because the Urban Institute has put out candy on the front row to try to get people to move down there early on. (Laughter.) And I noticed they were the last seats to fill up, so now I'm wondering whether incentives really work, which—(laughter)—which makes me think my conclusions are all wrong and I should just throw this away and walk out now. But let me go ahead.
As Bob Reischauer said, the Upjohn Institute has just published a book that Rich Burkhauser and I edited, entitled "The Decline in Employment of People with Disabilities: A Policy Puzzle," and I actually put three copies out there on the table with Urban Institute books, but it's not an Urban Institute book, and if anybody wants to look at it—they're not to take away, but feel free to look. There's also in your packets a paper that we wrote in an Upjohn Institute newsletter which apparently summarizes what's in the book, but also contrasts what happened to people with disabilities in the last decade of the last century to what happened to the single mothers with children—single mothers with children, I guess most single mothers have children—(laughter)—and in terms of their employment and also their program participation.
I owe a lot of acknowledgment to a lot of different people. Let me first say that the research that I'm going to talk about on disability was funded by the National Institute for Disability and Rehabilitation Research through a grant to Cornell University, and also was partially supported by the Social Security Administration. There are actually many people in this room who contributed to the conference volume one way or another, as well as to the welfare research that I'm going to talk about. And I'm going to play fair by not saying anybody's name and not acknowledging anybody because I don't have time to do it.
Let me tell you the quick version of what's in the paper that's in your pamphlet. First of all, the employment rate of single mothers increased remarkably in the 1990s, both absolutely and relative to the rate for married mothers. I think this is probably not news to many people in this room. At the same time, the employment rate of working-age people with disabilities declined very substantially. During the same period, participation in welfare programs for families declined by an astonishingly large amount, but participation in the Social Security Administration's infant support programs for people with disabilities grew very rapidly. The divergent experiences of these two populations during this period are really quite stunning, as we say in the article, and as you can see by looking at the graphics that appear in the article.
Our reading—this is Rich and I... when I say "our," I'm usually referring to the two of us. Our reading of the extensive research on both sets of trends leads us to conclude the following. First, that the divergent experiences of these two groups are largely due to changes in public policy. Second, that employment for people with disabilities will not increase substantially and reliance on income support will not decline unless we institute much more radical changes in disability policy than we have seriously contemplated so far. Third, that the experience of welfare reform is instructive for disability policy, although following welfare reform's lead too closely would be a mistake. So what I will do is briefly summarize what we know from research about these two trends for these two populations, and then close with a few comments about policy.
Considering single mothers first, the research shows that three major factors contributed to employment increases and declines in welfare caseloads. The first is the exceptionally strong economy of the latter half of the 1990s. In fact, the economy was so strong, it's hard to believe that any major group did not benefit in terms of higher and better employment.
The second is welfare reform, and the one that most people think of when they first think about what happened to single women, their employment, and their program participation. Specifically, the implementation of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which is the act that changed Aid to Families with Dependent Children to Temporary Assistance for Needy Families. The new welfare policy embodied for the very first time the expectation that all parents would work to support their children as best they could, reflecting a broader, longer-term social change: increased employment of married mothers.
The new policy imposed work requirements on state programs. It also imposed—and on the people—the participants in those programs... it also imposed a five-year time limit on participation and it replaced a federal-state sharing arrangement with federal block grants to states, which gave states both incentives to encourage work—for example, provide support for work with child care support and things of that nature—as well as the means to do that; that is, they could use the money for those purposes rather than income support if they chose to.
The third factor that contributed to the employment rate increases and program participation decreases for single mothers in the 1993 increase in the Earned Income Tax Credit for low-income families with children. The EITC is in fact available for all low-income workers, but the value of the credit is very small unless the worker has at least one minor child, in which case it is quite substantial for those with the lowest earnings.
The EITC and welfare reform together changed welfare as we know it. They represented a real change in the welfare paradigm for families. They institutionalized work expectations for parents, they made work pay for parents with low skills, and they provided support for work. The strong economy hastened the change, but early evidence indicates that the adverse impact of the weak economy of the last two to three years on these trends has been small relative to the gains of the previous six to seven years.
A final point worth mentioning on welfare reform is that some have argued that the government is spending more to support low-income families now than it did before all these changes occurred, despite the reduction in the TANF rolls. That's largely because of the increased cost of the EITC. At the same time, these same people will point out that the new programs are much more popular than the old with taxpayers and politicians, and the apparent reason for that is their pro-work orientation. We're happier to spend money to help people who are asked to help themselves.
Now let me return to the recent history for working-age people with disabilities, which is dramatically different. The employment rate for working with people with disabilities declines substantially from its peak in the late 1980s throughout the 1990s. This is, in fact, the lone working-age group whose employment did not benefit from the economic expansion, as hard as that is to believe, and despite the Americans with Disabilities Act.
The decline in employment, in fact, has been disputed, and the authors of one of the important papers in our book address this dispute from a methodological perspective. They demonstrate—the main issue here is that it's very difficult to measure who has a disability, and to do that consistently over a long period of time is problematic. But they demonstrate, through careful comparison of multiple data sets and by using multiple definitions of disability, that the employment rate decline is, in fact, real. And if anybody still doubts that it's real, all they need to really look at is what happened to growth in the rolls for the Social Security disability programs in the working-age population. They went up, and in fact one of the pages in the books shows you how they go up in lockstep with the decline in employment.
Other authors in the book examine possible causes of the decline. The findings in some of the chapters appear to rule out several possible factors that you might consider—for instance, change in the demographic composition of the population. As the population got older, you would expect more disability, less work, but in fact even just looking at age groups or sex groups, we see that the decline in employment is pervasive.
There were changes in the nature of work during this period, and some people thought perhaps it was just making it more difficult for people with disabilities to compete. In fact, the best evidence we have on that indicates there may be a little of that, but it's not a big deal. It probably helped some and hurt others.
There was also a lot of reason to think that growth in health care costs with accompanying declines in private insurance coverage might have contributed substantially, but in fact the best research we have on that shows that it probably only had a fairly small role.
All of these factors might have played some role, but at the most they were minor roles. So that leaves us looking for other explanations. One of the authors in the book contends that the decline can be entirely explained by increases in the severity of the medical conditions that people with disabilities have. So that leaves us looking for other explanations.
One of the authors in the book contends that the decline can be entirely explained by increases in the severity of the medical conditions that people with disabilities have. That is that they're more likely to be conditions that cause them to have work limitations than they used to be. But Rich and I are convinced that in fact the analysis behind that conclusion is flawed, and we point this out in the book's conclusion. One chapter in the book reviews evidence that links the decline in the employment rate to people with disabilities to expansions in medical eligibility criteria for Social Security's income support programs, which started in 1984, and also some unintended increases in the value of benefits for workers with the lowest wages, the consequence of SSA's indexing methodology. Both of these changes substantially reduce the incentives to work for significant groups of people with disabilities. In fact, Rich and I find that this evidence is perhaps the most compelling evidence in the book, although it is not definitive. But there is pretty strong evidence that expansion in the Social Security program did in fact contribute to the employment decline.
There are three chapters in the book devoted to the ADA, which of course is a very important issue for us, and one of them presents and defends the findings of the researchers who claim to have demonstrated that the ADA is in fact the singular cause of the decline in the employment of people with disabilities. The argument is that the ADA imposed costs on employers due to both the mandate for reasonable accommodation and an increased risk of litigation after hiring a person with a disability. But that evidence is highly controversial, as discussed in the other two papers.
From a methodological point of view, the evidence is weakened by the fact that it has to rely on pre/post evidence from a period in which many other things, including the economy, were changing rapidly, and of course also including eligibility for Social Security programs. But it's also hard to refute the evidence, and from what we've seen, nobody has successfully said that this evidence is really wrong. Politically, of course, the evidence fingering the ADA for the employment decline is highly charged because some people would use it to support rolling back the civil rights of people with disabilities, specifically their right to work. I think that's a mistake—the wrong conclusion to draw, even if you do believe the ADA is the cause. And we can talk about that later.
But on the merits of the evidence, we have to conclude that the expansion of Social Security's income support programs is the most likely cause of the employment rate decline, although we also have to leave open the possibility that the ADA contributed to the decline. Either way, the most important point—fundamental point—is that the employment declines of people with disabilities during a major economic expansion, and the divergence of their experience from that of single mothers, is induced by changes in public policy. So it seems that if we're going to make progress, we've got to have better public policies.
Well, in fact, several policy changes that are designed to promote employment and economic independence of people with disabilities are currently being implemented under the authority of the Ticket to Work and Work Incentives Improvement Act, the Workforce Investment Act, some other recent legislation, and also the current administration's new Freedom Initiative. It appears to us that these initiatives are in fact similar to past welfare reform efforts that were less than successful, even though some of them have a fair amount of merit. That is, they reflect expansions in employment services, investments in human capital, and modest reductions in some of the work disincentives associated with current programs.
We increasingly think that these changes are not going to be enough. Instead, we are convinced that we need to shift the paradigm of support policies to people with disabilities, as was done for families with children—not exactly in the same way but in a similar fashion in some respects. Right now our policies tell people with disabilities, as Dave Wittenburg indicated, that, we'll give you income and other support, provided that you don't support yourself too much by working. Instead, we need to have policies that tell people with disabilities—although perhaps not all people with disabilities, but at least some of them—we expect you to support yourself through work to a reasonable extent; we'll help you do that if you need help and we will also reward you for working.
Designing such policies without breaking the bank or putting many vulnerable people at risk will be a terribly difficult and controversial task. However, we're convinced that such policies could both improve the lives of people with disabilities and provide them with more economic security than our current programs do today. The current miasma of policies and programs is so expensive and so inefficient that we might be able to achieve these goals without increasing government expenditures at all. But even if expenditures were increased, the experience of welfare reform suggests that a work-oriented policy might be more popular with taxpayers and politicians than our current disability policies are.
Thank you.
DICK THORNBURGH, Kirkpatrick and Lockhart: Thank you.
Let me move next to my immediate right, Mark Nadel, from the Social Security administration, who will discuss emerging policy issues for that administration's disability programs, including recent initiatives discussed by the commissioner.
Mark?
MARK NADEL, Social Security Administration: Thank you. I'm going to talk about three things today: first, the role of Social Security programs in the safety net; secondly, some of the administrative issues that were posed in the Urban Institute paper in the written version, although not discussed this morning by Dave; and third, the role of SSA programs in supporting the employment of persons with disabilities.
First, the role of SSA programs in the safety net. I think as we consider gaps in the safety net, it's very important also to talk about what the current floor is and to recognize the contribution of SSA programs. I'm not here as a cheerleader for SSA by any means, but I think it's important to get a sense of the enormous scope and contribution of the programs.
The DI program provides benefits to over five-and-a-half million disabled workers. This is about 3.5 percent of the working age population. The odds of any one of you at some point collecting disability benefits are not that long. Benefits also go to one-and-a-half million of their dependents. So it's a very important part of the safety net. In terms of SSI, for people with low or no attachment to the labor force, benefits go to about four million working-age adult-disabled adult beneficiaries. And of those numbers, about a million people receive both SSI and DI benefits, which happens when the disability insurance benefit is below the minimum guarantee of the SSI program.
In terms of the degree of the safety net contribution, DI is particularly advantageous to low-income workers, and the typical DI beneficiary is in fact a low- to mid-income worker. For example, for a low-income 50-year-old worker earning about $15,000, the replacement rate is 58 percent. And, as Dave Stapleton pointed out, there are some questions raised about the extent to which that replacement rate itself is an inducement to file for disability. For a mid-income worker, around $33, 000, that age replacement rate is 44 percent. And in terms of high-income workers, that's a fairly negligible number. Their replacement rate is very low, but there are very few of them, actually. Turning to SSI, SSI substantially reduces the poverty gap for that set of individuals that gets it. About two million people currently receiving SSI would be below 50 percent of the poverty threshold without SSI. On average, SSI reduces the poverty gap for working-age recipients by 63 percent.
Well, I said I wasn't going to be a cheerleader for the SSA programs, and I'm not. There certainly are gaps in that safety net and Dave Wittenburg talked about a couple. Let me expand on a couple items.
Disability insurance is the gateway to Medicare for disabled beneficiaries who are under 65, and yet there is a two-year waiting period for Medicare benefits, which is actually longer than two years because that's two years on top of the five-month waiting period that's required for DI benefits from the adjudicated onset of disability. So Medicare is terribly important, but people have to wait a long time for it and a not insignificant number of beneficiaries die before they get it.
A problem with Medicare of course is that Medicare famously does not provide drug benefits, which is a particular problem for persons with disabilities, and this is especially a problem for people with mental illness, which has, over the last couple of decades, been a growing share of the caseload and is now leveling at about 30 percent of the disability rolls.
SSI generally provides categorical eligibility for Medicaid. Ironically, SSI, the welfare program, provides a richer health benefit program than the earned entitlement program, SSDI. First, there is no waiting period for Medicaid eligibility, and second, Medicaid in fact does provide drug benefits. But as Dave Wittenburg pointed out, given the huge budgetary crisis facing the states, Medicaid is—(chuckles)—the federal government isn't a whole lot behind—there is substantial pressure and looming cutbacks in Medicaid, and there is a whole range of particular services and issues for persons with disabilities that are problematic under Medicaid as well.
There are a number of people who are known as dual-eligibles, and you would think they would have the best of both worlds; that is, they're currently eligible for both Medicare and Medicaid. But as a recent national health policy forum paper pointed out, that presents its own set of gaps as well. And I would refer you to that paper for a really excellent analysis of the dual-eligible problem.
Turning now to some of the administrative problems which affect the actual application of the safety net, there are two things that—Dave mentioned one of them, which is delay, and the commissioner has just announced proposed changes in the process to speed it along. One part of that is to really expand the use of presumptive eligibility for easy cases. People who quite clearly meet the standards will actually be, in effect, allowed as soon as they come in the door. Secondly, there's going to be increased use of specialized medical and vocational screening so that when there are sort of unusual or borderline cases that come in to a particular determination service that they may not have seen before, they can refer it—and this will be nationwide—to a centralized unit. There may be one unit in the country that may specialize in traumatic brain injuries, for example. Now, I note that these things are proposed. It will be a ways before they happen. These initiatives will require regulations, and we hope that the agency would have proposed regulations in about a year.
Another problem that is mentioned in Dave's paper that's important is the whole problem of variation. It is often a charge that people have very different odds of getting on the disability rolls, depending on where they live. Even though it's a national program, variation rates across states have changed. This is an important part of thinking about a national safety net. Well, in fact, a study that we have done in the Office of Policy at SSA showed that most variation in fact is accounted for by state level economic and demographic factors. When adjusted for those factors, only two states differed by more than 10 percentage points from the national mean allowance rate, so that while there is some variation, when adjusted by differences in employment rates and so on in the states, it narrows down considerably.
Well, third I'm going to talk about our role in employment. The ultimate economic security of course is work, and it is important to note that people can work and retain benefits even though the marginal tax rate is in fact high. Nonetheless, it is commonplace to say that the record of SSA is quite poor in having people return to work. About one-half of 1 percent of DI beneficiaries leave the rolls for work. Only 7 percent of disabled SSI beneficiaries report any earnings, although that's been steadily increasing. But I think it's important to note there are mitigating circumstances. First, there is substantial heterogeneity in the population of persons with disabilities. We've been talking about persons with disabilities in employment trends as though that's a unified group. It is not. They differ in general and they certainly differ on the rolls. Most people who apply for DI in fact come to us for early retirement due to disability. That's how the program started and that's pretty much the reality of the program today. The average age of which a worker is awarded benefits is 49. Sixty-one percent of those now on the rolls are at least 50 years old. People at that age, sad to say, don't have a realistic prospect of getting a job, particularly given their often low educational attainment. I myself just celebrated a milestone birthday at what the SSA disability regulation so charmingly called "advanced age"—(laughter)—and because of that fact alone—and I don't have a disability—because of that fact alone, I would be very unlikely to be able to get another job of anything at all comparable to what I do now or probably anything else.
Secondly, it's important to reemphasize that the standards of DI insurance are much tighter and restrictive than other disability programs. Sometimes people point to the better role of the private disability insurers in returning people to work. And that's absolutely true, but that's because we get their failures. They have a real cash incentive to get people to work. They do a great job of doing it for people who are both willing and able to return to work. We get the folks who don't pass that screening.
Dave mentioned the tough standards, but let me turn it around. If, for example—we are often criticized by GAO and others for, you know, only one half of 1 percent get off the rolls. Given that a finding of disability requires that someone be unable to perform substantial gainful activity—which means earning only $800 a month for at least 12 months, and the reality of that means pretty much forever—if, let's say, 20 percent of our beneficiaries return to work, you can be sure my former colleagues at GAO would turn around and criticize us for lax and sloppy administration of the disability program because how can you say these people are unable to perform substantial gainful activity when 20 percent of them return to work? This is not to say that persons with disabilities should not work or should not have all the support in terms of returning to work. It is to say that a substantial number of those on the rolls are seeking basically early retirement and are in fact entitled to early retirement, and I think it could be a mistake to make them feel guilty about not working when their personal situations may make that, in fact, impossible. Right to work doesn't mean that people should be compelled to work, given situations of the job market, an increasingly unforgiving job market. But nevertheless, other things are being explored.
I see my time is just about up, but maybe in questions we can talk about the Ticket to Work program, which is now a couple of years underway, and there also are a series of demonstration projects that are exploring early intervention and other paths to employment.
DICK THORNBURGH, Kirkpatrick and Lockhart: Thank you very much, Mark. Our cleanup hitter, if you will, Sue Suter, will give us a personal perspective on how employment and program participation issues have been changing over the recent years. And that will set us up then for our further discussion.
Sue?
SUE SUTER, Suter and Company: Thank you. I could just say "ditto" and save some time. I want to talk a little bit about my experience as a director of a state VR agency, vocational rehabilitation agency, in addition to some of my work on the national level in terms of public policy.
I think it was Dave who first said, what's the message that we're sending out to people with disabilities and also to the general public and to employers? I'm from Illinois, and I had a discussion last spring—our son graduated from school there at the University of Illinois, and when I was there for graduation I talked to a young gentleman who happens to be a wheelchair user, a gentleman who is a quadriplegic, and he had graduated from the U of I in engineering. The U of I is one of the best schools in engineering, undergraduate, in the country. And I asked him what he was going to do with his degree, and he said, well, I've actually been advised by my friends and my colleagues not to get a job because I may lose my health care benefits and my cash assistance. Four-year graduate engineer. That happens all the time.
I think what we've seen today and what we've heard today is that if you have a disability and you happen to live in the United States, the odds are overwhelming that you will live a life of poverty and dependence. What we've heard in terms of the SSI and the SSDI program, in addition to the numbers that we've heard in that program, 40 percent of the families on TANF have a person with a disability in the family; 15 percent of families on TANF have a parent and a child who have a disability. While this is obviously unacceptable for the richest country in the world, it's also failed social, human, and economic policy. When you think about it, it really is pretty simple. When we think about a paycheck, I think we realize that a paycheck is a great equalizer. It tells us where we're going to live, where our kids are going to go school, where we're going to socialize, and how we're going to get around.
I've been asked on the panel today to talk a little bit about the difference from when I was director of the vocational rehabilitation program in Illinois and where we are now. I actually was the director—I have to take responsibility—I was the director of the Illinois vocational rehabilitation program. I was director of the Illinois Department of Public Aid and the child welfare program. So I have been a part—well intentioned —I have been a part of these policies that we now see are leaning to dependence in this tangled web that people can't get out of, even when they want to.
When I was director of the Illinois Department of Rehabilitation Services, a third of our agency did the adjudication for SSI and DI, so we had a third of our staff and our agency and the people we served and we said, you have to prove you can't work—you'll never be able to work and you can't work, and you have to prove that if you want this safety net, if you want health care and some of the supports you need just to live your life day to day. The other two-thirds of the agency we said, people with disabilities can work. We're being discriminated against, we have the same hopes and dreams as everybody else, and we can work.
So this obviously is a very mixed message that still goes on for people with disabilities. We thought that good, short-term rehabilitation programs would be enough. We thought that we just needed to get telethons off the air and change employer attitudes. We thought that a workable service delivery system—that we had a workable service delivery system. We thought this all-or-nothing model worked, and we thought one size fits all, regardless of your disability. As Mark said, we thought all people with disabilities who wanted to work, and we thought by the year 2000—in fact, I gave this speech when I was leaving the agency and the staff were counting up the years to the retirement because they didn't like what I said.
We thought that by the year 2000 we would have an integrated society, that we wouldn't need specialized services for people with disabilities, and we thought that we as, quote, unquote, "professionals" knew best. Well, we were wrong. We now know, as you've heard today, that people with disabilities have more significant disabilities because of the great medical advancements, because of assistive technology, aging parents and baby boomers. We know that we need more intensive and long-term supports to get a job and retain a job. Some people who want to work, in order to work, are going to need supports for the rest of their lives, and that is okay.
In a survey with public and private employers, we found that the most commonly used accommodation is to change coworkers' and supervisors' attitudes. We also found out—Cornell, I think—that this is the most difficult accommodation. We know that too often, families and special education staff think that getting a student on SSI is the ultimate good graduation goal, and that's why early intervention is so important. We know that our national disability policy is so difficult to navigate, even among professionals, we make it impossible for people with disabilities. We need benefits planners, which SSA is providing, to help us. And when an individual who takes the risk of getting a job and their earnings are not correctly reported, they end up having to pay back Social Security in overpayments. Is it any wonder that it's so scary for a person with a disability to take the risk of getting a job: if we go to work we could lose our safety net, including our health care. If the job doesn't work, we have to start the SSI process all over again.
In addition to the engineering student that I talked about that I met last spring, I talked to a woman—one of the actually good programs is a Medicaid buy-in program change in public policy, so that people that work can buy into Medicaid and keep their health care benefits. I talked to a woman who happens to use a wheelchair and is director of a state Medicaid buy-in program. She has not become a participant in the Medicaid buy-in program. She has stayed on her SSI in order to keep her health benefits because she is afraid that the Medicaid buy-in program is just another national demonstration pilot program, it's just a passing fancy, and she doesn't want to take the risk of giving up her SSI and her health care. We've also learned that depending on the disability, and especially people with psychiatric disabilities, psychiatric survivors, some people need episodic supports and episodic work and varied accommodations.
What you've heard today is that we need a radical change in our national public disability policy. We can't tinker around the edges. What we need is "nothing about us without us," and that means people with disabilities and families need to be a part of the design of public policy at the get-go and throughout the whole process. We need a unified and coordinated national policy that makes the risk of taking a job worth it.
I love what Martin Geary says. He says, "The disability is not the risk; the risk is poverty." We need a policy that has long-term services and supports that lead to individual, customized jobs for the long term. We need to get rid of the institutional bias in our Medicaid program, and the Medicaid dollars that we put into institutions we need to put into community services so people can live productive lives in their communities.
I met a gentleman, 35 years old, who was moving from a nursing home into his own apartment with a personal care assistant. Big deal. He's getting a job. I asked him what he liked best about living in his own apartment and he said, "I get to eat what I want to when I want to." So simple for most of us, but so difficult for him.
Thank you.
(Applause.)
DICK THORNBURGH, Kirkpatrick and Lockhart: I fear if we were to adjourn at this point that we would have a level of angst and discouragement among this gathering today that was unparalleled. I don't want to do that, and I think we have some time to entertain questions. Let me asset the moderator's privilege, if you'll allow me, to ask one very basic question.
Let's go back to Sue's college graduate with an engineering degree. And this is a jump—fall, anybody who wants to answer this. Can you give me, off of a clean slate—we're beginning anew to fashion disability employment policy—can you give me a one, two, three, four, et cetera list of what that kind of policy would look like to spare qualified people from having to choose an involvement in cash payment programs rather than seeking a job?
MARK NADEL, Social Security Administration: Universal health insurance is not the only answer, because they have it in Europe, and they still have pretty much the same problems we do. But for a portion of the population, like the bright student that Sue talked about, that would go a long way.
DAVID STAPLETON, Cornell Center for Policy Research: Yeah, I think one of the problems with designing disability policy is the heterogeneity of people with disabilities, and different people need different things. And I think if you think about a group of people who have a medical condition that's clearly not going to improve, that can't be corrected in some way like glasses or something like that, then we need a different policy for those types of people. And that policy provides them some sort of permanent sets of benefits, which have incentives to work in them.
One of those would be medical insurance, and I think a very obvious one. There might be support services that they'd be—that'd be available to them, perhaps provided by providers under a program that's like a Ticket to Work, which Mark didn't get a chance to talk about, but maybe other people will. But I think that kind of a program where, you know, early on people are identified as having a medical condition that's not going to go away, we need to have something in place that they can be assured that the medical care is there, and they can also have—get rewarded for working.
DAVID WITTENBURG, Urban Institute: In response to that, given that we're starting over, I guess the very first thing I would do is make sure we all understand the rules and get a consistent measure or mechanism of what we expect out of people with disabilities. And it seems like there has been a movement towards more integration in the mainstream.
So based on that playing field, just to build off what Dave Stapleton just said, the next thing you've got to recognize is that there's heterogeneity within that population. People have different characteristics. People with multiple skeletal impairments are very different from people with mental impairment characteristics and need very different types of accommodations. And we would need to structure a set of programs that recognizes the heterogeneity within that population, the heterogeneity of impairment characteristics and the need for services, but also the heterogeneity in terms of the length of disability onset.
Disability is a dynamic concept. A lot of impairment characteristics are episodic in nature, so I guess I would start with a basic notion of what we expect from people with disabilities, and then develop a system around a more kind of continuum of disability status.
With that nice, ideal vision put forth, I think you have to throw in the caveat that Mark Nadel mentioned. That system would cost a heck of a lot of money, and there are currently programs in European countries that are modeled after that type of system. So, you know, that's a nice, idealized vision, but there are real costs that we have to measure, and we have to measure those costs against the costs of the current system, which essentially is taking people and putting them on a lifetime of program participation.
DICK THORNBURGH, Kirkpatrick and Lockhart: One point of clarification, and I'll recognize you for questions, and I want to see if I understood this, Mark. You said that 7 percent of SSI recipients presently report earnings, and then I thought you said that that figure has been increasing. That seems at odds with a little bit of the premise of this discussion.
MARK NADEL, Social Security Administration: Yeah, it has been increasing slowly. It's about double what it was 25 years ago, and the answer is I'm not sure why. It may just be better mechanisms to get people to report earnings, better computer matching, and so on. This may be an enforcement issue. We don't really know, I would say.
DICK THORNBURGH, Kirkpatrick and Lockhart: Yes, sir? If you'd identify yourself, and—
ANDY BILYCK, McFadden Associates: I work for Jim McFadden. Jim McFadden has been deaf all his life. He actually employs 85 hearing people. Just to answer your question, I think one of the incentives ought to be to create more Jim McFaddens, however we do that, either through some kind of 8-8 program or whatever, to enable people with disabilities to create their own companies. That's one.
The other thing is Jim McFadden is spending his own money now to help—start out helping the deaf people in an entire developed country. That country happens to be Ukraine. And sometimes, it's good to go abroad to get a perspective. I mean, sitting here it's very depressing to hear all this, and I thought it was depressing in Ukraine. But look what's happening in Ukraine—the deaf—I mean the same things. There's been a decline of employment in people with disabilities, among the deaf and the blind in particular, in Ukraine, but theirs is an easy fix. All you have to do there is empower the factories that they own and operate and have owned and operated for 70 years. So that's one way of looking at it.
Also, in Ukraine, there's an interesting concept that was passed in 1990 about the time the ADA, which called it a 4 percent solution. Every company, foreign or domestic, that has over 25 people employed, must employ 4 percent people with disabilities or pay a fine. The interesting thing is the Coca-Colas of the world, the American companies, actually hire the disabled there at the 4 percent, maybe more. So that's another way of looking at incentives.
The question is, is it possible to do this in the United States?
DICK THORNBURGH, Kirkpatrick and Lockhart: From my experience, let me just drop a footnote there. In other countries is that most employers pay the fine, so that the incentive by establishing quotas is a—(inaudible). Any other comments? Yeah?
SUE SUTER, Suter and Company: I think in terms of the self-employment and small businesses, there is particularly in the developmental disability community programs that look at income assets and that a person doesn't necessarily need a job, but needs some way to generate income in their lives. And this could be for people who happen to have very severe disabilities. They have microboards where they put a team around them. They pick the team. It could be a budget manager, it could be someone to assist them, and they set up their own businesses and generate income. So that is some new thinking that I think is very exciting.
DAVID STAPLETON, Cornell Center for Policy Research: Yeah, just one other comment. I think it's really important that we develop policies that encourage employers to hire people with disabilities, but I would push towards ones that are more positive. And Mark mentioned how well employers actually do at returning people who are disabled to work and employers and their private insurers, and the SSA ends up with the people they aren't successful with. And I think one thing we ought to contemplate is whether we can help those organizations do even better or give them incentives to do better than they do, and I think that is something that'd have to be under consideration. But in general, you know, if there is a problem with the ADA, it imposes costs on employers to hire people with disabilities, and if we're going to rectify that, we've got to figure out ways to make it a more positive experience for employers.
DICK THORNBURGH, Kirkpatrick and Lockhart: I ought to insert one caveat here. I don't want to let Mark get away without giving us a thumbnail assessment of the Ticket to Work program, but consistent with that, I'll recognize other questions. Yes, in the back?
DANIEL DAVIS, National Council on Independent Living: One study that I had seen that might have some relevance to this is something that was done by the National Council on Disabilities Youth Advisory Commission, which actually did a survey among the disabled students. It was sort of looking at barriers, in terms of financial aid at the college level, and I think that one—for example, one recommendation that they had was that a number of students have been intimidated from entering work-study programs, because that goes against their eligibility, even though they actually do not pocket one cent of that money. It goes straight to the school. So I guess my question is can we, by looking at the higher education system and how that relates to Social Security, do some policy adjustments there that would help impact the situation?
DICK THORNBURGH, Kirkpatrick and Lockhart: Any thoughts?
MARK NADEL, Social Security Administration: It's difficult, and—like everything we've said... it's—I feel that's the unfortunate answer, because there's no coordinated approach to dealing with students with disabilities at the higher education level. We don't even know where special education students are going, following their transitions from school. They're potentially going on to programs, but we're finding that a lot of them are falling into the juvenile justice system. I think that this is definitely a very, very important area, and it's in an area where I think college administrators need to be educated on disability issues. But before that, we need to figure out what's going on in high schools with kids before they transition off to college, before we can figure out what the exactly policies are, to pinpoint those incentives for colleges to recruit people with disabilities and to show how people with disabilities will make college campuses a more diverse and unique place.
DICK THORNBURGH, Kirkpatrick and Lockhart: Questions? Yes, sir, in the back?
BENNIE HOWARD, Office of Disability Policy: I have this famous Ticket to Work question. This is for Mr. Nadel, I believe. My office provides technical assistant to disabled people across the nation, and I discovered that most and many of these individuals are trying to find work. They need jobs. They lose—many of them are losing their homes; they can't pay their mortgages. My question to you—I've been following that Ticket to Work program a little bit. How are you getting the word out to the people who are eligible for that program, and how are the people who are eligible responding to this opportunity?
MARK NADEL, Social Security Administration: Let me just give a couple—for those of you who don't know—just a very couple quick words about what the Ticket to Work is. It is basically a consumer choice sort of VR program. Instead of requiring people to go to just a state VR agency, the idea behind the ticket is that people can select their own provider, and the providers for their turn work on an incentive basis. They're really sort of two-payment mechanisms. One, they get a portion of what the person's DI benefits would be if the person gets off the rolls. Then there's a milestone situation where they don't—where the providers don't assume all the risk, but sort of share the risk with SSA. Not surprisingly, almost all the providers have picked the risk-sharing mechanism.
In terms of getting the word out, I think the agency has done everything except perhaps send someone knocking on people's doors to get the word out. I mean, when people apply for benefits, they're told. When they're awarded benefits, they're told. Mailers have gone out. That's not my department, but I know that there was a very serious effort.
Actually I wasn't kind of straining at the leash to talk about the Ticket, because the news there is also not that great. It was a phased implementation, and for those states that have been in there for more than a year, the take-up rate is less than half of 1 percent. The take-up rate—that is people who have their ticket—think of a ticket as a voucher—and actually go to a provider and say, okay, I want to try to go to work. Enroll me in a program. That's not too great.
Now, initially, the ticket was restricted against a class of people called "medical improvement expected;" that is, the people who were most likely to improve and go back to work were excluded from the program. Some of us argued against that in the regulatory process, but initially, we lost. And now it looks like the agency has turned around, and the commissioner very much wants to remove that. It may be that the take-up rate will improve, but right now, there's a long way to go.
DAVID STAPLETON, Cornell Center for Policy Research: I'm actually involved in evaluating the Ticket to Work, as are some other people in the room and maybe have more recent statistics. But the take-up rate is very low. There's no question about that. I think that there are a couple of things to think about, though. One is that actually implementing that program from scratch was a very difficult thing for the Social Security Administration to do. I mean, this—there was no demonstration. There was no pilot. They started with the full program, rolling it out, and now it's been rolled out in about 40-odd states. And it was a tremendously complicated task, even though the program itself seems like a fairly simple concept. So that was—and there were implementation problems, and SSA is addressing those problems, and I think the program is operating better now than it was when it started.
I think the other thing you've got to remember is the economy. We're not blessed—the Ticket was not blessed the way that welfare reform was, and nobody's getting jobs, whether you have a disability or not. And I think it should be no surprise that the program hasn't been extremely successful in getting people to this point into the workforce.
DAVID WITTENBURG, Urban Institute: I just want to add one thing to that, and that's one thing you've got to consider with the Ticket to Work program is the timing is coming after people have gone through this very long application process. They've been on the rolls for a very long [time], so even if you had a wildly successful Ticket to Work, incentives, and everything was set up great, participation would likely still be fairly small, because you're getting people very, very late into the game. And there are some problems with the adequacy of the incentives with the current Ticket program.
PAUL SCHROEDER, American Foundation for the Blind: Let me set out something, and see if a, it's true, and b, what the response might be. It would seem that the employment market, the kinds of—the job market, the jobs themselves have gotten to be more challenging, more multitasking, much more service industry-oriented. And I wonder if a, that's true. Two, are our systems prepared to train people for those kinds of jobs where the tasks are changing frequently, the technology is changing frequently? And number three, what can we do to help employers actually accommodate people in that environment and do straight-up incentives, such as paying employers, providing accommodations to employers directly, things that are somewhat tried in the tax incentive side of things, but maybe more straight-up incentives. Would those have any impact, or have those been looked at to see if there's any impact on increasing employment?
DAVID STAPLETON, Cornell Center for Policy Research: Actually, yeah, one of the papers in the book, and it happens to be one I was the co-author on, addresses that issue. It's very difficult to answer your first question, because we don't have strong historical data on the nature of work and how it's changed, at least within occupations. We know how occupational distributions have changed, but a lot of change goes on within occupations. As best as we can tell, however, the types of changes you've described have been occurring for a very long time, much longer than the decade that we were most interested in. They were occurring in the previous decade, to the extent that we could document them. And during that decade, we didn't see the same type of decline for employment for people with disabilities.
So our conclusion was that the evidence just didn't support the notion that those changes per se were the cause of the employment rate decline that we saw. But that doesn't completely answer your question. I think it's clear that some changes in the nature of work benefit some people with disabilities and hurt others. And the types of changes you were describing with people multitasking and attempting to change what they do more frequently are going to be more difficult for people who find it very difficult to adapt quickly to changes in what they do every day. And I think that probably is a serious problem for a group of people and that we ought to be considering public policies for helping employers do that better, but I haven't seen any discussion of that before, and I don't unfortunately have any great ideas in that area either. But I think it's a good question.
DICK THORNBURGH, Kirkpatrick and Lockhart: We have reached the witching hour, 1:30. I'm sure that our panelists or for those of you who didn't get a chance to answer questions will be glad to remain for a minute or so and try to entertain those.
Let me just close with a couple of observations. One, to me, the compelling nature of accommodating persons with disability in the workforce has always seemed to me to be much more than simply the dollars and cents question. It is the dignity and self-esteem that comes from holding a meaningful job, interacting with coworkers, being removed from that notion of being a closet case or being shut away because of the disability. And that I think is the incentive that ought to drive all of those interested in public policy to come up with some tangible solutions.
And the second is the notion of sharing with the public at large the positive role models of persons who have made the transition and who have now held meaningful jobs. And we all in this room know the examples of those persons, but I'm not sure that that's a phenomenon that's as widely known to the public at large, how people have been able to, despite what others may look to be disabilities that are incapable of overcome, have made that transition into the workforce. And that's the kind of model that ought to inspire all of us interested in this kind of policy, to persevere so we get the job done.
So saying, I want to thank our panelists and thank Bob Reischauer and the Urban Institute for providing this forum. Sorry we didn't get to all of your questions, but I think we had a meaningful discussion, and I hope we leave with a little fire in our eye to see that we can improve this situation, despite some of the dire observations made today.
(Applause.)
(END)
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