Social Security Plans New Tests of Disability Pay

Seeking to rein in the costs of a fast-growing entitlement program, the Social Security Administration plans to review the cases of more than 1.4 million Americans receiving disability benefits to determine who should be dropped from the program, officials said Saturday.

To carry out the task, the agency will seek a special $320-million appropriation from Congress that would allow it to review 700,000 disability cases each year for the next two years. The proposal, to be announced by the agency Monday, will be included in the details of President Clinton’s 1997 budget, which are to be unveiled this week.

Social Security officials expect the review to produce a “cessation rate” of 14%--meaning an estimated 196,000 recipients would be declared ineligible for benefits. Currently, 4 million people receive an average of $682 a month under the disability program.

Essentially, the review would examine whether a beneficiary’s medical condition had improved enough to permit a return to work.

Although the agency already conducts some eligibility reviews, the extra funds would allow it to double the rate. Officials estimate that they would save about $3 for every $1 spent on the review process.

The plan is almost certain to be controversial, however.

A similar review by the Reagan administration in the 1980s looked at more than 1.4 million cases. Although about 40% of beneficiaries were dropped from the rolls, nearly half were reinstated through appeals.

That review process produced such a furor that Congress declared a moratorium on it and adopted a policy in 1984 requiring evidence that a beneficiary’s medical condition had improved before benefits could be taken away. Before that, the government had simply been able to decide on its own that a beneficiary was well enough to return to work.

People who receive disability payments under Social Security suffer from mental or physical impairments that make it impossible for them to work at their regular jobs. To qualify for aid, an applicant must produce supporting evidence from a doctor or hospital.

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Mental disorders are the most common form of disability, followed by arthritis, back problems, heart disease, high blood pressure, diabetes and injuries from accidents.

Although Social Security normally reviews cases every three years, it has been so overwhelmed by new applications that it has been unable to fully carry out the policy. Applications rose from 1.5 million in 1988 to 2.7 million in 1994. At one point, the backlog grew so large that applicants had to wait 100 days to learn whether they were deemed eligible for the program.

With that backlog now reduced by recent efforts to focus on new applications, officials hope to turn their attention to reviewing existing cases.

On Saturday, officials sought to reassure beneficiaries fearful of arbitrarily being dropped from the rolls.

“This won’t be like the 1980s under President Reagan, when there were some real horror stories about people losing benefits,” said one official who requested anonymity. “Payments will continue while the case is under review and even after someone is declared ineligible, until a final appeal before an administrative law judge.”

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In carrying out the reviews, the agency plans to examine medical records to determine whether a person’s health has improved. In cases where a beneficiary had not seen a doctor recently, the government would pay for an exam.

People considered permanently and totally disabled, such as those with AIDS, would be excluded from the process.

One of the key goals of the review program is to save money for an agency that now is the biggest federal spender.

Overall, Social Security programs cost $250 billion a year. The disability program, one of the fastest-growing benefit programs in the country, alone carries a price tag of about $36 billion annually.

The biggest segment of Social Security, the retirement fund, is under severe financial pressure. Trustees predict that the fund will be bankrupt by 2029.

If officials can slow the growth of the disability program, some of the money saved could be used to help bail out the retirement fund.

Because of a congressionally imposed cap on domestic spending, the administration cannot spend the $350 million for the case-review program without a special appropriation from Congress.

Although the GOP-controlled Congress might normally look with some skepticism on additional spending, Social Security officials hope the promised net savings will persuade congressional leaders to back the plan.