Chronically Impaired

bout 6.5 million Americans, most of them disabled, get monthly checks from the Social Security Administration through a "safety net" program that both SSA officials and the General Accounting Office consider one of the government's riskiest businesses.

The program, Supplemental Security Income, accounts for less than 7 percent of SSA's outlays but half of its workload and 37 percent of the fraud allegations reported to the inspector general's hot line. Now SSA plans to expand computer systems and increase other SSI spending to reform a program often criticized as a hotbed of waste, fraud and abuse.

Of the $27.4 billion in SSI benefits his agency will dispense this year, SSA Commissioner Kenneth S. Apfel acknowledges that about $1.6 billion will be paid out in error. "We can identify right now about a billion of that," he said in a May interview. "And of that billion, we can collect a chunk of it, but we don't collect all of it back."

Accumulated overpayments over the years add up to almost $4 billion, although SSA has written off $1.8 billion as uncollectible. Those numbers are big enough to make the most jaded Washingtonian sit up and take notice. Then there are the colorful anecdotes like the one about the Georgia family where 181 people spanning four generations had qualified for SSI benefits. For 66 of the cases where benefits were discontinued, including two dozen alleged malingerers, the inspector general said SSI benefits added up to more than $1 million.

It's cases such as the Georgia one that cause members of Congress to call for crackdowns on SSI. Defenders of the program, generally from nonprofit organizations working on behalf of the poor, strike back with criticisms of "government by anecdote," saying there's little hard evidence of the extent of fraud or abuse. But GAO has characterized the program as "high-risk," saying it suffers from "many years of inadequate attention to program integrity issues."

Apfel agrees that fraudulent claims for benefits are a problem. But he says most of the overpayments are the result not of fraud, but of poor information. "Many people translate overpayments into fraud," he says, "and you just absolutely can't do that. Let's just use the example of nursing homes." SSI is intended to provide poor elderly and disabled people with the means to get food and shelter, and people in nursing homes are not eligible for most SSI benefits. They also are supposed to report to SSA when they enter a nursing home.

"We have a sweet little 87-year-old lady," the commissioner continues. "She's getting SSI and goes into a nursing home for a three-month period of time and then maybe gets back out. That individual should not have received SSI while they're in a nursing home. Was that an intentional fraudulent activity?"

Apfel makes it clear he hopes his fictional SSI client isn't prosecuted for fraud, and the rest of his agency seems to share that hope. SSI recipients hardly ever are prosecuted on program-related criminal charges, and the agency even has difficulty demanding repayment in cases like Apfel's example. The money probably has been spent, and there is no hope the client's bank account will be replenished soon.

If Apfel's little old lady is a typical client, her SSI check of $494 a month-74 percent of the federal poverty guideline for an individual-is her only income. "These individuals have little in the way of personal savings or other income," Principal Deputy Commissioner John R. Dyer told Congress in April. "By any measure, SSI recipients are among the poorest of the poor."

An Ounce of Prevention

Sometimes the agency sets up a repayment plan that reduces future payments by $10 or $15 a month to recover excess benefits. It recently began diverting income tax refunds to repay overpayments, and it's asking Congress for new authority to withhold SSI benefits for cheats and to draw on other benefits for repayment.

Because recovering overpayments is so difficult, Apfel is hoping to head off problems from the start by getting better information about SSI clients and getting it faster. Asked about the challenges facing the program, he replies: "How do we do a strong job of determining when the person walks in the door what their income and assets are, and their disability conditions? Then, once they're on the rolls, how do we do a better job on an ongoing basis of determining both income and assets and institutional placements-nursing homes, prisons, etc.?"

The agency's handling of the prisons situation is one SSI success story. SSI has recognized that it can't depend on prisoners to report being incarcerated. Federal law requires prisons and jails to report inmates, but SSA has gone one step further by contacting the institutions and agreeing to pay bounties for inmate population reports that reduce SSI outlays.

"We have cut off benefits to about 200,000 prisoners over the last three years," Apfel brags. "We have one of the best prisoner databases in the country right now." The benefits not paid to prisoners add up to $500 million a year. Apfel's team is hoping to achieve similar success with nursing home inmates. Although SSA eventually learns of most clients' nursing home stays, the agency is working with the Health Care Financing Administration to get the information faster, before the checks are cut.

In fact, automated information gathering is the key to SSA's strategy for improving administration of the SSI program. At press time, Apfel was preparing to release a comprehensive management plan for the program. He says it will rely heavily on data exchanges to supplement clients' reporting of their financial condition, health and employment status. As Dyer told Congress, the old and sick people on SSI-which covers mental disabilities as well as physical ones-may not understand what assets they have or even comprehend the questions the SSA representative is asking.

The agency plans to check on clients' financial transactions, at least in their own regions of the United States, by querying multiple banks for their Social Security numbers. Now SSA is limited to checking with the recipients' banks, as disclosed to the agency when an individual applies for benefits. To expand the sweep for data, SSA will need legislative approval, which it has requested.

"That legislation would have a major impact" on program administration, Apfel says. The agency also plans to obtain workers' compensation data and wage information from the Office of Child Support Enforcement, and it has gotten permission to dip into online records maintained by 20 state agencies for other data matches.

"This is a big, tough and important activity that entails an enormous amount of data cross-matching," Apfel says. "It's a lot of new work for our systems people, working with operations to be able to establish in place the financial transactions and the earnings cross-matches that we need to be able to do." To get it done, he will need more money for computer systems.

The agency also is spending more for disability reviews. The agency is required to reassess the disability status of recipients periodically. It has a backlog of 2 million overdue SSI disability reviews that it is whittling down. Although the agency conducted only 8,517 SSI disability reviews in 1993, it will complete about 400,000 this year and will double that rate to 800,000 in an effort to eliminate the backlog. These reviews more than pay for themselves by eliminating payments to recipients who are no longer eligible.

One strategy Apfel is pursuing involves targeting disability reviews to those recipients whose conditions are most likely to have changed. He gives the example of a profoundly retarded 12-year-old as one case where the recipient's SSI eligibility probably won't change substantially in terms of disability.

Automating these reviews has proved difficult, although the agency has begun mailing forms to doctors for part of the effort. Much of the work is done by state agencies called disability determination services that handle examinations on SSA's behalf. Nonetheless, Apfel says, "this is a labor-intensive activity for our field operations."

Indeed, the whole process of determining eligibility in terms of financial status and disabilities is cumbersome-so much so that it takes an average of 108 days to process a first-time disability benefits application. The SSA representative must probe not only the applicant's own income, assets and health status, but also the income and assets of other members of the applicant's household. Because SSI recipients are extremely poor, their household status and their incomes can vary considerably from month to month.

Bureaucratic Challenge

"Means-testing is inefficient," says Martha Derthick, a University of Virginia professor whose 1990 book, Agency Under Stress, described SSA's difficulty in administering SSI and its other programs. "It's inherently difficult."

Lynn Thompson, a retired Social Security claims representative from Fort Lauderdale, Fla., recently described the claims handling process to the House Ways and Means subcommittee on human resources. Here's a small part of her account:

"If he [the applicant] lives in someone else's household, we must develop what the household expenses are, how many people live in the household, and whether or not he is paying his proportionate share. If not, then his check is reduced by the difference between his share and what he pays. If he lives with someone else who furnishes both food and shelter, his check is reduced by one-third. Because of the instability of the life of many recipients, they may move three or four times in a year. We must determine the correct living arrangement for each new situation. Even if a recipient stays in the same place, people may move into or out of the household, thereby changing the recipient's proportionate share of the expenses. . . . Verification of income and resources on a monthly basis is not only required for each SSI recipient, but also for each person whose income is deemed available for his support."

The notion of keeping track of such detailed information on the households of each of 6.5 million SSI beneficiaries, all to ensure that they get the proper portion of the $494 maximum monthly benefit, is mind-boggling. Administration of the program costs taxpayers almost $2.2 billion. It's unlikely that policy-makers had that in mind in 1972, when SSI was created to replace special programs for blind and disabled elderly people. At that time the maximum monthly benefit was $81.

The program started off modestly enough, but it soon grew at dramatic rates, partly because of laws that extended eligibility. Disabled recipients younger than 65 went from 4.4 million in 1986 to 7.5 million in 1995. And between 1991 and 1996, the number of children receiving SSI doubled to more than a million. Some experts say SSA never got a handle on the program because of the rapid growth. "Disability is always a sleeper issue," says Virginia's Derthick.

Now that growth has leveled off, due in part to enactment of welfare reform legislation in 1996. The 1996 law changed the definition of eligibility for children, narrowing it to eliminate some behavioral problems and some cases of mental retardation. The change will keep off the rolls almost one-third of the children who would have been eligible as new applicants. The impact on already-enrolled children was less severe, but children's advocates quickly rang the alarms when about 135,000 recipients were declared ineligible.

Acknowledging that some of those eliminated from the rolls deserved another review, Apfel ordered reviews of 45,000 cases. He now expects about 35,000 children to win restoration to the SSI rolls.

A similar scenario unfolded with respect to legal immigrants. The 1996 welfare reform law ordered most of them struck from the SSI rolls. A year later Congress reversed itself and restored most of the immigrants before the cutoff took effect. A disproportionate number of elderly SSI recipients are immigrants, because many immigrants did not work long enough under Social Security to be eligible for old-age benefits.

But the congressional action to remove alcoholics and drug abusers from the disability rolls has stuck, eliminating at least 18,000 recipients, by one estimate.

Agency officials say that besides the legislative changes, America's healthy economy and their success in completing more disability reviews have helped keep the rolls from growing much since 1994. Now they are planning to help more of the disabled SSI recipients return to the workforce.

Few recipients now leave the rolls because their earnings have increased, but both the Clinton administration and Congress seem committed to making that happen more often. They are spending more on vocational rehabilitation and looking at the disincentives that discourage recipients from going to work. One disincentive is the loss of medical benefits. SSI recipients automatically receive Medicaid too.

A High Priority

With the number of recipients stabilizing and the systems geared up to reduce the backlog of reviews, SSA officials seem confident they can get a handle on the management issues that have plagued SSI. Apfel insists that "one of my very highest priorities in this agency is to ensure the legitimacy of the SSI program" because of the extent to which SSI clients rely on it.

"I think part of the overall legitimacy of the program comes from effective administration," Apfel adds. It's clear he fears continued congressional attacks on program management eventually could lead to further cutbacks in its scope.

But a few people question whether the way the program is structured is sustainable, even in this era of information systems that will let SSA leave no stone unturned in its search for unreported income and other information that bears on eligibility.

Retiree Thompson, for one, went on to suggest in her congressional testimony: "If SSA could do away with the living arrangements requirement and just pay every
recipient a specified monthly amount from which we subtract other income, it would reduce the workload and eliminate this opportunity for abuse."

Meanwhile, as became apparent during the removal and restoration of children, clients too are baffled by the program's intricacies. "The procedures and eligibility standards are simply too complex for the most vulnerable members of society to navigate alone," Hofstra Law School professor Andrew Schepard wrote recently.

The American Bar Association undertook a special nationwide volunteer project to provide representation to families affected by the changing children's eligibility standards. Julie Justicz, director of the ABA project, complains that SSA has difficulty
applying its own eligibility criteria. As evidence, she points to extremely uneven rates from state to state in the portion of children terminated when the new eligibility rules took effect.

What about reinventing the program and cutting down on the amount of information SSA must obtain? Apfel acknowledges it's been discussed. "There is work going on looking at broader simplification efforts," he says. "But when it comes to things such as family living arrangements and other things, it is hard to find easy, cost-neutral ways to establish a more simplified program.

"Broad-based simplification could have some real potential pains and hurts for some very low-income people, so we need to go very carefully on this one" he continues. "Ultimately we're talking about the sustainability of six and a half million very poor and mostly disabled Americans."

Capitol Hill sources say there's little interest in fundamentally changing SSI among members of Congress, except for those members determined to cut back all welfare programs. "Politically, it would be hard to have a flat benefit," says Eric Kingson, a professor at the Syracuse University School of Social Work, recalling the controversy surrounding "guaranteed income" proposals two decades ago.

Similarly, the Clinton administration's reinvention team seems content with the changes wrought two years ago in the name of welfare reform. "We're still dealing with a needs-based program," Apfel says, and his focus is on fine-tuning that program.

"We in this country tend to be a little suspicious of people who lack incomes," Syracuse's Kingson says. He is not alone in predicting that the nation's largest cash welfare program will remain controversial, no matter how well-administered it is or how vigilant about fraud its managers are.