Statement by Dr. Shirley Charter,
Commissioner of Social Security

March 9, 1995

Now, please, in the order of the witnesses, Dr. Chater, please. Dr. Chater, of course, being the Commissioner of the Social Security Administration; and David Koitz, a Specialist in Retirement and Social Policy, Congressional Research Service of the Library of Congress; and the Honorable Jim Slattery, former colleague of ours in the House, and a very able legislator I worked with personally and enjoyed thoroughly, the Chairman of the Childhood Disability Commission of Washington, DC.

Dr. CRATER, PLEASE. STATEMENT OF HON. SHIRLEY S. CHATER, COMMISSIONER OF SOCIAL SECURITY, WASHINGTON, DC, ACCOMPANIED BY DR. SUSAN DANIELS, ASSOCIATE COMMISSIONER FOR DISABILITY

DR. CRATER. Thank you, Mr. Chairman. May I introduce to you Dr. Susan Daniels, to my left, who is our Associate Commissioner for Disability.

It is a pleasure to be here today. I thought it might be most helpful to you if I simply reviewed the significant disability growth that has occurred, talk a little bit about the reasons for that growth, and t hen share with you some of the measures that we want to pursue to maintain costs and to address this growth. I will, of course, submit to you my full written testimony for the record.

First, let me talk about disability program growth. I want to make it clear now that the administration shares your concern about increases in disability program participation.

You have heard that since 1989 the number of disability beneficiaries for both programs grew 47 percent, from 5.4 million to 7.9 million. In the SSDI program, the growth was 37 percent, but in the SSI disability program the growth was 53 percent. Consequently, the annual benefits grew 72 percent, from $33.8 billion in 1989 to $58 billion in 1994.

Now, we have been working hard to determine some of the causes for the increase. We conducted a number of studies and have concluded that the causes of the increase have to do with economic and demographic trends, as well as some program-specific factors that have been leading contributors to the increasing applications, as well as to the decreasing terminations-the number of people who go off the rolls.

So, first, if I might, I would like to talk about the causes of the increase in applications, and I direct your attention to the chart to my right. The unemployment rate is the single largest factor affecting application rates for the SSDI program. This occurs, for example, when severely impaired workers who were working despite their disabilities lose their job and then apply for benefits.

We saw this factor come into play during the recession of the early 1990s, as you can see from the chart. Similarly then, this recession put more people into poverty, increasing the universe of potential eligibles for the Supplemental Security Income program.

Two demographic factors are significant. First, the baby boom generation is aging and more of its members are reaching that time in their lives when they are increasingly vulnerable to disability.

Second, an increasing proportion of women have worked long enough now to be insured for Social Security disability, and they 19 . are coming on the rolls. We believe that these trends will continue to be a source of program growth in the future.

Now, I also mentioned some program-specific factors that have also stimulated an increase in applications. For example, legislation and court decisions have resulted in changes that have attracted more applications.

The classic example is the 1990 Supreme Court decision in the case of Sullivan v. Zebley, which expanded the number of children eligible for SSI benefits. I would also cite as an example the 1984 Congressional mandate which caused us to revise the criteria for evaluating disability, particularly involving mental impairments.

Now, if I might, let me turn to decreasing terminations, that is, the decreasing number of people who come off the' rolls. At the same time that applications have been increasing, terminations have, indeed, been decreasing.

Some of the reasons are as follows. One, more applications and awards to younger people with mental impairments. Now, why should that make a difference? Well, these people are physically healthier than older recipients and, therefore, they live longer and they stay on the rolls longer.

Second, the increasing number of baby boomers on disability rolls has lowered the average age of disability beneficiaries.

A third reason, is the increase in disability awards to women, who have a greater life expectancy than men and so, of course, they would stay on the rolls longer.

Now, SSA has taken some initiatives to take care of some of the problem. As I said, we are concerned about this growth in disability benefits and we want to, and are, taking some specific actions to address the factors which are under our control.

These are addressed at some length in my written testimony, but I would like to just mention to you two of them now. The first, is CDRs, the continuing disability reviews. On the chart you can see that in 1995 and 1996 we are going to do many more CDRs.

First, we are determined that the only people who receive benefits should be those who meet the legal requirements for receiving them. Toward that end, our proposal to do continuing disability reviews is very much intact.

The Administration's fiscal year 1996 budget includes a request for sufficient funding so that we can increase the number of CDRs, as you see on the chart, to 431,000, which represents a threefold increase over 1994.

A second strategy that I would like to point out to you has to do with our employment strategy. We know that less than one-half of 1 percent of the individuals who receive Social Security disability insurance ever leave the rolls to go back to work, and we want to address this problem. So we are developing a plan that will address current disincentives and will restructure the way we help our beneficiaries return to work.

In conclusion, Mr. Chairman, I want you to know that this Administration shares your concern about the growth and we have, accordingly, launched some initiatives, including the two that I just mentioned to you. I want you to know, too, that I look forward to working with you and your committee on these issues. Of course, I am always pleased to answer your questions.