Lex Luthor: Villain Behind Rise In Social Security Disability?

There has been much discussion recently about the rising number of people on Social Security disability benefits. In fact, just last week, the Senate had a hearing on the matter.

Right now, the hunt is on to find the “bad guy” in the story -- the villain who is making it too easy for people to get benefits.

This effort has even led Carrie Lukas of the National Review Online to align herself with the views of a government employees union. Realistically, fixing a program that’s been around for over 60 years is possible, but involves more than tracking down its would-be Lex Luthor.

The September 13 Senate hearing raised some interesting issues, but because the witnesses all were employees of the Social Security Administration, their responses were limited. I am under no such constraints.

Could the Social Security Administration change its rules to make it tougher to get benefits? Yes, but it’s reluctant to do so for fear of blowback from Congress and disability rights organizations. Back in the early 1980s, David Stockman, President Ronald Reagan’s budget director, ordered an increase in audits of people on Social Security disability benefits.

The public reaction to this was so negative and fierce the agency did a 180-degree turn and loosened its eligibility rules. (Remember, this was during the Reagan administration.) One of the major “blowbackers” from that time was Senator Carl Levin, who, incidentally, is still in the Senate and chaired last week’s hearing.

Currently, Social Security’s eligibility rules grant extra points to those over 50, more points to those over 55 and even more to those over 60. The rationale is that once a person is over 50, it’s harder for them to find a job. The 50-year-old breakpoint is a leftover from the days when disability benefits applied only to workers aged 50 or over.

However, in 1960, this limitation was removed by Congress during the Eisenhower administration, and it opened eligibility to workers of all ages. Given the agency’s considerable blowback fears (see the paragraph above), raising the breakpoint age may require Congressional action.

Another unspoken issue regarding the rise of Social Security disability recipients concerns the millions of illegal immigrants whose status was “regularized” by the 1986 Simpson-Mazzoli Act, signed by Reagan. Many of the 2.8 million immigrants involved were low-skilled and had little education; it’s a population that commonly suffers from muscular-skeletal problems at older ages. Additionally, upon turning 50, they would be eligible for those “extra points” discussed above.

Simpson-Mazzoli granted legal residence status to those who could prove they had lived in the United States continuously since or before January 1, 1982, or had worked for at least 90 days as an agricultural laborer between May 1, 1985 and May 1, 1986. If you do the math, you’ll see that someone who was 20 years old in 1982 would be aged 50 today -- and a likely a prime candidate for disability benefits. Likewise, someone who was 24 years old in 1986 and had met the 90-day test for agricultural workers would be 50 years old now.

Compounding matters, as we can presume that much of this population is low-income, Simpson-Mazzoli may also account for part of the uptick in Supplemental Security Income, or SSI, applications.

Furthermore, a law passed in 2004 -- during the Republican trifecta of the House/Senate/White House -- allowed immigrants who had been issued Social Security numbers prior to January 1, 2004 (including the Simpson-Mazzoli group) to have their earnings count toward Social Security disability benefits, even if the immigrant was working illegally, meaning, without a work authorization, under a fake Social Security number, etc.

During the hearing, one senator said it was wrong that people had to get representation before the Social Security Administration because the disability eligibility requirements were so complex. But if Congress is seeking a villain in this area, it can begin by just picking up a mirror.

Over the past 60 years, Congress has made numerous changes to the Social Security disability law. Add countless court decisions (some of which conflict across appeals circuits), and it’s no wonder people seek professional help to navigate the system.

The idea that people should be able to file a claim without assistance runs counter to a Republican initiative that made it easier for people to get representation. The same 2004 law that widened the ability of immigrants to claim disability benefits also started a pilot program to allow certain non-attorneys to represent Social Security claimants, and allow them be paid in the way attorneys usually are, which is to have their fees deducted from Social Security payments. (The pilot program was made permanent in 2010. Amazingly, even Ron Paul, aka “Dr. No,” voted for it.)

Because representatives, attorneys or not, make their living by winning cases, they can say to a would-be client what a Social Security employee cannot: “No chance.” As in, “there’s no chance based on this evidence that you’re going to win.”

Thus, the Social Security clerk who receives a client file from a representative knows the client has already passed the representative’s win-ability test. One might say it is outsourcing the initial screening. Is this having a positive impact on the agency’s ability to process cases and, if so, how much? Again, no one knows.

Another hot topic from the hearing involved the agency’s 1,400 Administrative Law Judges, or ALJs, especially those who appear too lenient in their decision-making. On the surface, the solution seemed to have the agency use statistics to target certain ALJs. But if you listen closely, you’ll hear vague concerns from the witnesses about litigation.

Allow me to put some meat on the bones of those concerns.

Back in 1980, Senator Henry Bellmon, R-Okla., thought some ALJs were too “easy” in granting benefits and sought legislation that would allow the agency to review high-allowance --“easy” -- ALJ decisions. However, language that would have allowed targeting of “easy” ALJs was dropped from the final version of the legislation, while granting the Social Security Administration the ability to review ALJ decisions on a discretionary basis. This is known as “Bellmon reviews.”

In subsequent litigation, a federal court found that Bellmon reviews were acceptable, as long as the agency did not target high-allowance ALJs.

In addition to recognizing that “targeting,” language had been dropped from the legislation, the court also found that by targeting “easy” ALJs, the people who had their cases decided by them had an unacceptable due process burden. Simply put, if Mrs. Jones had her case decided by “easy” ALJ Green, her case would get an extra level of review that would not have occurred if “hard” ALJ Blue had heard her case instead.

Therefore, if Congress wants the Social Security Administration to specifically review decisions by “easy” ALJs, it will have to pass legislation. But the legislation must robustly protect a person’s due process rights or it will fail under litigation.

The Senate hearing raised the issue of having a quality control monitor present at Social Security disability hearings to improve the quality of ALJ decision-making, reduce ALJ errors, etc. If you’ve stuck with me so far, you’ll realize this raises the same issues as in the Bellmon litigation -- no targeting of “easy” ALJs or added due process burdens permitted.

While having a quality control monitor for hearings seems to be an attractive way to control costs, Republicans (and the National Review) failed to consider the price tag involved in hiring a cohort of monitors.

Let’s say that the agency decides to have monitors at 25 percent of all hearings. Since 1,400 ALJs are involved, that works out to 350 quality control personnel. Since these monitors will have to be well versed in Social Security law and regulation -- and have the gravitas to be respected by an ALJ -- he or she will have to be a senior attorney.

The starting salary for such attorneys is about $85,000. Multiply that by 350 and you have minimum added costs of nearly $30 million per year. Of course, those 350 monitors will need supervisors and so forth, resulting in even more personnel costs. The basic cost-effective test, therefore, should be a realistic yes-or-no expectation that the savings resulting from the use of monitors will exceed their costs. As far as I know, no such data exists.

But that’s not all. While ALJs are in the top tier of federal employee pay, about 80 percent of them belong to an AFL-CIO union, which I believe explains its support for the monitor idea. What a great opportunity for the union to increase its membership -- by including the monitors in their ranks. I suspect expanding a government employee union (and capturing more union dues) was not exactly what the National Review and Senate Republicans had in mind when discussing the monitor issue.

I hope you’ve realized by now there are no Lex Luthors lurking about the Social Security Administration who are causing the rolls to swell. There are no easy answers either. Reforms are possible, but only through a great deal of hard work and carefully crafted legislation. Is Congress up to the job? We’ll see.

Joanne Butler is a graduate of the Kennedy School of Government at Harvard University and a former professional Republican staff member at the U.S. House of Representatives Ways and Means Committee.