United We Stand, Divided We Fall

The report was recently published. There is some good news. The Medicare Trust Fund has 2 more years before bankruptcy to 2026 from 2024. This is due to the deceleration in healthcare costs incurred over the last year. The bad news is that Social Security overall will be bankrupt by 2033 requiring a 23% cut in benefits at that point. In addition, the Social Security Disability Trust Fund will be bankrupt by 2016, just 3 years from now. This will require a 27% decrease in benefits. It is imperative that the President and Congress pass legislation to fix these critical problems.

The Governor has proposed the expansion of Medicaid to another 275,000 folks in Ohio starting January 1, 2014. This proposal is supported by healthcare providers, business interests, and others. It is a very appealing proposal as expansion would help many of our fellow residents, it is line with the new healthcare reform proposals, and it would net the state $4 billion dollars over several years. However, we have to do what is right for our state and our country. At the federal level, we have a debt of over $16 billion and a deficit for FY 2013 projected to be $642 billion or 4% of the GDP based upon the latest Congressional Budget Office figures. We cannot, therefore in good conscience, support this expansion of Medicaid and agree with the majority leaders of both legislative bodies in Ohio in their views to oppose this expansion proposal. We would hope other states would follow such an example and Arizona would rescind its expansion legislation.
If and when the Congress and the President get the budget in line and run a surplus, we would be more than glad to consider and support this proposal for Medicaid expansion. Until that is done, all new expenditures at the Federal level should be opposed.
Harry Pukay-Martin

Froma Harrop of the Creators Syndicate wrote an editorial on Social Security Disability scammers that appeared in the Columbus Dispatch on April 26, 2013.  She indicated that ‘over 5 percent of eligible American adults are now receiving disability payments from Social Security. Twenty years ago, it was 3 percent.’  This problem is not just a US problem but is found in many countries throughout the world including Canada and Denmark she noted.  It is just not fair to the rest of us who work everyday despite the aches, pains, and mental distress that we sometimes feel.

We at United We Stand agree.  We also believe it is unfair to those folks who are truly disabled and legitimately receiving Social Security Disability benefits.  When the Social Security Disability Trust  Fund goes broke in 2016, benefits for these legitimate folks will be cut by 25% just as will those benefits for the scammers.  Would it not be better to clean up this program by adding $3 billion to the Social Security Administration budget to review the 8,000,000 claimants over the next 4 years and to insure the Administrative Hearings are attended by an advocate for the taxpayer and the Trust Fund?  Would it not be better to fine the states like Oregon and Washington who are gaming the system and converting their poor from a state responsibility to a Federal responsibility?   Would it not be better to prohibit the paying of consultants a bounty of $2,000 to $3,000 per person that is converted?  The short term savings are enormous and could return the Social Security Disability Trust Fund to solvency almost immediately.  Our estimate of savings by following the steps above are $47 billion out of a $146 billion budget.  When will the Congress and the President act.  We hope soon.

Harry Pukay-Martin

It has been 2 weeks since the Boston Marathon bombings.  I was away visiting my Dad for much of the aftermath of that awful tragedy including the apprehension of the last suspect on Friday.  The resources brought to bear to solve this case were enormous.  They included the FBI, the ATF, and others at the Federal Level.  It occurred to me that these resources may not be available after 2025.  That is when our entire Federal budget will be devoted to 3 programs-Medicare, Medicaid, and Social Security.  Unless we reform these entitlements now in 2013 or 2014, they will crowd out our other national priorities including our need for a strong military, a robust FBI and ATF, and  a stronger surveillance of the many potential bombing suspects.  The President and the Congress understand the problem and its ramifications.  When will they take action.  When will, we the people, demand action from them.

Harry Pukay-Martin

Harry,

I just reviewed the information presented by Chana Joffe-Walt.  It made me so mad I could spit…One quarter of an entire county on disability benefits…How is that possible without a tremendous unethical if not illegal effort by the local medical and county establishment to achieve this?

States hiring firms to move their impoverished citizens from the welfare programs to the Social Security Disability and Medicare Funds and paying these firms $2,000 or $3,000 per person switched…  No wonder the Social Security Disability Fund will be broke by 2016 and the Medicare fund by 2025.

Several big law firms raking in tens of millions of dollars by overwhelming the judges at the appeal Hearings by the Administrative Law Judges for disability cases.  The judges don’t have a chance without an advocate there representing the trust funds and the tax payers.

These physicians, these states, and these lawyers should be ashamed of themselves…but they aren’t.  They are just making money…without concern for the long term stability of the Social Security Disability and Medicare programs.  It is time to add resources to the Social Security Administration so we can defend these programs, the tax payers, and the folks who really need and deserve these programs.  Review every disabled worker on the program over 4 years.  Add lawyers to advocate for the programs and the tax payers at Hearings by the Administrative Law Judges so it is balanced and fair once more.  Put in laws to stop the unethical and illegal behavior by the physicians, the states, and the lawyers who are riding this gravy train. Impose heavy fines and put a few of them in jail.   The others will get the message.

Sam Allen

One of my friends just sent me the link to Chana Joffe-Walt’s observations.  It is at http://apps.npr.org/unfit-for-work/.  You need to review the article to more fully understand the abuse to which the Social Security and Medicare funds are subject.  Not only do we need to review the current 8,000,000 disabled workers on this program over the next 4 years as I suggested on Friday but we also need to shore up the Hearings by the Administrative Law Judges that hear appeals of rejected disability claims.  This is the easiest route to win disability benefits.  In these proceedings, there is no one representing the tax payor-just the claimant or their representative and the judge.   We need to hire lawyers to represent the tax payers to insure a fairer and more reasonable set of decisions made in these proceedings.

Harry Pukay-Martin

Harry,

By your very example of the Social Security disability insurance program contrasted with the market for Long Term Disability Insurance in the US, you show the difference between the two.  The Long Term Disability Insurance market responded to their experience with major increased claims in the physician market by increasing premiums, tightening underwriting, and backing off on coverage limits and other overgenerous policy provisions.  On the other hand, the Social Security disability insurance program did none of the above.  It takes an act of Congress to change the disability rate premiums and none was requested or passed by Congress.  Regulations on coverage limits and overgenerous policy provisions were not changed or tightened.  Finally, underwriting was weakened with the onslaught of the lawyers and others in the vast ‘disability industrial complex’ and the cuts in the numbers of folks in Social Security defending the program.   As you suggested, we need to review each of the 8,000,000  citizens on this program to insure they are still disabled.  It will take an additional $2 billion a year and 4 years to do this but the return and outcome will be substantial and will be well worth the added costs.   It will also move the program back into surplus from the deficit position it will be in by 2016.

Sam Allen

After a good night’s sleep, I remembered that the private market for physician long term disability insurance changed dramatically in the 1990’s.  The physicians before the 1990’s were considered the best risk in this marketplace.  As a consequence, the physicians were rewarded by the insurance companies with low premiums, lax underwriting, and generous policy provisions.   However, during the 1990’s and subsequently,  the number of claims rose dramatically.   Some have suggested it was caused by an attitude change among the physicians.  Others suggested it was a consequence of the  pressures put on the physicians by third party payers (Medicare, Medicaid, Blue Cross-Blue Shield, etc.).  These third parties cut physician reimbursements dramatically, increased their paperwork burden, and subjected physicians to intense audit scrutiny with criminal and civil penalties if found wanting.  As a consequence of the major increase in physician long term disability claims, the physician long term disability marketplace changed radically.  Premiums increased dramatically, underwriting became very intense, and the policy provisions became much less generous.

Was the social security experience the same as the physician experience; i.e., was there a dramatic increase in disability claims starting in the 1990’s?  The social security experience, on the other hand, might have been more linear or it might have accelerated dramatically at other times.   Let’s look at the data from 1960 to 2010 in 5 year intervals.

Graphing the data, there appears to be 2 recent points of acceleration, starting in 1990 to 2000 and then another acceleration starting in 2000 thru 2010.  The data is different than the physician data.  It would be interesting to know from the actuaries of the Social Security Administration if these accelerations were from just the number of claims or a combination of the number of claims and the size of the claims.  I will ask.

Harry Pukay-Martin

Jonah Goldberg had a great editorial April 5, 2013 about the social security disability program.  It appeared in the Columbus Dispatch.   If the British experience is any indication, we have 67% of the folks on social security disability that can still work.  Goldberg indicated that .65% of theUS workforce in 1960 was on disability.  By 2010, it was 5.6% or a 9 fold increase.   Wow!!  Looking at the Office and Management Budget website (omb.gov) and the historical data section, I found the Social Security trust funds with their historical income and expenditures.  It showed that $140 billion was spend on Social Security Disability payments in 2011 and $146 billion payments were estimated for 2012.  This trust fund is projected to go into deficit by 2016…Even if we estimate that only 33% of the folks on social security disability can still work, that generates $47 billion a year in savings and eliminates the deficit in this trust fund.  The Administration is aware of this issue and in its budget for 2013 is requesting an additional $1 billion to examine 650,000 people (see omb.gov, budget tab, social security administration budget).  We at United We Stand (unitedwestandllc.com) agree with the administration’s direction but would request another $2.1 billion to examine 2,000,000 recipients each year.  Even with these added funds, it will take 4 years to get through all the disabled workers.

Just how serious is this ‘vast disability-industrial complex’ so called by correspondent Chana Joffe-Walt and alluded to by Mr. Goldberg in his editorial? It appears quite serious and effective and is composed of many aggressive lawyers and friendly physicians.  One indication of the seriousness of this is a series of quotes about the social security disability program from Attorney Joseph Matthews with Dorothy Matthews Berman in a book I am reading about Social Security, Medicare, and Government Pensions (NOLO 2012).  On page 51, he indicates there are  over 8,000,000 workers on disability.  On page 52, he references a book (NOLO’s Guide to Social Security Disability: Getting and Keeping your Benefits) that guides the worker on how to convince the Social Security Administration that they are disabled.  On page 61, he indicates that ‘age is also taken into consideration. Social Security realizes that it won’t be committing to as great an outlay of money when it grants disability benefits to people nearing retirement age…For this reason, and because it is more difficult for older workers to find new employment…Social Security tends to approve their disability claims more readily than those of younger workers’.  If you factor in the ‘disability freeze’ into the retirement calculations of these disabled workers, by acting generously to the older workers, the Social Security Administration is increasing its outlays later for retirement benefits for these workers.

Harry Pukay-Martin

Harry, you are whistling in the dark.  President Obama blew it when he ignored the Republicans in the fiscal cliff negotiations when the Republicans were prepared to compromise and did.  The President reneged on his end of the bargain.  Now that President Obama is back at the table, it appears the Republicans are blowing it themselves by passing a budget that rips Obamacare from the budget.  That will never pass in the Senate.  Even if it did, the President would veto it.  Such utter nonsense.

When are we going to get two Republicans and two Democrats (1 each from the House and Senate) and Jacob Lew to sit down and put a grand bargain together with an up or down vote in each house?  They could use the revised Simpson Bowles proposal or the United We Stand proposal as the starting point.  As Governor Christie indicated, don’t let them out of the room until they have agreed on a plan.

Sam Allen