Insecure Social Security

House Oversight Committee investigating fraud and waste in Social Security program

Social Security checks (AP)
March 15, 2013

Fraud could be a major reason that the number of people enrolled in Social Security Disability Insurance (SSDI) has risen so dramatically over the past 10 years, according to two letters written by the House Oversight and Government Reform Committee.

The number of enrollees in the program grew by almost 60 percent between 2003 and 2012, from 5.58 million to 8.82 million people, the March 11 letter to acting commissioner of the Social Security Administration Carolyn Colvin says. This rate of growth is twice what the previous decade experienced.

The increase is likely not coming from people who actually need the care, the letter contends. Fraudulent enrollment and improper payments are pushing up the numbers.

The letter, signed by Committee Chairman Darrell Issa (R., Calif.) and two subcommittee chairmen, points out "significant management problems that lead to misspending within the program."

The letter says many ineligible people are receiving benefits citing a 2010 Government Accountability Office report.

For example, some people receive SSDI before receiving a Commercial Drivers License, which requires a rigorous physical exam—indicating that they are not disabled. And some people simply lie about their income to receive the benefits, according to the chairmen.

The letter to Colvin also points out structural flaws in the whole SSDI program that make it better to stay on the program than return to work, citing a paper written by MIT economist David Autor.

The SSDI "program is ineffective in assisting the vast majority of workers with less severe disabilities to reach their employment potential or to earn their own way. In fact, the program provides strong incentives to applicants and beneficiaries to remain out of the labor force permanently," Autor writes in his 2011 paper.

Andrew Biggs, a former principal deputy commissioner of the Social Security Administration and a current scholar at the American Enterprise Institute, agreed with Autor’s assessment.

"There is unquestionably a strong disincentive for individuals on disability to return to work, since if they earn more than $1,040 per month they lose their disability benefits entirely. The U.S. doesn’t allow for partial disability, so you’re either disabled or you’re not, despite the many gradations of disability that people suffer from in the real world," he wrote in an email to the Washington Free Beacon.

The second letter from the Oversight Committee, addressed to New York Regional commissioner Beatrice Disman and also sent on March 11, notes where the program’s exposure to fraud is the greatest.

"In recent years, Puerto Rico has emerged as ‘one of the easiest places’ in the country to qualify for and receive benefits through SSDI," the chairmen write, referencing a Wall Street Journal article. New York’s Social Security commissioner oversees the programs in Puerto Rico.

Nine of the top 10 zip codes for people receiving SSDI benefits were in Puerto Rico, the letter notes, while Puerto Rico’s acceptance rate into the program is higher than in any state and the percentage of the working-age population receiving benefits is twice the national average.

"It is unacceptable that taxpayers have been left to pick up the tab for the mismanagement of federal funds and lack of competent government oversight of SSDI in Puerto Rico," the chairmen write.

The program’s growth threatens to bankrupt it.

"The Social Security Board of Trustees and the Congressional Budget Office estimate that, without reform, the SSDI trust fund will be depleted within the next four years," the letter to Colvin states.

The letter to Colvin notes that the Social Security Administration has failed to implement several recommendations from the Office of the Inspector General. The recommendations include conducting disability reviews of both recipients’ medical state and income and seeking criminal prosecutions against fraudsters.

Even when the Social Security Administration agreed with the recommendations, the Office of the Inspector General told the committee that they might not be implementing them, according to the letter.

The federal government overall has forfeited more than $67 billion in potential savings by not implementing the recommendations of the agencies’ inspectors general.

"Disability insurance badly needs reform and there should be places where Republicans and Democrats can work together, but no one seems to want to do the hard work of getting reform done. But we only have a couple years left before disability insurance goes insolvent," Biggs said.

"Since it is difficult and costly to recover money improperly spent, the best way to maximize SSDI program integrity is to prevent misspending in the first place by ensuring that only individuals meeting eligibility criteria are permitted into the program," the chairmen write.

"The truly disabled are the individuals who will be harmed most without program reform."

A Social Security spokeswoman declined to comment on the letters, saying the administration would respond directly to the committee.

However, she pointed to the testimony of Social Security’s chief actuary from Thursday. The actuary testified that while the program is headed toward insolvency, a one-time shift in either program costs or revenue would solve the problem.

The actuary also blamed Social Security’s financial woes primarily on demographic shifts, not on structural problems. The actuary’s testimony makes no mention of fraud.