A HISTORY OF THE SOCIAL SECURITY DISABILITY PROGRAMS

January 1986

The recognition of the hardships created by a worker's loss of earnings due to disability dates back to consideration of the original Social Security Act of 1935. After the establishment of the retirement

insurance program under the 1935 Act, serious thought was given to whether that program should be expanded to provide wage related cash benefits to workers who become permanently and totally disabled before age 65 and to their dependents. Some urged immediate introduction of these benefits, arguing that the permanently disabled were the only major class of people needing protection that did not receive it under the Social Security Act, and yet no other group was more completely

dependent or in a more desperate economic situation. Others favored further study, envisioning high costs and difficult administrative problems of a character wholly apart from the existing program. There was concern about the dynamic nature of the disability program, and the administrative difficulty in making disability determinations, i.e., the subjectivity of determining whether a person was truly disabled or out of work for other reasons such as age, obsolete skills or experience, etc.

During the period from 1940 to 1950, the Social Security Board and its 1946 successor, the Social Security Administration, recommended in their annual reports that benefits be provided to permanently and totally disabled workers as part of the Social Security system. The agency also recommended that benefits be paid to the worker's dependents--a feature of the retirement program since 1939. In 1948, the Advisory Council on Social Security to the Senate Finance Committee made specific recommendations for the payment of Social Security benefits to disabled workers, which would later serve as the basic framework for legislation in this area. A minority of the Advisory Council opposed the plan, recommending instead that protection against the risk of total disability be provided by State assistance programs aided by Federal grants.

Based on the recommendations of the 1948 Advisory Council, the House of Representatives, in 1949, passed a bill containing provisions for the payment of benefits under title II of the Social Security Act to permanently and totally disabled insured workers. However, the Senate-passed version of the bill made no provision for disability insurance benefits. Instead, provision was made for grants in aid to the States for public assistance to permanently and totally disabled, needy individuals. The Senate version was adopted in conference and reflected in the final bill enacted as the Social Security Act Amendments of 1950.

The new program of Federal grants to States for aid to the permanently and totally disabled was enacted as title XIV of the Social Security Act. It complemented similar programs for State public assistance to the aged and the blind enacted in the original Social Security Act of 1935 as titles I and X, respectively. These three programs for State public assistance would be replaced in 1974 by the Federally administrated program of Supplemental Security Income for the Aged, Blind, and Disabled--the current title XVI program.

The protection afforded disabled workers under the retirement insurance program was again the subject of legislation in 1952. The Social Security Amendments of 1952 included a measure providing for the establishment of a "disability freeze". The disability freeze provision was designed to protect the benefit rights of workers and their dependents by providing that the worker's period of disability would not be counted in determining insured status under the retirement insurance program or in determining the worker's average earnings for purposes of computing benefit amounts. Under the 1952 Amendments, the disability freeze provision would become operative July 1953, but only if Congress took additional action to affirm the measure before that date. The Congress took no action on the measure, and the 1952 disability freeze provision did not become operative. However, its specific provisions would serve as the basis for the disability freeze enacted in the Social Security Amendments of 1954.

THE DISABILITY PROGRAM PROVISIONS

The 1954 Amendments created the first actual Social Security disability program with the institution of the disability freeze. Recognizing the importance of rehabilitating disabled persons, the Congress also provided in the 1954 Amendments for the referral of such persons to State rehabilitation agencies. Disability determinations for purpose of the freeze would be made mostly by appropriate State agencies (presumably, the State rehabilitation agency) under agreements with the Secretary of HEW, and financed from the Trust Funds. The House Ways and Means and Senate Finance Committees stated that this would serve the dual purpose of encouraging rehabilitation contacts by disabled persons, and would offer the advantages of the medical and vocational case development undertaken routinely by the rehabilitation agencies.

THE DEFINITION OF DISABILITY

As defined by the 1954 Amendments, disability meant, "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration."

This definition was considered to be a conservative one. The congressional committees explained that:

"The physical or mental impairment must be of a nature and degree of severity sufficient to justify its consideration as the cause of failure to obtain any substantial gainful work. Standards for evaluating the severity of disabling conditions will be worked out in consultation with the State agencies. They will reflect the requirement that the individual be disabled not only for his usual work, but also for any type of substantial gainful activity."

DISABILITY INSURANCE BENEFITS

Monthly disability insurance benefits were first established by the Social Security Amendments of 1956. Benefits were provided for disabled insured workers between the ages of 50 and 65 and for disabled children of retired or deceased insured workers if the child was disabled before age 18. The provisions for disability benefits were recommended by the Ways and Means Committee and appeared in H.R. 7225 as passed by the House in 1955.

In its report on H.R. 7225, the Committee on Ways and Means stated as follows:

"Your committee believes that retirement protection for the 70 million workers under old-age and survivors insurance is incomplete because it does not now provide a lower retirement age for those who are demonstrably retired by reason of a permanent and total disability. We recommend the closing of this serious gap in the old-age and survivors insurance system by providing for the payment of retirement benefits at age 50 to those regular workers who are forced into premature retirement because of disability."

The Senate Committee on Finance, which held hearings on the bill in 1956, recognized the problems of disabled workers, but opposed the establishment of disability insurance benefits as part of the Social Security program. The Finance Committee did recommend a provision for childhood disability benefits. However, when the bill was finally considered by the full Senate in 1956, an amendment providing for disability benefits for insured workers was adopted on the floor by a 47 to 45 vote. The Amendment differed from the House version in that it established a separate Trust Fund for paying disability insurance benefits, which would be financed by additional payroll and self-employment taxes. The Senate version of the disability insurance program was adapted by the Conference Committee.

Other provisions in the 1956 Amendments included: a 6-month waiting period for receipt of disability insurance benefits; a disability insured status requiring a recent and substantial attachment to the work force; a benefit offset when the worker receives another Federal disability benefit payment or State worker's compensation benefit; and a suspension of benefits for refusal, without good cause, to accept rehabilitation services available from the State rehabilitation agency. Determinations of disability for the cash benefits program would be made by State agencies under the framework established for the disability freeze. The definition of disability was the same as the definition established for the freeze, except that blindness was not presumed to be a disability as it had been with respect to the freeze.

DISABILITY POLICY

In an effort to develop uniform standards for evaluating disability as defined in the 1954 Amendments, the Commissioner of Social Security, in February 1955, appointed a Medical Advisory Committee to provide technical assistance in formulating disability policy. The panel recommended the issuance of evaluation guides and standards setting forth medical criteria for the evaluation of specific impairments with the level of severity prescribed for each. The panel also suggested that factors such as age, education, training and experience may be important in the evaluation of disability, even though the law did not specifically require consideration of these factors. In 1957, SSA published regulations outlining the factors to be considered in determining whether an individual's impairment precludes the performance of any substantial gainful activity. The regulations provided in part that,

"In determining whether an individual's impairment makes him unable to engage in such activity, primary consideration is given to the severity of his impairment. Consideration is also given to such other factors as the individual's education, training, and work experience."

DEPENDENTS' BENEFITS AND TRIAL WORK

In 1957, and again in 1958, legislation was enacted making several technical amendments in the disability insurance program. In addition, the Social Security Amendments of 1958 expanded the program by including benefits for dependents of disabled workers. Further changes were made with the enactment of the Social Security Amendments of 1960. These amendments removed the minimum age requirement of 50 years for disability insurance beneficiaries. They also established a 9-month trial work period during which a disabled beneficiary could test his ability to work without suffering a loss of benefits.

REVISED DEFINITION OF DISABILITY

The next major change which occurred in the program was a liberalization of the definition of disability. The Social Security Amendments of 1965 deleted the requirement that the impairment be of "long-continued and indefinite duration" and substituted in its place a requirement that the impairment "be expected to last for a continuous period of not less than 12 months." With these changes and an increasing public awareness of the disability insurance program, the size and complexity of the program grew significantly.

In 1967, faced with an actuarial deficiency in the Disability Insurance Trust Fund, the Congress expressed concern that the definition of disability may have eroded over time, resulting in more allowances than had been anticipated. In response to this concern, legislation was proposed to provide a more precise definition of disability. In its report on the bill which would later be enacted as the Social Security Amendments of 1967, the Committee on Ways and Means stated:

"The committee's studies indicate that over the past few years the rising cost of the disability insurance program is related, along with other factors, to the way in which the definition of disability has been interpreted."

The House Ways and Means and Senate Finance Committees were particularly concerned about what they viewed as a,

". . . growing body of court interpretations of the statute which, if followed in the administration of the disability provisions, could result in substantial further increases in costs in the future."

The congressional committees took note of the following trends in the case law:

• First, an increasing tendency to put the burden of proof on the Secretary to identify jobs for which the claimant might have a reasonable opportunity to be hired, rather than ascertaining whether jobs exist in the economy which he can do.
• Second, a narrowing of the geographic area in which the jobs the claimant can do must exist.
• Third, the case of Leftwich v. Gardner. In Leftwich, the Court of Appeals for the Fourth Circuit held that the claimant was under a disability, even though he was performing work at a level which was considered to be substantial gainful activity under the Secretary's regulations.

The committees explained that the amendments to the definition of disability were intended "to reemphasize the predominant importance of medical factors in the disability determination." The Social Security Amendments of 1967 added language to the definition to make it clear that a claimant may be found disabled, "only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work." Also, under the amendments, the Secretary was given specific statutory authority to prescribe, by regulations, criteria for determining when services performed or when earnings from services demonstrate ability to engage in substantial gainful activity.

DISABILITY BENEFITS FOR WIDOWS AND WIDOWERS

In addition to the clarifications made in the definition of disability, the 1967 Amendments provided for the payment of benefits to disabled widows and widowers age 50 or older. However, the test for disability for widows and widowers was more restrictive. It required a showing of inability to engage in "any gainful activity" based an medical evidence alone, without consideration of vocational factors.

THE 1972 AMENDMENTS (INTRODUCTION OF THE SUPPLEMENTAL SECURITY INCOME PROGRAM; OTHER CHANGES)

Additional changes in the disability insurance program were made by the Social Security Amendments of 1972, including a reduction in the waiting period from 6 to 5 months, and an extension of the definition of disabled adult children to those disabled before age 22. However, the most significant aspect of the Social Security Amendments of 1972 was the creation of the Supplemental Security Income (SSI) program for the Aged, Blind and Disabled. The SSI program replaced the State program of public assistance to the aged, blind and disabled, effective January 1, 974. Funded from general revenues, the program was intended to supplement the income of needy persons who had attained age 65 or were blind or disabled and who received no or only minimal benefits under the Social Security insurance program. Unlike the insurance program, eligibility for SSI payments is based on need, requiring an assessment of the person's income and resources.

Under the 1972 Amendments, the definition of disability used for disability insurance benefits was carried over into the SSI program, with a modification for SSI claimants under age 18. Other provisions applicable to the disability insurance program were incorporated into the SSI program as well, including provisions for a 9-month trial work period and for the suspension of payments for refusal to accept rehabilitation services. For purposes of making determinations of disability or blindness under the SSI program, the Secretary was authorized to use the structure that had been established with the States for determinations under the disability insurance program. Although it was anticipated that persons eligible an the basis of age would comprise the largest group of SSI recipients, experience proved otherwise. In almost every year since 1975, more than 60 percent of all SSI awards have been based on disability or blindness.

The 1972 Amendments also provided Medicare and Medicaid protection for Social Security disability recipients, providing needed medical coverage to a high risk group, and extended the definition of a disabled adult child to those disabled before age 22.

GROWTH OF THE DISABILITY PROGRAMS

During the early and mid-1970s the size and cost of the disability insurance and SSI programs increased dramatically. The number of persons being placed On the disability rolls was substantially larger than had been anticipated. The increasing costs of the disability insurance program during the period from 1970 to 1975 were attributed, in large measure, to a nearly 50 percent increase in the percentage of covered workers being awarded disability benefits. The increase in the disability incidence rate and the attendant drain on the Trust Fund were of great concern to the Congress and the Social Security Administration. Studies of the problem suggested that a combination of factors had

contributed to the increase. These included: high unemployment rates; changes in attitude toward disability; high benefit levels that encourage persons with impairments to stop working and apply for benefits; and various administrative factors, such as the massive nature of the disability determination process, tremendous pressures for timely processing of claims, disparity in adjudication. among the States and at different levels of administrative review, and other factors. During the period 1975 to 1979, several proposals for disability reform legislation were introduced in the Congress. These proposals were designed to address some of the problems which had been perceived as contributing to the unanticipated growth of the disability insurance and SSI disability and blindness program. The proposed legislation primarily focused on removing work disincentives built into the disability

program and on improving program administration. Legislative activities in this area intensified in 1979, culminating in the enactment of the Social Security Disability Amendments of 1980.

FURTHER CONGRESSIONAL ACTION

In his June 9, 1980, signing statement, President Carter described the 1980 disability legislation as "a balanced package, with Amendments to strengthen the integrity of the disability programs, increase equity among beneficiaries, offer greater assistance to those who are trying to work, and improve program administration." Some of the principal features of the Amendments included a revision of the disability insurance benefit structure and measures for strengthening incentives for rehabilitation and return to work. A cap was placed on the family benefits that could be paid to disabled insured workers and their dependents. This provision was designed to ensure against excessive replacement rates that might attract persons to the disability insurance rolls and discourage beneficiaries from returning to work. (An amendment in 1981 also placed a cap on the total payments received from multiple government programs.) To strengthen work incentives in both the disability insurance and SSI programs, the Amendments provided a disabled individual who completes a 9-month trial work period with an additional 15-month period within which to test his ability to work while retaining disability status. During this period, payments are suspended for months in which the disabled individual perform substantial gainful activity, but are automatically reinstated if the work attempt fails. As another incentive, the Amendments provide that in determining whether a disabled individual's earnings demonstrate substantial gainful activity, the amount of such earnings will be reduced by the amount of impairment-related work expenses incurred by the individual. These are just a few of the work incentive provisions which characterize the Social Security disability programs.

CHANGING THE FEDERAL/STATE RELATIONSHIP

In passing the 1980 legislation, Congress also sought to strengthen Federal management of the State disability determination process to ensure effective and uniform administration of the disability programs throughout the United States. To this end, it abolished the system of individual State agreements and required the Secretary to promulgate regulations specifying performance standards and administrative requirements and procedures to be followed by the States in performing the disability

determination function. In addition, a provision in the 1980 Amendments requires the Secretary to assume the determination function from a State if the Secretary finds that the State agency is substantially failing to make disability determinations in a manner consistent with published regulations and written guidelines. To ensure uniformity and consistency of State agency determinations, the Amendments further required the Secretary to gradually reinstitute a system of preeffectuation review of a majority of State agency disability allowances and determinations of continued disability.

PERIODIC REVIEW OF CONTINUING DISABILITY

In another provision of the 1980 Amendments, Congress sought to ensure the integrity of the disability programs by requiring that the status of disability beneficiaries be reviewed at least once every 3 years, unless the individual's disability is considered permanent. Prior to the Amendments, continuing disability reviews were conducted only in selected cases where the individual's condition was expected to improve (medical diary cases), or the individual had returned to work. Congress thought that this highly selective review process was inadequate as a means of ensuring that only persons who continued to be disabled remained on the rolls.

Shortly after implementation of the continuing disability review provision, the periodic review process came under criticism from the public and some members of Congress for the effects it was having on some beneficiaries. There were adverse reactions to both the increased number of cases subjected to review, and the fact that the reviews resulted in the termination of payments to many beneficiaries who had been on the rolls for some years and had not expected the review. Because of the widespread concerns regarding periodic reviews, numerous congressional hearings were convened to review the operation of the continuing disability review program. In all, more than 2 dozen hearings were held during 1982 through 1984. During these hearings, questions were raised about the criteria for selecting cases for review, the effects that the enormous workload were having on the quality of adjudications, the adequacy of the medical evidence relied on in medical cessation determinations, and the standards applied in making such determinations. Some persons expressed concern that continuing disability cases were being adjudicated as if they were initial claims without any presumptive effect being given to the previous finding of disability. Some contended that a determination that disability has ended based on medical factors should only be made if there is evidence of medical improvement. Concerns were also expressed that the criteria for establishing disability based on a mental impairment were too restrictive for younger individuals with severe mental impairments that did not met or equal the Listing of Impairments. It was argued that in such cases, the individual was virtually presumed to have the capacity for unskilled work, resulting in an almost automatic finding of not disabled.

During this same period a growing number of Federal courts were issuing decisions requiring the use of a medical improvement standard in continuing disability reviews. For example, in Finnegan v. Mathews (1981), the Ninth Circuit held that the Secretary may not terminate an individual's disability benefits based an medical factors absent a finding of clear error in the previous determination of disability, or evidence of medical improvement sufficient to establish that the individual is no longer disabled. This holding was reaffirmed by the Ninth Circuit in Patti v. Schweiker (1982), and Lopez v. Heckler (1983). Several other Courts of Appeals issued somewhat similar rulings.

In June 1983, Secretary Heckler announced a package of major reforms affecting the continuing disability review program. These included, among others, a temporary moratorium in the review of most mental impairment cases pending a thorough review of the standards for evaluating certain mental impairments, a substantial increase in the percentage of beneficiaries classified as having permanent disabilities and exempt from normal periodic review, selecting cases for review on a random basis instead of based on specific profiles, and an acceleration of a top-to-bottom review of standards, policies and procedures affecting disability evaluation. These reforms were in addition to many administrative initiatives undertaken in 1982 to improve the periodic review process and the quality of disability determinations.

DISABILITY REFORMS

In response to concerns about the periodic review program and the standards applied in evaluating disability, a number of comprehensive disability reform bills were introduced in both the 97th and 98th Congresses. Among other things, legislation was introduced to provide a disability insurance beneficiary who received an initial determination of medical cessation an opportunity for a face-to-face evidentiary hearing at the reconsideration level of administrative review. Another proposal provided a beneficiary the opportunity to receive conditional benefit payments through the administrative law judge hearing level. These provisions were enacted on January 12, 1983, as part of Public Law 97-455. It was thought that replacing the paper review with an evidentiary hearing at reconsideration would improve adjudications at that level and eliminate the need for some beneficiaries of having to appeal their cases to an administrative law judge. Other measures that were contained in many of the disability reform bills included the establishment of a medical improvement standard for medical cessation, a moratorium on periodic reviews of mental impairment cases pending revision of the criteria for evaluating such impairments, a statutory standard for evaluating symptoms, such as pain, and a provision requiring that the combined effects of a person's impairment be considered at all steps of the sequential evaluation of disability. These areas of disability evaluation were the subject of an increasing number of class-action suits in the Federal courts, many of which resulted in court orders requiring the Secretary to apply particular standards for evaluating disability on a State-wide or circuit-wide basis. These developments, coupled with various concerns regarding periodic reviews, prompted the Congress to pass the disability reform legislation that was signed into law on October 9, 1984, as the Social Security Disability Benefits Reform Act of 1984.

1984 DISABILITY AMENDMENTS

Medical Improvement Standard

One of the basic purposes of the 1984 legislation was to reemphasize the congressional intent that there be national uniformity in the disability programs under standards established by Congress and authoritatively interpreted in the regulations of the Secretary. Therefore, most of the major provisions of the 1984 Disability Benefits Reform Act involved the establishment of statutory standards for evaluating disability. Perhaps the most important of these is the amendment setting forth the standard of review for termination of disability benefits. In general, the amendment provides that, with certain exceptions, the Secretary may terminate benefits based on disability only if there is substantial evidence which shows that the individual's impairments have medically improved and the individual can now perform substantial gainful activity. The new regulations implementing this change were published in the Federal Register on December 6, 1985.

Multiple Nonsevere Impairments

The 1984 Disability Benefits Reform Act also changed the established policy concerning the evaluation of disability in cases involving non-severe impairments. Prior to the amendments, by regulation a case could not proceed through the sequential evaluation process unless the individual had a least one severe impairment. Thus, an individual with two or more impairments, each of which was a non-severe impairment, could not be found to be under a disability. However, the statute now requires that in determining whether a person's impairment or impairments are of sufficient medical severity to be considered the basis for eligibility, the Secretary must consider the combined effect of all of a person's impairments. This provision is reflected in interim regulations published on March 5, 1985.

Evaluation of Pain

In addition, the 1984 legislation codifies, through 1986, SSA's policy concerning the evaluation of pain and other symptoms in adjudicating disability. The amendment makes explicit that an individual's subjective complaints shall not alone be sufficient to establish disability, and that there must be medical signs and findings which show the existence of a medical impairment which could reasonably be expected to produce the pain or other symptoms alleged. The 1984 Amendments also require the appointment of a Commission to conduct a study on the evaluation of pain in determining disability. This study is currently underway and a report is due by the close of this year.

Personal Appearance Demonstration Projects

Another provision of the 1984 Amendments requires the Secretary to implement demonstration projects with several States in which applicants for disability benefits and beneficiaries undergoing continuing disability review are provided an opportunity far a personal appearance prior to an initial determination of ineligibility. Under the demonstration projects the opportunity for a face-to-face meeting at the initial level of adjudication takes the place of the reconsideration level of review. The purpose of the demonstration projects is to test whether a face-to-face interview will result in a better evaluation of the individual's condition and simplify and expedite the decision-making process. A report on the projects, together with recommendations, is due to the Congress by the end of 1986.

Revised Mental Evaluation Criteria

Of further note is the provision in the 1984 Amendments which placed a temporary moratorium on periodic reviews of all mental impairment cases pending the issuance of revised criteria for evaluating such impairments. A thorough and complete reevaluation of the mental listings has been a major administrative goal since June 1983. As the result of the Department's commitment to this initiative, revised criteria are now in final regulations, appearing in the Federal Register on August 28, 1985.

SUMMARY

The disability programs are of vital importance to millions of Americans whose lives are disrupted by the onset of disability. Currently, the disability insurance program provides replacement income to more than 2.6 million disabled workers and their families. In addition, more than 2.3 million disabled or blind needy individuals receive benefits under the SSI program. A combined total of approximately 2 million disability applications are filed each year. The problems associated with administering these enormous and highly complex programs are often difficult to comprehend. As was observed by the Supreme Court in Heckler v. Day, the task of managing these programs effectively and efficiently is an extremely difficult one. Yet, the Department is committed to ensuring that the disability programs are administered both fairly and responsibly, as demonstrated by its many initiatives these past 2 years. It is the Department's goal to ensure that there is consistent and equitable treatment of all those who are served by these national programs. As their history demonstrates, the disability programs are dynamic programs, undergoing continuous examination, change, and refinement.