Prospects for Harnessing Private Sector Capabilities to Improve Employment for SSDI Beneficiaries

1. February 21, 2007 Prospects for Harnessing Private Sector Capabilities to Improve Employment for SSDI Beneficiaries

2. Winthrop CashdollarExecutive Director for Disability Insurance America’s Health Insurance Plans SSDI: Challenges and Opportunities

3. Overview • The SSDI program is under increasingly severe strain. • Demographic and fiscal trends will swamp the program – insolvency looms. • Current efforts to change SSDI program policy and administration are not likely to bring sufficient or timely relief. • Circumstances may allow a scenario under which the private disability insurance industry can partner with SSA to improve SSDI outcomes

4. Declines in Household Incomes of Working-Age People with Disabilities Median Household Income for Men Ages 21 to 64 by Work Limitation Status 2002 Dollars. Based on Current Population Survey. www.disabilitystatistics.org

5. Exodus of People with Disabilities from Employment … Employment Rate of Men Ages 21 to 64, by Work Limitation Status Based on Current Population Survey. Employment defined as more than 52 hours worked in previous year. www.disabilitystatistics.org

6. … onto Public Programs Source: Social Security Advisory Board, The Social Security Definition of Disability, October 2003.

7. Aging of the Baby Boomers 50 to 64 50 to 64 50 to 64 50 to 64 Data from: http://www.census.gov/ipc/www/idbpyr.html

8. Age and Disability • The boomers are now 45 to 60 years old. • A recent study* estimates that: • 20% of adults in their 50s have a work limitation • Another 34% experience a work limitation in the next 10 years Richard W. Johnson, Gordon B.T. Mermin, and Cori E. Uccello, Urban Institute, “When the Nest Egg Cracks” December 2005.

9. Ticket-to-Work • Objective: Create competitive market of employment service providers motivated to help SSDI and SSI beneficiaries earn enough to exit the programs • Tickets are performance based vouchers • State VR agencies must compete with private providers • Results: • National rollout started in 2002, finished in 2004 • In earliest states, participation rate is approaching 2% • Many administrative problems • Private providers have not found a successful business model • SSA is about to implement new regulations that will likely increase provider interest • But will they increase beneficiary interest?

10. SSA Demonstrations • Accelerated Benefits • Mental Health Treatment Study • HIV/Auto-immune Impairments Demonstration • Benefit Offset National Demonstration • Replaces the benefit cliff at SGA with a gradual decline • Offers an “early intervention” to qualified applicants • Provides employment support & health benefit package • Enrollment starts in late 2007 (?)

11. Private-Public Partnership • Application of private insurer core competencies and tools • Move SSDI program administration and risk management further and faster in the necessary direction • No need to increase government bureaucracies/recreate capabilities already present in the private sector • Test private-public partnership approaches more expeditiously

12. Options to Re-Orient and Strengthen SSDI • Improved Sharing of Disability Claim Information • Fee for Service Early Intervention and RTW • Private Administration of Public Disability Benefits

13. Improved Sharing of Disability Claim Information • Medical information/documentation provided by a treating physician • Documentation of definitive medical evidence in cases of presumptive diagnoses (e.g. diagnoses by Board Certified physicians) • Results of any Independent Medical Examinations (IMEs) performed to support private disability claim adjudication • Results of any Functional Capacity Examinations (FCEs) performed to support private disability claim adjudication • Information regarding actual return-to-work of SSDI applicant or beneficiary

14. Fee for Service Early Intervention and RTW • Early evaluation of medical/functional status of new SSDI applicant: • Comprehensive rehabilitation/return-to-work plan for SSDI applicant/beneficiary • Rehabilitation/return-to-work management for SSDI applicant/claimant • Outreach, planning, and follow-up with employers to implement and support SSDI beneficiary return-to-work. • Periodic review/reassessment of SSDI beneficiary medical/functional status • Fraud investigation/documentation regarding SSDI applicant/beneficiary

15. Private Administration of Public Disability Benefits • Demonstration of competition between private and public sectors in administration of public disability benefit • Workers would have a choice between traditional SSA administration of SSDI benefit and administration by a private disability insurer • Private insurer participants reimbursed/rewarded for risk management and RTW

16. Private Administration of Public Disability Benefits - continued • Private insurer participants required to pay SSDI benefits following SSDI rules and adjudication decision • Benefits paid from the Trust Fund • Performance incentives for continuation of employment, RTW, impact on Trust Fund • Structure could encourage integrated management of private and public disability benefits

17. Privacy and Interoperability • Suitable arrangements to authorize sharing of claimant/applicant information • Security of claimant/applicant information • Guarantees against unintended/inappropriate uses of claimant/applicant information • Private-Public interoperability