SSA Cut of $750 Million could End Up costing $6 Billion

Submitted by Ram on Tue, 08/14/2012 - 12:23

In 2011, Congress approved a budgetary appropriation of $1.024 billion for Social Security “integrity”, an initiative intended to address spending waste within the Social Security Disability (SSD) program. A recent push by House Republicans proposes to cut that budgetary appropriation by more than $750 million in 2013, a change that could backfire according to some. The proposed cut in budgetary support for Social Security program integrity may actually increase spending, waste and expenses associated with SSD fraud by as much as $6 billion.

The 2011 Congressional approval of Social Security integrity spending was a portion of the Budget Control Act, and was supported at the time by House Republicans. The new proposal from republicans however demolishes the former plan and may, according to the Chief Actuary of Social Security, Stephen Goss, increase benefit payments by $5 to $6 billion in 2013.

The additional budgeted funds for program integrity were intended to pay for more stringent review processes in the SSD redetermination and continuing disability areas of program administration. Redeterminations are the process by which the Social Security Administration (SSA) checks the financial status of individuals receiving SSD benefits.

Redeterminations are periodically required in order to ensure beneficiaries are not receiving more than the allotted benefit payment for someone in their particular financial circumstances. In other words, redeterminations ensure the SSA is not overpaying SSD benefits. Recovering overpaid SSD benefits from disabled workers is often difficult if not impossible, and the repayment of overpaid benefits can take a significant period of time. All of these factors account for some degree of “waste” spending in the SSD program.

Continuing disability reviews are conducted by the SSA to determine if disability beneficiaries remain medically eligible for benefits. These reviews are typically conducted every three or more years for individuals receiving SSD benefits, though they may be completed more often or less frequently dependent upon the medical condition that initially qualifies an individual for benefits. Additional funding in this administrative area was intended to make reviews more thorough and provide additional protection against fraud and excess spending for those who are no longer medically eligible for SSD benefits.

According to Democrat representatives on the House Ways and Means Committee, the proposed cut in the Social Security operating budget would leave the SSA unable to effectively combat SSD fraud, abuse and wasteful spending.

Proponents of the increased Social Security integrity program spending point out that the Republican backpedal on the initiative is confusing, given republicans have consistently complained that the SSD program is ripe with fraudulent claims. The additional budgetary allotment to combat fraud and other spending waste within the program would therefore seem to be on par with the republican arguments that spending must be reduced and fraud should be effectively fought within the program. However, without the appropriate administrative budget, the SSA will be hard pressed to find the necessary resources for accomplishing these cost saving measures.

The Social Security actuary reports a high return on the integrity program budget spending. For every additional dollar put toward the continuing disability review process, the actuary reports a savings of $6. For every additional dollar allotted to the redetermination process, a savings of $9 is realized. These are significant savings for the overall SSD program, but the proposed cut in operational budget for the SSA would drastically reduce the cost savings achieved through the program integrity initiative, ultimately costing the American people much more in waste, fraud and other spending than would the initial investment of additional funding in the integrity program.