As an end-stage renal disease patient, I’m automatically eligible for Social Security disability benefits. But since my diagnosis eight years ago, so far (he says, knocking wood), I’ve managed to work more than full-time. I carry private short- and long-term disability insurance through my employer, the University of Minnesota.
Chances are, sooner or later, I’m probably going to need those disability benefits. But Social Security is spending millions of dollars each year screening dubious disability applications that insurance companies are forcing their customers to submit. So says Mary Williams Walsh’s report in today’s New York Times.
Kenneth Nibali, the former head of the Social Security disability program, told Walsh that the sheer number of dubious applications is making it more difficult for Social Security to respond to the truly disabled. Federal rules require Social Security to completely vet every application and claims can be resubmitted time and time again. The waiting times for a Social Security administrative hearing have doubled since 2000; a hearing took 258 days to schedule in 2000, but now takes 512 days.
Nibali told Walsh it costs an average of US$1,180 to process each Social Security disability application and if the claimant proceeds through the typical three-level process—initial review, reconsideration, and administrative hearing—the cost rises to an average of US$4,759.
Predictably, it’s all about insurance company profits.
If an insurance company forces a claimant to apply for Social Security disability and the claimant refuses, the insurer can stop paying their benefits. Additionally, when a claimant applies for Social Security disability the insurer can reduce the amount of money it holds in its claim reserves. To make matters worse, Walsh reports, “disability insurers tell many of their claimants to appeal Social Security’s rejections again and again, until some are finally accepted. Then the insurers can take those people off their rolls, shifting the cost to the government.”
As a result, several lawsuits have been initiated under the False Claims Act claiming that “insurers are recklessly dumping people on Social Security’s doorstep, without properly screening them to make sure they have a chance of qualifying.”
Meanwhile the Bush administration continues to rearrange the deck chairs. Insurance companies have historically been regulated by the states (way to go states!). But under a Bush administration plan, insurance companies would be able to choose to have a national charter and be subject to “supervision” by a new federal agency under the Treasury Department. It’s appropriate that on baseball’s opening day, Senator Christopher Dodd (D-Connecticut) called Bush’s plan a “wild pitch,” and in a later statement with regard to expanding the Federal Reserve’s authority said, “it does not make sense to give a bigger shovel to the very people who helped dig us into this hole.”
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