Deck chairs and bigger shovels

By Michael Fraase

Tuesday, 01 April 2008 08:05PM CST

Section: Politics

DisabilityAs 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.”

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