Saturday, March 23, 2013

The perverse incentives program from Hell




 
...But disability has also become a de facto welfare program for people without a lot of education or job skills. But it wasn't supposed to serve this purpose; it's not a retraining program designed to get people back onto their feet. Once people go onto disability, they almost never go back to work. Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce since then, one economist told me.

People who leave the workforce and go on disability qualify for Medicare, the government health care program that also covers the elderly. They also get disability payments from the government of about $13,000 a year. This isn't great. But if your alternative is a minimum wage job that will pay you at most $15,000 a year, and probably does not include health insurance, disability may be a better option.

But going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That's the deal. And it's a deal 14 million Americans have chosen for themselves.

...Part of Clinton's welfare reform plan pushed states to get people on welfare into jobs, partly by making states pay a much larger share of welfare costs. The incentive seemed to work; the welfare rolls shrank. But not everyone who left welfare went to work.

A person on welfare costs a state money. That same resident on disability doesn't cost the state a cent, because the federal government covers the entire bill for people on disability. So states can save money by shifting people from welfare to disability. And the Public Consulting Group is glad to help.

PCG is a private company that states pay to comb their welfare rolls and move as many people as possible onto disability. "What we're offering is to work to identify those folks who have the highest likelihood of meeting disability criteria," Pat Coakley, who runs PCG's Social Security Advocacy Management team, told me. 

The company has an office in eastern Washington state that's basically a call center, full of headsetted women in cubicles who make calls all day long to potentially disabled Americans, trying to help them discover and document their disabilities:

"The high blood pressure, how long have you been taking medications for that?" one PCG employee asked over the phone the day I visited the company. "Can you think of anything else that's been bothering you and disabling you and preventing you from working?"
The PCG agents help the potentially disabled fill out the Social Security disability application over the phone. And by help, I mean the agents actually do the filling out. When the potentially disabled don't have the right medical documentation to prove a disability, the agents at PCG help them get it. They call doctors' offices; they get records faxed. If the right medical records do not exist, PCG sets up doctors' appointments and calls applicants the day before to remind them of those appointments.

PCG also works very, very hard to make the people who work at the Social Security happy. Whenever the company wins a new contract, Coakley will personally introduce himself at the local Social Security Administration office, and see how he can make things as easy as possible for the administrators there.

"We go through even to the point, frankly, of do you like things to be stapled or paper-clipped?" he told me. "Paper clips wins out a lot of times because they need to make photocopies and they don't want to be taking staples out."

There's a reason PCG goes to all this trouble. The company gets paid by the state every time it moves someone off of welfare and onto disability. In recent contract negotiations with Missouri, PCG asked for $2,300 per person. For Missouri, that's a deal -- every time someone goes on disability, it means Missouri no longer has to send them cash payments every month. For the nation as a whole, it means one more person added to the disability rolls.

...In the past few decades, an entire disability-industrial complex has emerged. It has just one goal: Push more people onto disability. And, sometimes, it seems like the government is outmatched. This is especially true in the legal system.

Daytime TV in many places is full of ads from lawyers who promise to fight the government and win the disability benefits you deserve. There are tons of YouTube videos about getting disability -- one lawyer, one webcam. The standard form is a let's-get-real chat about how to win this thing.

There is one man who takes much of the credit for this industry: Charles Binder. "When we started," Binder told me, "I don't think anybody else was advertising." What's more, most people who applied for disability were denied and never had a hearing. Binder, and the lawyers who followed him, changed that. "I've created some of the problems for the government because so many people appeal," Binder says.
When he started in 1979, Binder represented fewer than 50 clients. Last year, his firm represented 30,000 people. Thirty thousand people who were denied disability appealed with the help of Charles Binder's firm. In one year. Last year, Binder and Binder made $68.7 million in fees for disability cases.

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