Focusing On The Nation’s Priorities

The President is committed to strengthening the Social Security system and has put forward three goals for any reforms: strengthen the safety net for future generations; protect those who depend on Social Security; and offer every American a chance to experience the opportunity of ownership through voluntary personal retirement accounts.

The President has proposed reforms to address the system’s long-term financial shortfall while making Social Security a better deal for today’s young workers. Under the President's approach, Social Security would include voluntary personal accounts funded by a portion of workers’ payroll taxes. The 2007 President’s Budget includes the estimated impact from the creation of personal accounts. The accounts will be funded through the Social Security payroll tax. In the first year of the accounts, contributions will be capped at four percent of Social Security taxable earnings, up to a $1,100 limit in 2010, increasing by $100 each year through 2016. The President has also embraced the idea of indexing the future benefits of the highest wage workers to inflation while providing for a higher rate of benefit growth for lower-wage workers. This measure would significantly contribute to the solvency of the system. By adjusting the way benefits are calculated, progressive indexing would eliminate nearly 70 percent of annual cash shortfalls by the end of the Social Security Trustees' long-range (75 year) valuation period, trending towards greater improvement thereafter. Because progressive indexing would index benefits for lower-wage workers to wage growth, which generally grows faster than inflation, benefits would grow faster than the poverty level. This will keep a greater portion of future seniors out of poverty than today.

Under the Medicare Prescription Drug Improvement and Modernization Act of 2003, the Social Security Administration (SSA) is helping eligible Social Security and Medicare beneficiaries obtain extra help paying for prescription drugs.

To be eligible for the additional assistance, Medicare beneficiaries must have limited resources (below $10,000 for an individual or $20,000 for a married couple) and limited income (no more than 150 percent of the poverty level). Individuals have the option of applying for the extra help through the Internet, telephone, mail, or at a local Social Security office. SSA is continuing its outreach efforts to ensure that all who are eligible for the extra help know about it and have the opportunity to apply. From May through mid-August 2005, SSA sent 19 million applications to potentially eligible beneficiaries.

Only about a half of one percent of SSA’s disability program beneficiaries ever leave the rolls for work. To better connect these beneficiaries with employment opportunities and in response to a Program Assessment Rating Tool (PART) review, SSA is implementing several demonstrations to test various types of assistance to help those who are able to return to work. Among the projects is the National Benefit Offset Demonstration, which will test the effects of allowing Disability Insurance (DI) beneficiaries to work without total loss of their benefits by reducing their monthly benefit one dollar for every two dollars of earnings above $830 per month. Within the benefit offset demonstration, SSA will also test an early intervention model in which SSA will provide cash and medical benefits to disability applicants with certain impairments presumed disabling who elect to pursue work rather than proceed through the disability determination process.

Under the Ticket to Work and Work Incentives Improvement Act of 1999, SSA provides disability beneficiaries with a “ticket” that can be used to receive vocational rehabilitation and employment support services to go back to work without losing health benefits. SSA has proposed regulatory changes to the Ticket to Work program to improve its overall effectiveness. These changes include offering enriched payments to service providers and allowing disability beneficiaries with medical conditions likely to improve to participate in the program.

The 2007 Budget projects that SSA will improve productivity in 2007 by two percent over the prior year, based on the Agency’s proven track record. Increased productivity means that SSA can provide more services to citizens with fewer resources. SSA has an impressive track record in increasing agency-wide productivity. In 2005, productivity climbed 2.7 percent over the previous year—for a total gain of 12.6 percent since 2001. SSA continually evaluates its business processes and invests heavily in its information technology systems to ensure these improvements. For example, eDib, SSA’s new electronic folder for disability applications, allows SSA to store disability cases electronically, which reduces staff time spent looking for and reconstructing lost folders.

Despite recent improvements in reducing waiting times, timely and accurate processing of disability claims has been a longstanding challenge for SSA. In recent years, the rapidly rising volume and complexity of these cases has greatly increased the challenge. In 2005, those who were denied benefits initially and again upon appeal had to wait on average 14 months for a decision from an Administrative Law Judge (ALJ).

To address these issues and ensure decisional accuracy, SSA is implementing several changes to the disability determination process. An integral part of the new approach is implementation of eDib, which enables SSA to use technology to replace a paper-driven process. SSA has initiated the electronic folder process in all SSA field offices and in all State Disability Determination Services sites except New York, where it will be implemented shortly. Under the new approach, quick decision units will make disability determinations within 20 days or less for individuals who clearly have disabilities, thereby reducing waiting times. A national network will be established to consistently make available medical, psychological, and vocational experts to assist all adjudicators. The new approach also introduces a Federal attorney review level prior to the ALJ hearing. Decisions made at all levels of review will be well-documented and evaluated by a centralized unit for quality. Together, these changes are expected to reduce processing time by at least 25 percent over the current process and result in making the right decision earlier in the process.