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Federal Entitlement Programs That Affect Persons With Serious Brain Disorders


November, 1996

Federal entitlements are critically important to disabled individuals with serious brain disorders and their families. They stand as the most important federal programs that provide individuals with severely disabling illnesses with a modest income and that provide access to necessary treatment and services.

The importance of these programs is underscored by statements of the NAMI membership and Board. NAMI policy says that reform should not result in less for beneficiaries than they have under current law. At the 1994 NAMI convention in San Antonio, membership brought forth a resolution demanding that staff make it a priority to advocate for increases in SSI (that were identified in the 20th anniversary review of SSI conducted under Social Security Administration Commissioner King). Specifically, members wanted the dollar-for-dollar grant offset that begins after the first $65 of earnings repealed.

Precisely because of their vital importance, federal entitlements demand our continued examination. As currently constructed, these federal programs do not meet the needs of all individuals disabled by serious brain disorders-they provide strong disincentives to work, even during periods when work is possible and desirable by the consumer. Federal entitlements, for too many people, are a barrier to optimal recovery.

Nor do the federal entitlement programs cover all necessary services. Some contain several discriminatory limits specifically on individuals with serious brain disorders. And the complexities of the entitlement programs, especially Medicaid, are such that any suggested changes for federal policy must be carefully considered. The complexities of the programs and their interaction are significant parts of the problem. NAMI, of course, can never tolerate discrimination against people with serious brain disorders and their families especially if written into federal law.

NAMI cannot, however, afford to ignore the pressures on the federal entitlement programs. There will be continued clamor for federal legislators to control the growth in these entitlements or to cut them, due to their staggering outyear growth projections and the effect these have on the federal deficit and crowding out of discretionary programs. NAMI must advance the cause of people with serious brain disorders and their family members-hopefully in a constructive manner but in a strong defensive manner if necessary.

Caution should be the byword for our examination. As noted, federal entitlement programs are a lifeline for many individuals with serious brain disorders.

Federal entitlements that historically are of the greatest utility to persons with brain disorders are of two kinds: insured and means- tested. Within each type there is an income maintenance program and a health insurance program. The insured entitlements are Social Security Disability Insurance and Medicare. The means-tested entitlements are Supplemental Security Income and Medicaid.

Insured Entitlements

Social Security Disability Insurance (SSDI) guarantees a continuing income stream to a worker who becomes disabled after sufficient covered quarters (minimum six) of work to qualify under Title II of the Social Security Act. In certain circumstances a child of a disabled or deceased worker who becomes disabled before age 22 can receive SSDI on the parent's work record rather than on their own.

The average monthly payment in 1993 was just under $650/month. In 1992 the federal government paid out $31.091 billion in SSDI benefits (up from $18.836 billion in 1985).

While there is no means test going in (because disability supposes current inability to work full time), there is a limit on earnings (currently $500) through substantial gainful activity coming out. A person with large unearned income, and or substantial assets is still eligible for SSDI. But a person who works just over half-time under the minimum wage jeopardizes continuation of his/her SSDI monthly check.

Medicare enrollment is automatically granted to a person under 65 years old whose disability and connection to covered work qualifies them for SSDI. But there is a two year waiting period. The underlying purpose is to observe whether the disability is permanent. Medicare Part A is the hospital insurance, and is non-contributory with respect to premium. Medicare Part B is Physician and other out-patient service insurance. It requires exercising an option to participate at all and payment of a monthly premium, currently $42.50.

Medicare, while it does not cover prescription meds, does (Part B) cover physician visits at 80%, and covers partial hospitalization. Additionally, many disabled persons enrolled on Medicare are poor enough that they are also eligible for Medicaid. When Medicaid enrolled, their Part B premiums, and all deductibles and co-pays can be picked up by Medicaid (when no other third-party plan is obligated for first dollar coverage). This dual eligible status brings participants better health plan coverage than all but a few plans in the private sector.

Medicare retains discriminatory limits on certain treatments for mental disorders. Hospital days are limited to 190 lifetime. This is not true for other diagnoses. Whereas outpatient co-insurance for all other services is 20% patient/80% plan, outpatient psychiatric services are @ 50% patient/50% plan. Ways & Means and Senate Labor made significant improvements in these discriminatory features of Medicare in the 103rd Congress, but the amendments never came to a floor vote in either chamber.

Means-tested Entitlements

Whereas the insured entitlements are linked to "premiums" paid into trust funds via employer and employee payroll taxes, the means-tested entitlements are public assistance programs available only to persons who meet the social characteristics for the programs -- and whose income, and assets -- each strictly defined in law and regulation -- are below the eligibility cut-off points.

Supplemental Security Income (SSI) is a national income maintenance program for the poor elderly, blind, or disabled. No state may set an eligibility threshold lower than the national, unlike the former AFDC, now TANF program. It was assumed when the SSI program was enacted that the elderly poor would be the principal beneficiaries. But in 1993 83% of the total federal payments went to all persons with disabilities, not just those disabled by brain disorders. The amount paid to disabled recipients was $1.470 billion.

The disability determination process in adults is virtually identical to that for SSDI. (The Social Security Administration is about to field test a "re-engineered" eligibility determination system.) A national income floor is established at about 68% of poverty. The current monthly grant is $470. When a person attempts to work full time, after the first $65 ($85 if they have no unearned income at all) of earnings their grant is offset one dollar for every two earned. They can control their hours or refuse raises to keep their earnings below the SSI vanishing point. They can thereby maintain a $1. grant, and thereby keep the categorical link to Medicaid eligibility.

Section 1619 of SSI can also be utilized. This provision permits recipients in any state to maintain Medicaid eligibility to a higher income level when they no longer receive any SSI grant, even the dollar. It requires 1) that the disability eligibility condition for SSI is still current, though the income and assets conditions are no longer met because of higher earnings; and, 2) that Medicaid services are necessary on an on-going basis as a pre-condition of maintaining the person in a health condition that enables him/her to work.

SSI for children is changed by the enactment of the Welfare Reform bill. "individual functional assessments" are no longer allowed as a tool for determining eligibility. Children must meet a listed disorder, and have a "marked and severe" functional impairment. The Administration reports that half of the children put off SSI, or not able to get on, will still qualify for Medicaid under another eligibility avenue (below the poverty level, for instance).

Adults who qualified for SSI with a "material" contribution from an addictive disorder are put off the rolls January 1. The debt ceiling bill contained this provision. SSA estimates that 80% may re-qualify by a clearer restatement of their underlying brain disorder as sufficient in and of itself -- without any material contribution by addictive disorder -- to certify them as disabled under the SSA definitions and procedures. Persons functionally impaired with cognitive deficits will need advocates to manage and assist in their reapplication.

SSI has a special relationship to housing for many adult recipients. Congregate housing -- group homes for the disabled, with or without support services, often take the person's whole (or nearly whole) monthly SSI check in payment for meals and shelter.

Medicaid is automatically given to persons who are SSI enrolled in all but twelve states. These states were grandfathered at the time of enactment, and are permitted to use their own more stringent definitions for income and asset thresholds, and for disability. Although a separate determination process is required in these "209b" states, we are not aware of rejections of SSI enrolled persons to any extent.

Medicaid pays for all diagnoses equally in the fee-for-service mode, so there is something akin to parity in the basic program. The community services that have been piloted in the public sector have more often than not involved Medicaid funding. Nearly forty states had included in their programs one or more of the optional services (services that do not have to be in a state's Medicaid plan for HCFA to certify its compliance) that help build a public sector community services network: the rehab option, the intense case management option, the clinic option, or the preferred provider option. Medicaid pays for prescription meds (which it still classifies as an optional service, but all 50 states and the District cover it), and in most states new generation drugs are covered by the formulary.

Medicaid's shortcomings are the Institution for Mental Disease (IMD) exclusion, and the inequality of access to the home-and- community-based waivers. IMDs are inpatient facilities in which more than 50% of the census has a primary diagnosis of mental disease, less patients over 65 with Alzheimer's or other dementia. Adults between the ages of 22 and 64 who are hospitalized in a facility characterized as an IMD cannot have their care paid for by Medicaid, even if they had Medicaid enrollment prior to admission. Psychiatric wings of larger hospitals have their in-patient census averaged in with the entire facility's, with the effect that Medicaid does reimburse care there. Scattered beds in acute, general care hospitals are also eligible for reimbursement. Up to age 22 and over age 65, there is no such exclusion.

Repeal of the IMD exclusion might not be an unmixed blessing. When such language appeared in the first House version of Medicaid reform in 1994, the field feared that states would re-finance their old-line state mental hospitals with Medicaid if this went through.

Persons with mental retardation and developmental disabilities who were residing in state institutions were the primary beneficiaries of the home-and-community-based waivers created in OBRA 87 as sections 2175 and 2176 of that act. They required that an institutional bed be closed as a community slot was opened, or that without community services the person would absolutely require an institutional bed. Since deinstitutionalization for persons with brain disorders was mostly over by the time they were enacted, the slot tradeoff balance was not available.

Parity for mental illnes was attached to S 1795, the last Medicaid attempt of the past Congress, in the Senate Finance Committee through the Conrad amendment. It covers amount, duration, and scope of services and co-pays. It is problematic to predict its effects, since it doesn't repeal the IMD rule, nor does it make the optional services that constitute the community services network mandatory. If it can pass the Senate Finance Committee again in the next Congress, there is still the question as to whether final enactment would follow.

Characteristics of the Income Maintenance Programs

Just over a quarter of all the enrolled persons in SSDI and SSI are disabled by a mental condition, not including retardation. 31.2% of SSI recipients (Dec, 1995) had a mental disorder as a primary disability diagnosis. This represented 852,600 persons between the ages of 18 and 64, plus 210,100 children. (A self-reported survey of a sample of the adults asserted that 43% lived below the poverty level.) The SSDI numbers for the same period are 1,069,000 persons, 25.9% of the total SSDI enrollment.

The dilemma

Consumers and families certainly desire that the federal entitlements worked in better harmony with the clinical course of the brain disorders and their unpredictable cycles. But too much success at independence causes loss of Medicaid and of the stability and quality of life Medicaid can enable. The same is roughly equivalent for Medicare. So the very support that enables one to work is threatened when one works.

Private employer-sponsored health plans could fill the gap if they covered all needed services and supports. But SSDI beneficiaries and Medicaid recipients typically would have the kind of job that would not have such a health plan at the time they hit the ineligibility "notch".

  • SSDI only has a nine-month trial work period (plus 36 months of continued eligibility without any Social Security check for the final 33 months), and has a very low permissible earnings (SGA) limit: $500/month. These features create very frightening disincentives for persons with severe brain disorders who are stabilized in the community and wish to work. Medicare can continue, but Social Security checks not stopped in timely fashion by self-reporting of earnings over the limit will have to be repaid.

  • SSI has the equivalent of a very high marginal tax rate, 50% (for every dollar earned $0.50 is deducted from the SSI grant). SSI's section 1619 extenders of eligibility when earnings rise are very little understood and hard to access. These features create discouraging disincentives to persons with severe brain disorders who are stabilized in the community and wish to work. Loss of SSI threatens loss of Medicaid.

Under these circumstances, for persons with severe brain disorders to reach for independence and self-fulfillment through greater earnings is like letting go of one swinging high trapeze bar to grab another -- without a net.

Proposed solution

The "open file" solution has been proposed. This mechanism would permit a disabled person in a period of stability to exceed the current fall-off thresholds. But if their disorder, acknowledged as clinically unpredictable yet chronic, flared up and rendered them unable to continue work -- their active enrollment status would be reactivated without the need to reapply from scratch, and the attendant lengthy waiting periods without supports.

The former Ways & Means staffer who wrote section 1619 has been promoting versions of this solution for at least three congresses. There was no bill to this effect in the 104th. When the Social Security Administration's Associate Commissioner for Disability was asked if the SSA would support such a notion, the response was negative.

Framework for legislative change

Entitlement reform pressures that come from outyear cost growth forecasts are well known. Former Senators Rudman and Tsongas are leaders of the Concord Coalition, one prominent movement to rein in entitlement growth. Senators Nunn and Domenici did an across-the-aisle proposal in the just-ended Congress. Senator Robert Kerrey (Nebraska), with former Senator John Danforth headed another such group, at the request of the President. All of these bi-partisan efforts conclude that continuation of the status quo is under no circumstances a realistic option. While the largest entitlements, driven principally by the demographics of an aging society that is simultaneously adding significantly to lifespan, are Social Security and Medicare -- Medicaid is not far behind.

The signing of the Welfare Reform bill and the number of votes it received from Democrats attest to the real political will to go beyond talk. The population whose disability arises from a severe brain disorder is not the target of these forces, but is caught up in them. The pre-conference House version of this bill contained a House provision creating a disability commission to look at all this. The House language did not survive the conference, and so is not in the law. But the House interest and intent remains.

NAMI's position is clear:

Consumers need life options that aren't severely curtailed by safety net eligibility rules. Consumers and families certainly believe that federal entitlements should work in better harmony with the clinical course of severe brain disorders.

NAMI believes that these better life options include education, vocational and employment services, and employment -- and that participation in them for those who are able contributes to recovery and quality of life. Underlying the freedom to explore such options is the necessity for stable access to adequate and appropriate treatment and supports, living arrangements, and other basic life necessities.

Once again, NAMI Board-passed public policy says that reform should not result in less for beneficiaries than they have under current law. (This is stated in the context of Health Care Reform, but is deeply and strongly enough held that it can legitimately be extended to other support areas in the public safety net.)