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Statement of Michael Freedman On The SGA Level For Blind And Disabled Beneficiaries

For Immediate Release, April 11, 2000
Contact: Chris Marshall

* The following is testimony of NAMI Board Member Michael Freedman delivered to the House Committee on Ways and Means that argues for an increase in the work income allowed for SSI and SSDI beneficiaries. It also clarifies the discriminatory disparity in income levels allowed for blind and non-blind beneficiaries.



APRIL 6, 2000

Chairman Shaw and Representative Matsui, on behalf of the more than 210,000 members of NAMI (The National Alliance for the Mentally Ill) and the 50 state organizations and over 1,240 local affiliates across the nation and in Puerto Rico, American Samoa, and Canada, I would like thank you for this opportunity to submit testimony on work incentives for disabled beneficiaries of the disabled and income security programs of the Social Security Administration.

NAMI is the nation's leading grassroots organization dedicated solely to improving the lives of persons with severe mental illnesses such as schizophrenia, bipolar disorder (manic-depressive illness), major depression, obsessive-compulsive disorder, and anxiety disorders. NAMI's efforts focus on support to persons with these serious brain disorders and to their families; advocacy for ending discrimination in federal income support and health insurance programs, and education to eliminate the pervasive stigma surrounding severe mental illness. NAMI also endorses efforts to promote employment opportunities and greater independence through increased access to rehabilitation and job training programs and extended healthcare coverage to workers who need treatment to enter and stay in the workforce.

I am Mike Freedman, member of the board of directors of NAMI and a former president of the NAMI Consumer Council, the nation's largest organization of consumers of mental health services. I was diagnosed with clinical major depression, extreme panic/anxiety disorder, and post traumatic stress disorder as a result of a genetic disposition that came to the surface in 1976 after experiencing both war and the suicide of my father, a decorated Air Force pilot, and later a federal narcotics officer. In addition, my spouse, a former mental health crisis counselor, became afflicted with bipolar disorder and was very suicidal until she was properly diagnosed and medicated. During this long period of stabilization, rehabilitation, and recovery, we did the best we could raising a child in deprivation and poverty caused by the existing rules governing state and federal policies that deal with assistance to the psychiatrically disabled on SSI and SSDI. I know first hand the struggles that consumers face in getting and keeping a job and attempting to leave the Social Security disability programs for a productive and independent life. As a state program director with the New York Association of Psychosocial Programs, I encounter consumers every day who struggle with the confusing, unfair, and complicated rules governing the SSDI program.

At the outset, I would like to express our deep appreciation to every member of the subcommittee for their important roles and the leadership displayed in the passage of the Ticket to Work and Work Incentives Improvement Act late last year. This law takes important steps toward self-determination in the rehabilitative process for people with disabilities, including people with severe mental illnesses, and removes barriers for disability beneficiaries who wish to enter the workforce and lead independent lives. NAMI is extremely grateful for the bipartisan leadership that you and your colleagues exhibited in passing this long-overdue reform.

Substantial Gainful Activity's (SGA) Impact on Work

Individuals with disabilities, including people with severe mental illnesses, want to work, but are often discouraged by many barriers in the current public system. A recent Harris survey showed that 72% of unemployed people with disabilities, including people with severe mental illnesses, have a strong desire to have a job. Several recent surveys have found this rate to be even higher for adults with severe mental illnesses, as high as 80%. Yet 69% of those surveyed by Harris say that their need for benefits is a major impediment to seeking employment. Employment is an essential part of recovery for people with severe mental illnesses, and recent advances in treatment services and medications have increased the capacity of people with severe mental illnesses to join the mainstream and live independently. NAMI has heard frustration from countless members who would like to begin the road to recovery by gaining employment but cannot risk losing their benefits by exceeding t! he SGA.

Employment assistance is critical for people with severe mental illnesses to regain independence, dignity, and purpose. People with severe mental illnesses are the fastest growing population within both the SSI and SSDI programs. More importantly, SSA data reveal that people with mental illnesses are joining the disability rolls at an earlier age. Given how difficult it is to get off the rolls through employment - less than 1% successfully do so - it becomes imperative to enact reforms that end the severe penalties for those who are willing to take the tremendous risks inherent in entering the workforce. Increasing the SGA level will certainly have a positive impact on individuals who would like to work but cannot afford to lose their eligibility for disability benefits.

The Current SGA Level is Outdated

Although NAMI strongly supported the increase of SGA to $700 a month in 1999 and acknowledged the intent of SSA to create an environment where more beneficiaries with disabilities can "enter the workforce and lead more productive, self-sufficient lives," this figure does not reflect an adjustment based on the national average wage index since the inception of SGA in 1979. SGA was designed as an indicator to signal whether a beneficiary is capable of earning significant wages, and it provides an incentive to enter the workforce. However, the current earnings limit of $700 a month reflects an income of only $8,400 per year, which barely raises an individual who wants to become independent of public support to the federal poverty level. Once making it to this meager plateau, a demarcation point that usually signals a crisis in an unimpaired workers life, a person with a disability that makes one dollar more can lose his or her eligibility for cash benefits. This is referred to as the "cash cliff," and it represents an all-or-nothing design that encourages people with disabilities to remain in poverty and dependent on the system. NAMI believes that a more equitable approach would be to increase SGA and index it to the wage growth that has taken place since the establishment of SGA.

Indexing SGA to Wage Growth

Since the establishment of SGA over twenty years ago, it has been increased only twice, in 1990 and just recently last July, in 1999. Obviously, those modest increases have not kept up with inflation over that period. This is especially the case with respect to cost increases in treatment, medications, and support services. As wages have increased over that same period, people with severe mental illnesses and other disabilities receiving SSA benefits have been forced to reduce the amount of hours they work to keep from exceeding SGA. Thus, SGA has become a very unreliable indicator of a beneficiary's ability to work. As you know, Social Security has stated that the past increase in SGA has resulted in substantial cost increases to both the SSI and SSDI programs. Likewise, any proposed increase is projected to increase the overall cost of Social Security's disability programs.

However, indexing SGA to wage growth, as is currently done for the SGA amount for the blind, would result in costs going down gradually over time. Such a move would allow SGA to be a more reliable indicator of an individual's ability to earn wages and work. It would also more effectively provide an incentive to work for all people with disabilities, including people with severe mental illnesses. This would mean that the federal government would not be hit by the substantial periodic cost increases needed to correct an antiquated and unreliable SGA. Finally, such a move would also avoid placing an unfair burden on beneficiaries who are eager to attempt to work.

Equivalence to the SGA Level for Blind Beneficiaries

NAMI believes that SSI and SSDI beneficiaries with severe mental illnesses and other disabilities should have an SGA level equivalent to the level established for the blind, around $1,170 per month, which is about 67% greater than the SGA level for non-blind beneficiaries. Such an adjusted level should also be adjusted annually for the cost of living, as is done for blind beneficiaries. This figure currently allows a blind disabled beneficiary to earn minimum wage (or a little more) and work a 40-hour week without a substantial loss of cash benefits.

Currently, people with disabilities (excluding blind beneficiaries), can work barely more than 30 hours a week at minimum wage before exceeding SGA and thus risk losing all or part of their cash benefits. It is likely that increasing SGA for non-blind beneficiaries to that for the blind disabled would create an additional fiscal burden for Social Security's programs. However, this change would create greater equity and fairness in both the SSI and SSDI programs and would more effectively prompt entering the workforce for many beneficiaries.

The difference in SGA levels for people disabled by blindness and for people disabled by severe mental illnesses or other disabilities has been supported by a rationale that has not been proven by research. In fact, evidence shows that the very characteristics thought to distinguish blind from non-blind disabled beneficiaries accurately describe the fate of non-blind beneficiaries disabled by severe mental illnesses. As was reported to the subcommittee in the GAO testimony by Barbara D. Bovbjerg, associate director, Education, Workforce, and Income Security Issues, Health, Education, and Human Services Division, disadvantages thought to separate people disabled by blindness were greater employment discrimination and low rates of employment.

The GAO noted that likely job prospects were low-wage jobs, and they incurred higher costs for supportive services. However, research by the National Institute of Disability and Rehabilitation Research shows that while people disabled by blindness are participating in the workforce at a rate of only 28.9%, they exceed the overall participation of rate of individuals disabled by severe mental illnesses (27.2%). In fact, NIDRR found that within the broad category of severe mental illness, the participation rate of persons with depressive disorders was only 25.4% and that the rate for individuals with schizophrenia was 11.9%, the lowest among any measured category.

The GAO testimony further compares evidence of cost differentials of supportive services associated with disabled blind beneficiaries and beneficiaries disabled by severe mental illnesses. A study conducted by the American Foundation for the Blind and Mississippi State University found that over 50% of legally blind individuals spent less than $500 for devices used to support work. In comparison, literature reviewed by GAO showed that, on average, people with severe mental illness incur costs of $1,400 to $3,600 annually for supportive employment services, and annual costs for mental health services range from $3,200 to $7,000.

If the suppositions that led to the original segregation of beneficiaries with severe mental illnesses and other disabilities are not supported by research, how can the disparities remain? If the evidence actually points to people disabled by severe mental illnesses as having a greater disadvantage, again, how can the disparities remain?

NAMI does not seek to single out any group in determining fair and legitimate SGA levels or their complete removal for all groups of people with disabilities. On the contrary, NAMI wishes to advance fair and equitable treatment for all disability groups. NAMI endorses the goals cited by the Consortium of Citizens with Disabilities that congressional action regarding SGA should:

1) Do No Harm - Changes made by Congress to the earnings limit, or to the Social Security Disability programs as a whole, should ensure that no disability group is negatively affected. Whatever Congress does, it must not enact policy detrimental to any particular category of DI beneficiaries.

2) Establish Equity - Congress should take favorable action on legislation that addresses earnings limits and must ensure equity among all DI beneficiaries.

NAMI would like to thank the subcommittee for taking this important look at long-overdue steps toward greater fairness in the SSI and SSDI programs. NAMI is hopeful that congressional action will allow more beneficiaries with severe mental illnesses to reach their potential-to move toward recovery-through employment. Thank you for the opportunity to comment on this important work disincentive in Social Security's disability programs.

With deep respect,

Michael Freedman