In the Social Security program alone, the White House proposes to spend $4.3 billion over five years to fight fraud associated with disability claims

[Editor – President Obama’s discussion of disability reform usually becomes reduced to a discussion of fraud. This five part series from the New York Times, looks at the issues from the viewpoint of experts.]

By New York Times – The 2010 budget unveiled on Thursday by the Obama administration estimates that the government can generate huge savings if it devotes more resources to eliminating fraud, abuse and waste in Medicare, Medicaid and the Social Security disability insurance program.

In the Social Security program alone, the White House proposes to spend $4.3 billion over five years to fight fraud associated with disability claims — a problem, officials say, that stems from lack of oversight. Federal spending on disability insurance leaped 65 percent from 2001 to 2007, “yet the number of full medical reviews, one type of review for evaluating claims for eligibility for continuing disability payments, fell from 840,000 in 2001 to 190,000 in 2007, according to the Social Security Administration,” as The Wall Street Journal reported this week.

Why have federal disability costs skyrocketed? Is it because of fraud, an increase in the number of the truly disabled, or are there larger problems with the program?

Jennifer L. Erkulwater, an associate professor of political science at the University of Richmond, is the author of “Disability Rights and the American Social Safety Net.”

Before we go looking for miscreants cheating the disability programs, it is important to realize that the growth in the Supplemental Security Income and Disability Insurance programs is perfectly understandable given bipartisan policy changes made two decades ago and current limits on what the Social Security Administration can do to ferret out fraud.

Between 1984 and 1990, Congress and the S.S.A. loosened the disability requirements, especially for children and people suffering from mental disorders. The agency also agreed that it would no longer cut off recipients it thought were “no longer disabled” unless it could show that their medical condition had improved, something that is exceedingly difficult to do. As part of welfare reform in 1996, Republicans in Congress did manage to tighten disability standards somewhat.

Layoffs of state examiners during this recession will make it hard to review disability cases.

However, none of those changes substantially rolled back the loosening of the disability criteria that had occurred. As a result, it should come as no surprise that, compared to two decades ago, it is much easier today for younger adults and children, particularly those with mental disorders, to receive disability benefits and to stay on the disability rolls longer once found eligible.

At the same time, current state efforts to trim budgets will make it difficult for President Obama to achieve the cost savings he seeks. In an effort to save money, some states are laying off the disability examiners that the S.S.A. uses to process claims, leading to a huge backlog in applications. Because these same state disability examiners also conduct the S.S.A.’s continuing reviews of disability, this cutback compromises the agency’s ability to maintain program integrity.

As the recession wears on and more people apply and fewer people are re-examined, disability rolls can be expected to grow. However, the villain here is not fraud. Instead, program growth is the result of intentional changes to policy and administrative capacity.

Next – Welfare Reform as a Model