Racial disparities in federal disability benefits

Contemporary Economic Policy, Jan, 2007 by Erin M. Godtland, Michele Grgich, Carol Dawn Petersen, Douglas M. Sloane, Ann T. Walker

I. INTRODUCTION

The Social Security Administration (SSA) administers the two largest federal programs providing cash assistance to people with disabilities, the Disability Insurance (DI) program, and the Supplemental Security Income (SSI) program. For the public to perceive that SSA's disability programs are run with the highest degree of integrity, it is of the utmost importance that the agency's decisions to award cash benefits to people with disabilities are accurate and made in a fair and impartial manner, without regard to race, sex, or other factors not related to a person's impairment. Yet, for over a decade, SSA has been confronted with allegations that its disability decision-making process discriminates against African-Americans.

Historically, African-Americans have been less likely than whites to be awarded disability benefits under SSA's disability programs. (1) In 1992, the GAO conducted a statistical analysis of the proportion of benefit claims that were awarded at the initial level of the decision-making process. GAO also conducted a statistical analysis of decisions at the appellate level--when the claimant appeals to an Administrative Law Judge (ALJ) to reconsider a denial made at the initial level. GAO found that racial differences, largely at the appellate level, could not be completely explained by factors related to the decision-making process. (2) This could be due to any number of reasons, including possible racial discrimination. In this paper, we use newly available data, multivariate econometric models, and Oaxaca decomposition methods to examine whether racial/ethnic differences currently exist at the appellate level and to what extent they are explained by related factors considered in ALJ decision making.

II. BACKGROUND

DI and SSI are the two largest federal programs providing monetary assistance to people with disabilities. Established in 1956, DI provides monthly payments to workers with disabilities under the age of 65 who have enough work experience to qualify for disability benefits, and also to their dependents or survivors. Created in 1972, SSI is a means-tested income assistance program that provides monthly payments to adults or children who are blind or who have other disabilities and whose income and assets fall below a certain level. (3) To be considered eligible for either program as an adult, a person must be unable to perform any substantial gainful activity (SGA) by reason of a medically determinable physical or mental impairment that is expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months. Work activity is generally considered substantial and gainful if the person's earnings exceed a particular level that is established by statute and regulations. In calendar year 2002, about 5.5 million working age individuals (aged 18-64) received about $55.5 billion in DI benefits, and about 3.8 million working age individuals received about $18.6 billion in SSI benefits.

A. Applying for Benefits

To obtain disability benefits, a claimant must file an application either online, by phone or mail, or in person at any Social Security field office. If the claimant meets the nonmedical eligibility criteria, the field office staff forwards the claim to the appropriate state Disability Determination Service (DDS) office. To make the initial disability determination, DDS staff--generally a team comprised of disability examiners and medical consultants--review medical and other evidence provided by the claimant, obtaining additional evidence as needed to assess whether the claimant satisfies program requirements. If the claimant is not satisfied with the DDS determination, the claimant may request a reconsideration within the same DDS office. A different DDS team will review the documentation in the case file, as well as any new evidence the claimant may submit, and determine whether the claimant meets SSA's definition of disability. In 2002, the DDSs made 2.3 million initial disability determinations and over 484,000 reconsiderations.

If the claimant is not satisfied with the DDS reconsideration, he or she may request a hearing before an ALJ. Within SSA's Office of Hearings and Appeals, there are approximately 1,100 ALJs located in 140 hearing offices across the country. The ALJ conducts a new review of the claimant's file, including any additional evidence the claimant has submitted since the DDS determination. At a hearing, the ALJ may hear testimony from the claimant, medical experts on the claimant's medical condition, or vocational experts regarding whether the claimant could perform work he or she has done in the past or could perform other jobs currently available in the national economy. (4) The hearings are recorded, and the majority of claimants are represented at these hearings by an attorney or a non-attorney representative (such as a legal aid, parent, relative, or social worker). Translators may be used for claimants with limited proficiency in English. In fiscal year 2002, ALJs made over 438,000 disability decisions.