Disability, USA

Steve Kroft reports on the alarming state of the federal disability program, which has exploded in size and could run out of money

The following script is from "Disability, USA" which aired on Oct. 6, 2013. The correspondent is Steve Kroft. James Jacoby and Michael Karzis, producers.

There is a Senate hearing scheduled tomorrow on a subject of some importance to millions of Americans, but with the government shutdown it's not clear that the Senate Committee on Government Affairs will be able to pay for a stenographer to record the event. The hearing involves the Federal Disability Insurance Program, which could become the first government benefits program to run out of money. When it began back in the 1950s it was envisioned as a small program to assist people who were unable to work because of illness or injury.

Today, it serves nearly 12 million people -- up 20 percent in the last six years -- and has a budget of $135 billion. That's more than the government spent last year on the Department of Homeland Security, the Justice Department, and the Labor Department combined. It's been called a "secret welfare system" with it's own "disability industrial complex," a system ravaged by waste and fraud. A lot of people want to know what's going on. Especially Sen. Tom Coburn of Oklahoma.

Tom Coburn: Go read the statute. If there's any job in the economy you can perform, you are not eligible for disability. That's pretty clear. So, where'd all those disabled people come from?

The Social Security Administration, which runs the disability program says the explosive surge is due to aging baby boomers and the lingering effects of a bad economy. But Sen. Tom Coburn of Oklahoma, the ranking Republican on the Senate Subcommittee for Investigations -- who's also a physician -- says it's more complicated than that. Last year, his staff randomly selected hundreds of disability files and found that 25 percent of them should never have been approved -- another 20 percent, he said, were highly questionable.

Tom Coburn: If all these people are disabled that apply, I want 'em all to get it. And then we need to figure out how we're going to fund it. But my investigation tells me and my common sense tells me that we got a system that's being gamed pretty big right now.

And by a lot of different people exploiting a vulnerable system. Coburn says you need look no further than the commercials of disability lawyers trolling for new clients. Namely, the two thirds of the people who have already applied for disability and been rejected. There's not much to lose, really. It doesn't cost you anything unless you win the appeal and the lawyers collect from the federal government.

Marilyn Zahm: If the American public knew what was going on in our system, half would be outraged and the other half would apply for benefits.

Marilyn Zahm and Randy Frye are two of the country's 1,500 disability judges. They are also the president and vice president of the Association of Administrative Law Judges. They are each expected to read, hear, and decide up to 700 appeals a year to clear a backlog of nearly a million cases. They say disability lawyers have flooded the system with cases that shouldn't be there.

Marilyn Zahm: In 1971, fewer than 20 percent of claimants were represented. Now, over 80 percent of claimants are represented by attorneys or representatives.

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