NUMBER DISABLED AT INDICATED DURATION OF DISABILITY My interpretation of these data is that the payments under the waiver and installment benefits represent actual disability while the experience under the income benefit includes payments to those individuals who, but for the incentive of a disability income, might have become reestablished as productive members of society. I do not mean to state or imply that the difference is accounted for by deliberate malingerers who have deluded the insurance company. Rather, I believe they have deluded themselves. No doubt many have deluded their physicians as well. There is little argument today over the proposition that the mental attitude and the emotions of an individual have a profound effect on his physical well-being. These apparent malingerers are, for the most part, really disabled according to any practical criterion of disability, but would not have been if there had been no disability income to rely upon. I do not believe that a government administrator or a government rating board would be any quicker to terminate disability benefits in such cases than the insurance claim adjuster. Other examples can be cited to show how the disability rates are influenced by the attractiveness of the benefits provided. During the depression of the thirties disability losses increased enormously, and during the war years they dropped to levels far below normal, whereas the actual changes in general health conditions were not nearly so marked. Chart B shows the trend in experience under two forms of disability policies.' The broken line indicates the loss ratios under noncancellable life-income disability policies. Some proponents of Federal disability insurance argue that this unfavorable experience is irrelevant to the consideration of social-security disability benefits because of the effects of individual selection and of benefits for very large amounts. However, the solid line, showing the ratio of actual to expected group disability claims during the same period indicates an even more adverse trend under small policies issued to the workingman under a plan that precludes individual selection. The dotted line shows the trend of mortality under industrial insurance, indicating that there was no substantial deterioration in general mortality during the depression. The record does not contain substantial proof or demonstration of Mr. Altmeyer's assertion that "to the extent that one is able to judge, the veterans' experience has been more favorable than the experience of private-insurance carriers, * In his testimony before this committee on January 18, 1950, Mr. Altmeyer stated the foregoing opinion after quoting the following from the recent book by Professor McGill. "The disability experience of USGLI has not been unfavorable. The combined experience of the two disability clauses appears to have been more favorable than commercial-insurance experience, although exact comparisons cannot be made because of differences in age limitations, qualification periods, and definitions of disability." " I would like to call your attention to the author's own qualifications in the quotation just made. I have carefully reviewed Professor McGill's analysis and have studied the reports of the Veterans' Administration and have been unable to find any published data which can be properly compared with insurance companies' experience. Moreover, I question the bearing which the experience under benefits payable to veterans has on the question at hand since the veterans comprise a select group not representative of the labor force of the Nation. This rather technical problem is discussed in greater detail in the written appendix to this statement. Cash benefits for extended disability generally have the effect of prolonging disability and deferring the return to productive activity. Chart A shows to what extent the amount and value of the benefit affects the disability rate, while chart B shows how greatly the need, as between periods of low and high employment, affects the disability rate. As this variation occurs rather uniformly under very different methods of selection and administration, there can be no doubt but that an assured disability income exerts a powerful influence on the behavior of the disabled person. In fact, there is reason to believe that, in many cases, a permanent disability benefit, by reducing or destroying the incentive to return to useful activity, has done the disabled individual more harm than good. The noncancellable disability experience data were taken from History and Present Status of Noncancellable Accident and Health Insurance, by John H. Miller, vol. XXI of the proceedings of the Casualty Actuarial Society, p. 246. The group life disability experience data were taken from a report entitled "Combined Group Mortality Experience, 1922-34," Committee on Group Mortality Investigations, E. E. Cammack, chairman. The industrial mortality experience is presented in the form standardized mortality rates for ages 1 to 74 according to the experience of the Metropolitan Life Insurance Co. under its industrial insurance as reported in Twenty-five Years of Health Progress, by Dr. Louis I. Dublin. Committee on Finance, United States Senate: Hearings on H. R. 6000, pt. I, p. 52, Washington, 1950. McGill, Dr. Dan Mays, An Analysis of Government Life Insurance, p. 102, Philadelphia, 1949. *This is a ratio chart drawn on a logarithmic vertical scale, CHART B Therefore, I would count the cost of this extra disability shown in chart A not just in claim dollars paid out by the insurance company, but in wasted lives and prolonged disability suffered by people who should have been making a greater effort to return to their jobs or to find a new role of activity. Precedents for disability experience from foreign plans should not be followed without an examination of the alternatives and a thorough appreciation of the advances made by medicine and other sciences in dealing with the problems of the disabled. Permanent-disability insurance is an old institution dating back to the earlier days of the British friendly societies. Its inclusion in the social-security plans of foreign countries has been cited as a reason for our adoption of these benefits and as proof of the feasibility of doing so. In my opinion, these arguments lose whatever force they might have when we find, as is shown in the appendix to this statement, that typical benefits of foreign plans, in effect before World War II, have been equivalent to only a few dollars a week. Although the British benefits, and perhaps those of other countries, have been increased subsequently, there has not been sufficient time to appraise the results under such liberalized benefits. However, in considering the problem of the disabled, it seems to me that the history of past attempts at paying cash benefits, whether successful or not, is of less significance than the tremendous gains which have been made in the past few decades in elimination of disability or its unfortunate consequences by cure or treatment on the one hand and by vocational rehabilitation on the other hand. Before accepting disability pensions as a desirable objective, it will be well to examine the developments in these fields. The Vocational Rehabilitation Service established by Congress in 1920 and 1943 have accomplished much and offer great promise for our disabled citizens. Two of the most important steps ever taken by Congress in promoting social welfare were the passage of the Vocational Rehabilitation Act of 1920 and the 1943 amendments to that act. A part of the Federal Security Agency, the Office of Vocational Rehabilitation has worked with State agencies, with the physicians of the Nation, and in cooperation with industrial medicine, in returning disabled and handicapped people into useful endeavors. The opportunities in rehabilitation have been well stated by Mr. Michael J. Shortley, Director of the Office of Vocational Rehabilitation, in the following words: "Most disabled persons can work efficiently if prepared for jobs compatible with their physical condition, aptitudes, and abilities. A man with a leg amputation can do anything at a bench or desk that an able-bodied man of equal skill can do. A man with an arm amputation may be a competent salesman, draftsman, or lawyer-to mention but a few occupations open to him. The deaf person is handicapped only in communication and not in the skilled use of mind and hands. Tuberculosis ex-patients and persons with heart defects are limited only in performing heavy manual labor and not in the duties of lighter-skilled vocations. The blind compensate their loss of vision by quickened perception, power of concentration, and manual dexterity. In fact, nearly every disabled person has far more vocational assets than are lost through his impairments, and it is only needed to develop his remaining skills and capacities, through physical restoration and vocational training, to the point of economic usefulness." Mr. Oscar Ewing has asserted, "Our disabled civilians generally are capable of becoming self-sustaining and contributing citizens of their communities; The proponents of permanent and total disability benefits "as a matter of right" point out that the proposed law (H. R. 6000) requires termination of disability benefits upon refusal without good cause to accept rehabilitation services. Unquestionably, the Administrator can, under threat of termination of benefits, force the disability pensioner to register at a rehabilitation center. But forcing a man into a rehabilitation center will not assure his rehabilitation any more than forcing a man to attend church will guarantee his conversion. His heart must be in the project. If his mind is fixed on the security of disability pension payable so long as rehabilitation is not successful, his doubts as to the outcome of rehabilitation and as to his future self-sufficiency will erect a psychological barrier to the success of the program. When you hold out a reward for failure, can you expect success? If, under these circumstances, the attempt at rehabilitation fails, after the disabled person has passively gone through the motions of compliance with instructions, it will be very difficult for the Administrator to remove him or her from the disability roll. Furthermore, because of the human tendency to follow the line of least resistance, not only the patient but also the administrative official or worker in charge may be less impelled to strive for rehabilitation, if a disability pension is available as a matter of right. The proponents of permanent and total disability benefits also argue that through the disability insurance, plan more people will be referred to the rehabilitation agencies. It seems to me that there are more direct methods of bringing the benefits of rehabilitation to people who can profit by it than through the process of declaring them permanently and totally disabled, a terrible and disheartening judgment to a person who needs hope and encouragement. It would seem better to attempt rehabilitation first, leaving the payment of a disability Shortley, Michael J., Independence Day for Disabled Civilians, Office of Vocational Rehabilitation. Federal Security Agency, pp. 7-8, Washington, July 1947. Office of Vocational Rehabilitation, Federal Security Agency: Brass Tacks-Vocational Rehabilitation for Civilians, Washington, June 15, 1949. 60805-50-pt. 3-22 allowance as a final resort in the hopeless cases. If, today, there are needy disabled people who are not seeking the aid of the rehabilitation services, would they be any more likely to do so if in receipt of a disability income? If they have not sought rehabilitation because of ignorance of the program, the solution would appear to be a strengthening of its publicity and its relations with other agencies. In an address before the Sixth Annual Congress on Industrial Health, Mr. Shortley expressed the opinion that "employment in ordinary industrial or agricultural pursuits would be possible for at least a million men (and as many of the million women in similar circumstances as wished to seek employment) if they obtained appropriate rehabilitation services." 8 Mr. E. B. Whitten, executive director of the National Rehabilitation Association, in his statement before this committee on January 25, 1950, mentioned the substantial accomplishments and the still greater potentialities of the rehabilitation services. He also stressed the desirability of making the rehabilitation program the principal approach to the disability problem rather than giving it a secondary role. Chart C, reproduced from the 1949 Annual Report of the Office of Vocational Rehabilitation, suggests that in most States the opportunities for restoring the disabled to self-support have scarcely been scratched. It will be noted that, for 1949, the rate of rehabilitation in Delaware was nearly four times that for the entire Nation, and over 10 times that for Massachusetts. If the national average had been equal to the Delaware rate the number rehabilitated in 1949 would have approached Mr. Ewing's estimate of 250,000 men and women becoming disabled every year." 10 The proposed disability insurance plan is limited in its scope and can never help certain large segments of the disabled among our population. At best, the proposed insurance plan can aid in the solution of only a part of the problem of disability, since many disabilities arise in childhood and others occur before the minimum employment qualifications are met. The rehabilitation services, on the other hand, are available to all citizens, regardless of age, occupation, or wage records. Therefore, inasmuch as the insurance plan cannot meet the entire need, and as there is danger that it may impede or inhibit full use of the rehabilitation services, would it not be better to rely on rehabilitation as the first line of attack and, secondly, upon assistance by private voluntary agencies, supplemented where needed by public assistance at the local level? The objection usually raised to such an approach is the necessity of the means test, which is criticized as being degrading to the individual and out of place in a modern, enlightened state. However, since it is manifestly impossible to give everyone all that he considers to be his needs, the only apparent alternative to the means test is a system of benefits paid as a matter of right according to an arithmetic formula involving factual data such as wage histories, employment records, and dependency. Now, in providing a basic floor of protection payable to the worker in his old age or to the dependents of a worker who has died, a benefit determined by a formula and paid as a matter of right may be satisfactory. However, in dealing with disability with its varying degrees of severity, its varying consequences, and its varying possibilities of terminaton by recovery or rehabilitation, we have a most intricate problem that can best be handled through individual consideration by a case worker or local administrator able to exercise some measure of discretion. No benefit formula can recognize the many elements that enter into a disability case. Since disability insurance benefits will not help those who have not established adequate earnings or employment records, will deal very inadequately and im 8 Journal of the American Medical Association, May 27, 1944, vol. 125, pp. 263-265. Annual Report of the Federal Security Agency, 1949, Office of Vocational Rehabilitation, pp. 23 and 24, Washington, 1950. 10 Ewing, Oscar R., The Nation's Health-A Ten-Year Program-A Report to the President, Federal Security Agency, p. 21. Washington, September 1948. The statement referred to follows: "REHABILITATION "We have only started to meet our national needs for rehabilitating those who have been disabled by disease or injury. "The goal: To provide rehabilitation services for the 250.000 men and women who become disabled through illness or injury every year so that they can be restored to the most nearly normal life and work of which they are individually capable." |