The Systemic Problem in Government Assistance Programs

The first thing you need to know is that this is not a scientifically researched article. This article, instead, is a reflection based on my personal experience of having worked for several years in Medicaid/Medicare funded programs with those receiving social security benefits for disability based on mental and physical health problems. This is what I’ve seen. My proof is anecdotal, though my experience does not far differ from what one would find if one were to do a research study.

I had so many misconceptions about “welfare” before I started working in the mental health and substance abuse related fields. Honestly, I was very biased. “People on food stamps don’t want to work.” “People on welfare just want to live off the system.” “I wish I could get paid for doing nothing all day.”

My experience has shown me just how wrong I was.

There are some very specific things that need to be understood before we get too far into this discussion, however. One is the basic difference between Supplemental Security Income (SSI) and Social Security Disability Income (SSDI). When we pay our FICA taxes, that money is like an insurance policy we pay to the government. I’ve been paying these taxes for many years now. If something catastrophic were to happen to me, a vehicle accident that left me disabled, an illness that impaired my ability to work, anything catastrophic that would make it impossible for me to sustain a living, I could apply for disability. If approved, I would receive SSDI. Basically, I would be receiving the benefits for which I have been paying through my taxes. That money is mine, paid to the government as a type of disability insurance. I would be getting back what I’ve paid in.

Supplemental Security Income (SSI) is for those who have not paid enough in taxes to benefit from SSDI. A person with a life-long disability that started in childhood and has never been able to work is an example of someone who would receive SSI. SSDI is based on the amount of taxes a person has paid in to the system. A person may not have paid enough taxes prior to the event that caused the disability to earn enough through SSDI to meet their basic needs. This person’s SSDI payment would be supplemented by SSI. Another possibility is that the person’s disability extends beyond the benefit limit the person paid in taxes. In other words, the person paid enough in taxes to earn SSDI for 5 years, but the disability the person suffered is life-long. SSDI will run out in 5 years, so the person will only receive SSDI for 5 years, and then be moved to an SSI income. So SSDI is based on our taxes paid. SSI is government provision of a cost of living income. This is what is traditionally thought of as “the welfare check.”

Another factor that should be considered is the intention of these government based assistance programs as compared to the results of how these programs are designed.

The intention of these programs is noble. Provide cost of living income and health insurance benefits to those who cannot provide these things for themselves due to disability. On the surface, this seems to echo the biblical teaching about caring for the poor, the sick, the lame and the orphans. On the surface this is the intent, to help people who need help.

The design of these programs and the outcome that is produced, however, do not follow the intent. The result of the design of these programs is that people are kept in poverty. They are kept, because of the system meant to help them, in a situation in which they are unable to help themselves. In other words, the design of these programs deepens a person’s dependency on the programs, rather than helping people become independent and able to care for themselves.

An example of a way that these programs deepen a person’s poverty, rather than help lift someone out of poverty can be seen in the regulations regarding limits of how much money a person can have and still qualify for benefits. When a person applies for benefits, they will receive what is called a back pay. The back pay is based on the date of application. Let’s say for whatever reason, a person gets denied disability, and then goes through the appeal process. The appeal process could take more than 2 years, during which time the person is living off of other people, because they are unable to have an income of their own. The person, after waiting 2 years, then gets approved through the appeal process. The back pay is based on the date of application, which means the person then receives a back pay equal to the amount of what the monthly SSI/SSDI income would have been if they had been receiving it all along. Le’s say a person’s monthly income is established at $950.00 per month. The person had to wait 2 years through the appeal process. The person then would get $950.00 times 24 months, or a back payment of $22,800 tax free.

According to the regulations guiding disability income, the person is not allowed to have more than $1,000.00 in savings, and can only receive a monthly income of a formulized amount before their SSDI/SSI income is reduced. In reality, the person who receives a back pay of $22,800 has about six months to get rid of that $22,800. If they don’t spend the money, they lose their monthly income allowance and insurance benefits, and have to start the process again nearly from step 1.

I used to get so angry while at the Samaritan Center, a local food pantry in Jefferson City. The people driving up to get free food would have the latest iPhone, a heck of a nice car, some obviously new designer clothes, and all kinds of other expensive things. Then I realized that these items were probably purchased with their back pay. The way the regulations are set up demand that a person blow thousands of dollars in a very short period of time or lose their long term benefits and end up at square one.

Then I began to feel badly for these people. In about a year, that really nice car would be rotting in a parking lot because the person would not be able to afford the long term costs of maintenance, insurance, licensing and gas to keep the car running. If they sold the car for what it is worth, they would have to report that money as income, and then have their monthly income and insurance benefits cut. That iPhone would be disconnected in 6 months to a year with a back balance on the phone bill that the person would be unable to pay. I would visit people’s homes as a case manager and see a brand new 57 inch LCD TV, surround sound, and the latest and greatest video game console on the market. When I realized these items were probably purchased with SSDI/SSI back pay, I realized that in 6 months to a year the person would have very fancy paperweights, because they would be struggling to keep the electricity turned on in the home.

The question could be asked why someone wouldn’t spend this money on buying some cheap property, for example a mobile home. The reason is because any property related to housing, a mobile home, a house, is considered an asset that is taken into consideration when a person has benefits renewed. In other words, if a person owns his or her own home, his or her benefits will be reduced, because the government considers that he or she could sell their home to pay for some things themselves.

People are paid these large amounts of money, and then told that if they use it responsibly, put it in savings for the future, plan for retirement, buy a home, or use it systematically over a long period of time, they will lose their meager income and insurance benefits and ultimately end up in a worse situation than they were in before the back pay is awarded. The system is designed to keep people from being able to save.

Another example of how the system is designed to keep people in poverty despite the intent of “helping people better their situation” is in the way the government manages the insurance benefits. The insurance benefits that people receive are based on their level of income. A person can have an income at a level that exceeds the amount that Medicaid/Medicare approve. In this case, the person is assigned what is called “a spend down”. In other words, the person does have Medicaid/Medicare insurance, but is assigned a formulaic price that could be considered a copay for their healthcare costs. Sounds reasonable, right? The devil is in the details.

The threshold at which a person would start paying copays (known as “spend downs” in the Medicaid/Medicare system) is roughly $750.00 to $800.00. So let’s take our example of the person above, who is awarded $950.00 per month in SSDI due to a disability the person sustained. He must spend out of his own income $200.00 per month on medical costs before Medicaid will pay for any of his medical bills. This reduces his monthly income to $750.00. The copay is based on whatever amount a person receives over the threshold limit. I worked with a couple who had a monthly income of about $3,000.00 between them. He had a long military history, and received military pension, but was disabled not related to military service. She was disabled, as well, and received SSI income, because she had no work history, having been a military wife and stay at home mom throughout her adulthood. Their monthly Medicaid/Medicare spend down was $2,250.00 per month. That’s how much they would need to pay out of pocket before Medicaid/Medicare would cover any medical expenses every month. People are disincentivized from making more money than the threshold limit, because they know that any medical costs are going to drop them to the threshold limit, and they will be in the same position.

Now, take our person who is disabled and is already required to pay $200.00 per month in his medical care for medication that makes him stable enough to be able to work. If he were to go to work and make over a certain amount of money, his monthly income would be reduced based on how much money he is making. There are limits to how much monthly income a person can make and still receive their income benefits. With these limits, people are disincentivized from making more money and improving their situation, because they wouldn’t be able to afford the healthcare costs that keep them stable enough to work to improve their situation. They are trapped. They can continue in a poverty level of care with government benefits in order to stay emotionally and physically stable. That’s Choice A. Or, Choice B, they can work hard, bring themselves out of the poverty level of existence they experience with government benefits, but lose the ability to afford the very things that have made it possible for them to succeed, the necessary things like medication, medical care, counseling, and other supports provided through insurance.

The intent of the system is to give people the necessary things they need to better their life situation. The design of the system, however, keeps people in poverty and makes them fearful of success, because they would not be able to continue to provide for themselves the very things that have made them stable and able to succeed. It is a problem in the design of the system.

I want to say something quickly about the recent legislation requiring drug screens in order to maintain benefits. I supported this legislation…initially. My thinking was, I have to be drug tested for my job. If I were to come up positive on a drug screen, I would lose my livelihood. So why shouldn’t those who are on government benefits need to submit to drug screens, as well, right?

This sounds perfectly reasonable, until you consider that one thing that people addicted to drugs are really good at is urine diversion to beat drug screens. This is going to be a monumental waste of resources by the government. In order to ensure that urine is not diverted to beat these drug screens, the people would have to submit to observed drug screens, saliva tests, or hair follicle tests. There will have to be people paid by the government to do this. It will have to happen in semi-sterile, laboratory settings that will include the cost of managing and disposing of biohazard material. It will involve tax payer dollars covering the cost of testing and processing the drug screen samples, whether it be urine, saliva, or hair tests. The cost of the drug screens, which will produce false results because those using drugs know how to beat the drug screens, will outweigh the benefit to society that the intent of this practice is meant to accomplish. Once again, the intent, to make sure that those receiving government benefits are not using those benefits to obtain illicit substances (“I don’t want my tax dollars used to support somebody’s crack habit.”) is a good intent. The problem is in the design. The design creates a greater expense of time, money and resources that requires tax payer dollars, and will not produce benefits that will outweigh the cost. It won’t work, but at least it’ll cost a lot of money. Typical government logic.

The amount of money people are awarded for SSDI/SSI is minimal. It is a cost of living income. The low amount of income, when we hear it, sometimes makes us gasp. We hear that a person receives only $694.00 per month, and we feel awful that this person has so little to meet his or her needs. One thing we need to understand is that while people who receive SSDI/SSI may only be receiving $694.00 per month, all recipients of SSDI/SSI are automatically qualified for Medicaid, and eventually Medicare. At this low income, they are below the threshold for having a spend down, and so all medical care (excluding minimal amounts for prescriptions, which usually have a $0.25 to $0.50 copay), is free. They don’t pay for their insurance, nor do they have to pay copays for doctors’ visits. This low amount o f income also qualifies them for housing assistance.

The way housing assistance works is that they are allowed to have a pre-approved apartment, with the cost of rent subsidized by the Housing Authority. They get rental assistance, and only need to pay a fraction of what the actual cost of rent is. Their payment portion is determined on a sliding scale basis, which considers their income and other expenditures, like car payments, telephone payments, electricity and utility bills, etc. The cost of rent of people with whom I’ve worked in my years as a case manager ranged from $0.00 to $125.00. The only people who had to pay more were people who had been disqualified from receiving housing assistance for various reasons (felony conviction or failure to meet their obligation of their portion of rent in the past are 2 reasons why someone may be disqualified). For the vast majority, the rent is a small portion of their income.

Due to low income, many of the individuals with whom I worked were also eligible for utility assistance if they were in a private apartment from various programs like the Community Action Centers. In public housing, utilities are included. Now here’s how this worked. The people with whom I worked did not actually have to pay their utility bills in order to be eligible for rental assistance from Housing Authority. They only had to show how much their utility bills cost. So a person would get subsidized rental assistance based on the amount of their utility bills, then go to Community Action Centers and other organizations to get money to pay utility costs. In other words, they were getting assistance based on a bill that they would not have to pay. My clients were masters at understanding all of this, and used these kinds of design flaws to their benefit. Who wouldn’t? I know when Lesley and I fill out our taxes, we look for every loophole we can find to get as much back from the tax system as we can. These people on assistance were doing the same thing, just in a different system.

The majority of people who receive SSDI/SSI are also eligible for EBT cards, colloquially known as food stamps. There are a large number of food pantries to which people of low income have access, as well. I worked with my clients on learning to use their EBT cards for purchases when they received them. The cards were awarded money at the beginning of each month. We would, at the beginning of each month, develop a grocery list of items they would need for about 2 weeks. They would buy these 2 weeks worth of groceries. At the beginning of the 3rd week, we would visit the various food pantries in the area, which usually provided about another 2 weeks worth of groceries. A person could eat for a full month, and never pay anything out of his or her own income, unless it was an item that they decided they wanted in the middle of the cycle we had developed.

The bottom line is, when we hear that people are receiving very low amounts of income in SSDI/SSI, we need to remember that for the majority of people receiving SSDI/SSI, their income is mostly disposable. “Disposable income” is that money we have each month that is not “earmarked” for bills, house payments, medical costs, and other necessary expenses. It’s basically the amount of money we have to blow on whatever we want. The majority of their money is disposable because the government assistance programs in their various forms are designed in such a way that they provide most of the necessities of a person’s life. I worked with several clients on budgeting, looking at their monthly bills. After working with several of them, and coming to an amount of disposable income each month, I went and looked at Lesley’s and my income. When I was doing this social service work, I realized that my clients had more disposable income per month than Lesley and I did, even though our monthly income was 3 to 4 times the amount of my clients’ incomes.

The entitlement or social assistance programs are noble in intent. We all want to help people who are struggling. By design, these systems do not help people in the long run. By design, these programs do meet people’s immediate, basic needs for housing, food, warmth, and medical care. By design, however, once someone enters into the social assistance programs, it becomes harder for them to get out. They are punished for using their finances responsibly by saving for the future or buying a home. They are disincentivized from working because if their income exceeds the threshold amounts, they lose the very supports that have made them physically and/or mentally stable enough to work. The systems are designed to allow people to double dip in benefits to maximize the disposability of their monthly income. The design of the system is highly flawed.

If social assistance programs are going to work, it is going to take a systemic change in the way they are designed. The systems will need to be designed in such a way that a person is rewarded for being responsible with their money. The systems will need to encourage people to work. Working is not a curse. The clients that I felt did the best in recovery were the ones whose benefits were low enough that they could obtain employment where they worked 10 to 15 hours per week (which, because of their low benefits, would keep their income below the threshold limit). It gave them a sense of purpose and accomplishment, and did wonders for their self-esteem.

The entire system needs to be changed. Currently, nearly 46% of the population of the United States is receiving some kind of entitlement benefit. This is unsustainable. We will be bankrupt as a nation if we don’t change the system. I want to help those who need help. I don’t think a government run system is the way to help them.