Lawmakers wary of state contract designed to move welfare recipients to disability rolls

In the growing debate over entitlement reform, an interesting dynamic is being revealed.  It is the shocking rise of Americans who are on the federal government disability rolls.  Today, taxpayers pay more money each year in disability benefits than is spent on food stamps and welfare combined.  More than 14 million Americans receive a disability check each month from the federal government.  

Missouri ranks in the top ten among states with the highest percentage of its working-age population on workers’ disability.  According to figures provided by the Social Security Administration, more than 6 percent of Missourians between the ages of 16-64 receive workers’ disability benefits.  A move by the Missouri Department of Social Services could cause that number to rise significantly.

In the fall of 2012, the Missouri Department of Social Services contracted with Public Consulting Group (PCG), a private firm based in Boston that specializes in working with state governments to move residents from welfare onto disability. The company, which provides similar services in Kentucky, Illinois, New York, Wisconsin and California, is set to receive $2,300 for every successful transfer it makes in Missouri.

That contract has raised eyebrows of some lawmakers.  On April 22, The House Committee on Government Oversight and Accountability, chaired by Rep. Jay Barnes, heard testimony from representatives from the Missouri Department of Social Services and PCG.

Brian Kinkade, deputy director of the Missouri Department of Social Services, described the arrangement with PCG as “revenue maximization” and told the committee that the contract could save the state $28 million annually by better aligning people with the correct programs to cover their needs.

But Rep. Barnes questioned the wisdom of the state paying a private company to shift people who are on programs like the Temporary Assistance for Needy Families (TANF) program to a system that would trap them in long-term poverty.

TANF is a cornerstone of the Clinton welfare reform, which was designed as temporary assistance to help move people from welfare dependency to work.  But over the last three decades many people have learned how to end-run the system, moving onto Social Security Disability system – which has no work requirement – and never leaving.

“You can call it revenue maximization or getting people onto the right program. At the end of the day, if we take the spin off of it, the state is spending money to put people on a broke federal program,” said Rep. Todd Richardson, a member of the committee.

PCG recently contracted with Flotron and McIntosh, a Missouri lobbying firm.  The firm’s principal, Richard McIntosh said during the hearing, “It’s clear these people are eligible for this program, whether the state encourages them or not.”

Rep. Richardson disagreed.

“Apparently it’s not clear, because in many cases there is an appeal involved, using an attorney or non-attorney representative to argue their case,” said Rep. Richardson.  “It’s not like we are talking about clear-cut instances when people are eligible for a benefit they are not getting.”

McIntosh argued that it is the Department of Social Services duty to try to find ways to make limited state funds go further.

“It comes down to this question, do you want the state to pay general revenue out that it doesn’t have to?” asked McIntosh.

Some lawmakers, like Richardson, believe that there is a deeper question to be answered.

“It is a question of whether we want the state to create a new class of long-term, permanent disability beneficiaries,” said Richardson.

During the hearing, Rep. Barnes also questioned the accuracy of the promise that transferring welfare recipients across the board would save the state money.

On April 22, the Social Services Department Director Alan Freeman sent a letter to House Republicans saying that the state would limit its contract with PCG to only shift people with serious disabilities who are currently enrolled in the state’s Medicaid program.  The director also wrote that PCG would not be allowed to “cold call” participants.

The Missouri Chamber of Commerce and Industry will closely watch the development of this issue.

“Entitlement reform should be at the core of budget debate in Washington,” said Daniel P. Mehan, Missouri Chamber president and CEO.  “But we can’t sit back and hope that Washington does the right thing.  We can’t sit back and think of ways to game a broken system.  We should take a stand to fix the broken system.  This is only the beginning of our involvement in this issue.”

For more information on this issue, contact Tracy King, Missouri Chamber vice president of governmental affairs, at tking@mochamber.com, or by phone at 573-634-3511.

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