Did you ever make a mistake? As Forrest Gump so aptly noted regarding his error in not watching where he was going, "it happens." That is a hilarious exchange, but poignant also. We all make mistakes. One (or one million, perhaps two) that has been in the news recently has to do with a series of mistakes that have come to light at the Social Security Administration. Time and again we hear from the workers' compensation naysayers that the path to a better future is federalization. The recent news sure could make one ponder that.
Social Security is not a new topic here. See The First Social Program Bankruptcy is Upon Us (June 2014); Time for That Bake Sale (August 2015); One Year to Insolvency (September 2015); Nationalization, Participation, and Disease (December 2017); and Friends, Romans, Countrymen, Lend Me Your Ears (March 2022)(which includes citation to other federalization posts).
The central control, one-size-fits-all, bureaucracy fans are out there, and periodically they trumpet the glamour and efficiency of the federal government and proclaim their desire for an end to state-run workers' compensation. Somehow, they manage to keep their rose-colored glasses on through example after example of federal shortcomings.
The Congress recently held hearings regarding Social Security's "overpayments to beneficiaries." It wrote checks that were mistaken. WPXI Pittsburgh reports that acting Social Security Commissioner Kilolo Kijakazi testified "at an October 18 hearing" that this occurred repeatedly. In fact, she said, the Administration was demanding overpayments back from recipients about 1 million times per year. That is about 19,231 times per week.
Imagine that. If they are sending a letter to 1 million people each year to inform them of some overpayment and to request repayment, the postage alone might be significant. At the post-card rate ($.44), it would be $440,000 just sending the initial notice.
But wait, as we have come to anticipate, there may be more to the story. In a December 11, 2023 letter to Congress the acting Commissioner strove to "apologize for any confusion or misunderstanding." Note here there is no admission of mistake or owning of error. The misunderstanding is essentially that the Administration sends 2 million such letters each year (almost 40,000 each week, 38,461 actually). Wow.
You may remember that old quote from Mitch Radcliff:
“A computer lets you make more mistakes faster than any other invention with the possible exceptions of handguns and Tequila.”
Apparently, the computer at the Social Security Administration is very fast and efficient. Imagine the paper, envelopes, and human involvement it requires to produce and send 38,461 letters each week. The federal government is indeed inefficient. Well, everyone makes mistakes. The acting Commissioner goes on to explain that her testimony was mistaken. Some have wondered aloud "whether the agency had 'intentionally deflated the numbers.'” An Oregon Senator noted that "the agency had damaged its credibility by 'not telling the truth.'” That is blunt.
WPXI alleges that the correct figures, closer to 2 million, were actually on a paper the acting Commissioner read from during her testimony. It asserts that multiple requests for further information and clarification were submitted to the agency during the seven weeks after her testimony in October, and responsive communication was minimal. Apparently, Freedom of Information Act requests for data may have led to the admission of misrepresentation in the Congressional testimony.
How did the testimony come to pass? Well, a House committee is looking into allegations that the Social Security Administration sends out "billions of dollars of benefit payments that it later concludes it never should have paid." That is hard to read. That is "billions" with a "B." It is doubtful we are discussing rounding errors here.
If the agency figures out the mistake in a particular instance, it then writes one of those 2 million letters to the benefit recipient "demanding the recipients pay the money back." This may occur weeks after the administration's mistake or years later. The demands can be for a few dollars or for "tens of thousands of dollars or more." O.K., it is clear we are not discussing rounding errors here.
The beneficiaries are troubled by the demand letters. Imagine your government telling you it made a mistake (or dozens of them) in calculating and paying your benefits. Imagine being on a fixed income and learning that you need to write a check to Uncle Sam to repay ten thousand dollars.
Nasdaq reports that the magnitude of this issue could grow in coming weeks. It says that recent agency filings "reveal it made about $11.1 billion worth of new overpayments to Social Security beneficiaries during federal fiscal year 2022." That number is also with a "B." The usual annual overpayment rate has been reported as "usually . . . between $6 billion and $7 billion." Efficient? Effective? Exemplary?
Nasdaq says that "most 2022 overpayments" occurred in "programs (that) provide retirement and survivors’ benefits to qualified workers and their families, or support workers and their families when the workers become disabled." The federal bureaucracy leaks billions persistently and perniciously, and when it discovers its errors demand is made for immediate and full repayment.
Fox Business reports that "Those affected are elderly or disabled people on a fixed income who may have their benefits frozen or cut until their debt is paid off." Their income may be terminated until the money is paid back. Well, there is merit in addressing the overpayment issue. Social Security is in financial trouble in the broadest sense. The Agency itself admits that it projects its solvency only through 2037.
Will it be saved by decreasing entitlement (raising the retirement age), increasing income (raising taxes), or otherwise? Perhaps it might be aided by not making $11.1 billion in errors each year? Between now and 2037, if we stopped those errors, we might save $155,000,000,000 in funding? That may seem like a solution, but somehow, that is not being discussed much here, there, or perhaps anywhere. You know, eleven billion here, eleven billion there, "and pretty soon you are talking about real money." That is $11,000,000,000. That is $30.00 each for every one of the 332 million people in America.
The Florida workers' compensation law is a statute. It was enacted by elected representatives who drafted, debated, and passed specific language. Those folks anticipated that mistakes can happen. In the statute section that defines indemnity, section 440.15, they included paragraph (12):
"REPAYMENT.—If an employee has received a sum as an indemnity benefit under any classification or category of benefit under this chapter to which she or he is not entitled, the employee is liable to repay that sum to the employer or the carrier or to have that sum deducted from future benefits, regardless of the classification of benefits, payable to the employee under this chapter; however, a partial payment of the total repayment may not exceed 20 percent of the amount of the biweekly payment."
This is clear. Overpayments have to be repaid. They can be "deducted from future benefits." Note that the Florida law does not allow the "benefits frozen" alternative noted by Fox Business. The Florida law clearly defines the repayment and constrains it. If benefits are overpaid, then there could be a reduction in future payments, but no more than 20% of those payments.
It is possible, perhaps simple, to contemplate that mistakes could happen. It is just as easy to clarify the responsibility for repayment and to limit the parameters. That anyone is facing "frozen" benefits is regrettable at least. That the Social Security Administration is making (or discovering) two million errors annually (out of the 66 million people who receive benefits) is simply preposterous. Systems can be designed, computers can be programmed, and people can provide oversight.
The Agency's 60,000 employees can do better (that comes out to one employee for every 1,100 benefit recipients). The Agency's Commissioner can do better (and tell the truth, and be straightforward, and so on). Congress can provide transparency and clarity through a very short statutory amendment in the spirit of the Florida law. And those who think that the federal government is exemplary and should be responsible for workers' compensation might re-think their criticisms of these effective state programs. There may be much to improve in workers' compensation, but making it an inefficient and ineffective bureaucracy is not even "an" answer.
