Reacting to widespread criticism of its elimination of Social Security disability benefits to tens of thousands of mentally and physically handicapped Americans, the Reagan administration announced yesterday that it would revamp procedures for pruning disability rolls.
Margaret M. Heckler, secretary of the Department of Health and Human Services, said an additional 200,000 recipients would be exempt from having eligibility questioned on grounds they might be able to work. They include people aged 55 or older with muscular, lung or circulatory disorders such as arteriosclerosis or emphysema, and mentally handicapped recipients with IQs lower than 70 who suffer from at least one other disability.
Another 135,000 people who are mental health patients diagnosed as having psychotic disorders also will be exempt while HHS reviews the criteria for judging whether they are unable to work, Heckler said. After new criteria are issued, she added, these 135,000 cases may again be reviewed.
Her announcement came less than two weeks after the revelation that a Medal of Honor winner wounded in his heart and lung during the Vietnam war has been tentatively ordered off the rolls because HHS judged him able to do some types of work.
"I feel the system has produced some sad results in terms of trauma on individual lives," Heckler said at a press conference yesterday. " . . . The Reagan administration inherited the process. As that process was applied, it was inadequate to the mission."
But she added, "These changes will not reinstate people who have been dropped from the rolls . . . . Ultimately they did get a fair hearing through the appeal process."
In 1980, Congress enacted legislation mandating review of the $18 billion program.
Several reports, including one by the General Accounting Office, auditing arm of Congress, indicated a high level of abuse by people receiving benefits even though they were able to work.
The Reagan administration's handling of those case-by-case reviews, however, drew criticism that people who were clearly disabled were being cut from the rolls.
Between March, 1981, and March, 1983, Social Security Administration officials estimate that about 266,000 people have lost their benefits.
Heckler said yesterday that slightly more than 1 million disability benefit recipients now will be exempt from review with the additions she announced yesterday. The new exemptions, she said, will reduce projected savings in the program by up to $300 million over the next three fiscal years.
Critics of the review process yesterday called Heckler's proposed reforms inadequate. Sens. William S. Cohen (R-Maine) and Carl Levin (D-Mich.), said they welcomed the changes but thought HHS had not done enough.
"They will have little impact on the fate of severely disabled workers because they do not remedy the fundamental flaws in the review process," Cohen said.
"Compared to the problems that exist in the system, the changes are insubstantial," said Jane Yohalem, an attorney with the Mental Health Law Project.
HHS said it wanted to study whether it has an obligation to prove that a disabled person's condition has improved before cutting off his or her benefits, but Yohalem said, "They've had plenty of time to study that.
"There's legislation in Congress on that issue and literally dozens of court cases."
She also argued that it is inequitable to exempt temporarily those with psychotic disorders while continuing to review the eligibility of those suffering other mental disorders such as severe depression.
Heckler also announced that:
* Cases will be reviewed on a random basis, instead of using a "profile" indicating a recipient may be ineligible.
* HHS will propose amendments to the 1980 law to ensure that state agencies' decisions to deny benefits be reviewed on the same basis as decisions to grant benefits.
* HHS will also propose legislation to ensure recipients are not denied benefits until they have had a chance for a face-to-face meeting with SSA representatives familiar with their cases.
Heckler said she did not know whether the proposed changes would have resulted in a different outcome in the case of Roy P. Benavidez, the former Green Beret who was awarded the Medal of Honor by President Reagan two years ago. Benavidez has appealed to an administrative law judge in the SSA, but the case has not been heard yet.