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Some general evaluation questions posed in this section are: Are there better and more cost-effective ways of achieving the objectives of these program benefits, as regards alternative design and delivery approaches? Should the CPP disability program be modified in any way to improve its effectiveness and administrative efficiency? Should it be modified to improve the attainment of its objectives? Should it be modified to improve its efficiency in delivery? This section summarizes alternatives and suggested changes to the CPPD program to better meet the needs of persons with disabilities while maximizing program effectiveness.
CPPD appears to generally meet its objectives of providing some measure of earnings replacement for disabled Canadian workers. Important needs are met, with nearly 300,000 beneficiaries helped by the program in 1995. The vast majority of these beneficiaries of CPPD appear to have disabilities, and to be entitled to their CPPD coverage based on their contributions to the plan, and the CPP's definition of disability. As well, the administration of the program appears to have been resilient, dealing with a massive influx of applications in the 1991-94 period, and initiating a variety of program responses (e.g. pilot projects in reassessment, rehabilitation, etc.) although somewhat hampered by a lack of resources and a primarily paper-file-based, 1960s-style "information system". Yet it is also apparent that CPPD might benefit from changes in key areas. These may include not only changes to some basic CPPD program features, but may also focus on providing better program linkages with other disability benefit providers in order to ensure that a better-integrated and more harmonized system is established. A substantial portion of the need for change, and recent challenges faced by this program (growth in caseloads) appear to have originated because of legislative changes that extended eligibility of the program. Similarly, the evolution of the QPPD seems to have its origins in a variety of legislated directions. Correspondingly, as will be emphasized below, any significant changes for CPPD may need to involve legislative changes. 4.2 Legislation and Control of CaseloadsLegislative changes which broadened eligibility criteria and increased the flat rate component of the benefit appear to have contributed to a more costly program than previous governments had anticipated. Also, some of the increase in applications, grants and benefit costs can be attributed to poor economic times. Such changes in eligibility criteria and related practices have contributed to an even sharper increase in CPPD costs than might otherwise have been expected. The CPPD program administration has been relatively constant in recent years in its adjudication of applications and claims for CPPD benefits, as evidenced by the findings of selected random reviews, internal audits, overpayment studies, and the 1995 Disability Incidence Study143, and research in support of this evaluation. However, significant administrative adjustments appear to be warranted in order to ensure more efficient and cost-effective program administration, in a continuous quality control framework. Ideally, as suggested by the CPP Fifteenth Actuarial Report144, steps should be taken to match eligibility and administrative procedures to the resources available to CPPD, either by controlling costs (restricting eligibility), or by increasing contribution rates where needed. If program costs of CPPD are to be substantially controlled, or even reduced -- as has been suggested in some public discussions, or by differences from the QPPD experience145 -- modification of basic program features would be essential. This is considered necessary even though the number of CPPD applications declined in 1994-95 and has since stabilized, and the proportion of applications granted has also declined. Restricting eligibility could be achieved in one of two ways. First, it could be done by applying stricter adjudication criteria and re-orienting the definition of disability in a more tighter and more medically oriented way. This is the approach followed in a number of countries (with varying levels of success) such as the Netherlands, the United Kingdom and Australia. This seems also to be the approach followed, to a certain extent, in Quebec. The revised CPPD adjudication guidelines of September 1995 were an important step in this direction. The second way to achieve a restriction of eligibility would be to modify the contributory requirements to the program. Germany opted for this solution in the early 1980s after having experienced a dramatic surge in the number of grants, mainly attributed to a relaxation of its adjudication criteria. Judging from the German claims experience in the 1983-93 period, this direction has been particularly effective. Indeed, Germany is the only country included in the international comparison, which experienced a decline in the number of beneficiaries over this period. Restricting contributory requirements or otherwise tightening up CPPD eligibility criteria may not be desirable, if these steps are contrary to the current government's social goals.146 From the point of view of equity, it may be more appropriate (if program retrenchment is considered necessary) to further modify adjudication processes or the legislative definition of disability if needed, rather than contributory requirements, to target the program at the most severely disabled individuals. Other means of controlling caseload growth might be through enhanced efforts in the areas of rehabilitation and re-assessments, and joint activities with complementary program deliverers (UI, WCBs, LTDs). These are discussed later in this report. But any significant readjustments of key program elements, and perhaps also some aspects of adjudication procedures, would almost certainly require legislative amendments and efficiencies to administrative practices. This will be desirable if CPPD is to avoid conflicts with appeals tribunals which are not bound by administrative practices and which may counter any attempts to re-orient the definition of disability under the Act. This is a crucial element, as the credibility of the CPPD adjudication process depends on its ability to defend its decisions before appeals tribunals. An element of concern in this area would be the issue of maintaining program continuity and comparability with the Quebec program. This may especially apply to contribution requirements, as the Quebec program has recently moved to match the CPPD contribution requirement of 2 of 3 years. As well, any consequent reduction in CPPD costs might result in increased costs of other complementary programs, such as PSA costs.
The evaluation analysis suggests that current linkages of CPPD to other disability benefits providers are programmatically and administratively confusing and weak. Therefore, the development of clear linkages would improve efficiency and cost-effectiveness for the system of complementary programs as a whole.147 Our primary evidence for these conclusions comes from consideration of the following:
These inefficiencies are apparent in both adjudication practices, where multiple claims, each with requirements for individual medical assessments and reports, are submitted by claimants, and also in such areas as partial disability, offsets, overpayments, and multiple payments. This suggests that, as a whole, a fundamental reform appears to be desirable through an overall benefit linkage and information-sharing strategy. Stakeholders in particular noted that the integration, collaboration, information-sharing, harmonization, and co-operation in the whole disability support system could be vastly improved. This would result in cost-savings to the system as a whole by ensuring that people with disabilities receive the appropriate benefits and support they need. The evaluation cannot determine what proportion of these benefits, if any, would eventually accrue to the CPPD. However, some of these savings might be at the expense of beneficiaries considered to be clients by almost all parties, and these efforts would imply some increased administrative costs to CPP.
A clear remedy of this situation would be to emulate the better-defined QPPD model -- with a primarily "single payer" system in relation to WCBs. In such a system, workers with permanent disabilities who were injured through work would, as a rule,148 be compensated only by WCBs, and CPPD would compensate permanently disabled workers whose disability was not caused by work. Developing such models would also allow CPPD to better deal with the issue of potential cross-subsidies from CPPD to higher-risk industries, as noted in our earlier discussion of the large number of CPPD beneficiaries who report disability caused by work, but who are not receiving WCB benefits. Such linkages would call for new kinds of Federal-Provincial agreements regarding the linking of CPPD and WCB programs. Current legislation does not prevent CPPD from covering any of the cost of work-related disability. Administrative Arrangements: Administrative arrangements and special agreements with single-payer linkages to most beneficiaries of WCB, LTDI, and possibly PSA as well, may well be desirable. Some administrative relationships have been initiated by CPPD, with the WCBs in particular, but more linkages are possible. While such models would be new (they do not exist in Quebec in relation to LTDI and PSA), they could be modeled on the current administrative agreements between QPPD and SAAQ (the public automobile accident insurance board). Under the current system in Quebec, beneficiaries eligible for both the QPPD and SAAQ receive only one payment from the SAAQ, while QPPD transfers a sum equivalent to the benefits it would have paid to claimants directly to the SAAQ. While eligibility for each program is based on different criteria, SAAQ beneficiaries are systematically asked to apply for QPPD benefits when they are thought to be potentially eligible. Linkages between CPPD and LTDI/PSA would seek to facilitate referral practices, to minimize the paper burden for applicants, and to avoid the duplications of medical and administrative costs arising from multiple adjudications of disability claims through common application forms, definitions, joint investments in rehabilitation for suitable clients, and to reassess jointly, or at the same time. To aid these goals, it would be desirable to modify legislation to enable greater sharing of information between programs.
4.4.1 Overall Administration The available evidence suggests that the CPPD program administration has been relatively constant in recent years in its adjudication of applications and claims for CPPD benefits (in spite of labouring with limited resources and an antiquated system based largely on paper files). The background research for the evaluation has pointed to economic fluctuations, legislative changes and population demographics as being the true drivers of CPPD caseloads. However, various estimates have suggested that a significant minority of CPPD beneficiaries may be capable of substantially gainful employment (close to 10% by the 1991 HALS estimate prepared for this evaluation). Further, many changes are occurring (e.g. new guidelines, September 1995) and the current adjudication process has not been rigorously assessed, even though a CPPD file review had originally been part of the CPPD evaluation study. These considerations point to one of the most important conclusions of the study -- that improved data is required for ongoing assessment of the fidelity of CPPD to its legislation. CPPD adjudication practices should therefore be "benchmarked" (a current description of key factors documented149) in order to be fully understood. This might well be addressed in a comprehensive, ongoing case/file review, which would be an extremely important part of addressing questions of administrative practices related to approvals, within a continuous quality assurance context. Such an ongoing monitoring system is particularly desirable in light of the decision to regionalize the adjudication function, since maintaining adjudication standards across regions will be a particular challenge for the new system. The proposed case/file review study is further elaborated on in a later section of this report. Program Resources: Operating mainly with an antiquated paper administrative system, CPPD administration was not sufficiently equipped to accommodate the significant increase in applications of the past five years and the particular strains caused by Bill C-57, with its resulting complexities in adjudication.150 However, the data through 1995 suggest that claims adjudication has remained relatively consistent over the past 5 years, and that any shortcomings of CPPD administration may have been caused primarily by the lack of resources provided for adjudication systems. The most recent data shows significant reductions in new grants at both the initial application and appeals levels. Nonetheless, a number of improvements in adjudication are desirable. CPPD's administrative resources and systems should, therefore, be reviewed in relation to the Redesign project, to ensure that appropriate and sufficient resources are available to support changes in CPPD adjudication. Expanding CPPD administrative resources, particularly at the initials level, may be an important part of improving adjudication and controlling overall program costs. This is particularly important in terms of upgraded technological and computer resources which appear to be more developed at QPPD than at CPPD. After the CPPD administration came under severe criticisms in the late 1980s, it must be noted that many corrective measures were adopted.151 The most significant of these changes is reflected in the current Redesign Project, which will decentralize the administration of CPPD (along with other HRDC income support programs) to a regional level. The new adjudication guidelines, which have recently been implemented, are expected to produce a more consistent adjudication process between the initial decisions and appeals tribunals. Finally, recent changes to integrate the adjudication process for the initial claim and the first level of appeals will likely make for more efficient procedures by ensuring the collection of adequate information at the initial claims level. These changes are seen as positive, but further steps may be desirable as detailed below. 4.4.2 Adjudication The evaluation data suggest that a number of substantial reforms may be desirable to address adjudication shortcomings such as unwarranted grants (estimated at 3% in 1994 according to the CPP Disability Incidence Study), and slow response times (application and appeals inventories). For example, issues of backlogs and response times point to the need for improved resources for administration. But above all, changes are suggested so that the CPPD adjudication process is seen as a maximally predictable, replicable and objective administrative process that is set within a continuous improvement context. Other jurisdictions have faced similar problems (the United Kingdom, United States, Australia) and have responded by reforming adjudication structures and guidelines. Therefore, consideration of additional changes to adjudication practices is suggested, for example:
4.4.3 Appeals Process Given the recent change in the appeal system, with Level 81 appeals now incorporated with initials, some of the apparent inefficiencies in the appeal system, with multiple levels of appeals, etc., will likely be improved. The "new" appeal system should therefore be evaluated in the near future to determine, measure and understand the effect of these recent changes. Initial Adjudication of Claims: It is difficult to separate out a discussion of the appeal process from a broader discussion of initial adjudication, since the two aspects are so interdependent. For example, many of the problems experienced at the appeals level in recent years may originate from practices for the initial adjudication of claims. For this reason, modifications should be made to confirm and ensure the credibility of the first-level adjudication process in relation to appeals tribunals. The recent implementation of new adjudication guidelines that are more in line with decisions of appeals tribunals, is an important initial step, but other modifications noted in the previous section should be considered as well, especially more efficient and objective adjudication support tools and expert assessment to support adjudicators. This might also ensure that more legitimate applicants who do not understand the program criteria would not be unintentionally discouraged from applying for benefits. Collection of Evidence: A new philosophy at the initial adjudication of claims (and reconsideration level) might centre around allocating more resources to the collection of objective and independent medical evidence to support CPPD administration decisions before appeals tribunals. International comparisons have shown that most countries devote more resources to the collection of evidence at the initial stage than is common practice in CPPD. In contrast, CPPD's general practice is for the claimant to bear most of the burden of providing sufficient information to support disability claims. When insufficient evidence is provided, the claim is often rejected and will be further developed only if an appeal is pursued. While this practice may be justified on the basis of program-specific cost control, the CPPD experience with respect to extensive reversals of initial decisions up until recently at the appeal level, raises doubts as to whether real savings are achieved at all.152 Given the recent changes in CPPD administrative practices, it will be important to evaluate their effectiveness over the 1996-1999 period. There may be a need in the context of the Redesign Project to examine the possibility of a greater role for adjudication officers in case development, and of ensuring that a claim has been entirely examined before rendering a decision. The first step would be to ensure that claimants and physicians (perhaps independent physicians) understand exactly what kind of supporting evidence or documents they are expected to provide. The approach should be, not only to acquire a sufficient understanding of a client's file in order to render the appropriate decision, but also to collect sufficient objective evidence (results of medical tests/analysis, residual capacities, etc.) to support the adjudicator's decision, if an appeal is sought on the part of the claimant upon a denial of a claim. This seems to have been a key to QPPD's success in maintaining low levels of reversals of decisions on appeal. Legislative Changes: Whenever significant changes are made to CPPD administrative practices, it should be borne in mind that appeals tribunals are not bound by administrative guidelines and rely primarily on the legislation to develop jurisprudence rules. Considerable anecdotal evidence suggests that appeals tribunals have applied a "reversed burden of proof", forcing CPPD to justify why a claimant should not be granted benefits, rather than assigning the claimant the burden of demonstrating his/her disability. While it is very difficult to obtain independent data on this topic, this issue should be closely assessed and monitored as it could represent a marked departure from the intent of the legislation. All the above elements seem to suggest that modifications to the legislation could be an important aspect in reforming the appeals structure and clarifying the definition of disability under the Act. Thus, if significant changes are to be made to adjudication practices in the future, these modifications should be clearly tied to existing legislation, or to amended legislation.
The CPPD Initiatives: The encouraging initial results of the recent CPPD reassessment initiatives suggest that consideration should be given to a substantial expansion of these reassessment initiatives. The current priority for reassessments has been to focus on CPPD files that have the highest potential to become "ceased" files, either because of inappropriate grants or because of CPPD abuse or fraud. While this priority may be appropriate given the limited resources for reassessments, expansion of reassessments should be considered to allow for other types of CPPD files to be reviewed.153 For example, reassessments could also be undertaken for CPPD beneficiaries with a high potential for rehabilitation once their medical condition stabilizes, with the aim of providing the support needed to overcome the disability and allow for re-integration into the workforce. Reassessment might particularly be targeted at those recipients who have been identified at the initial adjudication of claims as having the greatest possibility of recovery from their condition. QPPD, which has more stringent criteria with respect to the duration of the disability, has established a system whereby disability claimants whose medical conditions can potentially improve are immediately scheduled for subsequent reassessment (usually after two years). Thus, the beneficiaries' file is automatically transferred to the medical unit and reassessed after this period of time and a new medical report is produced. CPPD beneficiaries with a potential for recovery should, therefore, be included in the reassessment procedure. Also, regular reassessments, possibly annually, as is common practice for both WCBs and LTDI providers, should be undertaken for CPPD beneficiaries if the disability is not because of terminal illness, or due to irreversible degenerative causes. Such regular reassessment procedure, properly resourced, would allow for the identification of CPPD beneficiaries who are no longer unable to work, either because of improved medical condition, new technologies, or changes in employment opportunities. It would also fundamentally change the perception of CPPD from being a "pension for life" to a program that required "re-establishment of qualification for benefits" on a regular basis. Any enhanced reassessment activities would of course have resource implications that would need to be balanced against anticipated program savings. International Lessons: Other countries, such as the Netherlands, have implemented reforms aimed at removing from disability benefits any recipients who have recovered from their disability. The Dutch system now allows for temporary benefits to be paid and, after expiry of these benefits, a claimant must present a new claim which will be reassessed de novo. This approach is aimed at removing the hurdle of a "reversed burden of proof" when the disability administration has to demonstrate that a claimant's medical condition has improved before terminating benefits. Such a system might be applied by the CPPD for beneficiaries whose condition is not expected to be terminal, or does not reflect a degenerative condition from which recovery is unlikely. However, having to re-establish eligibility for benefits might be a disincentive to successful rehabilitation and return to work.
Significant changes in a number of aspects of the CPPD rehabilitation and return-to-work initiatives might improve the effectiveness of CPPD. In part, changes could build on the improvements to work incentives which have been recently developed within CPPD under the National Vocational Rehabilitation Project, but further changes also seem desirable. 4.6.1 Work Incentives There is a need to improve the incentives for CPPD recipients to return to work both in terms of administrative provisions and beneficiaries' understanding of the provisions. This would have positive impacts in two areas. On the one hand, CPPD beneficiaries would have more motivation to return to work, and on the other hand, CPPD program costs would be reduced. Changes in this direction, of work incentives, already begun in CPPD in 1995, might include:
Stakeholders of all types, including LTDI representatives, and representatives of advocacy groups, agreed that CPPD might adopt a more pro-active "return-to-work" philosophy which could include return-to-work incentives. These should (they argued) include partial benefits for those able to work part-time; "ease back-to-work" programs; longer trial work periods; guaranteed benefits during rehabilitation, re-training and trial work periods; and easy re-entry to CPPD for people with disabilities who failed to return to work. 4.6.2 Rehabilitation There is a need for extensive program development in the area of rehabilitation and CPPD. This is highly desirable because of findings from the 1995 survey of CPPD beneficiaries, which indicate that significant number of respondents (31%), might be candidates for some kind of work now or in the future, and even a return to full-time work, and that many respondents (26%) express a desire to do so. To the extent that HRDC's agents of rehabilitation (e.g., private rehabilitation professionals) would play a key role in the success of rehabilitation efforts, financial incentives conditioned on results, might enhance the success of these efforts. This is a challenge, as many observers have pointed out that rehabilitation is most effective when introduced shortly after onset of the disability -- a situation that can only infrequently occur in CPPD. Rehabilitation that begins after the start of CPPD benefits would occur too late to be maximally effective in the case of many CPPD beneficiaries, meaning that new program concepts and designs are needed to enable early interventions. Furthermore, new kinds of program linkages between CPPD, the new Employment Insurance program, LTDI, WCB and PSA programs would be needed to allow for the timely identification of rehabilitation candidates. A significant expansion of rehabilitation efforts, possibly building on the National Vocational Rehabilitation Pilot Project, appears to be highly desirable to aid these goals. An effective extension of rehabilitation efforts would likely need to go beyond the CPPD program, to facilitate and improve rehabilitation of potential CPPD recipients even before the granting of CPPD benefits. Related initiatives should include an examination of the role of unemployment sickness insurance in the early onset of disability, and the potential for that program to identify and stream cases for rehabilitation prior to application for CPPD. Such changes would satisfy not only concerns of other government programs (WCBs and PSA) and LTDIs, to return these beneficiaries to work, but would also meet important social development concerns of voluntary organizations representing the concerns of persons with disabilities and the interests of many CPPD beneficiaries themselves. Some of these changes reflect recent redirection of priorities within CPPD.155 4.6.3 Broader Issues of Work and Disability in the Work World One of the evaluation sub-studies, the HALS analysis, suggested that a substantial number of people with disabilities who might receive CPPD benefits if they were to apply, nonetheless, manage to support themselves independently, often in the workforce. There is a need to examine the ways in which current initiatives can contribute to persons with disabilities maintaining their independence in the workforce, as opposed to relying on the disability income support system, including CPPD. This is a focus for programs such as the National Strategy for the Integration of Persons with Disabilities. Work-Related and Other Causes of Disability: There is an important case to be made for improving our understanding of the causes of disability for CPPD beneficiaries. This should include, in particular, examining new diseases which present challenges for assessment (musculoskeletal, psychological, environmental), which need to be better understood. More generally, however, such understanding may contribute to improved Federal and Provincial initiatives and private sector contributions in the prevention of disability -- attacking the problem of disability incidence at source. Also, there is a need to examine how comprehensive is the coverage provided by WCBs and work as a cause of disability. Research for this evaluation, examining HALS, has suggested that work-related conditions may be a significant cause of disability for CPPD beneficiaries, and that many persons disabled through work may be receiving CPPD, but no related WCB benefits.156 Understanding this relationship would be an important part of forming new Federal-Provincial agreements as a basis for improving the linkages between CPPD and WCB benefits, as well as determining the legitimate responsibility of employers in this regard.
Appropriate benefit levels are extremely important in preserving the rationale of PDI programs, as they must be properly harmonized with other income security programs and meet some minimum earnings replacement goals for contributors who become disabled. If benefit rates are kept below social assistance scales of needs, the earnings replacement rationale of the program is weakened in the sense that many contributors (particularly those with few assets and no other income) may feel that they derive no additional benefits from having contributed to the CPP program for several years. On the other hand, if benefit rates were too high, this might have a significant negative impact on private insurers and be perceived as an encroachment on their market prospects. It might be seen as undesirable government intervention in the private sector, especially since it would accentuate moral hazard concerns. CPPD benefit payments currently reduce the level of LTDI payments under the typical integration of the two benefit plans. However, it is assumed that LTDI providers would not benefit through further reduced LTDI settlements if CPPD benefits were enhanced. This is because of the likely reaction this would provoke among employee groups, who believed employees were not getting a fair return on their LTDI coverage. When compared to programs of other countries, CPPD benefits are generally less generous than comparable PDI programs, especially with respect to maximum rates. This would suggest that benefit rates need not be reduced as part of cost-containment measures. Not only would reduced benefits undermine the minimum earnings replacement objective of the program for disabled individuals, but they would force CPPD beneficiaries to rely more on social assistance. But minimum CPPD benefit rates are often below the scale of needs for social assistance programs in most provinces, suggesting that adequacy of benefits would be an appropriate research topic. However, the CPPD program under its current rationale, is intended to provide a basic level of earnings replacement on the onset of disability to workers, to be supplemented by income from private sources (LTDI's, etc.). It was not to take over the role of provincial social assistance. A particular concern is the existence of different offsetting practices between CPP and WCBs in different provinces. Any standardized approach, in this regard would require the cooperation of federal and provincial/territorial governments.
Some evaluation questions posed include: Are the disability benefits affordable currently and in the future? Should a Federal employment-related disability program be provided on a fully-funded basis? Would income-testing or repayment of disability benefits above certain income levels be desirable, feasible, and cost-effective? 4.8.1 Funding Issues There have been suggestions that it would be desirable to have CPP more "fully funded".157 Presumably these suggestions have been triggered by proposals that the CPP in its entirety be funded on an actuarial basis. This is a concern that merits further consideration (although outside the specific mandate of this evaluation). First, however, it is worth reviewing how the private sector funds long-term disability insurance (LTDI) benefits, and contrast this with the CPP. We shall largely ignore the funding of individual LTDI, as not being particularly germane to this subject due to the small coverage associated with such plans. Differences in LTDI: In group LTDIs, a premium is set each month that is targeted to be equal to the present value of all LTDI benefits put in pay during the month. When a claim is approved, a reserve equal to the present value of all projected future disability benefits is established. Thus disability benefits arising from the prior months' claims are not charged against the current month's premium, but rather against the reserves established in earlier months. Similarly, in private LTDI plans, future disability payments from claims arising in the year in question are charged against the reserve established, and not against future premiums. Whether the reserves established are adequate depends upon the future experience of the disability claimants, i.e. the rates of disability termination from recovery, death, or expiry because of reaching a certain age or conversion to a retirement pension. The reserve can be too high as well as too low. In CPPD a different procedure is used. All CPP pension, survivor, and disability payments in a year, regardless of which year the first claim occurred, are charged against the contributions of employers and employees for the year and that year's investment earnings of the CPP Fund (Account). No accumulated "reserve" of the type just described for the LTDIs was established for the CPP or its components. This meant that in the early days of the CPP, disability claims were modest, but they have increased over the years, and were expected to do so even in the absence of increases in disability incidence rates. Also, for the first time in the history of the CPP, in 1993, 1994 and 1994 some repayment of principal advanced to the provinces by the CPP Fund was required to meet the annual obligations to CPP beneficiaries. The arguments in favour of fuller funding for the CPP as a whole (or of the CPPD component) are beyond the mandate of this report. If it were fully funded in some way, however, obviously both the contributions and the fund would be considerably larger, and the CPP would be more insulated against fluctuations in disability experience that might require a temporary increase in contributions.158 It would be possible to adopt the approach used in private group LTDI plans, whereby the contribution for each month is sufficient to establish a reserve equal to the future disability benefits arising from the claims in that month. If this were done, however, the contributions would have to be higher than that determined using the current method, because there would have to be a component covering disability benefits from earlier months (years) for which no reserve had been established. Future Projected Costs Within CPP: As set out in Exhibit 21, the future projected disability costs are taken from Main Table 3 of the Fifteenth Actuarial Report. This exhibit shows the projected disability expenditures, including those relating to the children of the disability pensioners, for future years, expressed as a percentage of contributory earnings. For comparative purposes, there is also shown the total projected CPP expenditures, including disability. Thus, while the disability component of the pay-as-you-go rate159, as projected here, increases for about the next twenty-five years before leveling off and ultimately declining, this increase is only a small part of the overall increase in the CPP Pay-As-You-Go contribution rates because there will be many fewer CPPD beneficiaries than CPP retirement beneficiaries. This should not be a surprise, as disability recipients are all under age 65, and this sub-group will not generate the same immediate demographic pressure that retirement pensioners generate. This latter subgroup is increasing rapidly in both numbers and as a percentage of those covered. At the same time the drop-out provisions for disabled years in the calculation of the CPP retirement pension has a positive effect on downstream CPP retirement costs. Discussion: The concentration therefore must be, as this evaluation report has emphasized, on better claims management if disability expenditures are to be contained or reduced.160
4.9.1 Taxback Alternatives The government might consider adding a repayment provision for CPPD/QPPD income benefits in any year when a recipient earns in excess of some defined income ceiling for different sources of private and public income. Such a repayment clause could, for example, be administered in the same way as repayment of Unemployment Insurance benefits in a case where net income exceeds a defined ceiling. Any CPPD recipient who lost all of his/her entitlement to the tax-back could be required to re-apply for any future CPPD pension benefits. Of course, the regular receipt by an individual of any significant earnings through employment would disqualify him/her from obtaining such CPPD benefits.161 This tax-back treatment might be limited to the flat-rate portion of the pension. Otherwise, this might not be consistent with insurance principles since it would confiscate part of the return on an insurance component of the CPP program because contributors had made contributions in order to acquire certain defined benefits in the event of a disabling condition leading to a CPPD benefit. Alternatively, the whole benefit might be subject to the taxback on the grounds that it is intended to replace earnings lost because of disability, where it is evident that, if earnings are above a certain level, no such loss has occurred. Some problems could be anticipated: the implementation of such a provision might be challenged in the courts. As well, it would present problems of equitable treatment of beneficiaries. Where would one establish the threshold at which to begin to tax back these benefits, especially in light of great divergences in personal medical expenditures associated with disability? Depending on the value of the threshold, this tax-back provision could also have the effect of discouraging re-entry into the work force through even part-time work. Any tax-back should be credited to the CPP Fund, net of administration costs. The benefits to the Fund might be reduced by the additional costs of beneficiaries who might have otherwise been successful in re-integrating into the workforce, but chose to continue to receive the CPPD benefit because of the perceived disincentive to work. This group would, however, probably be small. 4.9.2 Alternative Approaches to CPPD Funding This section addresses the question: Would it be desirable and feasible to develop some form of separate, individually based, experience-related CPPD program? Within the present CPP it would be difficult to develop a separate, individually based, experience-related CPPD program. Experience rating requires records to be kept, either by employer or by industrial classification, and the CPPD administrative system is not set up to do so. Individual experience rating would only make sense in the context of one individual using CPPD several times during the working career -- hardly a likely scenario, though it is the case for UI. It might also be necessary to relate an individual's disability to a previous employer rather than the current one, as the disability might have resulted from previous employment. It would also involve having a part of the CPP premium vary from year to year by virtue of experience rating. It would, however, be possible to separate disability out of the CPP in its entirety, and convert the remaining CPP into a plan providing only retirement and survivor, death, orphan benefits.162 Such a new disability program, which will be referred to hereafter as the Canada Disability Plan, could be (i) experience-rated either by employer or industry, and the premium could vary from one employer to another; (ii) it could be the same for everyone as under the current CPPD; (iii) it could comprise a redesigned stand-alone program with a benefit structure based on recency of contribution or current earnings. It also could be linked with short-term Employment Insurance benefits. The funding method could also be changed from the pay-as-you-go method currently used for the entire CPP to that used in private LTDI plans.
Surprisingly, there is relatively little solid data available on the CPPD program, that can be used for ongoing evaluations. Because of its importance, and the complex issues raised for this evaluation, and because future changes need close monitoring, ongoing evaluation and research are suggested as a key priority for CPPD. These needs encompass general research, but also important administrative concerns with quality assurance, and the ongoing evaluation function (for which planning should begin now, for a full evaluation to precede the next Federal-Provincial government review). Some points of emphasis are:
An Ongoing Case/File Review: An ongoing case/file review would support the efficient administration of CPPD, ensure the fidelity of the program, and enable HRDC and the CPP administration to answer important policy questions. This ongoing review study would serve several purposes suggested by this evaluation and would also support important administrative needs. These needs are not fully served by existing reviews such as the CPP Random Review, 1996, or previous audits. The ongoing case/file review would have several unique characteristics:
ISP Branch, HRDC, has initiated a 'file review' project to determine whether or not CPPD guidelines are being applied consistently across the country during the initial period of decentralization of CPPD program delivery services165. The files reviewed comprise initial applications, reconsiderations and appeals. These are selected randomly, and reviewed by experienced CPPD medical adjudicators in accordance to a set of parameters using a step-by-step analytical guide. The project which began in the summer of 1996, will end in January 1997, with a document setting out the 'lessons learnt' and 'recommendations for improved practices', which will be available before the end of March 1997. Although characterized as a 'first step' initiative166, it is not clear that this file review will be an on-going activity, which the evaluation considers to be essential to promote the greatest degree of consistency in CPPD adjudication practices. General Research Programs: The problem of relatively little research on CPPD could also be remedied in part by HRDC providing data resources to encourage research into PDI by academics, and also possibly by encouraging inquiry through a modest program of designated research grants. This could be done with several of the following strategic emphases. Improving Administrative Data Resources: Considerable information exists regarding CPPD, even in the master benefits computer files, which could be used to generate historic electronic analysis files with no identifying information. There is a need for authoritative up-to-date historical series for useful analysis. Even now, such files could capture the historical information on applications, appeals and grants, showing detailed patterns of grants by age, sex, medical condition, severity of disability, province, etc. In subsequent years, as the HRDC Redesign Project unfolds, additional data could be incorporated in these files and micro-data, such as the recent Survey of CPPD Beneficiaries. There is also a need to more fully integrate such data bases with other sources (e.g. Tax Filer, employment data, etc.), while at the same time fully respecting standards for confidentiality and privacy. Developing New External Data Resources: The importance of ongoing evaluations of CPPD will call for additional information which can be used by academics, evaluators and others for ongoing evaluations of CPPD. For example, in other work for this evaluation, the 1991 HALS was demonstrated to be a valuable resource for examining aspects of CPPD. There are no plans for a post-censal HALS in 1996. If possible, this decision should be reversed, and a somewhat different HALS developed for the future, incorporating a number of key questions which would be designed to calibrate the status of disabled persons vis-�-vis CPPD and QPPD (questions on eligibility, work history, etc.). Thus plans could be initiated now for a 2001 HALS survey, which would support future evaluations. Specific issues: A number of specific issues could be promoted as research topics. These could include:
Potential Demand for CPPD: An analysis of the 1991 HALS data examined the potential "market" for CPPD and QPPD as of 1991, by considering the question: how many persons with disabilities are there who work, or otherwise obtain economic self-sufficiency, without recourse to CPPD or QPPD? To consider this question, a discriminant analysis168 was run to estimate the proportion of non-participants in the program, who had the same characteristics (disabilities, age, education, etc.), as those already in the two programs. The result suggests that (as of 1991), a substantial "market" for CPPD/QPPD existed outside of those actually receiving benefits from the two programs. In Quebec, the analysis indicates that while only 9.6% of persons with health and activities limitations were actually in receipt of benefits, another 21.6% of persons with health and activities limitations might be eligible for the QPPD program, if unemployed, and able to apply. Some of these may currently be receiving benefits from WCB or social assistance. In the other provinces, 11.9% were in receipt of CPPD benefits, and another 14.4% were estimated to be potentially eligible for CPPD, if their characteristics reflected application of similar criteria. This potential market estimate169 reminds us that the maintenance of employment opportunities through employment equity, modified work provisions and other measures becomes an extremely important concern to policy-makers, if disabled individuals are to be facilitated in their work efforts, and thus avoid dependence on CPPD. It is important to gain an understanding of what distinguishes activity limited persons who continue to work from their counterparts who leave the labour force. A social justice focus asserts that full participation in the life of society, including the working world, is the right of all persons with disabilities, and that governments are duty-bound to pursue feasible measures which eliminate socially constructed barriers to such participation. This perspective is not prominent in the Canadian literature, but is present in American writing and has been accepted into mainstream disability philosophy in Europe. Measures to maintain the employability of persons with disabilities may serve not only to contain program growth, but also to increase the satisfaction of persons with disabilities in Canada with the government's efforts on their behalf.170
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