January Final Report. Summative Evaluation of the Canada Pension Plan Disability Program. Strategic Policy and Research Branch

Transcription

1 Now and Tomorrow Excellence in Everything We Do January 2011 Summative Evaluation of the Canada Pension Plan Disability Program Final Report January 2011 Strategic Policy and Research Branch SP E

2 Summative Evaluation of the Canada Pension Plan Disability Program Final Report Evaluation Directorate Strategic Policy and Research Human Resources and Skills Development Canada January 2011 SP E (également disponible en français)

3 Note: the departmental catalogue number is placed on the front cover, bottom left hand side. You can order this publication by contacting: Publications Services Human Resources and Skills Development Canada 140, promenade du Portage Phase IV, 12 th Floor Gatineau (Quebec) K1A 0J9 Fax: Online: This document is available on demand in alternate formats (Large Print, Braille, Audio Cassette, Audio CD, e-text Diskette, e-text CD, or DAISY), by contacting O-Canada ( ). If you have a hearing or speech impairment and use a teletypewriter (TTY), call Her Majesty the Queen in right of Canada, 2011 Paper ISBN: Cat. No.: HS28-186/2011E PDF ISBN: Cat. No.: HS28-186/2011E-PDF Information contained in this publication or product may be reproduced, in part or in whole, and by any means, for personal or public non-commercial purposes, without charge or further permission, unless otherwise specified. You are asked to: Exercise due diligence in ensuring the accuracy of the materials reproduced; Indicate both the complete title of the materials reproduced, as well as the author organization; and Indicate that the reproduction is a copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada. Commercial reproduction and distribution is prohibited except with written permission from the Government of Canada s copyright administrator, Public Works and Government Services of Canada (PWGSC). For more information, please contact PWGSC at: or droitdauteur.copyright@tpwgs-pwgsc.gc.ca

4 Table of Contents Executive Summary... i Management Response... v 1. Introduction Evaluation Scope and Methodology Some General Cautions and Limitations Organization of the Report Description of the CPPD Pension CPPD Eligibility CPPD Pension CPPD s Main Features Rationale for the Program Theoretical Perspective Equity Efficiency Public Good International Standards CPPD as First Payer Interaction with Employment Insurance Program Relevance Program Objective Program Activity Profile of CPPD Beneficiaries Application and Approval Rates CPPD Pension Program Logic Model Achievement of Program Objectives Are Those in Need Being Reached? Disability Definition Legislated Definition Prevalence of Disability Are Those with Labour Market Attachment Being Reached? Experience of Denied Applicants Assessment of Benefit Levels Earnings Replacement Rate Income Share International Comparisons Benefit Levels May Not Meet the Needs of All Groups Impacts and Effects of the Program Impacts on Prevalence of Low-Income Impacts on Quality of Life Impacts on Work Incentives... 30

5 5. Issues in Program Delivery Issues Related to Significant Partners Applicants Learning about the Program Communications with the Program Understanding of the Program Doctors Awareness and Understanding of Eligibility Criteria Awareness of Return to Work Supports Interactions with other Disability Programs Communications with the Program Staff Members in Regional Processing Centres Effectiveness of Communications with Applicants and Beneficiaries Issues with Changing Policies and Procedures Working Relationships with Other Earnings-Replacement or Income Support Programs Quality of Service Delivery The Application Process Adjudication Reconsideration and Appeals Automatic Reinstatement Benefit Payment Impact of Changes to Service Delivery on Client Service Performance Measurement Framework and Quality of Administrative Data Cost Effectiveness of Program Administration and Delivery Conclusions and Recommendations Conclusions and Areas for Further Work Recommendations The Application Process Could be Reviewed and Simplified Examine Return to Work Supports Annex I - Evaluation Questions Annex II - Legislative Changes/ Major Events Annex III - Proposed Logic Mode Annex IV - Bibliography... 65

6 List of Tables Table 2.1 Stock and Flow of CPPD Beneficiaries Table 2.2 Females as a Percentage of CPPD Beneficiaries Table 2.3 CPPD Pension Table 3.1 Disability Distribution by Age Table 3.2 Distribution of Contributors Qualifying for CPPD by Gender and Year of Contribution Table 5.1 How First Found Out About the CPPD Pension by Granted and Denied... 34

7 List of Figures Figure 3.1 Average earnings of beneficiaries starting CPPD during Figure 3.2 CPPD as a share of income Figure 4.1 Employment rates and earnings of beneficiaries Figure 4.2 CPPD applicants' average earnings ( ) Figure 4.3 Average earnings among year olds... 32

8 List of Abbreviations CCHS CMA CPP CPPD CRA HRSDC LAD LICO MBF MQP NATS NGO OAS OECD OCRT PALS QPP SLID WCB WSIB Canadian Community Health Survey Canadian Medical Association Canada Pension Plan Canada Pension Plan Disability Program Canada Revenue Agency Human Resources and Skills Development Canada Longitudinal Administrative Database Low Income Cutoff Master Benefit File Minimum Qualifying Period National Automated Template System Non-governmental Organization Old Age Security Organisation for Economic Co-operation and Development Office of the Commissioner of Review Tribunals Participation and Activity Limitation Survey Quebec Pension Plan Survey of Labour and Income Dynamics Workers Compensation Board Workplace Safety and Insurance Board

9 Executive Summary This report presents the findings and conclusions for the summative evaluation of the Canada Pensions Plan Disability (CPPD) Pension. As a component of the Canada Pension Plan (CPP), the CPPD Pension provides income security to individuals and families in cases where a contributor experiences a severe and prolonged disability that renders the person incapable of regularly pursuing any substantially gainful occupation. Evaluation Scope and Methodology The evaluation was organized around a set of evaluation questions examining the continued relevance of the program, objectives achievement, impacts and effects, program delivery and cost effectiveness. This final report presents a synthesis of over 20 technical reports covering the ten-year time period (from 1997 to 2007) since the last evaluation of the CPPD Pension (which was in 1996). The range of methods used by the technical reports include literature review, document and file reviews, analysis of trends in CPPD applicants and caseload, analysis of data collected by a survey of 2,000 randomly selected CPPD applicants (consisting of approximately 1,000 granted and 1,000 denied applicants), analysis of linked CPPD administrative data and Canada Revenue Agency income tax data for CPPD applicants, case studies of the national disability earnings replacement or income support programs in four other countries, focus groups and key informant interviews. When interpreting the findings and conclusions presented in this report, readers should bear in mind some general cautions. Quebec administers its own plan. Therefore, the totals for most tables presented in this report will only include the nine provinces and the territories. The CPPD Pension and delivery process went through many reorganizations during the study period (1997 to 2007), and this presented challenges for the evaluation process. For example, changes in the mode of delivery made it difficult to make meaningful comparisons of delivery cost data over time. Canada Revenue Agency income tax data were used to derive information on earnings and incomes. Therefore most annual data are on a calendar year basis rather than the usual government fiscal year basis. Due to the vastness of the CPPD Pension, many complex issues are only briefly touched upon in this report. As well, the field of safety net programs for workers with disabilities is complex and includes a large number of public and private programs. Therefore, this report should be taken as a summary of what is known about the effectiveness and delivery of the CPPD pension at the time the report was written, while also recognizing that many questions remain unanswered. Summative Evaluation of the Canada Pension Plan Disability Program i

10 Continued Relevance The CPPD Pension was founded on a strong rationale. As well, the stated intent of the program, the economic efficiency and equity considerations, the continuing role of the federal government in providing income support to those in need, and the degree to which CPPD Pension has become coordinated and integrated with other programs for workers with disabilities all point to its continued relevance. Achievement of Program Objectives The program covers virtually all sectors of the labour market including the self-employed. Each year between 1998 and 2005, about two-thirds of those covered had sufficient labour market attachment (i.e. had made sufficient CPP contributions) to be eligible for CPPD pension in the event they became disabled (as set out in the CPP legislation). The CPPD Pension has become the single largest public long-term disability insurance program in Canada. Each year between 1997 and 2007, close to 60,000 new applications were received, close to 300,000 beneficiaries received approximately 3.5 billion dollars in CPPD pension. The profile analysis showed a rising trend in females as a share of new and total beneficiaries (increasing from 42.9 percent of all beneficiaries in 1996 to 50.7 percent by 2006) mirroring increased female participation in the labour market. The profile analysis also showed that the majority of CPPD beneficiaries are in the 55 to 64 age group (which is consistent with Canadian data sources showing that the incidence of disability increases with age). Nearly two-thirds of the CPPD beneficiaries are married. As well, CPPD beneficiaries have a higher incidence of low-income than the rest of the population (22 percent have an after-tax family income below the after-tax Low Income Cut-Off (LICO) versus 15 percent of all Canadians age 18 to 64). Comparing the number of CPPD beneficiaries with data collected by the Participation and Activity Limitation Survey (PALS) and Canadian Community Health Survey (CCHS) suggested that CPPD reaches between 15 and 32 percent of those self-identifying as having severe disabilities. The difference between the number of program beneficiaries and the results of these two surveys is largely due to differences in disability definitions among the CPPD, PALS and CCHS, as well as the contributory requirements of the CPPD Pension. Determining CPPD eligibility is a challenging task. The CPP legislation and the Department s policies and guidelines are used to identify the characteristics of a person considered to be disabled for purpose of the CPPD legislation. The process places particular emphasis on determining whether a disability is severe and prolonged as per this legislation. In spite of the technical and theoretical challenges in defining disability, the program has maintained a high level of stability in its application of its definition over a long time period. However, it remains a major challenge to provide a reliable assessment of disability levels across jurisdictions and through time. ii Summative Evaluation of the Canada Pension Plan Disability Program

11 Stringent definitions are stringently applied. Between 2001 and 2006, the average approval rate at the initial stage of the CPPD application process was 45 percent. Of the denied group, more than 80 percent did not meet the CPPD medical requirements. For the group of applicants who were denied at the initial stage (i.e. 55 percent of the total applicants), about 35 percent requested reconsideration and of these 40 percent were approved. Very few cases arrived at the Pension Appeals Board (PAB), which is the last stage of the appeal process. It should be noted that new information can be introduced at any stage of the reconsideration and appeals process, which can affect the decision. However, it was not possible to determine in what proportion of cases new information was provided. Impacts and Effects of the Program The analysis showed that CPPD pension has a positive effect on the income and quality of life of the individuals who qualified for CPPD. For example, on average, CPPD pension accounted for about 50 percent of beneficiaries total income. In some cases, CPPD is the only source of income (e.g. the survey of applicants suggested that CPPD pension accounted for all of family income for 12 percent of beneficiaries). Further analysis indicated that roughly half of the beneficiaries who would have been in poverty, avoided it as a result of the program. In the case of quality of life, the survey of applicants indicated that 72 percent of the granted applicants felt that CPPD pension enabled them to live independently and 50 percent indicated that the pension let them live actively. Two lines of evidence suggested that many of those not granted CPPD pension do not resume working even three or four years after their CPPD application is denied. For example, the survey of applicants showed that 60 percent had not worked since their application was denied about four years ago. Also, less than a quarter of the denied applicants were working when they were surveyed four years later. Similarly, an analysis of linked CPPD administrative data and Canada Revenue Agency income tax data showed that nearly half (49 percent) of the denied applicants had no employment earnings three years after being denied benefits. This raises questions for further study. Although economic literature suggests that disability benefits may create a disincentive to work, studies prepared for the evaluation found that the disincentives to work appear to be less prominent than suggested by other research. For example, the studies found that employment rates and earnings among CPPD beneficiaries begin to decline years before the start of CPPD pension. Also, as discussed above, many denied applicants do not resume working after their CPPD applications are denied. The application process was found to be long, complex and stressful for clients. For example, the focus group participants and applicant survey respondents generally felt the application process was too long. The majority of focus group participants indicated that their ability to cope with their illness, disease or accident was severely impacted by being continuously asked to prove that they were as disabled as they claimed. As well, many focus group participants and applicant survey respondents indicated that they had to rely on family and friends for financial and/or emotional support during the application process. Summative Evaluation of the Canada Pension Plan Disability Program iii

12 Program Delivery The overarching structure of how the program is delivered seems to work well. However, a number of areas were identified where changes could improve the process for applicants. For example, the application form is perceived to be lengthy and complex by applicants as well as delivery staff. As well, many applicants with mental health disability felt the application form was geared to those with physical disabilities. In addition, discussions with doctors indicated their view of unnecessary duplication in providing medical documentation required for CPPD, the disability tax credit, long-term disability insurance and other programs. The applicant survey, focus groups and key informant interviews indicated that the program is well known, but not all aspects are well understood. For example, knowledge of the return to work rules, the impact of receiving children s benefits, and the consequences of applying late could be improved. As well, the majority of focus group participants did not understand the adjudication process. Most managers and two-thirds of the medical adjudicators who participated in the key informant interviews felt that the current indicators are having the effect of encouraging easy files to be processed first as one strategy for meeting performance targets, and therefore a more comprehensive framework for managing work be made visible that balances quality and speed of service performance indicators is warranted. Cost Effectiveness The cost effectiveness of program administration and delivery could not be assessed because substantial changes in the mode of delivery during the study period (1997 to 2007) made it difficult to make meaningful comparisons of cost data over time. However, qualitative information from program data and other sources indicated the major cost areas were administrative, adjudication, appeals and communications. Comparing the CPPD Pension to those of national disability programs in four other countries (United States, Netherlands, United Kingdom, Australia) suggested that the program delivery cost of the CPPD Pension is relatively low and the program is cost effective. iv Summative Evaluation of the Canada Pension Plan Disability Program

13 Management Response Introduction Canada Pension Plan Disability (CPPD) is the largest federal income security program for working-age persons with disabilities and Canada s largest public disability insurance program. A Summative Evaluation, undertaken from , assessed the following aspects of the program for the period: continued relevance; achievement of objectives; impacts and effects; cost-effectiveness and program delivery. The Department of Human Resources and Skills Development Canada (HRSDC), which includes Service Canada, agrees with all of the report s six recommendations and is pleased to present the following management response. As the first major examination of CPPD in almost 15 years, this evaluation is integral to ensuring the program remains as relevant and responsive to the needs of working-age Canadians as possible. HRSDC would like to recognize the significant work required to undertake an evaluation of this magnitude and thank everyone who participated. We look forward to collaborating with our key partners (internal and external) as we work to advance these recommendations. In particular, we would like to thank applicants and beneficiaries, physicians, HRSDC staff and officials from other government departments who generously shared their insights and experience to help inform this process. Key Findings Overall, the evaluation found that the CPPD program remains as relevant today as it was at inception. Disability that affects work capacity continues to be a key risk faced by workingage Canadians and public disability insurance remains an equitable and economically efficient way of addressing this risk. Over the years, the population served by the program has changed. Current beneficiaries tend to be older with 55 percent in the age group in They are also more likely to be female; women comprised 50.7 percent of the caseload in 2006 compared to 42.9 percent in 1996 due to their rising levels of labour market participation. Medical conditions have also changed and the largest disability categories are currently mental health issues, musculoskeletal conditions and neoplasms. Yet the objective of the CPPD program has not changed: CPPD aims to provide a basic level of earnings replacement for contributors and their families when an individual can no longer work because of a severe and prolonged disability. The majority of workers who contribute to the CPP (about two-thirds) would meet the disability contributory eligibility requirements. However, the evaluation points out that this proportion (68 percent in 2005) is significantly lower than the peak of 78 percent in Each year of the study period, CPPD Summative Evaluation of the Canada Pension Plan Disability Program v

14 paid approximately $3.5 billion in benefits to almost 300,000 beneficiaries, representing between 15 and 32 percent of all Canadians with severe disabilities (depending on the survey). The receipt of CPPD has a positive impact on beneficiaries incomes. On average, benefits comprise about 50 percent of beneficiaries income, while 12 percent of beneficiaries report it as their only income source. In the absence of CPPD, the prevalence of low-income among beneficiaries would be almost double the current rate. CPPD also contributes to quality of life; in a survey of clients, 72 percent reported that receipt of the CPPD benefit enables them to live independently while 50 percent reported it enables them to live actively. In terms of areas for improvement, the evaluation identifies disability determination as a challenging task for any national program, and one that warrants ongoing consideration to ensure consistency of decision-making across regions and over time. It notes that Canada can continue to learn from the experiences of other countries with publicly-funded long-term disability programs. It also raises concerns with the complexity applicants can experience in applying for benefits and suggests more be done to understand their experiences in order to improve program design and delivery. The evaluation also urges officials to explore options that maximize access to employment resources and services for both granted and denied clients in order to support their return-to-work efforts. The evaluation concludes with six recommendations that require action on the part of management in the areas of quality assurance, service delivery, and working with key partners and, it identifies areas for further study. The recommendations and areas for study, as well as the departmental response, are outlined below. Recommendations Define, Develop and Implement a Quality Assurance Framework HRSDC agrees with this recommendation. The evaluation affirms that CPPD has maintained a high degree of stability in applying its medical eligibility criteria over time. Yet it also recognizes that determining whether an applicant s particular disability meets the legislative definition of severe and prolonged is a challenging and complex process. While progress has been made in recent years to improve the clarity and transparency of this process, HRSDC concurs that more remains to be done to demonstrate that sustainable decisions are being made in a timely, and consistent manner. Overall, HRSDC recognizes performance management as an essential component of organizational success and is committed to measuring performance, managing for results and reporting on progress. While the Department has established a strong performance measurement framework in recent years, it continues to be reviewed and strengthened as part of ongoing program improvement efforts. The performance measurement framework for CPPD is an integral part of this work. vi Summative Evaluation of the Canada Pension Plan Disability Program

15 Going forward, CPPD will ensure an appropriate mix of indicators for assessing timeliness (e.g. speed-of-service) as well as the quality of decision-making. These efforts will be part of the Department s broader work to modernize Canada Pension Plan (CPP) and Old Age Security (OAS) service delivery. This multi-year modernization process will develop and implement a comprehensive strategy of service delivery improvement with a focus on achieving service excellence. As this strategy is developed, the Department will identify and report on its components. As HRSDC works to develop an overarching quality assurance framework for the CPPD program, the tools that support disability determination including the CPP Disability Adjudication Framework will be key components. Developed in response to the last CPPD evaluation, the Adjudication Framework is a comprehensive package of policies and reference tools that supports CPPD medical adjudicators with the process of disability determination. Based on CPP s legislation, this Framework lays out the set of criteria against which applications are assessed. The Framework is supported by a number of policies and reference tools on particular conditions (e.g. chronic pain, fibromyalgia and multiple chemical sensitivities). To support CPP modernization, work began in the fall 2010 to review the Framework in order to identify areas for improvement; this work will involve medical experts and stakeholders. An initial consultation with a key group of stakeholders took place in November 2010 and further consultations with health professionals and stakeholders will be undertaken as work proceeds. Additional research is also planned to better understand existing domestic and international best practices in this area. It is anticipated that this work will lead to a renewal of the supports to adjudication, including the Framework. As this work advances, the Department will provide updates to stakeholders and report on progress. In addition to the Adjudication Framework and policies/reference tools on specific conditions, HRSDC recognizes that further support could be provided to ensure that advances in medical knowledge related to disability are provided to CPPD staff involved in disability determination. Therefore, over the last two years, the Medical Expertise Division of CPPD Directorate has developed and offered staff in headquarters and regions a number of knowledge seminars on specific conditions. These learning events will continue and the Directorate will continue to build on this knowledge-sharing by offering more such seminars. The Department will also investigate best practices, domestically and internationally, to determine other mechanisms for sharing the latest medical knowledge, updating existing tools and developing additional tools to support disability determination. The Application Process Could be Reviewed and Simplified Consider a two-step application process. HRSDC agrees with this recommendation. Under the legislation, CPPD eligibility has two components contributory and disability. To meet contributory eligibility, applicants must have recent attachment to the workforce as signified by a minimum level of CPP contributions in four of the last six years (or three Summative Evaluation of the Canada Pension Plan Disability Program vii

16 of the last six years for long-term contributors who have contributed for at least 25 years). In terms of eligibility related to disability, applicants must demonstrate a severe and prolonged disability as defined in the CPP legislation. Severe refers to being incapable regularly of pursuing any substantially gainful occupation while prolonged indicates the disability is long lasting and of indefinite duration, or is likely to result in death. Assessing contributory eligibility is a relatively straightforward process in contrast to the complexities of determining whether the applicant s medical condition meets the legislated requirements for a severe and prolonged disability. The key issue is in relation to the impact of the medical condition on the individual s capability, on a regular basis, to work at any substantially gainful employment. While the majority of CPPD applications received in a year (around 60,000) meet contributory requirements, just over 5,000 applicants do not have sufficient earnings and contributions. Nonetheless, under the current process, medical information is required for all applicants whether or not they meet the contributory requirements. For this reason, consideration of a staged process, in which contributory eligibility is assessed before medical information is requested, is an area the Department is actively exploring. A staged application process would contribute to CPPD s overarching goal of a more streamlined, client-centred application process which asks the right questions at the right time and minimizes the burden on applicants and the medical community. For this reason, the Department is investigating how best to accomplish this without adding another layer to the application process. A number of alternate approaches have been conducted in the regions that will contribute to knowledge gathering in this area. It is anticipated that the Department will be in a position to undertake additional alternate approaches in the next year, with a view to broader implementation of successful options. Consider testing approaches for making the application more user-friendly HRSDC agrees with this recommendation. HRSDC is committed to ongoing improvement of service delivery in all programs, including CPPD, to ensure a more client-centred approach and achieve service excellence. In this context, the Department is currently exploring several approaches to make the CPPD application process more user-friendly. Early deliverables could include shortening the application form and providing revised and updated communications products to applicants so that the eligibility requirements (and documentation required) are more easily understood. In the longer-term, the Department plans to make greater use of technology and e-services as part of its commitment to developing comprehensive cross-channel approaches to service delivery that respond to the changing needs of individual Canadians. It is anticipated this will result in moving away from an entirely paper-based system. To respond to the challenges of a particular client group, over the last three years, Service Canada has tested a shortened application form, supported by an outreach process, for gravely ill applicants in the Atlantic region. This shortened application has been well received by applicants, medical professionals and Service Canada staff, and won a 2010 Deputy viii Summative Evaluation of the Canada Pension Plan Disability Program

17 Minister s Award for Program Design and Delivery. As work progresses on making the CPPD application more user-friendly, we plan to build upon this project and develop additional alternative approaches in order to provide a strong evidence base for program change. The Department will explore other promising approaches to create a more client-centred approach, and will use information received from clients as part of the evaluation as well as continued contact with clients and key stakeholders to inform this work. Consider how best to collaborate/coordinate with other programs HRSDC agrees with this recommendation. CPPD complements other measures which provide support to persons with disabilities (i.e. tax support and benefits, earning replacement and income support programs). HRSDC acknowledges the need to continue to collaborate with these programs with a view to exploring areas of common interest. For example, a new five-year agreement was recently signed between the Minister of HRSDC and 41 private disability insurance companies with the goal of continuing to streamline service to mutual clients. In addition, work continues with the provinces and territories under the auspices of the Deputy Ministers of Social Services Forum to explore issues of common interest, including achieving an improved understanding of existing supports and services for persons with disabilities. Nonetheless, the Department acknowledges that specific disability programs, benefits and services in Canada each has its own objectives (often legislated) and target population, and therefore, defines its parameters accordingly. While recognizing the importance of these existing definitions and program parameters, we will look for opportunities to collaborate wherever possible. For example, we will continue our work with insurers to explore other opportunities for efficiencies, with the provinces and territories and the Canada Revenue Agency (CRA). Enhance partnership with physicians HRSDC agrees with this recommendation. Physicians play a key role in the CPPD application process. In fact, the evaluation found that physicians are a key information source for most applicants when it comes to the CPPD program. The Department recognizes the need to continue to improve communications with physicians in order to provide them with up to date information on CPPD benefits and to work to minimize the administrative burden when it comes to the completion of required medical reports. Over the past two years, steps have been taken to enhance the relationship with the medical community through ongoing contact with the Canadian Medical Association (CMA). This collaboration has led to several outcomes including: the formation of an HRSDC-CMA senior executive information-sharing forum; the creation of a CPPD communications strategy for CMA members, and the updating of the CPPD Physicians Guide. Summative Evaluation of the Canada Pension Plan Disability Program ix

18 To further enhance communication, HRSDC recently developed a Web Portal for Health Care Professionals. This reference tool, launched in February 2009, assists health care professionals to better understand the requirements of CPPD and other federal disability programs, including the medical certificates/reports that may need to be completed on applicants behalf. To make this resource as effective as possible, focus groups were held with physicians, nurses, and occupational therapists in Respondents indicated that they found the information to be useful, but also suggested that ways be found to improve navigation to the site. The Department is actively pursuing this work. To address the administrative burden presented by CPPD application forms, HRSDC is taking action on several fronts. In the short term, the fee paid to physicians who complete CPPD applications was increased by 30 percent from $65 to $85 as of In the longer term, the program will continue to examine the potential to gather medical information in a more targeted manner and explore whether other efficiencies are possible (e.g., electronic information exchange) and utilizing medical information previously provided to other disability programs, although privacy considerations must remain paramount as these avenues are explored. The Department will also consult with health professionals in the renewal of tools to support disability determination and other areas of modernization. Examine Return-to-Work Supports HRSDC agrees with this recommendation. There is a global consensus on the need for removing work disincentives and promoting active return-to-work measures for persons with disabilities in order to improve economic security, promote social inclusion and integration, and contribute to Canada s productivity. HRSDC is committed to ensuring that CPPD applicants are provided with information on existing supports and services to support their efforts to join the labour force or return to work. The Department is also committed to ensuring that those clients who have expressed an interest in returning to work have access to information on supports within the CPPD program, including vocational supports. As noted in the evaluation, Service Canada representatives regularly provide information and referrals to denied clients in order to advise them of the services and supports to which they may be eligible. This is integral to Service Canada s mandate of providing Canadians with easy access to a full range of government programs and services in a reliable, convenient and cost effective manner. These existing referral services will be improved through Service Canada s evolving Client Segment Strategy for Persons with Disabilities. This strategy assesses the diverse needs of persons with disabilities in order to provide the most relevant and effective service offerings. This approach often entails bundling, that is providing information on the spectrum of employment-related programs and services available to people with disabilities whether they are provided by HRSDC, other federal departments, other levels of government or the not-for-profit or private sector. x Summative Evaluation of the Canada Pension Plan Disability Program

19 HRSDC is also working to improve and enhance existing CPPD return-to-work supports, including ensuring more clients with rehabilitation potential are accepted into the Vocational Rehabilitation (VR) Program. The Department will continue, as well, to examine the effectiveness of other initiatives to reduce disincentives to work (e.g. work trial, automatic reinstatement) with a view to helping clients who regain work capacity to return to the workforce for as long as they are able. The Department recognizes that disability can be dynamic and, over time, some beneficiaries may experience improvements in their health that could enable a gradual return to the workforce with appropriate supports. Training for Service Canada staff on a strength-based approach to vocational assessment will be launched in spring Areas for Further Study The evaluation suggests that further research be undertaken to understand the circumstances and reasons why a large percentage of denied clients are not working in the years following denial. The information needed to understand this issue is currently not available as the survey undertaken for the evaluation did not allow for such analysis. The Department agrees that this is an important knowledge gap and will undertake further research in this area. In addition, the Department will undertake analysis into the characteristics of clients in the appeal system and the role of new information in this process. We also agree on the importance of further analyzing the issues of program delivery costs, benefit coverage, and the assessment of eligibility by disability type and will undertake further research and policy work in each area. In closing, the Department is committed to continuous improvement of CPPD s design and delivery in order to ensure that it responds to the needs of Canadians while ensuring administrative efficiency, effectiveness for clients and consistency with our role as stewards for this important national program. Summative Evaluation of the Canada Pension Plan Disability Program xi

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21 1. Introduction This report provides the first full-scale summative evaluation of Canada Pension Plan Disability (CPPD) program since It is a synthesis of over 20 technical reports conducted over the period from 2007 to The field of supports for workers with disabilities is vast and complex. This report reflects a summary of what is known about program effectiveness and delivery at the time the report was written, as many questions admittedly still remained unanswered. 1.1 Evaluation Scope and Methodology As is the case with any formal program evaluation, the work was organized around a set of questions 1 that were approved by an advisory committee in March The technical reports designed to answer these questions cover the period from 1997 to 2007, which corresponds to the ten-year time period since the previous evaluation of the CPPD Pension. These evaluation questions were developed in consultation with the program area, the Treasury Board Secretariat and other central agencies. The final list is extensive and is included in Annex I of this report. This report summarizes what was learned from this process. It should be noted that there is much valuable information in the supporting technical reports. The evaluation was undertaken at the same time that the Organisation for Economic Co-operation and Development (OECD) was preparing a major review of government involvement in the area of disabilities. Although the work for this evaluation was conducted independently of the work done by the OECD, the OECD work did have its influence at the planning stages of the project. As a result, the HRSDC evaluation focuses more on the program operational aspects. This final report presents a synthesis of over 20 technical reports. A mixed-method evaluation design, including both quantitative and qualitative evaluation methods, was used to inform the different evaluation questions. The range of methods used by the technical reports include qualitative analysis such as a document and literature review, case studies, a survey, focus groups, and key informant interviews, as well as quantitative analysis using data from CPPD administrative data, Canada Revenue Agency income tax data, Statistics Canada survey data and administrative databases. In synthesizing the technical reports, this final report places particular emphasis on drawing from multiple lines of evidence to corroborate and explore the main findings for each of the evaluation questions. The evaluation process also benefited from the valuable support and cooperation of the program area. 1 It is worth noting that the structure of the questions was based on the Treasury Board Policy on Evaluation in force at the time. Where possible attempts have been made to shift the emphasis in the direction of the 2009 policy. Summative Evaluation of the Canada Pension Plan Disability Program 1

22 1.2 Some General Cautions and Limitations When interpreting the findings and conclusions presented in this report, readers should bear in mind some general cautions. It should be kept in mind that the period of analysis (1997 to 2007) covered a period of years when the program and delivery process went through many reorganizations, and this presented challenges for this evaluation process. For example, for a precise assessment of program efficiency, it is difficult to make meaningful comparisons of cost data over time. Also, as Quebec administers its own program, the totals included in most tables will only include the nine provinces and the territories. In addition, as the income tax data from the Canada Revenue Agency is used to derive information on earnings and incomes, most annual data is on a calendar year basis rather than the usual government fiscal year basis. 1.3 Organization of the Report The second chapter starts the report with a description of the program from many different perspectives. This description ranges from the operational to the theoretical. Particular attention is given to the description of program objectives as they provide the metric by which program performance can be judged: the subject of the third chapter. The fourth chapter goes into the impacts and effects of the program. This section suggests that the disincentives to work appear to be less prominent than many other discourses on the subject have indicated and that the impact on poverty reduction is significant. The final major section discusses issues surrounding program delivery. The report ends with a set of recommendations. It is also important to note that many complex issues are only briefly touched upon and suggestions for further research are provided at the end of the report. 2 Summative Evaluation of the Canada Pension Plan Disability Program

23 2. Description of the CPPD Pension Introduced in 1966, the Canada Pension Plan (CPP) is based on contributions from workers and employers. It operates in nine provinces and the territories while the Quebec Pension Plan (QPP), a parallel plan, operates in Quebec. The CPP is best known for its retirement pension, but also provides survivor, death and disability benefits to CPP contributors and their families. The 1964 White Paper on the Canada Pension Plan envisages the CPP as a compulsory and contributory social insurance scheme that will provide working Canadians, including the self-employed, and their families with reasonable minimum levels of income available at normal retirement ages, and to people who become disabled, and to the dependents of people who die. It describes disability pensions under the general heading supplementary pensions and states such pensions have to meet situations that are fundamentally different from retirement pensions. 2 CPPD provides income security to individuals and families in cases where a contributor experiences a severe and prolonged disability that renders the person incapable regularly of pursuing any substantially gainful occupation. The person must be determined to be disabled at the time they last made sufficient contributions to the CPP. CPPD has become the single largest public long-term disability insurance program in Canada. Based on statistics between 1997 and 2007, annually about 60,000 new applications were received, and about 300,000 beneficiaries received approximately 3.5 billion dollars in CPPD pension. 3 There are a large number of other public and private programs which provide complementary benefits for persons with disabilities, such as Workers Compensation Boards, Social Assistance, private long-term disability insurance, Employment Insurance Sickness Benefit, and auto accident insurance. 2.1 CPPD Eligibility As defined by CPPD legislation, the program provides social insurance protection to its contributors throughout their working years in the event of a disability that prevents a person from pursuing any substantially gainful employment. It is not a universal plan, as is the case with Old Age Security, but is limited to labour market participants who meet the contributory requirements and the medical criteria. There are important issues involved in defining labour market attachment and disability. The extent to which these issues are addressed determines the degree to which the program objectives are met. The mechanics of determining sufficient labour market attachment are 2 Department of Health and Welfare (1964), p For more details on trends in applicants, beneficiaries and program expenditure, see Section 2.6 Program Activity. Summative Evaluation of the Canada Pension Plan Disability Program 3

24 discussed in detail in Section This is important as attachment is defined in terms of years of contributions above a certain minimum. Thus at any point in time, a certain percentage of contributors are not eligible for benefits as they are recent entrants or they have been detached from the workforce. The challenges in defining disability run throughout the report but are highlighted in Section , where a wide range of estimates are given from major surveys. 2.2 CPPD Pension A monthly CPPD pension is provided to individuals who are eligible, apply for, and have their applications approved. The amount of the benefit is the sum of a flat rate and a component which varies with the applicant s insurable income. The flat monthly rate was set at $ in The income-related component is 18.7 percent of insurable earnings, 4 which is 75 percent of the rate used for the retirement pension. A monthly benefit is also available to beneficiaries children who are under age 18 or ages 18 to 25 and attending school full time. The CPPD pension is indexed to the Consumer Price Index and is revised every year to reflect inflation. In 2007, the maximum monthly payment was $1,053.77, and the maximum monthly benefit for children of those who qualify for CPPD was $ per child. The maximum actual annual amount of CPPD pension paid was $12, CPPD s Main Features CPPD has a number of salient features that have been stable throughout its history: Inclusiveness no Canadian worker is excluded because of her or his former medical history as is normally the case with private insurance schemes; Contributory it is a contributory program and to be eligible for disability benefit, the individual must meet a minimum contributory requirement; Non-risk based premium the CPP premium is invariant with respect to medical risk; Continuing coverage the program provides coverage until improvement of the disability, 5 retirement or death; Children benefits a monthly benefit is also available to beneficiaries children who are under age 18 (and also for children between the ages 18 to 25 if attending school full time); and Appeals applicants have the right to appeal a decision at two successive levels: the Office of the Commissioner of Review Tribunals and the Pension Appeals Board. 4 Insurable earnings include amounts reported on an earnings statement, or wage slip before any deductions are made for income tax, Employment Insurance, Canada Pension Plan, health care plans, loan payments, union dues. 5 An assessment is required to determine whether the disability has stabilized and/or whether there has been an adaptation to and/or improvement in the disability which has resulted in an increased regular capacity for work. 4 Summative Evaluation of the Canada Pension Plan Disability Program

25 As summarized below, administration of the CPPD Pension has been enhanced over the years through initiatives such as the introduction of a return to work incentive, automatic re-instatement, child rearing provision, credit-splitting, and late-application provisions. Late application provision As long as a person had enough years of valid CPP contributions when he or she claims their disability began, and as long as the person is considered to be continuously disabled from that date up to the date the claim is adjudicated, he or she may be eligible for CPPD as described in Bill C-57 (Subparagraph 44(1)(b)(ii) of the Canada Pension Plan Act), even if the person did not initially apply. Return to work initiative CPPD supports beneficiaries to return to work through a variety of measures such as: allowing beneficiaries to volunteer or attend school with no impact on their benefits; permitting beneficiaries to earn up to $4,300 in 2007 without having to report this amount to the CPP (this amount is indexed to the Consumer Price Index and adjusted annually); providing a paid work trial that allows CPPD clients to continue receiving benefits for three months while working; and providing vocational rehabilitation services and return-to-work supports to help clients achieve their return-to-work goals. Automatic reinstatement Automatic reinstatement provides an extended entitlement to CPPD beneficiaries who try to return to work. If the same or a related disability reoccurs within two years of returning to work and prevents them from staying at work, the CPPD pension can be reinstated without going through the usual reapplication process. There is no limit to how many times a reinstatement of benefits can be requested, providing all the requirements associated with automatic reinstatement are met. The children s benefits will also be reinstated if the children are still eligible. Fast-track reapplication The fast-track reapplication process is designed to support applicants who do not meet the timelines or criteria associated with the automatic reinstatement provision. This simpler, faster application process is available for up to five years from the date benefits are ceased, and the applicant must reapply within on year of stopping work. However, earnings and contribution requirements must be met as a precondition for qualifying and the disability must be due to the reoccurrence of the same or a related disability. Credit splitting When a relationship ends, the CPP credits that the couple built up during the time they lived together can be divided equally between them. The program permits the credits to be split even if one spouse or common-law partner did not pay into the CPP. Child rearing provision If a contributor has no or low earnings while caring for a child under the age of seven, these periods of time can be excluded from the calculation of the contributor s benefit. This provision could help a contributor qualify for a CPPD pension or increase the amount of pension received. Summative Evaluation of the Canada Pension Plan Disability Program 5