Where Industry and Security Intersect
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VI.
Government, Industry and the FuturePublic assistance at the federal and state levels has enabled many people with disabilities to buy AT products they otherwise could not afford. The importance of these subsidies to those with disabilities becomes especially clear when examining the segment of the population with severe disabilities.
Nearly 74 percent of all persons with severe disabilities between the ages of 21 and 64 are unemployed, according to Bureau of Census data.39 For the most part, these people rely on federal and state assistance programs for help in acquiring AT products.
Today, most of the support for people with disabilities comes in the form of payments from the Medicare and Medicaid programs40 administered by the Centers for Medicare and Medicaid Services (CMS). Other public support for those with disabilities is delivered through health services-driven programs at the Department of Health and Human Services, and the Department of Veterans Affairs.
In addition, federal agencies provide limited, focused funding for research on AT devices for people with disabilities. This activity is centered largely at the National Center for Medical Rehabilitation Research (NCMRR) at the National Institutes of Health; the National Institute on Disability and Rehabilitation Research (NIDRR) at the Department of Education; the Department of Veterans Affairs; and the National Science Foundation.
Federal and state support to help people with disabilities obtain assistive technology has evolved over many decades (see summary history in Appendix B). Although public demand for the creation of a healthcare system was an issue government agencies were pressed to address in the early 1900s, the enactment of Social Security in the 1930s built the broad foundation for expanded delivery of health benefits by public agencies and by private insurers.
World War II spurred increased federal investment in health care and research on rehabilitation engineering. Congress further expanded access to medical care for the needy in 1950. And in the 1960s, government medical assistance programs were expanded further by Congress with the passage of medical programs for the aged and needy, including the creation of Medicare and Medicaid.
Government assistance for people with disabilities has been a major driver to the AT industry, helping foster a market environment that encourages companies to create new, innovative AT products. U.S. AT manufacturers have had more stable markets and greater predictably in sales than could be expected without this market stimulus. The demand created by federal and state funding has enabled the production of numerous AT products that might otherwise be too costly to produce and sell because of insufficient economies of scale.
The symbiotic relationship between state and federal government agencies and AT products and services companies extends beyond the commerce generated by support payments. AT companies also benefit from federal R&D programs in at least two ways: 1) they produce intellectual property that companies can transform into products; and 2) they are a source of limited R&D grants.
R&D data on federal spending on assistive technology is not systematically collected across agencies and collated annually; thus attempting to discuss funding history in a comprehensive way is not possible at present. But federal spending on AT-related R&D and technologies has been increasing over time, driven in part by congressional direction and legislation.
At the National Institutes of Health, for example, expenditures for AT R&D have climbed significantly. Total funding41 hit $116 million in fiscal year 2000, up from $100.4 million in 1999 and $79.3 million in 1998 — a 46 percent increase for the two-year period. The National Science Foundation (NSF) allocated $8.6 million to a range of disability research projects, many of which are supportive of assistive technology; $900,000 of the NSF funds went to AT-specific R&D.
The Department of Education through the National Institute on Disability and Rehabilitation Research (NIDRR) allocated about $15.7 million to R&D in FY 2000; and the Department of Veterans Affairs R&D budget for assistive technology was $5.6 million.42
Despite the benefits the U.S. companies obtain from public spending for people with disabilities, the AT industry’s relationship with federal and state agencies is less than optimal, according to survey participants. Numerous companies expressed frustration with the way federal and state government agencies conduct business. Some AT product manufacturers complained that often they must traverse a regulatory maze — one in which federal and state agencies are effectively the "market maker" for products.
At issue are processing delays for product classification, inconsistencies among states’ reimbursement amounts for the same product, and differences in reimbursement policies. The designation of AT devices into product classifications is an area of contention and misconception.
Companies that develop new, innovative products strive to obtain a new product classification code because this can result in higher state and federal reimbursement levels. When a new product, however, is not found to be unique and can be classified under an existing product code, then earnings on subsidized sales of the affected AT device to people with disabilities might be lower. This occurs because a different formula is used for AT product codes created before 1987. Regulatory agencies use a baseline allowance plus inflation factors to determine reimbursement or compensation allowances on AT products sold to people with disabilities who seek assistance.
In written comments, AT companies called on the federal and state governments to consider taking a number of actions to improve the ability of those with disabilities to obtain AT products–and to strengthen the business climate for AT manufacturers in the United States. Such comments included the following recommendations:
39 See http://www.census.gov/hhes/www/disability.html
40 Medicare provides health insurance to people who are at least 65 years of age, people with disabilities, and people with permanent kidney failure. The scope of coverage includes hospital care, medical equipment, supplies, and related services and materials. Medicaid is a health insurance program for low-income people and people with disabilities. This program is supported with federal and state funds and administered by the states, which individually determine eligibility standards and the scope of benefits and services to be provided (See http://cms.hhs.gov). CMS was formerly known as the Health Care Financing Administration (HCFA).
41 See Strategy for the Development and Transfer of Assistive Technology and Universal Design, Report of the Interagency Committee on Disability Research In Response to the Presidential Executive Memorandum of July 25, 2000.
42 Agencies supplied
R&D figures at the request of BIS. For more information on research efforts
at the Department of Veterans Affairs, see Appendix
F.