Social Security Disability Insurance is turning into a monster. It has experienced exponential growth, much like other big government entitlement programs. As a consequence, it threatens to run out of money by 2016. Worse, it weakens our economy and has become yet another dark cloud over our financial future.
Eleven-million Americans receive SSDI today, compared to 2.7 million in 1970. During that time, we seen an 800 percent increase, inflation-adjusted, in SSDI spending.
How could that be? The number of workers in physically demanding jobs like mining, manufacturing and agriculture has declined, while employment has surged in fields like health, education and finance.
Some of the growth can be explained by the aging of the working population and an increase in women with sufficient work history to become eligible. But the real culprit is the design of the program itself.
In 1984, Congress significantly broadened eligibility and included coverage for more subjective problems like back pain and mood disorders. The rolls begin to fill with sufferers from these hard-to-disprove maladies which now draw more payments than diseases like cancer, heart disease and provable musculoskeletal disorders.
SSDI payments, based on a workers wage history, average just $1,130 monthly for the predominately low-wage, unskilled workers who draw SSDI. That may not seem like much — just $2,000 annually over the federal poverty level for a single person — but Medicare eligibility is also included. For whatever reasons, it’s catnip for those in the program. In 2011, only 0.5 percent of people receiving disability payments returned to work. The vast majority simply “graduate” to the Social Security retirement program.
Tellingly, disability applications rise during economic recessions. Disability insurance can become more of a strategy for supplemental income and early retirement then a safety net. Many states actively try to herd beneficiaries who are in state programs into SSDI where federal cash and Medicare relieve the state of its obligations. Unions often help workers to achieve SSDI eligibility when they suffer job losses.
Multiple studies have demonstrated the obvious: SSDI functions as a powerful disincentive to return to employment. Workers are “pretty unlikely to want to forfeit economic security for a precarious job market,” notes Prof. David Autor of MIT. Workers also find that idleness makes them less employable.
But all these reasons to get on and stay on SSDI not only cost taxpayers a bundle, they’re a serious threat to our economy, which is suffering from a shrinking workforce. More than 66 percent of Americans age 16 and older were working or looking for work in 2009, at the start of the current recovery. The participation rate is currently down to 63.3%. The unemployment numbers don’t look so bad but we have fewer workers pulling the wagon and contributing to the wealth of the nation. SSDI recipients, whether warranted or not, are people in their working years who are taking from rather than contributing to the social programs they will expect when they are seniors.
SSDI is yet one more iteration of the same old story — a government social welfare program, founded on the best intentions, that in the hands of politicians and bureaucrats morphs into a wasteful blob. The administration of SSDI over the years has worked harder at getting workers into the program in than in getting them back to work.
They (we) actually paid $1.4 billion to “disability advocates”, who help workers attain eligibility. Yet administrators have enrolled only 3 percent of those eligible in the Ticket to Work program which offers vocational rehabilitation and job placement.
As Ronald Reagan would say, there is a solution that is simple, but not easy. If we privatized SSDI, we could reduce costs sharply.
Private disability insurers, needless to say, don’t just shovel money out the door. They’re highly motivated first to determine if claimants are truly injured or just wish they were. They also put great emphasis on programs helping people return to work. As a result, they typically return about 20 percent of claimants to work each year, a rate 40 times that achieved by government.
Helping people who need it is a long American tradition. However, that doesn’t mean we can afford to be stupid about our burgeoning social programs.
East Valley resident Tom Patterson (firstname.lastname@example.org) is a retired physician and former state senator.