The Social Security Disability Insurance (SSDI) program faces imminent insolvency. Annual expenditures totaled $143 billion in 2013, but program receipts amounted to $111 billion — a shortfall that is projected to continue indefinitely. According to the Social Security Trustees, the program’s trust fund will be fully depleted in 2016, compelling either a large benefit cut or a large tax hike — neither option being politically popular.
Regardless of the program’s insolvency, SSDI creates substantial work disincentives, causing many with medical impairments who could work to withdraw from the labor force and apply for SSDI. That undesirable outcome arises from the complicated rules and procedures that SSDI uses to establish benefit eligibility. But rectifying SSDI’s processes is a monumental task, unlikely to be accomplished in the short term.
Determining whether medical impairments imply inability to work is becoming more difficult in a growing number of cases, with the result that many applicants with residual capacities are admitted to SSDI. Many beneficiaries express a desire to return to work but fear of losing benefits and health coverage under SSDI’s current benefit rules impedes such a decision. Accordingly, this paper advocates a change in the structure of SSDI’s benefit payments to those admitted to the program. Shifting benefits at the margin toward paying beneficiaries to work rather than to remain out of the work force would encourage beneficiaries with residual work capacities to return to work. That shift would serve as a backstop to reduce the economic loss from wrongful allowances of applicants into SSDI. Such a switch in benefit design can be accomplished without compromising benefit eligibility for those who cannot work. The paper explains how to implement such a change to SSDI’s benefit structure and the advantages that would accrue from it. Apart from creating better incentives to work, the proposed reform complements other reforms Congress might adopt.
"Longitudinal Patterns of Disability Program Participation and Mortality Across Childhood SSI Award Cohorts"
Social Security Bulletin. 75(1): 35-64, 2015
KALMAN RUPP, Government of the United States of America - Social Security Administration
JEFFREY HEMMETER, Government of the United States of America - Social Security Administration
PAUL S. DAVIES, Government of the United States of America - Office of Research, Evaluation and Statistics
This article follows six annual cohorts of childhood Supplemental Security Income (SSI) disability awardees between 1980 and 2000, for a time horizon up to 30 years after initial SSI award, in many cases well into adulthood. The authors compare trajectories of successive awardee cohorts as the SSI program evolves from 1980 to recent years. The results show that the proportion of awardees in SSI-only status declines over the life cycle, with over half transitioning to other statuses roughly after 10 to 15 years. Many awardees transition from the SSI program to concurrent or Disability Insurance-only benefit status, and increasing proportions of awardees are deceased or off the rolls and alive. These patterns are common for all awardee cohorts, but there are major changes in trajectories across cohorts. Compared with the early cohorts, the more recent cohorts display sharper declines in mortality and steeper increases in the proportion off the disability rolls for other reasons. These two trends have opposite effects on the duration of disability program participation over the life cycle, with important policy implications.
"Perspectives: Long-Term Work Activity and Use of Employment Supports Among New Supplemental Security Income Recipients"
Social Security Bulletin. 75(1): 73-95, 2015
Long-term cumulative statistics on the employment activities of Supplemental Security Income recipients offer a different perspective than the Social Security Administration's published statistics, which are based on monthly or annual data, and have important policy implications.