The Future of Social Security Disability
In early December 2011, the House Committee on Ways and Means held the first hearing of a series on “Securing the Future of the Social Security Disability Program.” During testimony, witnesses spoke on the importance of the program, the exhaustion of the SSDI trust fund and the potential for reform.
The Social Security Disability Insurance (SSDI) program has been in the news for quite some time now, especially since the Social Security Administration trustees announced the disability trust fund will be unable to pay full benefits starting in 2017 or 2018. Critics of SSDI have said that the program is a burden on taxpayers, is not strict enough and is too subjective. Testimony from the December program shows these points are inaccurate and that the Social Security Disability program is solvent.
History of the SSDI Debate
Committee Chairman Sam Johnson began the December program by discussing the history of SSDI. The cash benefit program was signed into law by President Eisenhower in 1956, during a time when the majority of families only had one breadwinner — a time without internet and a time with shorter life spans. Even then, there was debate about the program’s subjectivity.
Today, the SSDI landscape has changed dramatically. Steve Goss, the Chief Actuary of the Social Security Administration, highlighted the changes that have affected SSDI:
- Baby boomers have reached prime disability ages
- Women have entered the workforce and more women are working consistently enough to be insured by SSDI
- Women used to be less likely to be disabled than men, but are now on par with men
- People are becoming disabled earlier in life
The economic recession has also added to the cost of the SSDI program. There has been a spike in the number of SSDI applicants, and SSDI recipients, in recent years.
The SSDI Prognosis: Not Bad
The data shows that the program is not working the same way it once did. Demographics have changed, and many would argue that the program has become unsupportable and should therefore undergo substantial reform. However, the problem is not as massive as SSDI opponents and news media would make it seem.
According to U.S. Congressman Xavier Becerra, SSDI has taken in 14.6 trillion dollars and has only paid out 12 trillion since its inception. Steve Goss adds that we are at the peak of the problem right now. “We have already moved into the worst of times.” Baby boomers have reached their prime disability ages, which means disability insurance has reached its peak cost. Women are now on par with men regarding the number eligible for SSDI as well as the number receiving SSDI. The SSA expects stability in the future. Similarly, the shift toward disabilities earlier in life has leveled out.
What does this mean? According to Goss, the cost of SSDI is at its highest right now and is even declining. The SSA has not projected it to go higher. Furthermore, it’s “on a sustainable course.” While the Social Security trust fund could be exhausted in 2017, tax income will still cover 86 percent of benefits. By 2085, there will still be enough money from tax income to pay 83 percent of benefits.
A Necessary Program for Many Americans
Andrew G. Biggs, resident scholar at American Enterprise Institute, argued that the number of people receiving SSDI is more than what you would expect from an aging population, especially during a time when the jobs are less physically demanding and people have higher incomes. He stated that employers need to provide reasonable accommodation for individuals with disabilities to keep workers working. He also believes that Congress needs to decide who is eligible for SSA, taking the “subjective decision-making” burden away from SSA examiners and administrative law judges.
His argument assumes that people currently on Social Security Disability Insurance would be able to work. As testimony from other witnesses showed, however, the current requirements for SSDI are very strict and most people on SSDI have no other option to bring bread to the table.
Virginia Reno, Vice President for Income Security Policy at the National Academy of Social Insurance, said, “People who get benefits rely very heavily on them.” Approximately one half of benefit recipients rely on SSDI as their entire income. They are not living rich lives. In fact, SSDI only puts recipients slightly above the poverty level. It is an “essential lifeline.”
The Difficult SSDI Application Process
In order to receive SSDI benefits, applicants must show they have worked in jobs covered by Social Security, that they can no longer work due to a medical condition and that their disability is terminal, or has lasted or is expected to last for at least one year. On its website, the SSA drills the point home: “This is a strict definition of disability. Social Security program rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers’ compensation, insurance, savings and investment.”
Yet, many people who need SSDI benefits are denied by the SSA. A 2011 Rand Institute study found that 70 to 80 percent of people who were denied SSDI benefits did not go back to work. And those whose applications weren’t denied likely faced a long battle, possibly including many appeals.
According to Congressman Becerra, more than 1.5 million Americans are currently waiting for a decision on their applications. Some have lost their homes, even their lives, while waiting. That is why many Social Security disability lawyers and advocates of individuals with permanent disabilities are fighting hard against attempts to make the SSDI requirements even stricter.
When asked whether people were using SSDI as a way to find money during the recession Steve Goss said, “Many people, through force of will, worked” even though they had a severe disability. Americans “have a strong work ethic — most people would take a good paying job over benefits.” But some people don’t have a choice. For them, SSDI is their only means of meeting their financial needs.