‘I thought I knew what being disabled meant, and I don’t.’

March 28, 2013

Over the weekend, "This American Life" and "Planet Money" ran a story by Chana Joffe-Walt looking at the extraordinary growth of America's disability insurance system. Joffe-Walt visited Hale County, Ala., where one-in-four residents is on disability, looked at the lawyers who specialized in winning disability cases against the government (and getting paid by taxpayers for it), and spent time with a young child whose disability check has become the key to his family's survival. 

The result is a detailed, nuanced, and discomfiting look at a social insurance program that has become a catch-all for the failures of both our economy and our safety net. It's worth reading, or listening to, in full. I spoke with Joffe-Walt on Wednesday. A lightly edited transcript of our conversation follows.

Ezra Klein: You talk about how you became, over the last few years, obsessed with the disability-insurance system. Why?

Chana Joffe-Walt: We had talked about the fact that the numbers were rising and that was interesting, and that people on disability aren’t counted among the unemployed, which was interesting, but what really got me interested was the variation across the country. There are places where 20 or 25 percent of the people were on disability. There was this parity between the jobs we were creating each month and the number of people going on disability.

There are multiple stories going on in the growth of the system. One is simply the demographic story of an aging workforce. People are more likely to be on disability in their 50s. Disability is very closely tied to the rise and fall of the unemployment rate, so there’s the recession story there. It also seems true that the more you have workers in their 40s or 50s in places where manufacturing has left, where there’s been a lot of offshoring of jobs, and where they’re high school graduates or less, the more you see people left without a lot of options for a job. Disability is a better option for them in a lot of cases.

Then there’s the story of welfare reform, which gave states an incentive to move people who they couldn’t get into jobs into disability programs. When a person moves from welfare, which states partially pay for, to disability, which is paid for by the federal government, that’s good for the state, because they save money, and good for the person, because they make more money on disability than on welfare.

EK: And your takeaway, as I understood it in the piece, is that the disability insurance system has become a kind of catch-all program for all these different problems, many of which are about economic opportunity as much or more than they are about physical or mental disability.

CJW: There are a lot of people not making it in the U.S. You can imagine the platonic ideal of leaders sitting down and thinking about what to do about these people. Disability insurance is probably not what you’d choose. But in the absence of thinking about this in a concerted way, disability insurance has become a bit of a default answer.

Planet Money
Planet Money

EK: A lot of the overlapping contributors to ending up on disability seem to come down to what we might call “unemployability.” There’s a lot of age discrimination against unemployed workers over 50. There are areas of the country with few jobs. There are people with few skills. There’s actual disability, which makes people hard to employ. And it sounds like what’s going on is that the higher someone gets on the metric of unemployability, the more likely they are to end up on disability.

CJW: One thing I found really interesting about looking into this was I thought I knew what being disabled meant, and I don’t. Disability is a social construct that changes over time, and that has changed substantially over the life of these programs. There were big changes in 1984 when we began taking into account somebody’s ability to get a job. We also included categories that are harder to test for. Congress added more broadly mental illnesses and musculoskeletal disorders, which mostly means back pain. Those can be harder to measure. The combination of all those things made disability mean something new. It’s not that it’s wrong. It’s just less clear.

EK: The implication of your story is that the catch-all quality of disability insurance is a bad thing. But I remember talking with a conservative policy expert who thought just the opposite. We were discussing raising the retirement age, and I asked whether that wouldn’t be a cut that targets seniors with difficult, physical jobs. His answer was that, for those people, there was always disability insurance. It does seem to me that in some quarters the mop-up role that disability insurance plays is tacitly encouraged. We’ll never be able to create social programs for everyone who’s been left behind, and so maybe having a program like disability insurance where the entry qualifications are a bit loose and quite responsive to the economy is a good thing. Did you find people in your reporting with this perspective? 

CJW: I think a lot of people see it as a sponge absorbing people who don’t otherwise have a place to find a social safety net but probably need one. One group of workers in the story are older workers from a mill state where the mill left, and they didn’t have many other options. And there’s an argument that that’s fine. Maybe the disability insurance program is like an early-retirement program for people who lost their jobs late in life, who had very physical jobs, and who we don’t expect to relocate to a whole other place. But the issue is we didn’t intend it to be that way.

People never really leave the program. It’s very hard to get back into the workforce. It provides health care. It’s a secure income. That’s not usually something we want as part of a welfare program. Most of those programs are designed to catch people when they fall down and put them back on their feet. But disability is for people who can’t work and won’t work in the future.

EK: You told a story in the article about a young woman who had a job tutoring, loved her job tutoring, but pulled back when the tutoring cut into her disability paycheck. That seemed like a slightly odd example given this argument. It seemed like she didn’t lose her check for going back into the workforce -- she just lost some of it, which in theory would always have to happen. And my understanding is that about 20 percent of people on disability have some kind of low-wage, typically part-time employment. So it seems there are some provisions to help people work.

CJW: That particular situation she found herself in is meant to be an incentive to work. The program for the poor she’s part of is meant to allow you to work a little bit, and they pro-rate your disability income if you do earn some money. That’s meant to help people transition into jobs. But she saw her check cut by $150, and it freaked her out. That check is secure. She worries her mental illness will get in the way of a full-time job. She would need a full-time job to really get enough income to live on. So she’d rather have disability’s guaranteed income.

EK: Did you hear many good ideas for reforming the system?

CJW: I heard lots of ideas on how to tweak the existing system. But I can’t say I heard reforms to totally overhaul the system that seem like obvious moves to make. Definitely Social Security would like to process claims quicker. There’s a long backlog, and that makes people not want to get off it if they get on it, because it could take a long time to get back on. There’s talk about shifting some of the burden onto employers, which could maybe push them to accommodate workers with disability a bit more -- perhaps people don’t really need to stand all day if the employer has to pay for the disability if they leave. Then there are the programs for kids, where a lot of the kids have mental illness or intellectual disabilities. You could change the program to focus more on educational programs. Social Security does review people on disability to see if they still meet the qualifications. You could possibly do more of that.

EK: Let’s talk about the kids' side of this. Toward the end of the program, you interview a child with a learning disability who loves school and sounds, on the radio, like he’ll do fine, and you mention that his family is extremely dependent on his disability check. So walk me through that part of the story a bit. What should I have taken away?

CJW: Part of the thing that’s confusing is there are two programs, one for disabled workers, one for poor people. The kids are on the program for poor people. That kid has real issues in school. he’s delayed, he’s far behind, but when you think about what the program means for him and his life, it’s a huge part of his family’s income. They rely on that check.

What you’d worry about with those incentives is they clearly set the parents up to depend on the kid’s disability to survive, and in that way, it doesn’t seem to be the ideal incentive structure that you would want for children. That’s not to say the program isn’t a huge help. It’s a cash transfer program for kids and families without much money, and that makes a huge difference. But the incentives for kids with diagnoses related to school performance and for kids when they become 18 and can potentially work, they’re not set up in the way you’d hope.

Planet Money
Planet Money

EK: What happens to the kids at 18?

CJW: Some kids stay on the program at 18, and for a lot of kids, it seems like the default path, and it has this bad incentive for working. Maybe they want to see if they can work, but the check is reduced or goes away when that happens, and because it’s hard to go on and off the program, that can be scary.

EK: One dimension that’s not as present in the story is anyone with incredibly serious health disabilities. But the program spends a lot on health care as I understand it. So when you talk about the $260 billion in annual spending, is health care included in that?

CJW: The $260 billion is the cost of the benefits to disabled workers and poor people and Medicare for disabled workers. That is a huge part of the picture in terms of what makes it beneficial to lots of people, and it’s a significant part of the cost -- $80 billion of the $260 billion. We didn’t count the Medicaid part in that total, though, as many of these people are poor and would be getting Medicaid anyway.

EK: Is there anything you’d have liked to get into the story but had to drop for space?

CJW: One of the things you were asking about is what’s the ideal reform structure. One thing I thought was interesting was that when talking to disability groups, there’s been this debate since the Americans With Disabilities Act, that disability insurance has been hugely beneficial to people with disabilities in the U.S., but a huge issue for these groups has been advocating to accommodate for disabled people in the workforce, and disability insurance program equates being disabled with being unable to work. Advocates tell me this is what gets debated when they get together. How do you reconcile this program that helps so many people with the other goals of movement?

Related: Harold Pollack on what 'This American Life' missed on disability insurance.

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