Social Security’s disability program, which sends a small bit of cash to 9 million former workers who now face serious disabilities, will be insolvent next year. This has as much to do with Social Security’s accounting structure as anything else, but if Congress doesn’t do something about it, beneficiaries would face a devastating 19 percent benefit cut.
Unfortunately, some conservative members of Congress and the media have used this occasion to stigmatize these relatively powerless Americans as frauds to justify benefit cuts they could never enact in middle-class programs like Medicare or Social Security retirement. While incidents of Medicare fraud have led to targeted crackdowns, these critics are using the Social Security Disability Insurance equivalent to question the integrity of the entire program and most workers with disabilities who receive benefits. Here are four of the most misleading arguments.
Social Security Disability Insurance has seen inexplicably exploding cost run-ups in recent years. Discussing the 2016 deadline, the Heritage Foundation says that “total spending on the disability insurance program is exploding,” and the Cato Institute talks of “a ballooning of SSDI enrollees” due to “the anti-work and pro-SSDI-dependency gravitational effect of the program.” While these charges are designed to give the impression that the program is unexpectedly facing huge growth, the 2016 insolvency was forecast back in 1994, the last time Congress legislated a reallocation of taxes between DI and Social Security. Rather than a shocking indictment of the program, the depletion of the trust fund has been anticipated for 20 years and reflects mostly demographic factors that were decades in the making.
In particular, while the number of beneficiaries increased by 6 million from 1980 to 2013, population growth, aging and other social changes account for roughly 70 percent of the increase, according to the Center on Budget and Policy Priorities. This includes the particularly important growth of women in the workplace, which has increased the share of SSDI beneficiaries who are women from one-third to nearly one-half. Not only is much of the rise in the number of beneficiaries well understood, but also in recent months the growth in beneficiaries (relative to 12 months prior) has declined to its slowest rate in over 25 years.
Anyone can get on SSDI and, as Sen. Rand Paul (R-Ky.) has claimed, “half of the people on disability are either anxious or their back hurts – [so] join the club.” This claim stems from a common misperception that the 1984 Disability Benefits Reform Act, unanimously passed in Congress and signed by President Ronald Reagan, created new eligibility categories for mental illnesses and musculoskeletal disorders that make it easy to get on SSDI and never get off. Yet workers with mental illnesses and musculoskeletal disorders were already eligible before 1984 – and constituted 30 percent of beneficiaries before the law.
Unsurprisingly, those numbers have expanded not only due to more clarity on eligibility and an older population, but also due to more women in the workforce and the reduction of stigma related to mental illness. With the serious problems of PTSD, depression and suicide affecting our returning veterans, mocking those with mental illnesses receiving benefits is counterproductive and callous. And with respect to musculoskeletal disorders (like amputation, burn injuries and others), regulations require “objective observation,” as well as “a medically determinable impairment that could reasonably be expected to produce the pain,” and prevent gainful employment.
Unfortunately, the caricature doesn’t stop there. Despite claims by Fox News host Shannon Bream that all SSDI recipients are frauds – there are “8.8 million people in the U.S collecting disability under false pretenses” – there is no evidence to back up this sweeping accusation. And despite Fox Business’s Charles Payne’s claim that “a young, adult male says this economy is too tough and they’ll just give you a check,” applicants must have worked at least five of the last 10 years and must establish with medical evidence that their disability will leave them unable to make roughly a poverty-level income for at least 12 months. The vast majority of beneficiaries are also at least 50 years old. From 2009 to 2011, even in the midst of the Great Recession and its aftermath, nearly two out of three applicants – 63 percent – were rejected. Moreover, the evidence suggests that a large number of those who apply for SSDI and are rejected are unable to find gainful employment. According to one study, only half of rejected male applicants over 45 had any two years later, and even fewer had annual earnings that were the equivalent of three months at minimum wage.
The obvious fix for Social Security Disability Insurance would rob the elderly to help those with disabilities. Some like Rep. Sam Johnson (R-Tex.) have said that if Congress redirected more of the Social Security payroll tax to help the solvency of the SSDI, as the Obama Administration has recommended, it would be an act of “raiding the Social Security retirement program to bail out” the disability program. But the division of how an employee’s payroll taxes, equaling 6.2 percent of the worker’s wages, are allocated between the Social Security retirement trust fund and SSDI (the current division is 5.3 percent for retirement and 0.9 percent for SSDI) has never been scientific or set in stone. On five previous occasions, Congress has reallocated Social Security funds from SSDI to retirement, and no one ever accused the elderly of “raiding” from people with disabilities.
In fact, the sdministration’s proposed reallocation would make SSDI solvent for 17 more years until 2033, while reducing the retirement program’s solvency by only one year, meaning it will be fine until 2033, as well. Nevertheless, brandishing trumped up “anti-raiding” charges, the Republican House has instituted a rule preventing such a reallocation without changes that could lead to SSDI benefit cuts, and some Republicans are reportedly discussing plans to allow SSDI to “borrow” from retirement – to still keep alive the idea that those with disability are somehow taking funds that they will owe back to Social Security.
Rather than use these myths and misstatements as a pretext for cutting SSDI, we should look at where reforms could strengthen the program and how to root out cases of fraud without limiting eligibility or cutting benefits for the vast majority of beneficiaries, who are deserving and in need. A thoughtful agenda would expand pilot projects that seek ways to give some potential beneficiaries realistic alternatives to SSDI so that they have the supports needed to remain at work, while allowing existing beneficiaries more options to experiment with returning to work without fear they will lose their safety net if their disability proves too much of an obstacle. We can also consider stronger standards for choosing administrative law judges and reconciling dramatic discrepancies in awards between judges who seem to award either too easily or too harshly.
Finally, as with Medicare, there should be a real effort to stamp out fraud without hurting innocent and deserving recipients. Medicare now recovers $3 billion to $4 billion in fraudulent payments each year, using data analysis to identify suspiciously high billing areas and implement screening systems for health care providers. SSDI could implement comparable procedures and Congress could at last fully fund Continuing Disability Reviews, designed to review the status of recipients after several years to see if they are capable of working.
Instead of caricaturing SSDI recipients or pitting them against the elderly, we should focus on reforms designed to ensure that this important component of Social Security is available for all workers who may at some point in their lives experience disability and economic hardship.