Health Policy$ense

What To Do To Rescue The Social Security Disability Insurance Program?

At Current Rates, SSDI Will Deplete its Reserves by 2016

The sponsored ad on Facebook read:

If your age is 50-54, you can be approved for Social Security Disability benefits even if you are still able to perform sedentary work as long as your past work was not skilled or semi-skilled, or if you do not have transferable skills to other work. To learn more about the special rules that can make it easier to get approved for disability benefits over the age of 50, click below for a free evaluation by an experienced SSD advocate or attorney.

What the ad doesn’t mention is that the Social Security Disability Insurance (SSDI) Program won’t be able to sustain itself much longer. Wharton Public Policy Institute Director Mark Duggan recently testified before Congress on SSDI's precarious financial condition. See the LDI Health Economist article here and full testimony here. SSDI pays nearly 9 million disabled workers an average of $1,129 per month. Enrollment rates have increased significantly since the 1980’s. At current rates, the SSDI trust fund, financed by payroll taxes, will deplete its reserves by 2016. Without Congressional action, that will trigger a 20% cut in disability benefits.

Duggan notes that disability applications rise as the unemployment rate rises:

ssdi chart

In a new Issue Brief, Duggan estimates that there have been approximately 2.5 million “extra” SSDI applications since 2008 as a result of the economic downturn. And he has ideas about how to stem the tide of SSDI applications. He writes:

"One way to improve incentives in the SSDI program is to provide medical intervention sooner for individuals with work-limiting conditions, so that they can continue working. Many individuals with more subjective disorders -- such as back pain -- could benefit from such early intervention."

"In a recent paper, David Autor and I proposed adding a “front end” to the SSDI system that would include early intervention through rehabilitation and related services with the goal of keeping workers with work-limiting disabilities in the labor market. Employers would contract with private insurers to administer this coverage and would have a financial incentive to keep their workers off the SSDI system (much as the Unemployment Insurance and Workers’ Compensation programs provide employers with these types of financial incentives)."

It seems like good fiscal policy, good health policy, and good labor policy. That’s a rare combination, and something we might all get behind.