off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
The Facts About Disability Insurance
March 25, 2013 at 4:02 PM
National Public Radio (NPR) is running a series of stories about the Social Security Disability Insurance (DI) program. Its first was extremely unbalanced and repeated some of the oft-claimed myths about DI. Here's the truth.
DI provides modest but vital benefits to workers who become unable to perform substantial work due to a serious medical impairment, as I testified last week before a House subcommittee.
Most of the recent rise in DI's rolls stems from demographic factors: the aging of the baby boom generation, the growth in women's employment, and Social Security's rising retirement age. In fact, when you adjust for these factors, the program has grown only modestly (see chart). Other factors -- including the economic downturn -- also have contributed to the program's growth, but its costs and caseloads are generally in line with past projections.
The typical DI beneficiary is in his or her late 50s -- 70 percent are over age 50, and 30 percent are 60 or older -- and suffers from a severe mental, musculoskeletal, circulatory, respiratory, or other debilitating impairment. His or her earnings fell sharply in the years before applying to the program. Only a minority of beneficiaries can do any work, and even fewer are able to do substantial work (enough to support themselves without help), studies generally conclude.
The Social Security trustees project that the DI trust fund -- which is legally separate from the Old Age and Survivors Insurance (OASI) trust fund for the Social Security retirement and survivors' programs -- will become insolvent in 2016; the Congressional Budget Office concurs. If policymakers do not bolster the fund, beneficiaries' checks will have to be cut by about one-fifth after that. But the fund's anticipated insolvency should come as no surprise; when policymakers last changed the allocation of taxes between DI and OASI in 1994, they expected the DI fund to run dry in 2016.
Policymakers should address DI's pending depletion in the context of overall Social Security solvency . Both DI and OASI face fairly similar long-run shortfalls; DI simply requires action sooner. Key features of Social Security are similar or identical for the two programs, and most DI recipients are near or even over Social Security's early-retirement age.
Tackling DI in isolation would leave policymakers with few -- and unduly harsh -- options, and lead them to ignore the strong interactions between the disability and retirement programs. A balanced solvency package would also be an opportunity to make sorely needed improvements in the needs-tested Supplemental Security Income (SSI) program, which is distinct from Social Security but has important intersections.
If policymakers don't agree in time on a sensible solvency package, however, they should reallocate taxes between the retirement and disability funds -- a traditional and noncontroversial action that they've taken often in the past.
And policymakers should give the Social Security Administration enough money to weed out beneficiaries who've recovered from their impairments -- an important effort that legislators have consistently underfunded.
We'll take a closer look at some of NPR's other misguided claims about disability in future posts.