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Prompt Action Needed to Test Work Incentives for Disability Insurance

February 12, 2016 at 10:30 AM

Last year’s budget deal renews the Social Security Administration’s (SSA) authority to conduct demonstration projects to encourage work among Disability Insurance (DI) beneficiaries.  As our new paper explains, previous SSA experiments have found that few beneficiaries can earn enough to support themselves and leave DI.  The renewed demonstration authority provides an opportunity to test more new ideas, but the window for action is very brief, so SSA — which is already working on one project — should soon decide on others.

The budget deal keeps DI’s trust fund solvent for fewer than seven years (to 2022), when policymakers must replenish it again.  That’s less time than almost all of SSA’s previous experiments took (see chart).  It takes years to design, conduct, and evaluate a good experiment.  Some of the best ideas — such as whether early intervention helps workers with disabilities and reduces DI participation — require years of follow-up to evaluate properly. 

 

We’d like to see SSA test new ideas, not recycle old ones like the benefit offset that the deal requires SSA to test, which largely duplicates an ongoing project.  

SSA is already designing one early intervention demonstration to provide health and job services for younger workers with mental illnesses who will likely receive DI in the future.  It could consider other early intervention ideas as well.  Early medical interventions could help people recover from health problems before they prevent substantial work.  Early work interventions could keep people connected to jobs before their skills atrophy and their attachment to the job market weakens.  

Another area SSA might explore is transitional benefits, which would give work, medical or financial supports — rather than indefinite cash benefits — to DI beneficiaries or applicants who will likely recover or be able to work.   

While SSA’s renewed demonstration authority enables it to test more new ideas, SSA has already carried out many experiments to encourage work over the past 25 years.  Some had positive effects, but in none of them did a significant number of beneficiaries earn enough to support themselves and to leave DI. 

That’s no surprise:  DI’s eligibility criteria are strict and few DI beneficiaries can work.  Still fewer could likely return to self-supporting work on a sustained basis. 

Nevertheless, Congress will likely look to the results of SSA’s work demonstrations for evidence on whether ideas to encourage work would help — or hurt — a very vulnerable population, and at what cost.  SSA should select some of the most promising ideas and act on them soon. 


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