Disability Insurance: America's $124 Billion Secret Welfare Program
Disability Insurance: America's $124 Billion Secret Welfare Program
The number of former workers enrolled in the Social Security disability program has more than doubled in the last two decades, and the reasons why have little to do with the health of our workforce.
Imagine for a moment that Congress woke up one morning, realized that the United States was suffering from a paralyzing long-term unemployment crisis , and, in a moment of progressive pique, decided to create a welfare program aimed at middle-aged, blue-collar workers.
The one thing everybody could probably agree on is that it should help all those jobless 50-somethings find employment, right?
Well, as NPR's Planet Money argues in an eye-opening story , it turns out there already is a "de facto welfare program" for those struggling Americans. The problem is, instead of getting the unemployed back on their feet, it pays them to give up work for good.
I'm talking about Social Security's disability insurance program, which over 20 years has quietly morphed into one of the largest, yet least talked about, pieces of the social safety net. Since the early 1990s, the number of former workers receiving payments under it has more than doubled to about 8.5 million , as shown in Planet Money's graph below. More than five percent of all eligible adults are now on the rolls, up from around 3 percent twenty years ago. Add in children and spouses who also get checks, and the grand tally comes to 11.7 million .
That rapid, under-the-political-radar expansion has turned the program into a massive budget item. As of 2010, its monthly cash payments accounted for nearly one out of every five Social Security dollars spent, or about $124 billion . In 1988, by comparison, it accounted for just one out of eight Social Security dollars. Because disabled workers qualify for Medicare, they also added $59 billion to the government's healthcare tab.
Are disabilities just becoming more common? According to economists such as MIT's David Autor, the evidence says no. The workforce is indeed getting older, and thus more ailment prone. But Americans over 50, who make up most disability cases, report much better health today than in the 1980s. And demographers have found that the percentage of Americans older than 65 suffering from a chronic disability has fallen drastically since then. In the end, economists Mark Duggan and Scott Imberman estimate that, at most, the graying of America's workers explained just 4 percent of the increase in the rate of disability program participation for women, and 15 percent for men, through 2004.
Instead, it seems two things have happened: Qualifying for disability got easier, and finding work got harder. As the Planet Money piece puts it, "there's no diagnosis called disability." According to the letter of the law, disability recipients must prove they are too physically or mentally impaired to hold a job. And early in the program's life, the most commonly reported ailments were easy-to-diagnose problems such as heart-disease, strokes, or neurological disorders. But after the Reagan administration began trying to thin out the program's rolls in the early 80s, an angry Congress reacted by loosening its criteria. Suddenly, subjective measures like self-reported pain or mental health problems earned more weight under Social Security's formula. Today, the most common diagnoses are musculo-skeletal issues, such as severe back pain, and mental illnesses, such as mood disorders -- health problems where the line between a disability and a mild impairment is far blurrier.
Just as the bar for disability fell, the economy turned on the working class. Factories laid off their assembly workers. The service sector picked up the slack. Wages stagnated for anyone without a college diploma. These changes have made disability more attractive for reasons both obvious and subtle. Although program's payments are small -- the average benefit is a bit over $1,000 per month -- they're not much worse than a minimum wage job. Better yet, they're indexed to inflation, meaning they sometimes rise faster than wages, and come with generous government healthcare. For former blue-collar workers who feel they've lost all hope of finding employment, or who don't want to spend their last years leading to retirement standing all day at McDonald's, disability isn't a bad offer.
It's little surprise then that, as MIT's Autor notes, disability applications tend to rise and fall with the unemployment rate (as shown in his chart below), or that most applications come from workers who have recently lost jobs.
If you're a conservative, the reasons to worry about all this are obvious. There are probably a couple million people who could work if absolutely necessary, and are instead choosing to subsist on taxpayer money. The system, from that perspective, is simply being abused.
But the failures here should be obvious to liberals, too. If the job market is so miserably weak that these workers cannot find jobs -- that they are choosing to live in government-guaranteed poverty rather than take a chance on the labor market -- we need to find a better solution than paying them to sit while their skills atrophy. As of now, that's all we seem to be doing. Despite Clinton-era changes to the program that made it possible for participants to ease back into the work force without losing all their benefits, less than one percent of Americans who go on disability ever leave the program.
Moreover, that program is headed for bankruptcy. As of last year, Social Security's disability trust fund was on pace to run dry by 2016 , which would lead to an automatic 21 percent benefit cut affecting all of the program's participants, including the millions who truly can't work because of their impairments.
Like I said, even if we wanted a new welfare program for the struggling poor, this wouldn't be the way to run it.
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The Social Security Disability Program Has More Than Doubled In The Last Two Decades, And The Reasons Why Have Little To Do With The Health Of Our Workforce.
This is how todays welfare kings and queens get a free ride and its never been easier for them. The system is broken and anyone that doesn't want to work can easily find a free ride on the backs of others.
The system is broken and anyone that doesn't want to work can easily find a free ride on the backs of others.
Don't talk about Wall St bankers like that.
Dean, this article is 4 years old. Next you'll be telling us that Mitt Romney won the GOP nomination.
"E Pluribus Unum"
It's sad and kind of sicking to see how one of our most treasured American traits has atrophied in so many of our fellow citizens.
How did our Countries proud goal and standard fall so far?
When did our national motto of, "Out of Many, ONE", become, "Fuck the many, I'm the One" for so many?
I have no ideal how the SS Disability system works these days but back in the mid 90's it was a bear to qualify for.
Though my wife's diagnosis gave her less than a year left, she would not qualify for any payments until she had been too ill to work for 90 days.
You know what the value of those disability payments we got for she and our two young children were worth?
Well, not that much monetarily but it was enough that I was able to quit the two extra jobs I had taken on to help us cover her loss of income and spend more time at home with she and the kids those last few months. (A treasure beyond value)
It was thanks to the SS disability and survivor benefits that, after their mother died, I was able to keep our home which meant we didn't have to move out and the kids were able to maintain their support groups.
Things like the Band for my son and my daughters soccer team, plus all their neighborhood and school friends were very important for them at during those hard times.
These social safety nets serve real needs for real people and they represent the best of America.
Those that can't see that truth just kind of piss me off. Cussing mad wouldn't be off the mark.
AH: Thank you for sharing and putting a real face to a real problem, whenever I read and hear people speaking against programs that helps Americans, it gets me pissing angry and that is why I call those people wicked and scoundrels..that description may not be appropriate but that how I feel..Jesus said it best...
John 8:44-45
King James Version (KJV)
44 Ye are of your father the devil, and the lusts of your father ye will do. He was a murderer from the beginning, and abode not in the truth, because there is no truth in him. When he speaketh a lie, he speaketh of his own: for he is a liar, and the father of it.
45 And because I tell you the truth, ye believe me not.
Consider this, critics of Social Security Disability, The population is getting older, Old people are less productive, If someone who has worked for forty(40) years has become disabled, what should they do, "JUST DIE", they have paid into Social Security but some people believes they should not be entitled to get their benefits..If we have a Strong Health Care System in the USA..Perhaps, people would be healthier and could continue for a longer working time..