New Report Details Why Federal Disability System Is On The Brink Of Failure

By Keith Plunkett | October 19th, 2018 at 1:37 pm

BY: Keith Plunkett / Editor

Keith Plunkett is a Policy Consultant, Editor, Writer, Founder and Publisher of MississippiPEP.com. http://mississippipep.com/profilegrid_blogs/keith-plunkett/

Filed Under: Budget, Feature Stories, Federal Government, Keith Plunkett, Mississippi PEP, MS State Government, Spending

Reforms to the U.S. federal disability system would improve the eligibility determination process to make it less subjective, promote work over dependency, reduce the correlation between high unemployment and increases in disability awards, and, most importantly, improve the outcomes for all people with disabilities.


The current federal disability system is broken and desperately needs reform. The program has diverged from its original design as a safety net for the permanently and severely disabled, instead becoming a lifestyle for too many adults with manageable work limits. While many of these recipients have substantial disabilities, many individuals have much more manageable work limitations and are more work-capable in the modern American economy.

With a growing and diverse economy and a work environment that is accepting of the disabled, there is no better time than now to make significant changes to the disability insurance program, ensuring resources are preserved for the truly needy.

A report issued today by the Foundation for Government Accountability finds 5 major factors threatening the program, calling on lawmakers to commit to reform.

 

1. DISABILITY INSURANCE IS RISING AT AN UNJUSTIFIABLE RATE

Disability insurance (SSDI) began as a relatively small-scale program for individuals deemed unable to work because of a permanent disability. It has now outgrown its original purpose, transforming into a massive system that provides benefits to one out of every 20 working-age individuals.

In recent years, many have moved off the disability rolls and back into the workforce due to the much-improved national economy, but not enough to protect the integrity of the program for those who rely on it.

The number of former workers receiving disability insurance increased from five million in 2000 to 8.8 million by 2016. To put this into context, caseloads have increased more than twice as quickly as the working-age population since 2010.

 

2. DISABILITY INSURANCE IS ONE BAD ECONOMY AWAY FROM INSOLVENCY

With the increased number of workers receiving disability insurance comes an increase in costs. Over the next decade,the costs of SSDI are expected to double,reaching $216 billion by 2028.

According to SSA estimates, the SSDI Trust Fund reserves will be depleted by 2032. While the booming economy has seemingly improved the longevity of the fund in recent years, it is only one economic downturn away from insolvency.

Unless something changes, a new generation of workers will start their careers with a system that is not set up to care for them in case of a life-altering diagnosis.

Absent major policy changes, mandatory reductions in SSDI benefits are on the horizon, threatening resources for truly needy adults and children with permanent disabilities.

 

3. DISABILITY INSURANCE IS NOT REFLECTIVE OF THE MODERN LABOR MARKET

The current SSDI program is not reflective of the modern economy or America’s diverse workforce. While the U.S. labor market has gone through dramatic changes since the SSDI program was created, the program has lagged behind.

More people continue to receive full disability benefits and remain on the program despite advances in medical technology and medications, changes in the workforce, and laws banning workplace discrimination for individuals with disabilities. Work today is less physical and technological advancements and medical treatments have allowed many workers with limitations to continue to work with modest assistance in their current jobs or more easily train for new jobs. While jobs involving physical labor still exist today, machines and computers help those with physical limitations work even in previously labor- intensive jobs like factories.

More opportunities also now exist for nontraditional forms of employment. Technological advances have created opportunities for businesses to use freelance workers rather than in-house employees. This trend provides workers—especially those with disabilities or smaller work limitations—the opportunity to choose their hours and benefit from flexible work arrangements.

 

4. DISABILITY INSURANCE PROMOTES LONG-TERM DEPENDENCY OVER WORK

One of the most troubling issues with the federal disability system is that work supports are only provided for recipients after they painstakingly prove they cannot work.

Disability applicants spend a significant amount of time, money, and energy demonstrating they cannot work. On average, these cash benefits are worth more than $14,000 per year, with additional Medicare benefits worth over $10,000 per year. Understandably, many fear losing their monthly cash payments and health care coverage.

The troubling consequence of this structure is that most individuals never leave SSDI. In fact, the number of workers removed from the program, because they no longer qualify, has also decreased by over half since changes were made in 1984 to SSDI.

 

5. THE STRUCTURE OF DISABILITY PROGRAMS ENCOURAGES STATES TO MOVE PEOPLE ONTO THE PROGRAM

Hospitals, insurance companies, and states have an incentive to move people from welfare onto disability because disability benefits are entirely paid for by the federal government.

Consequently, these groups have been helping individuals receiving state or county assistance apply for federal disability programs. Their goal is to shift costs to federal taxpayers, as states and counties are currently paying for a portion of their cash welfare benefits, while the federal government picks up the full cost of disability.

But this is short-term thinking. Many of those individuals will stay on disability forever, which could increase states’ Medicaid costs over time.

 

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