Most of the attention on the two-year budget agreement signed into law by President Obama Monday has focused on the political machinations involving the debt ceiling and a possible government shutdown. But buried in the document are important changes to the Social Security Disability Insurance Program (SSDI).
SSDI Trustees reported recently that the $150 billion program that supports disabled people when they are unable to work faced “an urgent threat of reserve depletion.” The report predicted the fund would run out of money late next year, forcing a near 20 percent reduction in benefits.
The new budget deal averts the crisis through a number of steps.
First, it shifts more money from the Social Security retirement program into disability. For three years starting next year, another .57 percent will be taken from the 12.4 percent payroll tax (for a total of 2.37 percent). Budget analysts say that will be sufficient to pay benefits until 2022.
But the new budget also addresses the fundamental problem with SSDI; the dramatic rise in disability payments.
The Wall Street Journal reported earlier this year that the number of people claiming benefits because of physical or mental disabilities that keep them from working rose from just under four million in 1984 to more than 11 million as of last year.
The Journal says one of the reasons is demographics. Older workers are more likely to become unable to work. However, the increase is also linked to the liberalization of program in 1984, making it easier to collect disability.
And once on disability, virtually everyone stays there. It’s estimated that nearly six percent of working-age adults are collecting disability insurance benefits, and less than one percent of workers who are awarded disability ever return to work.
The budget deal includes measures to try to bring costs under control.
According to the Washington Post, “The bill expands the use of investigation units that partner with law enforcement agencies to track down people who might be gaming the system.” It also increases penalties for fraud and requires a medical review before awarding benefits.
These are the most significant reforms since 1983, and they are sorely needed. Watchdogs have had their eye on SSDI ever since the story broke several years ago about how then-Social Security Disability appeals Judge David B. Daugherty in Huntington allegedly collaborated with attorney Eric Conn to abuse the system.
As with any government reform, however, the challenge is to weed out the waste and fraud and control costs while still fulfilling the original intent of the law—helping disabled working-age adults who cannot work.