Chairman Coats, thank you for calling today’s hearing. The Social Security Disability Insurance (SSDI) program is a critical part of our safety net that protects each of us in the event of a life-changing injury or illness that prevents us from working and earning a living. We all have an interest in making this program as strong and successful as possible.
The recent budget agreement extended the solvency of the Disability Insurance Trust Fund through 2022 and took important steps to bolster anti-fraud programs, strengthening program integrity.
Nevertheless, it’s likely that some concerns about SSDI will be raised this afternoon. We may hear that SSDI is plagued by fraud and abuse; the program is growing at an out-of-control rate; it’s easy to get SSDI; and the program discourages work.
These assertions are largely not supported by the facts.
SSDI is an insurance program. Workers earn benefits by paying a small tax – less than 1 percent of their taxable income – over years of work. The average beneficiary worked for 22 years before becoming disabled.
None of us knows if we will need disability benefits sometime in our lives. But a young person starting her career today has a one in four chance of needing SSDI before reaching retirement.
Who Receives Disability Benefits
Today, there are nearly 11 million SSDI beneficiaries, including nearly 9 million disabled workers and almost 2 million spouses and dependent children of disabled workers.
Those who receive benefits face severe and long-lasting impairments including Alzheimer’s, amputations, cancer, congestive heart failure, blindness, lupus, gastrointestinal hemorrhaging, cerebral palsy, multiple sclerosis, traumatic brain injury, intellectual disability, schizophrenia and severe depression.
SSDI benefits are modest, but critical. The average monthly benefit is $1,165 – slightly over the poverty line. SSDI is the only source of income for one in three beneficiaries. It is the main source of income for more than four in five.
There are several misconceptions about SSDI. I hope that today’s hearing can help to clear up some of the more common ones.
Misconception # 1: SSDI is rife with fraud.
We have seen vivid cases of fraud in the media – for example, a man doing yardwork while collecting disability payments. Let’s be clear – any fraud or misuse of the system is a waste of taxpayer money and is unacceptable.
However, SSDI fraud is rare. According to the Social Security Administration, the improper payment rate was less than one percent in FY 2013.
The Inspector General of the Social Security Administration is here today to tell us about successful fraud-fighting initiatives like Cooperative Disability Investigations (CDI) and Continuing Disability Reviews.
Every dollar spent on CDI efforts to investigate initial claims, for example, saves as much as $17. These are powerful programs and I’m pleased that the budget agreement doubles CDI capacity to track down people who are trying to claim disability benefits unfairly.
It is a credit to the Inspector General that this work is tracked carefully, so as policy makers we aren't forced to make decisions on the basis of anecdotal evidence. Let’s use hard data to make sure that SSDI serves the people who really need it.
Misconception # 2: SSDI is growing at an out-of-control rate driven by people who don’t really need disability benefits.
The overwhelming body of evidence shows that the growth in SSDI beneficiaries and program costs is largely due to demographic changes like the aging of the baby boomers and the huge increases in the number of working women.
As the baby boomers have aged, they have moved into age brackets that are more prone to disability. A worker is twice as likely to be disabled at age 50 as at 40, and twice as likely at age 60 as at 50. This alone drives a large part of the increase in the number of people who receive disability benefits.
Similarly, as women have entered the workforce in greater numbers, they became eligible for SSDI. While women accounted for less than 40 percent of those insured for SSDI in 1980, they make up close to nearly half of those insured for benefits today.
The Center on Budget and Policy Priorities finds that nearly 70 percent of growth in SSDI beneficiaries since 1980 is explained by demographic factors. New peer-reviewed research from Harvard economist Jeffrey Liebman confirms the key role demographic factors have played.
But these trends have generally played themselves out. As baby boomers continue to age and move from disability to retirement, the increase in beneficiaries has reached its lowest level in more than 30 years.
Misconception # 3: it’s easy to get SSDI.
This is not so. The United States has among the most stringent eligibility criteria in the OECD.
Applicants must provide extensive medical documentation of their disability and show that they are unable to do their prior job and any job in the national economy. That’s a high bar.
In fact, about two-thirds of disability insurance applications are denied. And as Dr. Duggan notes in his testimony, in 2014 the share of applicants approved for SSDI was at its lowest level in history.
Misconception # 4: Once on disability, beneficiaries have no incentive to return to work.
In fact, SSDI allows beneficiaries to earn $1,090 a month with no impact on benefits. In other words, beneficiaries receiving disability have a very high incentive to work.
The budget deal calls for more initiatives to test whether smoothing out the so-called “cash cliff” and replacing it with a gradual offset would help more people to increase their work and earnings.
And the Obama administration has advocated for early intervention strategies to help keep disabled workers employed and off the SSDI rolls in the first place.
Both ideas are worth exploring.
But we must recognize that most SSDI recipients simply cannot work – they struggle with debilitating injuries and illnesses. They have earned these benefits. Any one of us could be in that situation. And that is why we need and must protect Social Security Disability Insurance.
