Chad Stone is chief economist at the Center on Budget and Policy Priorities.
A Planet Money series from National Public Radio portrays Social Security's disability programs as a "hidden, increasingly expensive safety net." While NPR may claim to have checked the facts, the way it assembled them into a portrait of federal disability programs that are out of control and in crisis is highly misleading.
First, some background. The NPR story looks at two programs: Social Security disability insurance (DI) and Supplemental Security Income (SSI), especially payments to families with disabled children. DI, like Social Security retirement insurance, is funded through the payroll tax, has its own trust fund, and does not impose an income or asset test in determining eligibility for benefits. SSI is a means-tested program that provides assistance to individuals who are aged, blind, or disabled and have little or no income and few assets and, like most budget programs, does not have a dedicated funding source.
I'm concentrating on DI here, but NPR's portrayal of SSI for disabled kids and their families is similarly overwrought and unbalanced.
As Ruffing testified before Congress recently, "DI provides modest but vital benefits to workers who become unable to perform substantial work due to a serious medical impairment." She reports that the typical DI beneficiary is in his or her late 50s: 70 percent are over age 50, and 30 percent are 60 or older. People on DI suffer from a severe mental, musculoskeletal, circulatory, respiratory, or other debilitating impairment, and typically their earnings fell sharply in the years before they applied to the program.
The NPR story describes DI as a "deal" workers have "signed up for" even though it means "you will not work, you will not get a raise, you will not get whatever meaning people get from work." That makes it sound like going on disability is a lifestyle choice. In fact, studies generally conclude that only a minority of beneficiaries can do any work, and even fewer can do substantial work (enough to support themselves without help).
It's true, as critics claim, that DI expenditures and the number of people on DI have risen substantially over the years and the trust fund will need replenishing in 2016—but none of this is surprising or reflects a crisis. As Ruffing explains, demographics explain much of the rise in DI's rolls over the past two decades. It was completely predictable that claims would go up as the baby boomers aged into the period in their lives when disability claims become more likely and increasing numbers of women were acquiring the work experience necessary to qualify for DI.
As far back as 1994, policymakers anticipated that the DI trust fund would be insolvent long before the retirement trust fund. But that's not because of any unique or unexpected problems in DI. It's just that the strain of the baby boomers hits the disability program sooner than it hits the retirement program.
There's also an important geographic component to the receipt of federal disability payments. NPR visited Hale County, Alabama, where a large share of the population is on DI. That's consistent with CBPP's analysis showing that the high rates of disability receipt in some southern and Appalachian states (see map) reflect a small set of demographic and economic indicators: Low-rates of high-school completion, an older workforce, fewer immigrants, and an industrial mix that is disproportionately manufacturing-, forestry-, and mining-based. Older, less-educated workers in physically demanding occupations are less likely to be able to continue working if they become disabled.
None of this suggests that policymakers shouldn't look for ways to improve federal disability programsor for cost-effective ways to raise the odds that disabled workers who can continue to work will do so if their disability allows. That, of course, would be easier in a stronger job market. More funding for disability reviews would likely be cost-effective in reducing program costs due to improper payments.
The traditional and non-controversial way to address DI solvency is to reallocate payroll taxes between the retirement and the disability funds—the system as a whole is solvent until 2033. But, even better, policymakers should consider the strong interactions between Social Security's disability and retirement programs and craft a balanced solvency plan for both.