The Disability Insurance Monster

The fastest rising cost for Social Security isn’t retiring baby boomers, but skyrocketing Disability Insurance benefits. Disability benefits now make up 18 percent of all Social Security costs, up from only 10 percent in 1990. This year, the federal government will spend $125 billion for disability benefits. Including the Medicare benefits that are paid to D.I. recipients, total expenditures approach $200 billion.

Why have disability costs risen so fast? The main reason is looser eligibility standards passed by Congress in the 1980s that expanded the criteria for disability and put greater emphasis on evidence presented by applicants own doctors rather than the Social Security Administration's experts. Likewise, increasing numbers of D.I. applicants are represented by lawyers, with the result that S.S.A. loses two-thirds of appeals against denied benefits. The economists David Autor of M.I.T. and Mark Duggan of the University of Maryland conclude, "The rapid growth of Disability Insurance does not appear to be explained by a true rise in the incidence of disabling illness, but rather by policies that increased the subjectivity and permeability of the disability screening process."

These reviews save $10 in program costs for each dollar they cost to undertake.

Four steps would help screen out non-disabled applicants while ensuring the disabled continue to receive benefits. First, give greater credence to evidence from the Social Security Administration's own experts, rather than deferring to applicants’ own doctors. Second, allow S.S.A. to be represented by its lawyers in disability appeals. One study found that mistaken judgments could be cut in half if the S.S.A. were represented. Third, the Social Security Administration should receive funds to carry out more Continuing Disability Reviews to ensure that current beneficiaries remain qualified. These reviews save $10 in program costs for each dollar they cost to undertake.

Finally, making health coverage more affordable to low earners could reduce disability costs by making the Medicare coverage that comes alongside disability less attractive.

Andrew G. Biggs is a resident scholar at AEI and a former principal deputy commissioner of the Social Security Administration.

Photo Credit: Bigstock/AndreBlais

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

What's new on AEI

image Recovering from tax time blues
image 10 welfare reform lessons
image Let HHS nominee Sylvia Burwell explain Obamacare lie
image Why bold ideas backfire in politics
AEI on Facebook
Events Calendar
  • 14
    MON
  • 15
    TUE
  • 16
    WED
  • 17
    THU
  • 18
    FRI
Wednesday, April 16, 2014 | 10:00 a.m. – 11:00 a.m.
Calling treason by its name: A conversation with Liam Fox

Join us at AEI as the Right Honorable Liam Fox sits down with Marc Thiessen to discuss and debate whether America’s intelligence agencies have infringed on the personal privacy of US citizens.

Thursday, April 17, 2014 | 4:00 p.m. – 5:00 p.m.
The curmudgeon's guide to getting ahead

How can young people succeed in workplaces dominated by curmudgeons who are judging their every move? At this AEI book event, bestselling author and social scientist Charles Murray will offer indispensable advice for navigating the workplace, getting ahead, and living a fulfilling life.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.