How Large are the Classification Errors in the Social Security Disability Award Process?

Abstract

This paper presents an "audit" of the multistage application and appeal process that the U.S. Social Security Administration (SSA) uses to determine eligibility for disability benefits from the Disability Insurance (DI) and Supplemental Security Income (SSI) programs. We study a subset of individuals from the Health and Retirement Study (HRS) who applied for DI or SSI benefits between 1992 and 1996. We compare the SSA's ultimate award decision (i.e. after allowing for appeals) to the applicant's self-reported disability status. We use these data to estimate classification error rates under the hypothesis that applicants' self-reported disability status and the SSA's ultimate award decision are noisy but unbiased indicators of, a latent "true disability status" indicator. We find that approximately 20\% of SSI/DI applicants who are ultimately awarded benefits are not disabled, and that 60\% of applicants who were denied benefits are disabled. Our analysis also yields insights into the patterns of self-selection induced by varying delays and award probabilities at various levels of the application and appeal process. We construct an optimal statistical screening rule using a subset of objective health indicators that the SSA uses in making award decisions that results in significantly lower classification error rates than does SSA's current award process.

The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding

“…The U. S. General Accounting Office (1997) Figure 4 (Rupp and Scott, 1998;Black, Daniel and Sanders, 2002;Autor and Duggan, 2003 Figure 2). Remarkably, two-thirds of these terminated claimants eventually re-qualified for DI benefits under a different impairment (Lewin Group, 1998 Gruber and Kubik (2005) '^B enitez-Silva, Buchinsky and Rust (2004) GAO, 1997, p. 43 (Weaver, Shapiro and Jacobs, 1995 600^' k3…”

Social Security Work Disability and Its Predictors in Patients With Fibromyalgia

“…Work disability is difficult to determine, and the SSA SSD system has been widely criticized (3,39,41,42). The SSA reported that the initial SSA allowance (approval) rate for fibromyalgia as the primary impairment was 13.9% in 2009 -2011 (40), while in 2005, 39% of all diagnoses were approved at the initial allowance level (39).…”

“…The Social Security Administration (SSA) "must ensure there is sufficient objective evidence to support a finding that the person's impairment so limits the person's functional abilities that it precludes him or her from performing any substantial gainful activity" (2). While this is never an easy task (3,4), it is particularly difficult with fibromyalgia, a contested disorder (5), and a type of illness "where sufferers claim to have a specific disease that many physicians do not recognize or acknowledge as distinctly medical" (6,7). High rejection rates may be found in complex musculoskeletal diagnoses and complex psychiatric diagnoses as compared to well-defined ones (8).…”

Optimal Income Transfers

“…In addition, Benitez-Silva, Buchinsky, and Rust (2004) offer evidence that both types of classification errors are common in the social security disability system in the United States.…”