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

Abstract

More than 80 percent of nonelderly U.S. adults are insured against the risk of disabling physical or mental illness by Social Security Disability Insurance (SSDI). This article evaluates the causes of the extraordinary growth in SSDI enrollment, considers its fiscal ramifications, and discusses potential policy responses. While aggregate population health has improved by most measures in recent decades, the rate of SSDI receipt among nonelderly adults has nearly doubled since 1984. We project that SSDI receipt will rise by an additional seventy percent before reaching a steady state rate of approximately 6.5 percent of adults between the ages of 25 and 64, with cash benefit payments exceeding $150 billion annually (excluding Medicare). We trace the rapid expansion of SSDI to: (1) congressional reforms to disability screening in 1984 that enabled workers with low mortality disorders such as back pain, arthritis and mental illness to more readily qualify for benefits; (2) a rise in the after-tax DI income replacement rate, which strengthened the incentives for workers to seek benefits; (3) and a rapid increase in female labor force participation that expanded the pool of insured workers. Notably, the aging of the baby boom generation has contributed little to the growth of SSDI to date. Among several avenues for reducing SSDI growth, we suggest that the most promising are revamping the disability appeals process-in which the Social Security Administration currently loses nearly three-quarters of all appeals-and reducing the attractiveness of DI benefits for work-capable disabled individuals by providing additional access to public health insurance. By contrast, previous efforts to reduce the SSDI rolls by discontinuing benefits or by providing stronger return-to-work incentives have proved remarkably unsuccessful.

The Long-Term Health Implications of Marital Disruption: Divorce, Work Limits, and Social Security Disability Benefits Among Men

“…Age-related increases in work disability are well documented. Men are more than twice as likely to receive SSDI benefits at ages 55-64 (10.9 %) than at ages 40-54 (4.3 %) (Autor and Duggan 2006: Previous research has tended to find a higher prevalence of functional and mobility limitations among older divorced adults relative to older married adults. 2 In a study of the effects of marital biography on health using the Health and Retirement Study (HRS), Hughes and Waite (2009) reported a positive association between divorce and mobility limitations among persons ages 51-62.…”

“…Interest in work disability is fueled by population aging (Elo et al 2011) and the detrimental effects of work-limiting health for individual well-being. Disability is a driver of health care expenditures (Fried et al 2002) and national social insurance program costs (Autor and Duggan 2006). In the United States, Social Security disability rolls have grown rapidly since the early 1980s, from 2.2 % of individuals aged 25-64 in 1985to 4.1 % in 2005(Autor and Duggan 2006.…”

“…Disability is a driver of health care expenditures (Fried et al 2002) and national social insurance program costs (Autor and Duggan 2006). In the United States, Social Security disability rolls have grown rapidly since the early 1980s, from 2.2 % of individuals aged 25-64 in 1985to 4.1 % in 2005(Autor and Duggan 2006. In 2013, 4.8 % of the population aged 18-64 received Social Security Disability Insurance (SSDI) benefits (Social Security Administration 2014: table 8).…”

Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care

“…Public sources of coverage are available to lowincome individuals and those receiving Disability Insurance, but tend to be less generous than employer-sponsored group coverage. 8 Significant attention has been paid to older workers using Disability Insurance (DI) as a way to exit the labor force (Bound and Waidmann 1992;Stapleton and Burkhauser 2003;Autor and Duggan 2006). My analysis, however, is based on individuals who report employersponsored coverage at baseline.…”

A model of Social Security Disability Insurance using matched SIPP/Administrative data

“…This finding suggests the need for a policy emphasis on rehabilitation and return to work, including the new Ticket to Work effort. In addition, we need more analysis of the vocational grid-the special provision of the disability determination process used for older, blue collar workers-to establish its role in recent program growth, see Autor and Duggan (2006) as well as Chen and van der Klaauw (2008).…”