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Q & A: Social Security Disability Program - Problems and Reforms

Posted August 19, 2011 | Categories: Q&A, Blog
1.  The Social Security Administration is known for its old-age pension program but it also runs a program providing benefits to disabled americans?

The Social Security Disability Program provides insurance for American workers and their families against being left in poverty and unable to pay medical expenses if they become disabled.  The Program currently provides benefits to 8.4 million disabled workers and 2 million dependent spouses and children.

An economist from the Massachusetts Institute of Technology (MIT), Professor David Autor, presented a paper in Hawaii this week that highlighted some big challenges facing the program and some suggested reforms.

2.  What are the SSA's main challenges?

- 2.9 million US workers will apply for benefits this year.  SSDI cash payments and Medicare costs for disabled workers now amount to about $173 billion per year or $1,500 per household.  At this rate, the SSDI trust fund will be exhausted between 2015 and 2018.

-  The rules now require workers who apply for disability benefits to remain unemployed while their application is processed—about 3 years.  And if disability status and benefits are approved, they can be revoked if the worker returns to work for more than a few hours per work.  Taken together, the program totally removes millions of people from the labor force, many of whom may be able to work part-time or recover to work full time.   

3. what types of reforms are capable of dealing with these problems?

One change proposed by David Autor, the MIT economist who has intensively studied this program, is to provide incentives to employers and employees to allow disabled employees to remain employed, perhaps with fewer hours and some accommodations for the disabled person.

Another change would be to provide partial wage replacement for workers with disabilities who remain employed or find new jobs after they have started receiving social security diability benefits.  

The Netherlands—Holland—had similar problems with its disability benefit program in 1990.  The good news is that a series of reforms have helped to

-- Sumner LaCroix

Watch UHERO discuss this topic on KITV's Project Economy. UHERO faculty and research fellows appear on this segment weekly. Visit our media section to view previous appearances

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