SSDI (Problems) in the News

My recent paper on the rising cost of Social Security Disability Insurance is proving to be timely. 

First, the Washington Post’s Michael Fletcher provides a good overview of SSDI’s “issues.” Fletcher highlights a Maine county where the disability rolls have jumped as the local paper mills have shed jobs. That’s because the program has become a quasi-unemployment program, a problem that’s been exacerbated by the economic downturn. One former mill worker who said that he would rather be working now collects disability and “spends a lot of his free time riding his Harley-Davidson motorcycle to bike rallies around New England.” 

Second, The Economist points to research that suggests that SSDI is contributing to a reduction in the labor force participation rate: 

These results suggest that if it were not for people receiving disability insurance, reported unemployment would be far higher. Although DI recipients may initially have climbed because the economy was weak, their numbers will almost certainly not decline when it strengthens again; only 4% of beneficiaries return to work within ten years. The proportion of working-age adults on DI has risen from 1.3% in 1970 to 4.6% in 2013. The impact on participation rates may be cyclical at first and then become structural.

Third, a new Government Accountability Office report estimates that the Social Security Administration paid out $1.3 billion in benefits over two years to individuals who probably shouldn’t have received them. I should caution, however, that although fraud is an inherent problem with federal disability programs (and an improper payment doesn’t necessarily mean fraud was involved), it’s abuse of the system that is the bigger problem–i.e., people legally qualifying for benefits who arguably shouldn’t. 

But yes, fraud certainly exists and that leads to the fourth story. In June, a former Democratic state representative in Missouri pled guilty “to illegally taking $58,816 in federal disability payments while he was working as a state legislator earning $30,000 a year.” Ah, there are so many wisecracks to be made here, but I’ll just go with one: A politician stealing taxpayer money is illegal? Who knew!