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Liberalization of Standards for Disability Benefits Is Turning Able-bodied Workers into Government Dependents

August 9, 2013 in Economics

By Tad DeHaven

Tad DeHaven

Several weeks ago, I witnessed an able-bodied individual who had parked in a handicapped-only space proceed to put in a strenuous workout at my gym. Indeed, a casual internet search reveals that abuse of handicapped parking spaces is a real problem — so much so that cell phone apps have been created to help catch abusers. It shouldn’t come as a surprise then that federal programs intended to help the truly disabled are also being abused.

The federal government’s main disability programs, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), will cost taxpayers almost $200 billion combined this year. These programs have grown enormously over the last decade, despite the fact that the actual incidence of disability in the population has not increased.

The rapid growth in SSDI is particularly troublesome. With an estimated price tag of $144 billion in 2013, SSDI expenditures will have roughly doubled in real (inflation-adjusted) dollars since 2000. Disability insurance benefits are funded by a 1.8 percent tax on workers’ wages as part of the broader Social Security tax, but because payments are outpacing tax revenues the system is running deficits and the SSDI trust fund will be exhausted by 2016.

The number of people enrolled in SSDI has expanded rapidly in recent years, even as the share of the U.S. working-age population reporting a severe disability has remained stable. In addition, medical advances have aided people with disabilities and fewer workers are engaged in hard physical labor. However, the ratio of SSDI beneficiaries to all working-age people has doubled in the last two decades.

The problem is that policymakers have liberalized eligibility standards for disability benefits, with the result that many people who are capable of working are choosing to seek a government check. And once people get on SSDI, they rarely leave the program. In 2011, only 3.6 percent of workers on SSDI had their benefits terminated because of medical improvement. Almost 90 percent of people had their benefits stopped because they either died or reached retirement age.

The story is similar for Supplemental Security Income, which is funded with general revenues and will cost an estimated $57 billion in 2013. Although SSI was created with the elderly poor in mind, today the program mainly benefits non-elderly disabled adults and children. In 2011, less than one percent of disabled adult SSI recipients left the program because their disability had improved. About seven percent left the …read more

Source: OP-EDS

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