Disabled America

http://www.futureofcapitalism.com/2011/12/disabled-america

A professor of economics at MIT, David Autor, has a new working paper out from the National Bureau of Economic Research under the title, "The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and Policy Options." An abstract is here and a free download of a similar or identical MIT working paper from last month is here. From the paper:

Between 1989 and 2009, the share of adults receiving SSDI benefits doubled, from 2.3 to 4.6 percent of Americans ages 25-64. In the same interval, cash payments to SSDI recipients (adjusted for inflation) tripled to $121 billion, and Medicare expenditures for SSDI recipients rose from $18 billion to $69 billion.

Has the number of disabled Americans really doubled in the past 20 years and has it really gotten three times as expensive to take care of them? The answer to the first part of that question is probably not: "there is little evidence that the underlying health of the working-age population in the U.S. is deteriorating."

Reports Professor Autor: "Previous research has established that workers are most likely to apply for SSDI benefits following job loss, a fact underscored by the pronounced positive correlation between the national unemployment rate and the SSDI application rate." When the economy and job market are bad, all of a sudden there are more disabled people, or at least more people on disability benefits. Or, as Professor Autor puts it: "the SSDI program has come to function—at the margin, not on average—as a de facto social safety net for individuals whose primary barrier to gainful employment is one of poor skills and job opportunities rather than health limitations per se."

He suggests changing the law, perhaps to a system that relies more on private disability insurance and emphasizes finding ways to accommodate disabled workers in jobs: "economists, fiscal watchdogs and disability advocates generally agree that the SSDI program should be reformed to assist the disabled to remain employed and economically self-sufficient rather than fostering long-term dependency."

It struck me as a useful and constructive paper, and a reminder both that the work of welfare reform is incomplete and that there are vast areas of potential savings within the federal budget that still haven't really made it into the political debate. Why aren't the Republican presidential candidates out there talking about the fact that the number of Americans on federal disability benefits has doubled in the past 20 years even though, if anything, Americans are healthier, and work at jobs that are less physically demanding, than 20 years ago? It's an amazing story, especially when one considers, as Professor Autor points out, that the current system costs American households more than $1,500 a year, a cost he characterizes as "extremely high and growing unsustainably."

None of this is to deny that there are plenty of genuinely disabled individuals who may be unable to work, regardless of workplace accommodations. But if the law can be changed so that the incentives for those individuals in the gray area between total health and total disability encourage work and self-sufficiency rather than the alternative, it would seem like something to make a priority.

by Editor  |  Dec 26, 2011 at 10:24 am Related Topics:  Education, Unemployment receive the latest by email: subscribe to the free futureofcapitalism.com mailing list