The rolls of the federal government’s safety net for the disabled are swelling as people turn to it for financial help in bad economic times, welfare experts said on Wednesday afternoon at the Cato Institute.
Social policy experts from across the political spectrum, including the chief actuary from the Social Security Administration, discussed the future of Social Security Disability Insurance and provided different outlooks on its future at the event.
David Autor, a noted economics expert at MIT, praised the program’s social benefits but also highlighted several problems with it. Social Security Disability Insurance has an “outmoded definition of disability” that does not cover partial disabilities, creating a disincentive for people to work.
The program also has been very sensitive to downturns in the economy, indicating that people are seeking it when they cannot find a job, he said.
In addition, the number of people on the program’s rolls is increasing, even though the number of self-reporting people with disabilities has remained roughly the same, Autor said.
The kinds of disability claims have changed, too, he noted: the greatest number of claims once stemmed from cancer and circulatory issues, but now describe back pain and mental health problems.
The insurance program’s rolls have expanded because of an increasing looseness of the rules governing admission to the program, argued Cato senior fellow Jagadeesh Gokhale.
The program began in 1956, and in 1965 the definition of disability changed to include people with temporary disabilities. Two years later the Social Security Administration began adjudicating claims based on factors outside of pure disability, like job availability, and in 1984 the program began making allowances for subjective claims like pain and mental issues, Gokhale said.
All of these factors have given more and more people access to the program, Gokhale contended.
“The program is acting like a massive gravitational force, attracting people to itself,” he said.
Michael Tanner, the event’s moderator, noted in his introduction that the disability insurance program’s trust fund would become technically insolvent in 2016. Both Autor and Gokhale pointed out that the Social Security Administration has regularly underestimated future enrollment.
“Unfortunately, policy makers don’t seem to be exhibiting the urgency that I would expect to see,” he said.
Despite these problems, Autor praised the insurance program. “It does a lot of good—a great deal more good than harm,” he said.
Stephen Goss, the chief actuary for the Social Security Administration, pushed back on some of Autor and Gokhale’s ideas, arguing that while SSDI costs as a share of GDP have risen, much of that can be accounted for by the decline in GDP. Goss also contended that Congress would not let the insurance program actually go insolvent, if only because ending a popular government program would bode poorly at the ballot box.
Nevertheless, Goss conceded that there are problems with the program.
“Is the sky falling? We think not. Is there a problem? Yes.”
Harold Pollack, a liberal social policy expert at the University of Chicago, argued that Autor and Gokhale’s presentations were overblown. A majority of people who apply for disability insurance are rejected, he said, and those who are denied often do not participate in the job market—showing that their denial is not weighing down the economy, he argued.
“It’s not a piece of cake to get onto these programs,” he said.
Pollack admitted that the finances of the program are somewhat problematic, although he said they are not nearly as problematic as some say.
Pollack praised Autor’s policy recommendations even while disagreeing with his analysis of the program’s current state.
Autor said that giving employers some responsibility for covering the costs of disability insurance—an employer mandate of sorts—could be a possible way to reduce costs and promote employment. He said that he would like to see a state experiment with this policy in order to measure its effect.