Medical Tuesday Blog
Social Security Disability Insurance Costs More Than Medicare
By Tad DeHaven, the Cato Institute, August 6, 2013
Social Security Disability Insurance (SSDI) is one of the largest federal programs; it is also one of the most troubled. The program’s expenditures have doubled over the last decade, reaching an estimated $144 billion this year. Spending has risen so rapidly that SSDI’s trust fund is projected to be depleted just three years from now, says Tad DeHaven, a budget analyst at the Cato Institute.
SSDI was originally created as a modest safety net aimed at severely disabled workers who were close to retirement age, but Congress has expanded benefit levels over the decades and eligibility standards have been greatly liberalized.
The process for determining eligibility for disability insurance benefits has become a bureaucratic nightmare.
SSDI has become financially unsustainable and economically damaging, and policymakers should pursue major spending cuts to the program. They should also explore the potential to transition responsibility for disability insurance from the government to the private sector.
If Americans are not becoming less able to work because of health problems, why are the disability rolls increasing? Economists David Autor and Mark Duggan note that “the rapid growth of Disability Insurance does not appear to be explained by a true rise in the incidence of disabling illness, but rather by policies that increased the subjectivity and permeability of the disability screening process.” Similarly, economist Richard Burkhauser calls the explosion in the number of people gaining federal disability benefits a “policy-driven epidemic.”
Source: Tad DeHaven, “The Rising Cost of Social Security Disability Insurance,” Cato Institute, August 6, 2013.
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