The Social Security Disability Insurance program was designed to assist individuals deemed unable to work due to a permanent disability. SSDI has been, and remains, an essential component of the nation’s safety net.
However, with rates of disability remaining fairly stable in recent years, enrollment in SSDI has doubled in just 20 years from 2.3 million in 1989 to 4.6 million in 2009. What is more striking is that enrollment has more than doubled since then, to over 10 million enrollees in 2017, costing the federal government $144 billion. The cost of SSDI is expected to grow another 50 percent over the next decade alone, at $216 billion a year by 2027.
With the passing into law of the Social Security Disability Benefits Reform Act of 1984, the program's screening criteria were liberalized, and the SSA was directed to give additional weight to subjective factors when making its disability determination decisions. The result was a drastic and disproportionate increase in awards to beneficiaries with vague and hard-to-determine disabilities, such as musculoskeletal conditions and mental disorders.
Since 1984, each applicant’s eligibility for SSDI is determined using the so-called medical-vocational grid. Applicants are deemed eligible depending on their age, education level, skills and language ability. These guidelines apply much looser standards for applicants' eligibility and are an important part of the explanation for increased disability awards in recent years.
The increased use of medical-vocational definitions of disability has led to an increase in workers of advanced age claiming disability insurance since 1990, regardless of increasing life expectancy over the years. Workers aged 50 and older now make up almost 75 percent of beneficiaries, and with more baby boomers qualifying for SSDI this group is only set to expand further.
Unlike the United States, under governments center-Right and center-Left, disability benefit reform in the United Kingdom has been high on the public policy agenda for more than two decades now, starting with the replacement of Invalidity Benefit with Incapacity Benefit in 1995.
The reforms of 1995 indexed any increase in disability payments to the rate of inflation. More importantly, these changes also included an “all work test”, meaning an individual worker would be assessed according to their ability to do any kind of paid work, rather than work deemed appropriate based on their skills. This new medical screening was not conducted by the personal doctors of the worker, but carried out instead by medical staff at the regional level. An Incapacity Benefit could also not be claimed in addition to the state pension, so many claimants aged 65+ moved off of IB and onto their state pension.
The reforms that followed in the early 2000s involved pilot schemes such as the "pathways to work" program. These demonstration programs compelled disability recipients to attend interviews on managing their health conditions in ways that might allow them to re-enter the workforce.
In 2008, Incapacity Benefit was replaced with the Employment and Support Allowance. This new disability benefit consolidated all previous disability-related benefits into one payment and further increased the stringency of eligibility criteria. The new health test assessment divided claimants into 1) those deemed to have limited capacity to work, but able to follow work-related activities and 2) those who have limited capacity to work and no ability to follow work-related activities. Those in the first group are required to attend regular interviews and discuss job goals and skill enhancement under the pathways to work program.
More recently, these back-to-work pilot programs were extended and determination criteria was further strengthened under the Welfare Reform Act 2012.
The broadly successful disability reforms undertaken in the United Kingdom were only possible because policymakers acknowledged that it was changes in behavior, not changes in health, that were driving unsustainable program expansion. British policymakers recognized an important fact that allowed them to implement fundamental disability policy changes — namely, that disability is not the same as incapacity.
A subset of workers with disabilities have disorders so severe that work is impossible, but these workers represent a smaller proportion of disabled claimants than is often recognized. Although this notion is at odds with the current SSA system of definitions and requirement, recategorizing subsets of disabled beneficiaries into those who are able to follow work-related activities and those that are not would allow policymakers to install incentives and back-to-work opportunities for those who are deemed capable.
Ultimately, the medical-vocational grid guidelines used by the SSA should be eliminated and replaced with a fairer, simpler, and more uniform system for determining eligibility. By using the experience in the United Kingdom as an example to follow, SSDI demonstration programs could be implemented at the state level. With SSDI program funds facing insolvency in the coming decade, policymakers can no longer delay serious reforms of the SSDI program.
Jack Salmon is a research associate at the Mercatus Center at George Mason University. He has an M.A. in political economy with specializations in macroeconomics and comparative economic analysis from King's College London.
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