NCPA - National Center for Policy Analysis

The Disability Insurance Monster

November 17, 2010

The fastest rising cost for Social Security isn't retiring baby boomers, but skyrocketing Disability Insurance (DI) benefits.  Disability benefits now make up 18 percent of all Social Security costs, up from only 10 percent in 1990.  This year, the federal government will spend $125 billion for disability benefits.  Including the Medicare benefits that are paid to DI recipients, total expenditures approach $200 billion, says Andrew G. Biggs, a resident scholar at the American Enterprise Institute and a former principal deputy commissioner of the Social Security Administration.

Why have disability costs risen so fast?

  • The main reason is looser eligibility standards passed by Congress in the 1980s that expanded the criteria for disability and put greater emphasis on evidence presented by applicants own doctors rather than the Social Security Administration's (SSA) experts.
  • Likewise, increasing numbers of DI applicants are represented by lawyers, with the result that the SSA loses two-thirds of appeals against denied benefits.

Four steps would help screen out non-disabled applicants while ensuring the disabled continue to receive benefits.

  • First, give greater credence to evidence from the SSA's own experts, rather than deferring to applicants' own doctors.
  • Second, allow SSA to be represented by its lawyers in disability appeals.
  • Third, the SSA should receive funds to carry out more Continuing Disability Reviews to ensure that current beneficiaries remain qualified.
  • Finally, making health coverage more affordable to low earners could reduce disability costs by making the Medicare coverage that comes alongside disability less attractive.

Source: Andrew Biggs, "The Disability Insurance Monster," New York Times, November 14, 2010.

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