NCPA - National Center for Policy Analysis

U.S. Disability Insurance Program Running Out of Money

March 24, 2011

Puerto Rico has emerged in recent years as one of the easiest places in the United States to get payments from the Social Security Disability Insurance (SSDI) program, created during the Eisenhower administration to help people who can't work because of a health problem, reports the Wall Street Journal.

  • In 2010, 63 percent of applicants there won approval.
  • That is four percentage points higher than New Jersey and Wyoming, the most generous U.S. states.
  • In fact, nine of the top 10 U.S. zip codes for disabled workers receiving benefits can be found on Puerto Rico.

The SSDI is set to soon become the first big federal benefit program to run out of cash -- and one of the main reasons is U.S. states and territories have a large say in who qualifies for the federally funded program.  Without changes, the Social Security retirement fund can survive intact through about 2040 and Medicare through 2029.  The disability fund, however, will run dry in four to seven years without federal intervention, government auditors say.

Unlike Medicare or the Social Security retirement fund, which provide benefits mostly based on age, SSDI decisions are based in large part on medical opinions, which can vary from doctor to doctor, state to state, says the Journal.

  • Because someone else pays the bills, local officials have little incentive to keep the numbers low.
  • The feds have tried to enforce consistency, but the process relies heavily on the judgment of doctors and administrative law judges who hear appeals.
  • Benefits can be modest: In 2009, they averaged $1,064 a month.
  • But the program opens up access for recipients to other government programs, multiplying the ultimate cost to taxpayers.

Source: Damian Paletta, "Insolvency Looms as States Drain U.S. Disability Fund," Wall Street Journal, March 22, 2011.

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