VERY SHORT POST ON SOCIAL SECURITY DISABILITY INSURANCE
by Dale Coberly
VERY SHORT POST ON SOCIAL SECURITY DISABILITY INSURANCE
The Committee for a Responsible Federal Budget has issued a “call for
papers” with suggestions for “fixing” SSDI. I expect that by
“fixing” they mean cutting people off and getting them back to work.
After all, even people on IV’s could work as telephone solicitors.
But I would like to contribute my own observation:
SSDI could be put into “actuarial solvency” for the next seventy five
years… according to current Trustees Report projections…. by
raising the SSDI share of the payroll tax by two tenths of one
percent for each the worker and the employer. This would be an extra
dollar-sixty per week for each. This amount would NOT grow over
time. In fact it could be reduced (that’s the surprise) by about
half a tenth of a percent each after ten years… when the SSDI
trust fund begins to overshoot it’s target reserve.
I have no idea if the total SSDI cost is a reasonable cost for
disability insurance. My guess is that it is, given YOUR risks of
becoming disabled and what SSDI would pay as compared to private
disability insurance. I would like to see other opinions… or even
expert knowledge… about this.
It should be noted that this increase in the SSDI premium would not
be in addition to the needed increase in the OASDI (what people
usually mean by “Social Security”) premium, but a part of the
otherwise needed “one tenth of one percent per year” increase.. the
total increase in the payroll tax for Social Security would remain
“about 2% phased in over twenty years.” This increase would be
needed to pay for your longer life expectancy as compared to previous
generations.
Coberly,
“I have no idea if the total SSDI cost is a reasonable cost for disability insurance.”
The better question would appear to be whether SSDI is only paying benefits to those who are truly disabled. (by some reasonable definition) I don’t know the answer but finding the answer seems important.
The CBS program 60Minutes raises some doubt in my mind.:
http://www.cbsnews.com/news/disability-usa/
And so does the NPR program This American Life:
http://www.thisamericanlife.org/radio-archives/episode/490/transcript
Neither of these networks are bastions of conservative thought and thus their reporting seems more credible.
Perhaps the US Senate should investigate.
$1.60 per week. At $16.00 per hour, that is 6 minutes of work, 6 minutes out of 2400 minutes for a 40 hour work week. That is a pretty cheap fix.
JimH,
A question that is just as important is whether SSDI pays benefits to everyone who applies and is truly disabled. The answer is “no”, just as is the answer to your question. No program is perfect. The real questions are about the magnitude of the mistakes and which type is most common (since changing standards to reduce one type of mistake will generally increase the other). From what I’ve read, I think SSDI is doing a reasonable job, but that disabled people being denied is probably a bigger problem than non-disabled people getting benefits.
(Another way to keep the DI Trust Fund from depleting is to transfer funds from the OASI Trust Fund, as has been done before.)
Mike B
You are right about the kind and extent of the “mistakes” made by SSDI. I am hoping to hear from someone here that was on the front line of SSDI administration.
Meanwhile NPR is NOT a credible source anymore. They have “corporate sponsors”. I know they lie about Social Security proper; I am not personally familiar with the “facts” about SSDI.. except for the actual cost of eliminating the “actuarial deficit”.
While transferring money from OASI to DI has been done in the past, and is likely to be done in the near future, it has the problem of making OASI look worse in order to make DI look better. The whole OASI plus DI could be fixed by increasing the payroll tax one tenth of one percent per year until the economics/demographics stabilizes… projected to occur over the next twenty years.
I prefer the combined approach myself for a number of reasons that don’t sell well to an uninformed public and public policy advocates with their own hidden agendas.
Mike B.,
“A question that is just as important is whether SSDI pays benefits to everyone who applies and is truly disabled.”
I have not seen any mainstream media documenting complaints that SSDI does not pay benefits to the truly disabled.
Perhaps the US Senate should investigate.
I’m not that big a fan of the mainstream media and so I don’t watch or read it that much, but I would be surprised if there were no stories about complaints about denial of benefits to the truly disabled. But certainly I’d expect the stories about benefits going to the non-disabled to be more common and higher profile. There are a lot of people who want to cut SSDI, and want to use the Trust Fund depletion as the excuse. So you get stories about people getting benefits who shouldn’t (or a few judges that approve a very high percentage of cases). Just like you get a lot more stories about the need to cut Social Security old-age benefits than stories that say we should raise benefit levels.
JimH
i am a little worried about your apparent readiness to trust “mainstream” media… or the Senate for that matter.
Before I began to take a serious look at Social Security I might have felt the same. But in fact I had no preconceptions or political bias whatsoever about SS when I heard a report on NPR about the “looming crisis in Social Security.” The alarming numbers they cited didn’t seem to me to possible in the real world… given the number of retirees, the number of workers, the average wage, and a “reasonable” benefit. So I looked into it.
Turned out almost everyone was lying, or basing their “facts” on lies that they had heard from “non partisan experts.”
All I can say is that if you care about something you have to do your own research. First rule of research is “don’t trust anyone.” Second rule is “not even yourself.” Eventually of course you have to trust yourself… but you need to at least argue with yourself honestly for a long time before doing even that.
I don’t know what the “mistake” rate of SSDI is –in either direction– but I have heard from people who were there that it is much more likely that someone who “deserves” benefits will die before getting them, than that someone who does “not deserve” benefits will get them.
What I CAN say is that the cost of avoiding the future “deficit” in DI financing is about two tenths of one percent of payroll for the workers and two tenths matching from the employer.
And I CAN say that the cost of avoiding any future deficit in Social Security as a whole (including DI) is one tenth of one percent increase in the payroll tax per year until you reach about 2 percent of payroll more than it costs today… to pay for your longer expected retirement at today’s level of benefits at today’s “replacement rate.”
I THINK that is such a good deal for workers that it ought to be obvious to them that that is what they need to do. But the workers will never hear about that option because NO one, not the mainstream media, not the Senate, not even the “progressives” want them to understand that they have that choice.
Coberly,
On this issue, I prefer to trust CBS News and NPR to investigate and report. As opposed to Fox News or some blog.
CBS and NPR are not reporting based on some weird accounting or some willful misuse of the English language.
It does not seem reasonable to me that the number of SSDI recipients should grow by 20% over six years. (60Minutes) Or that nearly one in four of the working age people of Hale county Alabama are receiving SSDI. (NPR) Something is wrong.
SSDI is an important program. It seems reasonable to expect better oversight.
As for the US Senate, I believe that we are stuck with our elected politicians.
Either they will investigate SSDI and come up with reasonable changes or SSDI will be left to pay out reduced benefits.
And if we don’t like the results then we can refuse to vote for them in the next election. It is called accountability.
JimH said
“CBS and NPR are not reporting based on some weird accounting or some willful misuse of the English language.”
your faith in them is touching. but they are, and that’s why there is no “accountability” in the Senate.
I do not suggest you “have faith” in my accounting. I don’t know what to suggest if you don’t feel capable of checking it for yourself.
Coberly,
I don’t have an accounting problem. I do not believe that American workers should have to fund fraud.
I believe that we can say that we have reached a meeting of the minds.
On this subject, we completely disagree! LOL
JimH
sad to say, there’s nothing unusual about that.
you have been conned. you like being conned. i hate to think it’s because you expect to get your taxes lowered as soon as all the “fraud” is stopped.
Every so often, the SSDI program gets a lot of adverse attention. There are always people who oppose the concept of “paying people not to work” and this group has recently become very vocal. Also, the disability program is complex and hard to administer. There are a lot of moving parts not just within SSA but also in State Disability Determination Services. It’s never possible to insure that any one claim will be processed correctly. And, some types of claims are vastly more complex than others.
I am disappointed in the contents of the NPR and CBS’s recent articles. Neither author relied on any recent studies by SSA’s Office of the Actuary which show that after a period of several years of increased SSDI claims filings the number has now declined and is at pre-recession levels. Also, the number of hearings pending has also declined. It just isn’t true that people routinely file for SSDI and are automatically approved when their unemployment runs out. But, these authors simply accept the hearsay accounts of people with little or any real knowledge of the program that this is true. This isn’t just bad journalism–it isn’t journalism at all.
The NPR and CBS pieces pick up on two stories that have been in the news recently. One concerns alleged cronyism between an ALJ and SS attorney that produced a large number of approvals for ineligible people. Another refers to Binder and Binder, a large law firm which represents people from all over the US in their disability appeals. Re BandB, they process a large number of claims and the more you handle, the more are likely to be approved. Most lawyers representing SSDI appellants work in one or two attorney shops and handle relatively few appeals. The implication underlying the authors’ remarks is that somehow BandB cooks the books or manufactures favorable medical evidence. This type of fraud happens from time to time in the program as a whole but does not amount to a “disability legal complex.” Surprise! Some people don’t like Social Security a LOT.
I don’t doubt the sincerity of the the views offered by the people in Alabama who can’t account for a 25% disability rate in their county. From my experience as a former SSA field office employee and manager, I am not at all surprised that 25% of the citizens of a county in a Southern state are disabled. Disability correlates highly with poverty. Which in turn correlates highly with diabetes and obesity. By the time you factor in low educational attainment and the lack of employment opportunities, it’s a wonder the rate isn’t higher. If you are interested in the percentage of people receiving some form of federal disability benefits in your community, you can look online in SSA’s website, ssa.gov. There is a lot of current information which handily refutes the assertions made in NPR and CBS’s pieces.
I ran into only one case of genuine fraud compounded by ALJ error during my career. But, I met a lot of people who had been denied benefits and were (in my view) clearly disabled based on the severity of their medical conditions and the length of time they had been off work. The biggest problem most claimants had was the inability to access medical treatment after losing their jobs. I had an employee who became disabled because of his severe Type 2 diabetes. He lost his job as our contract security guard when he became too sick to attend work regularly. Once unemployed, his health deteriorated further because he could not afford the insulin he needed to stabilize his blood sugar. He died at the age of 41 from lack of medical treatment while his disability appeal was still pending.
So, my take on the shortcomings of the disability program is not that it pays too many people but that it does not provide Medicare benefits immediately upon entitlement. This view is widely shared by my former colleagues in SSA. Everyone has seen people whose marriages fall apart and who subsequently become homeless as a result of a serious illness or injury. My interest in the SSDI program is to insure that it fully supports the disabled people on the rolls. FYI. Nancy Ortiz
Coberly,
“i hate to think it’s because you expect to get your taxes lowered as soon as all the “fraud” is stopped.”
Funny! Lower taxes! You are a laugh riot! You really have no understanding of Independents. LOL
The elimination of ‘waste, fraud, and abuse’ is a fairy tale used by both political parties. Both of them want voters to believe that they can get something for nothing.
In this case there is a lot of smoke, which makes it difficult to believe that there is not a little fire going on. Quoting myself “I do not believe that American workers should have to fund fraud.”
This is dirt simple, the Democratic party controlled US Senate does an investigation and tightens a few regulations. Then the US House has to agree or look like the villain. Or do nothing and SSDI will probably be left to pay out reduced benefits since Republicans will demand some reform of SSDI qualifying rules.
And I don’t know what to say to people who believe that CBS news and NPR are conservative Republican mouthpieces. Has it never occurred to you that the value of a free press is that they will do their own independent investigations and print the results. And that sometimes they will disagree with you! LOL
Jim H–“Has it ever occurred to you that the value of a free press…..own independent investigations and print the results.” Do try to pay attention. In my comment, I explained that NPR and CBS did not base their reports on validated SSA statistical data, but the opinions of sincere, but ill-informed people. Do some reading. You’ll benefit by it. NancyO
JimH
i think this is where i draw the line for myself at least… we are getting off topic. You think there is a lot of fraud in SSDI. I don’t. But in any case the point I was trying to make in this post is that SSDI as it is working today could be made financially whole by raising its share of the payroll tax by a dollar sixty per week.
i did ask for knowledgeable people to comment on whether that would be “worth it” for the level of risk of disability and the amount of money you would need/collect in case of disability.
With respect, nothing you have said makes me think you are a knowledgeable person. I read the transcripts of the CBS and NPR reports you cited. They have the look and smell of propaganda to me.
This has nothing to do with thinking they are Republican mouthpieces. The propaganda machine that drives public opinion in this country is “non partisan.” the true power always is.
Until you have a coherent plan to eliminate “fraud and abuse” that is actually working the question remains.. does the SSDI “tax” with the proposed increase represent a good bet. I think it does.
Disregarding the accusations of fraud and abuse I will just comment on costs.
There is no disability program available, at any cost, that provides what SSDI provides. You could not even get a quote beyond 20 years of coverage anywhere.
And the costs at 20 years of coverage are ludicrous.
EMichael–Right you are. Yep, private insurance is no substitute for SSDI. Private DIB insurance is hugely expensive now. It would be even more expensive if SSDI were not available. NancyO
JimH is missing Coberly’s point entirely. Imagine two boxes:
Box 1 is a Black Box labeled SSDI with input ‘Revenue’ and output ‘Cost’. For many years now the gap between the two has been set by the official authorities at between .3 and .4% of payroll over both the 25 and 75 year windows. Meaning you could fund SSDI as is for the amount Dale suggests. End of THAT story.
Box 2 is divided by a grid that has ‘Approvable Claims Denied’ along the X axis and ‘Deniable Claims Approved’ along the Y. Suppose you superimpose a four box representation on that grid. If both the X and Y numbers are low (lower left) you label the box ‘Efficient’. On the other hand if X is low and Y is somewhere higher then you label that box ‘Stingy’. If the reverse ‘Waste and Fraud’. Or if both numbers are high simply ‘Inefficient’. The question is how to drive the numbers from any of ‘Inefficient’, ‘Stingy’ or ‘Wasteful’ down to ‘Efficient’. And mostly the answer is ‘Appropriate funding for Investigators and Claims Examiners’. But that solution is hindered by the current Black Box situation.
So fix the Black Box and THEN identify the right gaps in staff funding. The results then might be to reintroduce a small gap in the Black Box if the bias is towards claims being denied or to actually produce surpluses in the bias is towards claims being approved unnecessarily or costs simply being driven by delays in settling claims. But you would just be addressing changes at the margins.
Fix the Box. Don’t obscure the issues by trying to figure in advance where exactly matters fit on the grid. Because we know SOME people are dying waiting for approvable claims and a big part of that is the fact that staff funding is being starved by ‘Crisis’. Fix the ‘Crisis’ already!
Excellent description, Bruce. It is applicable to many situations. Conservatives often try to make a funding problem into a waste and fraud problem, thereby negating the need for increasied funding.
The reality is that waste and fraud are also a funding problem. Rather than negating the need for increased funding, it reinforces the need.
Jerry
I wish you hadn’t added that last sentence. It allows the “waste and fraud” brigade to insist that rather than in crease funding, we need to first “eliminate waste and fraud.”
I believe that “waste and fraud” has never been shown to be a significant part of the “funding” problem. Although taking seriously the last part of the NPR story one could suspect there may be a nation wide “employment” problem that may impact on the costs of DI…
the answer is to fund the DI we have now, while working on both the waste and fraud issue and the employment problem. Otherwise you get the situation of the patient bleeding in the street while the “doctors” are arguing about waste and fraud in the medical system or the need for higher wages so the patients can pay cash before being treated.
My guess is that “you” (the person reading this) has a much higher chance of ending up disabled than you realize. DI might make the difference between a life of extreme poverty and dying under a bridge somewhere. Certainly the delay in getting benefits and/or treatment is unconscionable and seems to be the result of ideologues and morons in congress trying to “control costs” without understand or caring about the realities of the problem. In any case, it is the workers, not Congress, who pay for the costs, and as long as the cost is commensurate with the risk of disability… as decided by “the workers” who are paying the bill… then that is what the workers, when well informed… will choose to pay, and any decent Congress would let it go at that instead of trying to impose their ideology on the people in need, the people who pay the bills.
My point was that the elimination of waste and fraud requires an increase in funding. It cost money to reduce waste and fraud. In fact, it is sometimes cheaper to tolerate some waste and fraud than to eliminate it.
thanks Jerry
I agree with that point entirely.
What Bruce said. It irks me a little when people complain about one type of error (wrongly issued SSDI checks) and not the other (wrongly non-issued SSDI checks). The former costs these people money, which concerns them, whereas the latter costs disabled people and their families money, not to mention worse things. In addition to mistaken rejections of applications for SSDI, the approval process for SSDI typically is long, difficult, and costly to disabled people, deterring and delaying approvals that represent mission accomplishment. It would cost money to fix both types of errors, but both need to be addressed regardless of whether the net result is a decrease in the costs of the program. That’s a call for better government, which may or may not be cheaper government.
PJR
thank you. i wish we could make that into a flag and fly it at polling stations.
People have been hypnotized into believing that the only thing that counts is the money. The idea of paying for what we need in the most efficient way we can think of is something that almost never enters the debate.
The Republicans and similar hate government. So they have made up a rule: government spending MUST be limited to 19% of GDP or some such. Even if half of that spending is people using the structure of government to most efficiently pay for their own needs… such as retirement insurance, disability insurance, health insurance…
It simply does not matter that Social Security costs more than new toys for the Pentagon…. unless you feel, as I am persuaded the “powers” do… that ALL money is for “defense of the empire” and any allowed to people, whether through wages or through government “transfers” is only tolerable to the extent that that is what it takes to keep the people working and providing for the national defense.
I like to think this could be stopped or at lest limited if people understood that they are paying for what they need, and it is better they find ways to pay for it themselves than to imagine that money comes from “the government” or “the rich.”
But to some people that sounds like I am agreeing with the Republicans. Far from it. The Republicans use such rhetoric to fool the people… because the people know that the rhetoric is “true” even though the politicians are lying to them.
I suspect that is too hard for anyone to understand.
JimH
thanks for your contribution, it helped me. I didn’t want to pursue it after a couple of exchanges because we weren’t going to get anywhere with our disagreement.
i just wanted to show the cost of “fixing” SSDI was not very high
And ask readers if they knew if the cost of SSDI overall was commensurate with private disability insurance, given the risks and potential “benefits.”