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8/14/2019 Social Security: 1-STAPLETON
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The Eligibility Definition Used in SSA’s
Disability Programs Needs to be Changed
Presented to the
Social Security Advisory Board
Discussion Forum on the Definition of Disability
Dirksen Senate Office BuildingWashington, DC
Presented by
David C. StapletonCornell University
Institute for Policy Research
April 14, 2004
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Overview
• “The Nation must face up to the contradictions created by theexisting [Social Security] definition of disability.” (SocialSecurity Advisory Board, 2003, p. 1)
• A bleak picture – Deteriorating economic security of people with disabilities
– Programs that are fiscally insecure – An inefficient, inequitable determination process that rations scarce
program resources by arbitrarily imposing high costs on applicants
• The reason: the current eligibility definition uses the medicalmodel
• The solution: recognize that the environment matters – consistent with the new paradigm of disability and the ADA• But that will also require a fundamental change in our approach
to providing economic security to people with disabilities
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Data
• Many statistics cited are based on trends from the Current Population Survey(CPS), from:
– Stapleton and Burkhauser (eds.) The Decline in the Employment Rate of Peoplewith Disabilities: A Policy Puzzle. W.E. Upjohn Institute for EmploymentResearch, 2003.
– www.disabilitystatistics.org
• The CPS method for identification of people with disabilities – a work limitation question – has been heavily criticized, for good reason
• Trends in statistics for people with disabilities from the CPS are very similar to those from other surveys that use preferred measures of disability
– The prevalence of disability differs
– Changes in employment are comparable
• Trends in the CPS statistics are mirrored in SSA’s administrative data
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The Decline in Economic Security
• Household incomes of working-age people with
disabilities fell further behind those of other
households in the 1990s
• People with disabilities became less reliant on their own earnings, and more reliant on SSDI and SSI
• The employment rate of people with disabilities has
declined continuously since 1989
• These trends are mirrored in disability program
statistics
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The Decline in the Employment Rate
of People with Work Limitations
Employment Rate by Disability Status and Sex
0
10
20
30
40
50
60
70
80
90
100
1 9 8 1
1 9 8 3
1 9 8 5
1 9 8 7
1 9 8 9
1 9 9 1
1 9 9 3
1 9 9 5
1 9 9 7
1 9 9 9
2 0 0 1
% E m p l o y e d
Men without Work Limitations
Women without Work Limitations
Men with Work Limitations
Women with Work Limitations
Source: www.disabilitystatistics.org
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The Rise in SSDI Participation
Source: Social Security Advisory Board, 2003
% Change in SSDI Beneficiaries
per 1,000 Insured, 1990-2002
0%
10%
20%
30%
40%
50%
60%
70%
All
ages
20-24 25-39 30-34 35-39 40-44 45-49 50-54 55-59 60-64
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The Decline in Economic Security (cont.)
• People with disabilities have become much more dependent on
public health insurance
• The decline in economic security is greatest for those in the
youngest age groups
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Employment Rates of Young Adults with Disabilities
Declined by More than Those for Older Adults
Source: Houtenville and Daly, 2003
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Fiscal Insecurity of the Disability Programs
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Inflation-adjusted Program Expenditures have Grown
Rapidly Since 1989
Source: Social Security Advisory Board, 2003
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Disability Program Expenditures have also Grown
Rapidly as a Share of Federal Outlays
Sources: Social Security Advisory Board, 2003, and
President’s Council of Economic Advisors (2003)
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Fiscal Insecurity of the Disability Programs (cont.)
• SSA’s actuaries have been warning of impending exhaustion of
the SSDI and OASI Trust Funds for years
• History suggests that current growth in disability spending will
eventually lead to cuts in eligibility and/or benefit levels
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Poor Service to Applicants
• Problems with the disability determination process
have defied SSA’s reform efforts for over a decade
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Poor Service: Allowances on Appeal
• Almost a third of awards are made after an initialdenial
• Many applicants who are initially denied benefits fail
to appeal, even though high allowance rates for appeals suggest that many would be successful if they
did
• Although many allowances on appeal might be the
result of changes in medical conditions, SSA statisticsshow that many are allowed on the evidence that was
available to the initial examiner
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Poor Service: Processing Times
• Many applicants have to wait months for their initial
determination.
• Many who appeal initial denials wait over a year for a
final decision
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Poor Service (cont.)
• Whether or not an initial application is allowed issubstantially affected by where it is filed and who
happens to review it
• The determination process likely discourages manyapplicants from applying, some of whom are likely to
be qualified
• The determination process likely denies benefits to
many people with disabilities who have a significantneed for support.
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The Eligibility Definition
Inability to engage in any substantial gainful activity
by reason of any medically determinable physical or
mental impairment which can be expected to result indeath or to last for a continuous period of not less than
12 months.
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Eligibility Definition (cont.)
• Disability = inability to work
• Inability to work is medically determinable
• Yes or no
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The Consequences:
The Decline in Economic Security
• Mounting evidence implicates SSA’s disability programs as the cause of the employment rate decline
– Liberalization of eligibility beginning with the 1984
Amendments
– Increase in the SSDI replacement rate for low-wage
workers, because of the way past wages are indexed to
determine benefits
– The 1990 recession triggered a flood of applications from
“contingent applicants”
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The Mounting Evidence
• Growth in the SSDI roles closely tracks employment declines
• The fastest growing impairment categories for beneficiaries are
those most affected by liberalization
• The allowance rate increased as applications increased
• Declines in employment and increases in participation are
greatest for those with low skills
• Employment and program participation have become more
sensitive to the business cycle
• The employment decline for those with “long-term” disabilities
began in the mid-1980s
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The Employment Decline for Those with Long-
term Disabilities
10
15
20
25
30
35
40
45
50
55
1 9 8
0
1 9 8
1
1 9 8 2
1 9 8
3
1 9 8
4
1 9 8
5
1 9 8
6
1 9 8 7
1 9 8
8
1 9 8
9
1 9 9
0
1 9 9
1
1 9 9
2
1 9 9
3
1 9 9
4
1 9 9
5
1 9 9
6
1 9 9
7
1 9 9
8
1 9 9
9
2 0 0
0
2 0 0
1
2 0 0
2
( P e r c e n t a
g e ) .
5
10
15
20
25
30
35
40
45
50
Annual Weeks Worked Annual Hours Worked Annual Hours greater > 140
Average Weekly Hours Annual Hours greater > 52
Source: Burkhauser and Houtenville, 2004
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The Role of the Eligibility Definition
• The eligibility definition forces people with significantmedically-determinable conditions to make a choice
– Seek benefits and give up economic independence
– Support themselves through work, despite significant
challenges
• The definition creates a work disincentive
• When we liberalize the definition so that we can care
for more people who apparently need support, or whenwe offer better benefits, it should be no surprise that
many reduce their earnings or stop working altogether
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The Consequences:
Poor Service to Applicants
• SSA cannot substantially improve the determination process because the Agency is being required to
perform an impossible task: medically define a line
between those who can work and those who cannot
• Adding consideration of environmental factors in
eligibility determination cannot fix the problem
• There is no line between those who can work and
those who cannot
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A New Approach to Economic
Security is Required
• The “caretaker” approach: – Is inconsistent with the new disability paradigm and the
aspirations of the disability rights movement
– Requires determination of who can and cannot work
• The “self-support” approach: – Is consistent with the new disability paradigm and the
aspirations of the disability rights movement
– Helps people with disabilities support themselves
– Would be more appealing to taxpayers – Eligibility requires determination of who has challenging
medical conditions
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Features of a Self Support System
• Work expectations for many, but not all• Access to comprehensive, integrated services that support
employment
• Tax credits or wage subsidies for those least able to compete in
the labor market• Income support for those with the most severe conditions, not
conditioned on earnings
• “Extra” early retirement benefits after some age, notconditioned on earnings
• Public health insurance benefits “for life,” but with premiums partly paid by beneficiaries or employers under certaincircumstances
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Challenges to Building a Self Support System
• How can we muster the resources from existing,independent programs and stakeholders?
• How can a government bureaucracy successfully
administer supports that are tailored to the widelydiverse needs of beneficiaries?
• How can we avoid hurting those we are trying to help
as we change the system?
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Learning from Other
“Self Support” Policy Efforts
• Pay attention to both strengths and limitations• Other countries
• Welfare reform – 1993 Earned Income Tax Credit expansion
– 1996 adopted “work-first” income support approach – Positive results:
Growth in employment
Decline in caseloads
Remarkably little regression during the recession
Maintenance of political support, despite cost
– Negative results: Some families harmed
Parents with disabilities were further segregated
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Conclusion
• “The Nation must face up to the contradictions created by theexisting [Social Security] definition of disability.” SSAB, 2003
• The current eligibility definition for SSA’s disability programsembodies the medical model and is responsible for: – The deteriorating economic security of people with disabilities
– The fiscal insecurity of the programs themselves
– An inefficient, inequitable determination process
• We have to recognize that the environment matters if we areever to fulfill the promise of the ADA
• We need to replace the “caretaker approach” to providingeconomic security with a “self-support” approach
• Accomplishment of that task poses many significant challenges
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% Change in SSDI Beneficiaries per 1,000 Insured
-10%
0%10%20%30%40%50%
60%70%80%
All
ages
20-24 25-39 30-34 35-39 40-44 45-49 50-54 55-59 60-64
% Change 1980-2002 % Change 1990-2002
Source: Social Security Advisory Board 2003
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