By Brian Faler
A government entitlement program is headed for insolvency in four
years, and it’s not the one members of Congress are talking about most.
The Social Security disability program’s trust fund is projected to
run out of cash far sooner than the better-known Social Security
retirement plan or Medicare. That will trigger a 21 percent cut in
benefits to 11 million Americans — people with disabilities, plus their
spouses and children — many of whom rely on the program to stay out of
poverty.
“It’s really striking how rapidly this is growing, how
big it’s become and how D.C. is just afraid of it,” said Mark Duggan, a
University of Pennsylvania economist and adviser to the Social Security
Administration.
Part of the reason for the burgeoning costs is
that the 77 million baby boomers projected to swamp federal retirement
plans will reach the disability program first. That’s because almost all
boomers are at least 50 years old, the age at which someone is most
likely to become disabled.
The growing costs are also a result of
the economy’s troubles. When people can’t find work and run through
their jobless benefits, many turn to disability benefits for assistance.
“They’re
desperate,” said Ken Nibali, a retired associate commissioner of the
program. “Some who are marginal and struggling to have a low-paying job
now literally have no options.” So, he said, “they figure, ‘I do have
trouble working, and I’m going to apply and see if I’m eligible.’ ”
Sen.
Tom Coburn (R-Okla.), said he has tried to interest fellow lawmakers in
the issue, without much luck. “Nobody wants to touch things where they
can be criticized,” Coburn said, adding, “the fund is going bankrupt”
and “then what are we going to do?”
Applications to the disability
program have risen more than 30 percent since 2007 — the last recession
started in December that year — and the number of Americans receiving
disability benefits is up 23 percent.
More Americans receive
disability benefits than 20 years ago, although people are less likely
to have physically demanding jobs, health care has improved and the
Americans With Disabilities Act bans discrimination against those with
handicaps.
Social Security is made up of two programs: the
retirement plan supporting 40 million senior citizens and 6 million
survivors, and the disability insurance program created during the
Eisenhower administration.
The disability program pays benefits
averaging $1,111 a month, with the money coming from the Social Security
payroll tax. The program cost $132 billion last year, more than the
combined annual budgets of the departments of Agriculture, Homeland
Security, Commerce, Labor, Interior and Justice. That doesn’t include an
additional $80 billion spent because disability beneficiaries become
eligible for Medicare, regardless of their age, after a two-year waiting
period.
The disability program is projected to exhaust its trust
fund in 2016, according to a Social Security trustees report released
last month. Once it runs through its reserve, incoming payroll-tax
revenue will cover only 79 percent of benefits, according to the
trustees. Because the plan is barred from running a deficit, aid would
have to be cut to match revenue.
Duggan said the disability plan
has been running on autopilot for decades and lawmakers could find
savings to help avoid the scheduled cuts. While federally financed, the
program is administered by the states, and disability rates among them
vary widely. West Virginia topped the list in 2010, with 9 percent of
residents between ages 18 and 64 receiving aid. Utah and Alaska had the
lowest rates at 2.8 percent.
People whose benefit applications are
rejected can appeal to administrative-law judges, and statistics show
some judges are far more likely to approve benefits than others. One
reason is that the program, which once focused largely on people who
suffered from strokes, cancer and heart attacks, increasingly supports
those with depression, back pain, chronic fatigue syndrome and other
comparatively subjective conditions.
“They’re very, very hard to
evaluate,” said Nicole Maestas, director of the Rand Center for
Disability Research. “Reasonable people differ about what constitutes a
disability.”
Statistics show that once people enter the program
they are unlikely to leave, with fewer than 1 percent rejoining the
workforce. Many worked “menial” jobs that didn’t offer health insurance,
and the program gives them an opportunity to join Medicare long before
they might otherwise qualify, Nibali said.
The agency faces a
backlog of 1.4 million reviews it’s supposed to periodically conduct to
ensure beneficiaries are entitled to stay on the rolls. The agency has
said it doesn’t have the money to do the reviews.
Neither President Obama nor House Republicans in their proposed budgets has addressed the disability program’s shortfall.
“We’re
not trying to fix every problem in America with this one document,”
said House Budget Committee Chairman Paul Ryan (R-Wis.) of his budget
plan. “We’re trying to prevent a debt crisis, and this is not a driver
of our debt.”
“The administration believes that disability
insurance is a vital lifeline for millions of Americans,” Kenneth Baer, a
spokesman for the White House budget office, said in an e-mail. “The
president remains willing to work with Congress on a bipartisan basis to
strengthen Social Security and protect the millions of beneficiaries.”
He added that lawmakers didn’t fully fund the administration’s request for more money to screen beneficiaries.
Senate
Finance Committee Chairman Max Baucus (D-Mont.), whose committee sets
Social Security policy, said the program’s finances are less dire than
they may appear. Congress can funnel revenue from elsewhere in the
government to cover the program’s shortfall, he said.
— Bloomberg News
© The Washington Post Company
