Provided

Richard Burkhauser testifies before the Senate Finance Committee on the Social Security Disability Insurance program, July 24.

In testimony to the United States Senate Committee on Finance July 24, Richard Burkhauser, the Sarah Gibson Blanding Professor of Policy Analysis in the College of Human Ecology at Cornell, said unless fundamental reforms are implemented the Social Security Disability Insurance (SSDI) program will continue to grow at an unsustainable pace and become insolvent by 2016.

Burkhauser told the Senate panel that since 1970 the number of disabled workers receiving benefits has increased nearly sixfold, from 1.5 million to 8.8 million in 2012, and inflation-adjusted SSDI expenditures have risen from $20 billion to $137 billion in 2012 dollars.

Since passage of the Americans with Disabilities Act of 1990 (ADA), employment of people with disabilities has declined considerably, their household income has remained flat and, Burkhauser said: “Increasingly, people with disabilities are substituting SSDI benefits for labor market earnings, making them net withdrawers rather than net contributors to the tax base. … This outcome challenges the finances of the SSDI program and is at odds with the view of disability codified in the ADA that people with disabilities are able and willing to participate in the labor market.”

Burkhauser said that SSDI’s rapid growth can be traced in part to one-time events: an aging population; the entry of women into the labor force; and the increase in the normal retirement age from 65 to 66 that will not affect future program growth. But Burkhauser also said researchers find that 43.8 percent of SSDI caseloads over the last three decades are accounted for by program-related factors (rule changes and their application) that have encouraged more workers to apply and be eligible for SSDI benefits.

These factors “… [will] continue to be missed in projections of SSDI program growth that do not account for them,” Burkhauser said.

Changes in Social Security Administration (SSA) policies have made it easier or harder to gain entry to the SSDI rolls, Burkhauser said. In the late 1970s and early 1980s, caseloads fell because program gatekeepers were urged to strictly interpret existing rules and because Congress, in 1980, required SSA to re-evaluate all recipients to see if they still met the medical standards.

This rule change resulted in a drop in the SSDI rolls despite a major recession, Burkhauser said. By 1983 the widespread re-evaluation of those already on SSDI was halted. In 1984, policymakers expanded the ways in which a person could medically qualify for the SSDI program, which moved away from a strict medical determination of eligibility to one that also considered an applicant’s overall medical condition and ability to work, Burkhauser said.

“In sum, a large share of SSDI growth … has been driven by factors other than an aging workforce, health declines, the increasing SSDI coverage of women, and changes in the normal retirement age,” he said. “… A growing number of individuals being allowed onto the rolls could work in some capacity and would do so if they were not judged eligible for benefits.”

Burkhauser and several colleagues call for prioritizing supported work over cash benefits for people with disabilities. “Such fundamental reforms would end the archaic and counterintuitive policy currently in place that provides access to work-focused support only after SSDI applicants have gone through an extended process of demonstrating that they are unable to work,” Burkhauser said.

He concluded: “The current SSDI program built on the assumption that disability and employment are mutually exclusive states is both archaic and fiscally unsustainable. Fundamental reform is needed to restore solvency to the U.S. disability insurance system and to support continued employment and greater self-sufficiency among workers with disabilities.”

Much of Burkhauser’s testimony is based on a co-authored paper, “Disability Benefit Growth and Disability Reform in the U.S.: Lessons From Other OECD Nations,” just published in a special issue of the IZA Journal of Labor Policy.