07.16.12

CBO Issues Sessions-Requested Report On Dramatic Surge In Americans Receiving Disability Insurance

“It is clear there is a great need to distinguish between proper and improper disability claims, and to better incentivize and find acceptable work for those who are able… The administration of this program must be improved to avoid sinking our country deeper into debt, to ensure the program remains viable for those with disabilities, and to protect Social Security itself.”

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, issued the following statement today upon receipt of a report from the Congressional Budget Office about the immense growth in the Social Security Disability Insurance program. Over the last three months, more Americans have begun receiving SSDI benefits than have found jobs:

“Today’s report from the Congressional Budget Office reveals a dramatic increase in applications and awards for Social Security disability, placing the disability trust fund on a fast-track to insolvency in just four years. Amazingly, while fewer Americans are working than at the end of 2008, 3.6 million Americans have been awarded SSDI benefits over the same period. The growing number of people on disability and other federal benefits, combined with weak economic growth, raises serious concerns about the sustainability of the American economy.

It is clear there is a great need to distinguish between proper and improper disability claims, and to better incentivize and find acceptable work for those who are able. Today only 1 percent of Social Security disability recipients ever return to work. The administration of this program must be improved to avoid sinking our country deeper into debt, to ensure the program remains viable for those with disabilities, and to protect Social Security itself.

Not only does the surge in SSDI beneficiaries jeopardize that program, it also hammers Medicare. When a person has been disabled two years, they automatically receive Medicare benefits regardless of age. The CBO report states that in 2011, DI expenditures totaled $128 billion and Medicare costs for SSDI recipients were an additional $80 billion.”

BACKGROUND: SSDI and CBO Findings

  • The Social Security Disability Insurance (SSDI) program was established in 1956 to provide monthly cash payments to individuals who are unable to perform any substantial, gainful activity due to long-term disability. Benefits are provided by the Disability Insurance Trust Fund, which is financed primarily through a payroll tax of 1.8 percent. While SSDI is funded by federal payroll taxes, eligibility is initially determined by state officials.
  • CBO finds that in addition to changing labor force dynamics and an aging population, the 1984 federal expansion in eligibility criteria has brought the SSDI program to the brink of insolvency. Since 2009, the SSDI program has been paying out more in annual benefits than it receives in taxes and interest on the trust fund’s assets. Consequently, the trust fund is shrinking and will be depleted by 2016—just four years from now.
  • As of May 2012, 8.7 million disabled workers were collecting Social Security Disability Insurance.
  • Between 1970 to 2011, the number of disabled workers receiving SSDI rose from 1.4 million to 8.3 million, significantly outpacing growth in the working-age population during that period. SSDI made up 10 percent of Social Security expenditures in 1970; by 2011, it was nearly 18 percent.
  • Over that period, the federal government’s cost per beneficiary rose from about $560 to $1,050 (in 2010 dollars). Inflation-adjusted expenditures for the DI program (including administrative costs) increased nearly nine-fold, to $128 billion in 2011. CBO concludes, “as a result, a growing share of spending for the Social Security system is being directed to participants in the DI program.” After two years, SSDI recipients also become eligible for Medicare coverage. In 2011, Medicare paid $80 billion for SSDI beneficiaries.
  • A July 2011 Government Accountability Office (GAO) report found that while SSDI beneficiaries are responsible for notifying the Social Security Administration when they return to work, this rarely happens. Known overpayments reached $1.4 billion in 2010. According to GAO, nearly 75 percent of known overpayments were made to beneficiaries who had returned to work and were no longer eligible for benefits.
  • In December 2011, the Social Security Administration commissioned an independent review of the federal disability system amid concerns that the program awards benefits to those who don’t deserve them and denies benefits to those who do. A draft of the report is expected in August, with final recommendations being released in November. The study will also focus on why federal courts are overturning many of the initial denials.