In defense of Social Security Disability Insurance
When Americans get too sick or injured to work, this program helps them survive.
“Over half the people on disability are either anxious or their back hurts,” Sen. Rand Paul (R-KY) said in 2015. “Join the club. Who doesn’t get up a little anxious for work every day and their back hurts?”
It’s a common line from conservative politicians: that the Social Security Disability Insurance program is just welfare for people too lazy to work.
Many of those politicians haven’t spent much time at all actually talking to the people they’re denouncing — people like Randy Pitts.
Before his body started to fail him, Pitts, a 43-year-old in Lake County, Tennessee, was a public servant. He loved his job as a 911 dispatcher for the county’s emergency services; he recounts with pride the story of the day he kept residents calm as trees crashed around them in an ice storm. He was elected county commissioner, a position he used to champion solar power.
Then in 2013, Pitts, who already had moderate arthritis and herniated discs in his back, was diagnosed with renal failure, an extreme form of kidney disease — the beginning of a chain of events that would leave Pitts and his family dependent on Social Security Disability Insurance (SSDI), which offers assistance for workers who develop disabilities and illnesses that render them incapable of working any longer.
Pitts’s renal failure led to a medical emergency that left him with what a doctor told him was likely post-traumatic stress disorder. Too weak to stand and talk, he campaigned for reelection but narrowly lost his seat. At his dispatcher job, he struggled to remain calm and form clear sentences to reassure callers. In 2015, struggling mentally and physically, he had to give up his job; these days, he’s unable to dress himself without help from his teenage son.
Pitts’s son works, as does his daughter, who is in college. But the family’s major lifeline is the $1,196 per month Pitts gets through Social Security Disability Insurance — which has been, over the past several years, under intense political assault from the likes of Sen. Paul.
SSDI is not a welfare program. Just like Old-Age and Survivors Insurance, the more famous half of Social Security, it’s a social insurance program that only goes to people who’ve paid into it over the course of many years. It’s meant to protect against a risk that every employed person faces: the risk that one day their body will fail them and leave them unable to keep their job.
But the stereotype Rand Paul echoed, of the lazy SSDI recipient with occasional backaches, influences policy. President Trump’s 2018 budget proposed $72.5 billion in cuts to SSDI and to Supplemental Security Income, another program for disabled people, over 10 years. White House budget director Mick Mulvaney called the program “very wasteful” and bemoaned the fact that it “grew tremendously under President Obama.”
Stereotypes about recipients wasting or not needing the money are common even among people on the program. “It’s harder for somebody that really needs it to get it than it is a dopehead,” Jeanetta Smith of Robbins, Tennessee, who has been on the program for 13 years, told me. “You’ve got these folks that don’t do nothing with it but dope it up.” (Insofar as the program has any kind of problem with drug abuse, it’s from Medicare, which insures SSDI beneficiaries, overprescribing opioids just as every insurer has.)
After visiting Tennessee, talking to SSDI recipients across the state, and scouring the rich economic literature on the program, I was left with a starkly different conclusion from the prevailing criticism. SSDI is not a gusher of free federal money for lazy people with backaches. It’s a stingy, hard-to-access program that helps some of the country’s most desperate citizens scrape by; applying takes months or years, and more than 60 percent of applicants wind up being rejected anyway.
SSDI is a thin piece of duct tape holding the American safety net together, ensuring people hit with severe medical misfortune have some means of survival. Cutting it without providing a viable alternative wouldn’t revitalize the economy or help disabled people find dignified work. It would leave some of the country’s most vulnerable without a way to get by.
The Disability Belt
I traveled to Tennessee because of its presence in the “Disability Belt,” a term researchers use for a cluster of counties stretching from Appalachia down through the South into the Mississippi Delta that all feature unusually high rates of SSDI usage:
Trump’s pledge to cut the program is somewhat ironic, if not surprising, given how these counties voted in 2016. According to Bloomberg’s Joshua Green, nine of the 10 countieswith the highest share of working-age adults on SSDI voted for Trump, with each of those nine giving him at least 70 percent of the vote; all but one of those nine counties are in Appalachian West Virginia, Virginia, and Kentucky, right in the middle of the Disability Belt. An analysis by the Center for American Progress, provided to Vox, found that the SSDI receipt rate in counties Trump won was 12 percent, compared to 9 percent in counties he lost.
The belt is nearly as old as Social Security Disability Insurance itself, and government researchers were identifying it as early as the 1960s. And the reason for its existence is simple: Disabled people themselves are concentrated in the belt. In other words, the “Disability Belt” doesn’t reflect abuse or waste. It reflects the parts of the country where more people really are disabled:
“If there was no variation in disability prevalence across states, the variation in DI participation would be reduced by approximately 80 percent,” Mathematica researchers concluded in a 2016 paper. Researchers at Boston College’s Center for Retirement Research came to a similar conclusion. They found that the single best variable for explaining variation in states’ SSDI application rates is self-reported poor health.
The regions where people are more likely to be on disability map onto objective measures of health status — like years lost due to early death, diabetes and heart disease rates, and even cancer rates. SSDI serves people who are desperately sick or injured; its beneficiaries have a mortality rate triple that of other people their age, and one-fifth of men and one-sixth of women on the program die within five years of first getting benefits. It’s no accident that it’s concentrated in areas where that kind of severe hardship is also concentrated.
But the single best explanation for the distribution of SSDI, according to an analysis by Kathy Ruffing, is the share of high school dropouts in each state.
Only about a fifth of people on SSDI lack a high school diploma, but education nonetheless is a powerful predictor of the program’s geographic distribution. That’s largely because low levels of education are correlated with poor health. A recent study by MIT economist James Poterba, Dartmouth’s Steven Venti, and the National Bureau of Economic Research’s David Wise found that “a large component of the relationship between education and DI participation — more than one-third for men, and over two-thirds for women — can be attributed to the correlation of education with health, and of health with DI receipt.”
Consider the case of Jeanetta Smith, a 51-year-old SSDI recipient in Robbins, Tennessee, in the eastern half of the state, near the Kentucky border.
She worked from when she was 13 years old to when she was 38. At first, she worked while attending school, but she dropped out after ninth grade to work full time and pay for her disabled mother’s care. After working at a textile factory making pants in the late ’80s (and earning the healthy wage of $15 an hour, or about $30 an hour today after inflation), she switched to being a certified nursing assistant (CNA) at a nursing home when the factory closed down.
The job required coursework, paid worse (starting out at $4.25 an hour and maxing out at $9.25 an hour 18 years later), and was physically taxing. But she enjoyed it immensely.
“I loved it,” she recalls. “I love old people, I’d absolutely love it. If I could stand it with my back, I’d be right back on it.” The nickname “Ox” came from her sheer strength, an underrated requirement in a job that sometimes requires lifting patients from bed to bed or easing them into wheelchairs. When she earned Employee of the Month in 1999, the moniker made it onto her plaque:
But carrying elderly patients for nearly two decades does a number on one’s back. “[The back problems] were from work,” Smith says. “Taking care of 36 residents every day, by myself, lifting and tugging. Getting ’em up, pulling them out of bed, showering them, putting them back into bed. I did it every day. It took a bad toll on me.”
“I can’t lift anymore anyway. My doctor says no,” Smith continues. “If I do, I’ll be paralyzed.” Her heart troubles and pacemaker compound the problem: “If I pull the wrong way or lift the wrong way, it pulls the leads out of my heart, and I’ll bleed to death before the ambulance comes.” While Smith vigorously resists mental health diagnoses, doctors have told her she has bipolar disorder as well.
There are other jobs Smith could do besides being a CNA. But basically all of them require either a great deal more training or physical strength. She can’t stand for long hours — a cashier must. She can’t work a stock room. And with only a ninth-grade education, she doesn’t have the qualifications for a sit-down office job.
In a better world, Smith’s mother would have had access to home aides or assisted living facilities that could have enabled Smith to stay in school, gain more skills, and find less taxing work. But as it is, she found herself a 38-year-old high school dropout with a family to feed and no jobs she was physically capable of doing. SSDI was the only way she could stay afloat.
Explaining the huge growth in SSDI
Severe back problems like those from which Smith and Randy Pitts suffer are common in SSDI, and have become more so over time. In 1996, 20.6 percent of all SSDI recipients qualified for musculoskeletal disorders like back pain, tendinitis, and carpal tunnel syndrome. In 2016, the share was 32.3 percent. Today, most people on the program have either musculoskeletal or mental health diagnoses (or both).
Those kinds of conditions are inherently hard to diagnose, and diagnoses are necessarily subjective. There’s no blood test to see if you really have debilitating back pain or bipolar disorder. That’s led some economists to worry that these conditions were enabling out-of-control growth in the program. In 2006, MIT’s David Autor and Stanford’s Mark Duggan released a paper warning that the disability insurance program was a “fiscal crisis unfolding,” a crisis driven in part, they argued, by this shift in diagnoses.
No reputable source is claiming what is happening is outright fraud: Everyone getting on SSDI definitely has some kind of serious, documented health problem. Autor and Duggan aren’t vindictive politicians, eager to slash and burn SSDI; they are serious economists who don’t think the program is performing as well as it could be.
“I don’t want to suggest that the rejected folks would be working 40-hour weeks as accountants,” Duggan tells me. Still, he finds it concerning that annual benefit awards for musculoskeletal conditions grew 347.5 percent from 1990 to 2010, and awards for mental disorders grew 108.1 percent, while all others only grew by 24.9 percent.
The question was whether all those people with musculoskeletal and mental disabilities are nevertheless capable of working, and whether SSDI is keeping them from employment that would be better for them in the long run. It was about whether people like Jeanetta Smith and Randy Pitts should be receiving SSDI or should keep looking for work. And it was about whether the US could afford the program if its cost was going to just keep growing.
Other experts, like Social Security Administration chief actuary Stephen Goss, have disputed the theory that “subjective” illnesses are leading to overenrollment. They argue that the program’s rising enrollment was the predictable result of more women working (and thus being insured for disability), and population aging (which, because older people are likelier to become disabled, should explain rising enrollment).
There are limits to this explanation, and the critics do have a point. The data is clear that at least some of the rise was not attributable to demographic factors. As Duggan notes, you can clearly see a rise in program usage if you look at the same age groups over time, or if you only look at men to eliminate the effects of women entering the workforce. Between 1989 and 2014, the share of adult men ages 50 to 59 on SSDI grew from 5.8 percent to 8.7 percent. For young men ages 25 to 39, it grew from 1.1 percent to 1.4 percent.
Jeffrey Liebman, an economist at Harvard’s Kennedy School, helped reconcile the demographic and eligibility stories in a 2015 paper.
“The resolution of the competing explanations is a tale of two time periods,” he writes. In the 1980s, the story really was about policy. The Social Security Disability Amendments of 1980 required the SSA to perform dramatically more “Continuing Disability Reviews” of people found to be disabled. The result was that 490,000 people had their benefits terminated, with about two-fifths of them recovering benefits on appeal.
That, in turn, caused a big political backlash, leading to the Social Security Amendments of 1984, which limited the reasons why the government could rescind benefits and ordered the SSA to determine new standards to ensure that people with severe mental disorders and musculoskeletal disorders received benefits. Liebman argues that the combination of the 1980 and 1984 bills meant there was a sudden drop and then sudden rise in incidence rates:
As you can see in the right-hand charts, which control for age distribution and the unemployment rate, the growth in the program in the late ’80s was largely a matter of making up for the decline in the program that occurred as a result of the early ’80s crackdown. But after that point, incidence rates, adjusted for age and unemployment, have been flat for men and have grown modestly for women.
“Since the early 1990s, incidence rates among men, adjusted for the population age distribution and the business cycle, have been steady, while those for women have been gradually approaching those of men,” Liebman explains. “In this period, population aging and increased eligibility among women account for two-thirds of the increase in DI benefit receipt, rising incidence among women accounts for one-fifth, and declining mortality rates account for one-sixth.”
The demographic story is also borne out by the fact that enrollment in the program has leveled off as baby boomers reach retirement and no longer qualify for SSDI, instead receiving Old-Age benefits. The number of SSDI beneficiaries has been falling since 2014, and the share of insured workers who take benefits has been falling since 2013. In 2010, new awards peaked at a little over 1 million. By 2016, the number had plummeted to barely 700,000, and more people were leaving the program than joining. The share of awards going to people with musculoskeletal conditions is still rising, but the share going to people with mental disorders has collapsed, from 21.3 percent in 2010 to 14.6 percent in 2016.
The Social Security Administration expects the participation rate to remain pretty stable through 2040 or so. Similarly, the Congressional Budget Office expects small changes in enrollment. While in 2016, 4.4 percent of the working-age population got disability benefits, by 2026 the CBO expects the share to rise to … 4.7 percent. The latest CBO projections also suggest that Social Security Disability Insurance cost 0.78 percent of GDP in 2016, and in 2027 will cost … 0.78 percent of GDP.
The program isn’t out of the woods yet — it faces a long-term funding gap and needs a larger share of payroll tax revenue going forward to stay afloat. But the factors that led to its surge in scale appear to have run their course.
The program is shrinking and is being directed away from people with “subjective” conditions. The fears of the mid-2000s haven’t been borne out; there’s no fiscal crisis on the horizon.
Does disability insurance discourage work?
But fiscal concerns aren’t the only reason critics worry about SSDI. They also fret that it takes people out of the workforce who could, in theory, still work.
“My main reason to be concerned isn’t that it’s becoming less solvent, but because we’re leaving so many people who could work with an all-or-nothing choice,” Mary Daly, an economist at the Federal Reserve Bank of San Francisco and leading critic of SSDI, says.
“The program is to some extent serving as a form of long-term unemployment insurance for some workers, which is troubling when one considers the low exit rate from the program back into the labor force,” Duggan, the Stanford economist, told Congress’s Joint Economic Committee in 2015.
Daly and Duggan argue that more people join SSDI when unemployment is high, and then don’t jump back in the job market when unemployment falls again. A recession permanently places them outside the labor force, when non-disabled workers who stop working in recessions often jump back in during recoveries.
They’re not wrong that enrollment ticks up slightly during downturns. Defenders of the program stress that actual enrollment in the program grows less in recessions than applications do — reflecting the fact that Social Security Administration staff are aware of the application surge and admit fewer people during recessions because of it — but enrollment still increases somewhat in lean years. Economists Dan Black and Kermit Daniel of UChicago and Seth Sanders of Duke have found that in the 1970s, as the price of coal soared, disability enrollment fell, reflecting the surge in mining jobs. When the price collapsed in the 1980s, disability participation surged.
Then again, even critics agree that the vast majority of people on the program would qualify no matter whether they applied in a recession or a boom. Unemployment may drive a few people to apply for the program, but that’s the exception rather than the rule.
Obama administration chief economist Jason Furman and his colleagues at the Council of Economic Advisers estimated that since 1967, the growth of SSDI reduced men’s labor force participation by, at most, 0.1 to 0.4 percentage points, with the lower figure being much more plausible; for context, men’s labor force participation fell 8.4 percentage points over this period. The effect of SSDI on the overall labor market is just extremely small. If we’re worried that not enough people are working, it’s not a natural place to start reforms.
Moreover, this is a program that overwhelmingly helps people in their 50s and early 60s, who often struggled to find work even in good economic times given their disabilities. Is it really so bad if SSDI hands them a lifeline when a recession hits? Is it such a tragedy if they don’t go back to work?
Take the case of Rebecca Tackett, 63, of Rocky Top, Tennessee. Tackett applied for disability insurance in 2015, after she got laid off from her job as a security guard at a nuclear power components factory in Oak Ridge, an economic center of Eastern Tennessee and the original home of the Manhattan Project in the 1940s.
Job loss was the immediate cause of her enrollment. But her situation illustrates that applying after losing a job doesn’t necessarily mean an applicant is undeserving. Tackett was 61 when she applied for SSDI back in 2015. She has osteoarthritis, requiring two knee replacements, and making the rounds in her job as a guard was difficult. Her fellow employees supported her, though, trading shifts so that she could sit and work at security camera monitors while more physically capable guards went patrolling. She made a point to take night shifts, when there would be less activity.
Before the guard job, Tackett worked in health physics, walking around old nuclear facilities with a Geiger counter to see which still had dangerous levels of radiation. “You had to survey everything to make sure there was no contamination before they tore it down,” she recalls. Among other buildings, she surveyed K-25, the legendary gaseous diffusion plant that produced the enriched uranium in the atomic bomb that destroyed Hiroshima.
Years later, in 2011, while working as a security guard, Tackett was diagnosed with breast cancer. The Department of Labor, which offers benefits to former Department of Energy employees working at radiation-heavy facilities, denied her claim, saying there was no reason to believe it was related to her years touring nuclear facilities looking for radiation. The security company didn’t offer health insurance, but Tennessee offers Medicaid to low-income breast cancer patients. Tackett took a medical leave from work, but it was capped at 30 days, after which she’d have to start again as a new hire at a lower wage.
So she went back to work just 28 days after her mastectomy, while still on chemotherapy. The latter was physically exhausting, but between night shifts at work and appointments during the day, she barely had time to sleep.
Tackett was dedicated to that job. She kept working even after her employer failed to offer a formal accommodation enabling her to stay seated during her shift. But her inability to patrol irked her co-workers, and eventually she was terminated for filling out paperwork saying she had patrolled when a co-worker did it for her.
Imagine you’re Becky Tackett. Your physical impairments leave you barely able to do your job as a security guard, your employer denies the one accommodation that would make it possible, and when you bend the rules to try to cope and keep working, you get fired. You likely can’t get another security job. At 61, additional work training isn’t much use. All the other jobs for which you’re qualified require as much or more physical strain. Why wouldn’t you apply for disability? Moreover, what is so wrong if you do?
And is it really that important, for society as a whole, to force people like Becky Tackett to work every day until they turn 65, at the cost of their mental and physical health, and at the cost of driving more disabled people into poverty? What goal, beyond promoting work at all costs, would that accomplish?
The Republican Party is eager to cut SSDI
The academic debate about disability occurs in the background of the political debate, which is, predictably, more heated, and more focused on cost-cutting. While there’s broad agreement that the program is not exactly in “fiscal crisis” right now, the Trump administration has proposed $72.5 billion in cuts to the program, and to Supplemental Security Income (SSI), over 10 years.
President Trump would cut SSI payments for families with multiple household members with disabilities, reduce the amount of back pay insurance applicants get upon being accepted (to cover costs of living during the application process), and eliminate certain policies in some states meant to be more generous to beneficiaries. But the biggest cost saver listed, accounting for two-thirds of the cuts, is for unspecified reforms to disability programs meant to boost work.
The budget assumes SSA will experiment with a few options over five years and then implement ones that work, and that this will save $18.6 billion in 2027 alone. That’s a shockingly large cut; though it uses different assumptions than the administration, the CBOexpects disability insurance to cost $217 billion that year, meaning that $18.6 billion would amount to a cut of 8.5 percent.
This is in spite of the fact that SSDI is shrinking, SSA is getting tougher about letting people with mental disorders onto the program, and the program’s cost is expected to remain roughly constant over the long run.
Even economists critical of the program, like Autor, Duggan, and Daly, don’t propose slash-and-burn cuts like this, preferring more nuanced reforms. What’s more, a serious effort to encourage work among disabled people would cost money rather than save it. It would entail subsidized jobs programs, transportation funding for disabled people who can’t drive, funding for home health aides or assisted living centers, job retraining programs, and much more. Cuts accomplish nothing besides hurting SSDI beneficiaries and future applicants.
Like any program, SSDI could be improved. Perhaps the single best thing to do to improve it would be to substantially increase funding for the Social Security Administration, so that applications are processed more quickly and beneficiaries all have someone they can be in touch with about the program. Pitts and Smith both mentioned wanting a reliable point person to assist them.
If policymakers are really obsessed with squeezing the last ounce of work out of the program’s enrollees, they could also adopt a universal “benefit offset,” in which instead of cutting off support for people earning above a certain amount, the program would reduce benefits by only $1 for every $2 in wages a participant earns. SSA has experimented with this approach, and while it doesn’t change things for the vast majority of recipients (because they can’t work at all, and adding work incentives doesn’t change that), it does increase the share with “substantial gainful activity” (defined as earning $1,180 a month or more) by 4 percentage points.
I confess I do not understand why those 4 percentage points matter so much to policymakers, but if finding some tiny number of enrollees and getting them to work matters, that’s how you’d do it. Here’s the thing, though: It doesn’t save any money. Slowing the phaseout rate for benefits could even make the overall program cost more.
Nor would adopting the Netherlands’ model of private disability insurance, as Autor and Duggan have suggested, reduce program spending. As of 2013, the OECD reports that the US spent 1.4 percent of GDP on cash disability benefits. The Netherlands spent 3.1 percent, more than double that. Among rich countries, only Canada, Japan, and South Korea spend less than we do, and most spend far more. A 2010 OECD white paper concluded that the US, Canada, Japan, and South Korea have “the most stringent eligibility criteria for a full disability benefit” in the developed world.
The idea that we, of all countries, are panicking that our benefits are too generous is slightly absurd — especially when we also offer substantially worse access to health insurance for working-class people, to prevent these disabilities from developing in the first place.
Critical coverage of SSDI in mainstream outlets like This American Life and the Washington Post has resulted in an impression among even many liberal Americans that this is a part of the welfare state that really is out of control, and deserving of cuts.
Nothing could be further from the truth. SSDI isn’t out of control, and cuts would do tremendous harm. Defending the American safety net means defending SSDI and ensuring that support for disabled workers and their families is bolstered, not gutted.