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Social Security's Disability Program Faces an Empty Trust Fund

Posted By David C. John On August 23, 2011 @ 8:11 am In Featured | Comments Disabled

With continuing unemployment problems driving more and more Americans to seek Social Security disability benefits [1], that program’s already weakened trust fund faces a bleak future. Just as unemployed older workers have been forced to apply for Social Security retirement benefits much earlier than they expected, thousands of other unemployed people who have disabilities, or hope that they might qualify, are applying for Social Security Disability Insurance (SSDI) benefits.

SSDI benefits are somewhat more generous than retirement benefits and turn into retirement benefits once the recipient reaches full retirement age. In addition, SSDI benefits allow the recipient to qualify for Medicare after two years, regardless of what age the individual has reached at that time.

The influx of new recipients is draining SSDI’s trust fund much faster than expected. Last year, the program spent $127.7 billion in benefits, but only received $104 billion in SSDI payroll taxes [2]. Since starting to run deficits in 2005, the SSDI trust fund has steadily declined, and it is expected to run out in 2017 or 2018. Assets could be transferred from the slightly healthier retirement and survivors program, but doing so would weaken a part of Social Security that faces its own crisis [3].

To make matters worse, SSDI has a history of significant administrative problems, and applicants face long delays in getting a decision—even longer delays if they go through the appeals process—and differing standards for approval depending on what state they live in. About 40 percent of initial applications are denied, and while an appeal can be heard in Delaware a mere 10 months later, that same appeal may not be heard for 20 months in Ohio [4]. Despite the continued efforts of the past several Social Security commissioners, it still takes more than 400 days (down from more than 500) to get a decision, and their success in reducing wait times is likely to be overwhelmed by the thousands of new applicants.

Fixing the problem does not mean raising payroll taxes or spending more. SSDI is filled with picky bureaucratic requirements that delay decisions and tie the hands of appeals judges or bias their decisions. Really reforming the program is not simple, but it is not impossible.

In July, Senator Tom Coburn (R–OK) [5] issued a comprehensive program to reduce federal spending that includes detailed proposals (starting on page 532) for fixing SSDI, reducing overpayments, and making it easier for applicants to get an accurate decision in an acceptable time period. The latest news on SSDI confirms what we already knew—like its sister program, Social Security, it should be fixed through comprehensive reforms [6].

 


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/08/23/social-securitys-disability-program-faces-an-empty-trust-fund/

URLs in this post:

[1] driving more and more Americans to seek Social Security disability benefits: http://www.washingtonpost.com/politics/economy-still-straining-social-security-disability-program/2011/08/21/gIQAdjJYVJ_story.html?wpisrc=nl_politics

[2] Last year, the program spent $127.7 billion in benefits, but only received $104 billion in SSDI payroll taxes: http://www.socialsecurity.gov/oact/TRSUM/tr11summary.pdf

[3] faces its own crisis: http://www.heritage.org/Research/Reports/2011/05/Social-Security-2011-Trustees-Report-Shows-Permanent-Deficits

[4] for 20 months in Ohio: http://www.govexec.com/welcome/?zone=welcome&rf=http%3A%2F%2Fwww.govexec.com%2Fdailyfed%2F0410%2F040610e1.htm

[5] Senator Tom Coburn (R–OK): http://coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=c6590d01-017a-47b0-a15c-1336220ea7bf

[6] comprehensive reforms: http://savingthedream.org/what-it-covers/social-security/

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