Source: Huntington Beach News
A new report says reforming Social Security Disability Insurance could save taxpayers billions of dollars.
The Social Security disability system, which is a portion of the payroll taxes American workers pay into the Social Security system, is in pretty big trouble. So says Pam Villarreal, senior fellow at the National Center for Policy Analysis and author of a new report on the subject.
“We have almost 11 million people who are receiving disability benefits,” she notes. “The program spends about $145 billion a year, and right now, we are having to draw down what we call the Disability Trust Fund, because we’re only taking in about $114 billion in payroll tax revenue.”
While it is reported in Villarreal’s report, it’s already believed that by the end of next year the trust fund will be exhausted. By law, the trust fund cannot borrow any money. That means that either taxes will have to go up or benefits will have to be cut.
OneNewsNow asked Villarreal what has led to SSDI’s financial state. She points to things such as an older population and – since about 1990 – a relaxed criteria for disability.
“For example, we now have many people who can file claims for things like back pain or depression, any type of mental disorder they call it, making it much easier to get onto disability,” she explains.
And are there people on disability who should not actually be eligible for disability?
“I would have to say … not everyone should be on it,” Villarreal responds. “In this day and age, we have better treatments, we have better diagnoses, we have the Americans with Disabilities Act – yet the probability of ever getting off disability is less than one percent.
“That tells me that there are people who are languishing on disability, whether they’ve lost the incentive, or maybe there is some fraud going on … and it hurts the people who really, really need disability.”
According to Villarreal’s report, four reforms could slow the depletion of the Disability Trust Fund and improve the function of the program:
Account for varying degrees of disability. Varying payments based on degree of disability in a manner similar to the Veterans Disability system could be the greatest cost saving measure for the SSDI, possibly saving the program over $12 billion a year.
Prioritize Continuing Disability Reviews. The Social Security Administration’s Office of the Inspector General found that every dollar spend on Continuing Disability Reviews yields $9 in cost savings. Restoring dedicated funding to ensure the program’s integrity could save tens of millions of dollars.
Eliminate the “Ticket to Work” program. The voluntary “Ticket to Work” program, which allows disability beneficiaries to work for up to three years without losing their benefits, costs the program more than it saves and results in lower annual earnings for participants than for those who leave the disability rolls.
Lift the maximum monthly income limit for work. The monthly maximum on labor income penalizes working and decreases the possible payroll tax revenue used to fund the SSDI program. Lifting the income cap and reducing payments based on degree of disability would encourage able workers to return to the workforce.