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Disability insurance painful for federal coffers

On Behalf of | May 1, 2012 | Social Security Disability, social security disability 1 | 0 comments

As election season approaches and federal spending gets more scrutiny, voters may notice that one important issue is barely even mentioned: Social Security Disability benefits. Social Security trustees said recently that the disability benefits trust fund could run dry by 2016, a dangerous scenario for the people who rely on those benefits just to get by.

Although more than 20 percent of Social Security funds are allocated for disability payments, politicians seem wary of talking about the issue. Disability insurance funding, according to many experts, is ballooning out of control. Too many workers leave the job market prematurely, lowering their lifetime income. Yet, the disability problem rarely receives any notice.

In addition to the nearly $130 billion in disability insurance payments distributed to the 10.6 million disabled workers during 2011, more than $33 billion was given out through the Supplemental Security Income program. Medicare also paid out about $90 billion to disabled workers. Medicaid spent another $110 billion for disabled poor workers.

These programs all provide essential support for disabled individuals, most of whom face a lifetime of unemployment. The growth in spending reflects the changing demographic landscape of the American population. The population is aging, and disability rates among women have risen significantly because of their relatively recent entry into the workplace.

Those factors, though, account for only a small amount of the rapid rise in Social Security spending. It’s harder for unskilled laborers whose jobs have been outsourced or mechanized to find stable work. Also, some say the disability program is flawed because it encourages people to permanently stop working.

During tough economic times, some workers turn to the program as a result of layoffs or economic downturns. Unemployment and disability applications seem to increase together when the economy tanks, say experts.

But blaming funding problems on people with real injuries and illnesses is not the answer either. It’s time for politicians to do their job to ensure the program remains solvent.

Source: The New York Times, “Disability insurance causes pain,” Eduardo Porter, April 24, 2012


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