How a Bold New Disability Insurance Proposal Would Benefit Individuals With Disabilities and Taxpayers

COMMENTARY Welfare

How a Bold New Disability Insurance Proposal Would Benefit Individuals With Disabilities and Taxpayers

Nov 21st, 2018 3 min read
COMMENTARY BY
Rachel Greszler

Research Fellow in Economics, Budget and Entitlements

Rachel researches and analyzes taxes, Social Security, disability insurance, and pensions to promote economic growth.

Key Takeaways

The Disability Insurance program is broken, both functionally and financially.

The bill seeks to improve return-to-work rates by having the SSA conduct more frequent and more comprehensive continuing disability reviews.

It could be improved by adding an optional private disability insurance component and establishing needs-based benefit periods.

A half-billion-dollar fraud conspiracy… thousands dying as they await their benefit hearings… Social Security’s Disability Insurance program does a good job making the news. Unfortunately, it’s for all the wrong reasons.

The Disability Insurance program is broken, both functionally and financially. It doesn’t serve disabled people well; it doesn’t serve taxpayers well. Its excesses have stripped about $150 billion from Social Security’s retirement program over the past three years.

Rep. Todd Rokita (R-Ind.) introduced a bill that addresses many of the program’s functional shortfalls. His Making DI Work for All Americans Act of 2018 (H.R. 6352) would also make the program solvent over the long run, setting the stage for a significant payroll tax cut.

The act includes 18 key provisions. Some target the program’s flawed and inefficient determination process, its outdated measures of disability, its work disincentives, and its inability to respond to individuals unique disabilities and work capacities. Others seek to correct abuses within the program, inadequate checks to see if workers remain disabled, and its lack of coordination with other government programs.

For example, the bill would add reviews for “outlier” administrative law judges (something that would have applied to a now-imprisoned administrative law judge). And to promote a more equitable determination process, it would subject SSDI judges to a code of ethics similar to those applied to other judges.

It would also empower disability applicants by cutting the SSA out of the representative/client relationship. Instead, applicants would be in charge of their own money. Currently, the SSA subtracts more than a billion dollars a year from disability recipients’ checks and sends that money directly to their representatives. Yet, an Inspector General report found many of those representatives provided little or no assistance to their clients. The Rokita bill would end this unfair and corrupt practice.

In terms of the standards for determining who’s eligible for benefits, the bill would require the SSA to update the archaic list of jobs that exist in the national economy — presumably eliminating occupations such as “seal killer” and “telegram messenger” and replacing them with the multitude of internet-enabled jobs that currently don’t exist in the official listing.

One of the biggest problems with the SSDI program is that too few people ever exit the rolls and return to work. The bill seeks to improve return-to-work rates by having the SSA conduct more frequent and more comprehensive continuing disability reviews, using the most appropriate standards available to determine continued disability status.

Finally, the bill would help restore the program to its original goal of preventing poverty without tapping the regular Social Security trust fund. To this end, it establishes a flat, anti-poverty benefit for all new SSDI beneficiaries. This would help lift more than a third of those SSDI recipients out of poverty.

The Making DI Work for All Americans Act is the most comprehensive and promising reform proposal on the table. Yet it could be improved by adding an optional private disability insurance component and establishing needs-based benefit periods to better target individuals’ unique disabilities.

Private disability insurance provides higher benefits at a lower cost, and also includes significantly more medical and work-based supports. And needs-based benefit periods would provide the support individuals need without encouraging them to needlessly remain on the disability rolls for life.

Rep. Rokita will retire from congress this fall having left a bold and meaningful reform proposal to help fix the broken SSDI program. Let’s hope another policymaker — one who is equally committed to making the program work better for individuals with disabilities and to protecting taxpayers’ dollars — will take it up in the next Congress.

This piece originally appeared in the Hill on 9/22/18