CBO: Record Number of Workers on Disability to Increase

July 20, 2012 - 9:46 AM

(CNSNews.com) - A report from the Congressional Budget Office (CBO) finds that the already record-high numbers of Americans collecting government disability checks will continue to rise, further harming the program’s finances and making it harder for low-income Americans to find work.

“CBO projects that as a result of the most recent recession and slow recovery, the number of disabled worker beneficiaries will continue to rise over the next few years (although growth will slow as the economy improves),” CBO said in a report released Monday.

The report, requested by Sen. Jeff Sessions (R-Ala.), the ranking member on the Senate Budget Committee, outlines why the Social Security Disability Insurance (SSDI) program has seen rapid expansion over the past few decades, and why it will continue to expand.

The SSDI program provides federal benefits to workers who can no longer work due to mental or physical disability, providing cash payments and making them eligible for Medicare, regardless of their age.

As CNSNews.com reported earlier, a record of 8,733,461 workers took federal disability insurance payments in June 2012, according to the Social Security Administration. That was up from 8,707,185 in May. It also exceeds the entire population of New York City, which according to the Census Bureau's latest estimate, hit 8,244,910 in July 2011.

CBO said that three factors are driving the growth in this federal entitlement program: demographic changes, federal policy changes, and a worsening employment situation.

Demographics drive the program’s expansion in two ways. First, as the workforce ages and baby boomers get older, the number of workers claiming disability grows. Older workers are more likely to claim disability than younger workers. CBO reported that 76 percent of SSDI benefits went to workers age 45 and older.

Second, CBO said that more women entered the workforce over the past decade, expanding the size of the workforce as well as the federal disability rolls, as some of those women became disabled and sought federal benefits.

Federal expansion of the program also contributed to its enlargement. CBO reported that an expansion of eligibility in 1984 -- shifting from a set of fixed mental disabilities to a more general definition of mental disability -- allowed more workers to claim mental disabilities. In 1986, 22 percent of enrollees claimed they were unable to work because of mental health reasons, but by 2010, 33 percent made that claim.

The third reason CBO said the SSDI rolls had expanded is the poor employment conditions caused by the recession. CBO said that this, combined with the more flexible enrollment criteria enacted in 1984, had “strongly affected” the surge in the program’s enrollment.

“Whether people apply for DI [Disability Insurance] benefits is strongly affected by the design of the program, the opportunities people have for employment, and the difference between the DI benefits an individual would receive and the compensation (earnings and benefits, including health insurance) associated with working,” CBO said.

The recession has severely hurt employment opportunities and employees compensation, pushing the unemployed to rely on SSDI benefits instead of paychecks.

“When jobs are plentiful, some people who could qualify for the DI program may choose instead to work. Conversely, when jobs are scarce, such as in economic downturns, some people with disabilities may find that their employment opportunities are especially limited, and they will instead choose to apply for DI benefits. Indeed, in the aftermath of the recent severe recession, applications for DI benefits reached a historic high, exceeding 2.9 million in calendar year 2010.”

CBO said that people forced onto disability insurance by the recession were unlikely to ever return to work, meaning that the recession will likely result in a permanent increase in the federal entitlement program’s enrollment.

“Once they have been awarded benefits, only a very small percentage of DI participants permanently leave the program to return to the workforce.

“CBO projects that as a result of the most recent recession and slow recovery, the number of disabled worker beneficiaries will continue to rise over the next few years,” the report said.

Sessions said that the CBO’s report proved that the government needs to reform its disability entitlement program, so that truly disabled workers could benefit without the program turning into a shadow welfare system.

“It is clear there is a great need to distinguish between proper and improper disability claims, and to better incentivize and find acceptable work for those who are able,” Sen. Sessions said in a statement Monday.

“The administration of this program must be improved to avoid sinking our country deeper into debt, to ensure the program remains viable for those with disabilities, and to protect Social Security itself.”