June 15, 2017 / 11:06 AM / a month ago

COLUMN-Yes, disability insurance really is part of Social Security

6 Min Read

(The opinions expressed here are those of the author, a columnist for Reuters.)

By Mark Miller

CHICAGO, June 15 (Reuters) - Quiz time: what do the letters “SS” stand for in SSDI?

If your answer is “Social Security,” congratulations. You know that Social Security Disability Insurance is part of Social Security. That seems obvious, but the Trump administration wants you to think otherwise.

“If you ask 999 people out of 1,000, (they) would tell you that Social Security disability is not part of Social Security,” Mick Mulvaney, the administration’s budget director, said in May at a press briefing on its 2018 spending plan. “It’s old-age retirement that they think of when they think of Social Security.”

Mulvaney was explaining a proposed $72 billion spending cut in disability benefits and Supplemental Security Income, to be spread over 10 years. The likely intent was to wriggle away from President Donald Trump's campaign pledge not to cut Social Security.

Mulvaney does have a point - most people do think of retirement when they think of Social Security, due to the universality of retirement benefits. But despite his claims on popular perceptions of Social Security, Mulvaney’s attempt to separate SSDI from Social Security is dangerous and could have a very corrosive effect.

Hacking away at the disability insurance program is an attack on the very idea of social insurance. The fundamental aim of Social Security is to protect against the risk of lost income from work, whether from retirement, disability or the death of a family breadwinner.

Disability insurance was added to the program during the Eisenhower era. Workers and employers alike contribute to the disability insurance fund through their payroll tax contributions. (Currently, 2.37 percent of the total 12.4 percent payroll tax goes into the disability fund, split evenly between workers and employers.)

Workers qualify for benefits by working the equivalent of at least 10 years - just as they do for Social Security and Medicare, although the number of work credits required for disability are adjusted for age to accommodate younger workers.

So disability protection is an earned benefit, no different than retirement coverage. But SSDI often is attacked as though it were a government handout.

Indeed, the administration's proposed cuts come alongside appalling cuts to other programs that assist the vulnerable, including Supplemental Nutrition Assistance Program, Children’s Health Insurance Program, Medicaid and Temporary Assistance for Needy Families.

Republican opponents of SSDI often argue that disability spending is out of control, and that more beneficiaries must return to the workforce. “It’s the fastest-growing program,” Mulvaney said during one television interview about the budget. "It grew tremendously under President Obama. It’s a very wasteful program, and we want to try and fix that.” Hence the Trump budget plan forecasts cutting spending by tightening program eligibility rules.

Spending Levels Off

SSDI spending did grow in recent decades, but that was due to changes in the nation’s demography and workforce. Aging baby boomers reached ages when disability is most likely, and more women entered the workforce, making them eligible for disability payments where needed. Another factor: the increase in Social Security’s retirement age, to 66 from 65, has kept more workers on disability who would have otherwise transitioned to retirement benefits at 65.

More recently, growth has leveled off - 9.455 million people received disability benefits in April this year, down by 121,000 compared with the previous April. The benefit is very modest, averaging just $1,032 per month.

Media reports on SSDI often try to make the case that fraud and abuse of the program are rampant, but the case is mostly anecdotal. Typically these stories focus on the South or Appalachia - parts of the country where SSDI beneficiaries are found in disproportionate numbers due to lower levels of education and income, and where access to healthcare is more limited.

"There hasn’t been any evidence to show that people who could be working are getting on benefits,” said Lisa Ekman, director of government affairs at the National Organization of Social Security Claimants' Representatives, a specialized bar association for attorneys and advocates who represent SSDI claimants. “The standards haven’t changed, and they are very strict.”

Indeed, only one in three SSDI applications are approved upon initial application and less than 40 percent are granted after all levels of appeal are exhausted, she notes.

If anything in SSDI needs reform, it is the horrendously clogged pipeline of cases on appeal awaiting adjudication. Wait times are at a historic high - an average of 616 days to get a hearing.

But budgeting for a big cut in SSDI spending by tightening work requirements is no more than wishful thinking. The only way to really save money in the program is by shrinking the benefits of vulnerable people or by reducing benefit levels that already are very modest.

But trying to cut the “SS” from SSDI is not going to cut it. (Editing by Matthew Lewis)

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