Federal disability insurance has been a reform cause for a long time in Washington. Driven by more than two decades of troubling enrollment growth in Social Security Disability Insurance, or SSDI, a staggering price tag of $143 billion, and long-term solvency concerns, lawmakers in Congress have introduced disability insurance reforms that range from comprehensive overhauls to the creation of partial and temporary disability benefits.
The bills have languished. Unsurprisingly, a polarized Washington has been unable to treat disability insurance reform seriously enough to make necessary changes.
Perhaps the answer is to move the debate and the programs out of Washington. A new report from the Wisconsin Institute for Law and Liberty, or WILL, suggests using the 1996 welfare reform as a model. Welfare reform proved that states were better equipped to structure benefits programs to balance the needs of citizens who need assistance with the importance of independence and self-sufficiency. If Congress acts, it ought to consider doing the same thing for federal disability insurance.
The Secretaries Innovation Group, a partnership of state-level human-service and workforce secretaries, has developed proposals on what state-level disability reform could look like. Employers who make accommodations for disabled workers to remain in the workforce could receive tax incentives. States could design partial and temporary disability benefits. And, perhaps most importantly, states would be better suited to offer case management for disabled workers who can be retrained and rehabilitated and early intervention to look for ways to keep disabled Americans working.
When local policymakers work in conjunction with business leaders, health professionals, disability advocates, and educators to reform disability insurance, they are more likely to design a system that meets their individual states’ needs and values. Instead of a one-size-fits-all model, a state-level reform effort could better balance support for disabled workers with the proper incentives for workforce participation.
For instance, disability insurance reform could help states facing a challenging labor shortage. The national unemployment rate is below 4 percent. A number of states are enjoying unemployment rates below 3 percent, and there are more jobs than workers. Meeting workforce needs has become a paramount concern for policymakers across the country. This comes after SSDI enrollment grew from 5 million to 12 million without any corresponding rise in self-reported measures of health and disability among the working-age population. Since 2013, SSDI enrollment has plateaued and even dropped slightly to 11.7 million.
Economists with the Federal Reserve Bank of San Francisco estimate that the value of benefits for low-wage workers, $1,196 per month plus Medicare, and subjective eligibility criteria have contributed to half of the enrollment growth in recent decades. Half of disabled beneficiaries in 2017 were deemed disabled due to pain or mental disorders. These impairments, while serious, can be hard to define. If an SSDI applicant does not qualify on strict medical evidence, demographic characteristics like age, work experience, education, language ability, and location are considered when weighing whether to offer benefits. Over half of all SSDI determinations in 2017 included “vocational considerations.” A 2013 RAND Corporation study found that nearly a quarter of SSDI applicants have conditions so vague that whether they receive benefits depends almost entirely on whether they get an easy or hard initial examiner.
But under the current system, SSDI beneficiaries who could reasonably make a return to the labor force through training or rehabilitation have few incentives and often not enough support to do so. Nearly two decades ago, Congress tried to address this problem with the creation of the Ticket to Work, or TTW, and the Plan to Achieve Self-Support, or PASS. These reforms tried to provide SSDI beneficiaries with the right incentives to return to the workforce. But a new report from the Office of the Inspector General says the programs have cost nearly $3 billion and have resulted in “no consistent evidence that TTW affected employment and benefit receipt.”
If states were given the opportunity to innovate and experiment, new approaches to disability insurance could unlock bottom-up solutions. Disabled workers need to be viewed as an untapped asset. Right now, too much human potential is being sidelined when communities need everyone participating. With proper reform, states can meet the needs of disabled workers while ensuring that those who have the ability to work can.
Collin Roth is a policy analyst for the Wisconsin Institute for Law and Liberty.
