Re: Your Money at Work
posted at 11/21/2012 5:14 PM EST
As one commentator notes, skyrocketing disability claims are credited “with distorting the unemployment rate and making it lower than most expect or believe.” A study found that “nearly 25% of those not actively seeking a job had applied for, and been accepted, by disability — mostly Social Security.” A report from JP Morgan Chase notes that “once someone starts receiving these benefits, it’s almost impossible to take them off the program. In 2011 only 1% of the recipients lost their benefits because they were no longer deemed disabled. . .The cost to the federal budget of these programs has escalated along with the number of claimants, and now runs around $200 billion per year — more than the budgets of the Departments of Commerce, Energy, Homeland Security, Interior, Justice, and State combined. Thus a quarter of people who drop out of the workforce and come off the unemployment benefits, simply move to receiving disability payments. And most stay there until they roll into the social security program when they retire — from their disability.”
As the Washington Post’s Samuelson notes,
In 2010, Social Security’s disability program cost $124 billion plus another $59 billion for Medicare (after two years, disability recipients automatically qualify for Medicare). This exceeded $1,500 for every U.S. household. For the past two decades, disability spending has increased at a 5.6 percent annual rate, compared with 2.2 percent for the rest of Social Security. . . .In 1988, 4 percent of men and 2 percent of women aged 40 to 59 received disability benefits. By 2008, the men’s rate was almost 6 percent and the women’s, 5 percent. . . .Now, mental problems (depression, personality disorder) and musculoskeletal ailments (back pain, joint stress) dominate (54 percent of awards in 2009, nearly double 1981’s 28 percent). The paradox is plain. As physically grueling construction and factory jobs have shrunk, disability awards have gone up.
The report by JP Morgan suggests that if anything, Samuelson has understated the problem somewhat. The Obama administration is not the only enemy of reform. As Samuelson notes, lawyers also benefit from the status quo, and would “resist big changes”:
The Social Security Administration initially rejects about two-thirds of applications, but about half of these are appealed by lawyers and other professional advocates before administrative law judges, where the approval rate is between 60 percent and 75 percent. In a series of well-reported stories, The Wall Street Journal’s Damian Paletta showed that the system is open to abuse. But it’s also lucrative. Lawyers and other advocates are entitled to 25 percent of back benefits. . ."