Disability Is Growing Very Fast And Might Be Hard To Stop

See Fun Facts on Disability Insurance by Bryan Caplan, economics professor at George Mason University. The CPI was up only 23% from 2001-2010. The SSDI was up 125%. The CPI increased 2.35% compounded annually while SSDI increased 9.45%. It increased at 4 times the rate of inflation.

Now Caplan's post

"The new Cato Policy Analysis on Social Security Disability Insurance is full of fun facts. (footnotes omitted)

The U.S. disability rate fell 25% between 1977 and 1987, then more than doubled.  The staunchest health care skeptics should be baffled.  Unless, of course, the availability of free money makes people sick to their stomachs...



Getting on disability is pretty easy if you game the system:

Applicants who are denied benefits can appeal. Indeed, the appeals process has four levels, and at each level the individual receives another chance to convince a government official or judge to grant benefits. Thus, individuals with questionable claims of disability have up to five tries at receiving benefits and they just have to succeed once.

The process can be very cumbersome and costly. A rejected applicant can first ask the SSA for a "reconsideration" of his or her claim from a different group of SSA officials. If rejected again, the applicant can request a hearing before an ALJ. These hearings do not include a government representative to question the claim on behalf of taxpayers. Meanwhile, the SSDI applicant in the great majority of cases uses the services of lawyers working on a contingency fee basis. It is a process slanted in favor of program expansion and higher spending.

If the ALJ denies the claim, the quest for federal benefits is still not over. The SSDI applicant can request a review from the Social Security Appeals Council. If the council either denies the claim or decides against reviewing it, the applicant can then file a lawsuit in a federal district court. In 2011 over 14,000 new civil actions were filed.68 In 2010 there were 2.9 million total applications for SSDI benefits. Only 35 percent were awarded benefits. However, that figure includes applicants who were denied for technical reasons or where a final decision was still pending. The overall allowance rate based on medical decisions was 55 percent. For medical decisions made at the hearings level or higher, the allowance rate was 76 percent.

Officials have enormous discretion.  Most succumb to the natural human temptation to show pity at the taxpayers' expense:

One result of judges trying to expeditiously complete case loads is high approval rates of about 60 percent on average. In 2011, 130 ALJs awarded benefits in 85 percent or more of the cases heard. A judge in West Virginia awarded benefits in all but four of the 1,284 cases he tried in 2010.100 Overall, the Wall Street Journal found that in 2011, 1,334 judges made more awards than denials, while only 439 judges had the ratio the other way around.

An anecdote that redeems anecdotal evidence:

A single judge in Pennsylvania, for example, overruled the SSA on 2,285 benefit applications in a four-year period--applications that the SSA had declined. That single judge's actions have cost taxpayers more than $2 billion.

For practical purposes, the officially disabled can collect for life:

The SSA conducts periodic reviews to determine if a beneficiary is still disabled. The frequency of the reviews depends on how long an individual's condition is expected to last. In 2011, only 3.6 percent of workers on SSDI had their benefits terminated because of medical improvement. Almost 90 percent of people had their benefits stopped because they either died or reached retirement age. The data thus indicate that once workers get on the disability rolls, they rarely leave and go back to work.

The main thing I learned, though, was that both Carter and Reagan managed to get the disability problem under control despite populist pressures.  If you assume the decline was simply cyclical, note the straight-line rise since 1987.  Democracy makes drastic rollback unlikely, but marginal reform has happened before - and can happen again."