Securing the future of the Social Security Disability Insurance (SSDI) program

By Andrew G. Biggs

Social Security’s Disability Insurance (DI) program pays benefits to over 8 million disabled Americans, along with an additional 2 million dependents. Perhaps more importantly, it provides protectionagainst disability for over 150 million workers. But over the past two decades, the share of working age Americans collecting disability insurance payments has doubled, from 2.3 to 4.6 percent of the population aged 25 to 64, with the largest increases coming among women. As a result, inflation adjusted costs have roughly tripled over that time period to over $125 billion in 2010, with at least $70 billion more in Medicare expenditures on the disabled. DI may not receive the same level of public attention as the retirement portion of Social Security, but it is clearly a large program both in terms of its costs to the taxpayer and its impact on Americans’ lives.

Unfortunately, the Disability Insurance program is also under considerable financial strain. While we generally consider the Social Security program’s finances as a whole, legally the DI program is distinct from the Old-Age and Survivors (OASI) program with its own payroll tax and its own trust fund. Under the Trustees intermediate cost projections, the DI trust fund will become insolvent in 2018. By 2018, DI payroll tax and other revenues would be sufficient to pay only around 86 percent of scheduled benefits, with further reductions in coming years. Put simply, DI’s fiscal shortfalls are no longer a long-term problem that can be put off indefinitely.  Read Full testimony PDF here>>>

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