Social Security Disability Insurance (SSDI) Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Congressional research reportJan 9, 2015

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Social Security Disability Insurance (SSDI)

Reform: An Overview of Proposals to Manage

the Growth in the SSDI Rolls

(name redacted)

Analyst in Income Security

January 9, 2015

Congressional Research Service

7-....

www.crs.gov

R43054

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Summary

Social Security Disability Insurance (SSDI) provides benefits to nonelderly workers with certain

disabilities and their eligible dependents. As in Old-Age and Survivors Insurance (OASI)—Social

Security’s retirement program—SSDI benefits are based on a worker’s past earnings. To qualify,

individuals must have worked and paid Social Security taxes for a certain number of years and be

unable to engage in substantial gainful activity (SGA) due to a severe mental or physical

impairment that is expected to last for at least one year or result in death. In 2015, the monthly

SGA earnings limit for most individuals is $1,090. In general, disabled workers must be unable to

do any kind of substantial work that exists in the national economy, taking into account age,

education, and work experience.

Recently, some Members of Congress and the public have expressed concern over the growth in

the SSDI program. Between 1980 and 2013, the number of disabled workers and their dependents

more than doubled, rising from 4.7 million to 11.0 million. This increase has placed pressure on

the Disability Insurance (DI) trust fund, from which SSDI benefits are paid. Over the same

period, spending on benefits increased by more than 50%, from 0.54% of gross domestic product

(GDP) in 1980 to 0.84% of GDP in 2013. Without legislative action, the DI trust fund is projected

to be depleted by the end of 2016. After that, ongoing tax revenues would be sufficient to pay

about 80% of scheduled benefits.

Most researchers agree that changes in the demographic characteristics of the working-age

population account for a large share of the growth in the number of individuals on SSDI.

Demographic changes consist of (1) the aging of the baby boomers, (2) the influx of women into

the labor force, and (3) the overall growth in the working-age population. However, there is

considerable disagreement among researchers over how much non-demographic factors

contributed to the growth. Non-demographic factors include (1) changes in opportunities for work

and compensation (e.g., slow wage growth for low-skilled workers and high unemployment), (2)

changes in federal policy that made it easier for some people to qualify as disabled, and (3) the

rise in the full retirement age for unreduced Social Security retirement benefits. In general, people

who support higher spending on SSDI focus on changes in the demographic characteristics of

workers. In contrast, individuals who want to limit program spending typically focus on the effect

of changes in the economic incentives to apply for SSDI and legislative changes to the program’s

eligibility criteria.

To assist lawmakers in addressing the sustainability of the program, this report provides an

overview of proposals to manage the long-term growth in the SSDI rolls. Most of the proposals

focus on reducing the inflow (enrollment) of new beneficiaries into the program. These proposals

involve (1) tightening eligibility criteria, (2) improving the administration of the program, and (3)

providing incentives for employers to help keep employees working when they become disabled.

On the other hand, some of the proposals seek to increase the outflow (termination) of

beneficiaries from the program. These proposals entail (1) providing stronger incentives for

beneficiaries who can work to return to the labor force, and (2) increasing the number of periodic

continuing disability reviews, which stop benefits for people found to be no longer disabled. This

report does not examine options to reduce benefit levels or increase program revenues.

Although many of the options discussed in this report have the potential to slow or even reverse

the growth of SSDI receipt and thus generate savings to the program over the longer term, such

proposals are highly unlikely to significantly forestall the projected exhaustion of the DI trust

fund. To avoid a 20% cut in benefits in late 2016, lawmakers would almost certainly have to use

cash infusions to bolster the assets of the DI trust fund. For example, Congress could reallocate

the Social Security payroll tax rate to give the DI trust fund a larger share (as was done in 1994),

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

or it could authorize interfund borrowing from the OASI trust fund or Medicare’s Hospital

Insurance (HI) trust fund. These short-term financing options would give lawmakers more time to

develop and implement some of the longer-term proposals mentioned in the report if they wished

to slow the growth in the disability rolls.

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Contents

Introduction .................................................................................... Error! Bookmark not defined.

Background on SSDI ....................................................................................................................... 2

Eligibility .................................................................................................................................. 2

Benefits ..................................................................................................................................... 3

Determination and Adjudication Process .................................................................................. 3

Trends in the SSDI Program Since 1980 ......................................................................................... 4

Enrollment ................................................................................................................................. 4

Termination ............................................................................................................................... 5

Program Size ............................................................................................................................. 8

Prevalence Rates ................................................................................................................. 9

Causes of the Growth in the SSDI Rolls ....................................................................................... 10

Changes in the Demographic Characteristics of Insured Workers ........................................... 11

Growth in the Working-Age Population ............................................................................ 11

The Influx of Women into the Labor Force ...................................................................... 12

The Aging of the Workforce ............................................................................................. 13

Changes in Opportunities for Work and Compensation .......................................................... 15

High Unemployment ......................................................................................................... 15

The Value of Cash Benefits............................................................................................... 16

The Value of Health Coverage .......................................................................................... 18

Changes in Federal Policy ....................................................................................................... 19

The Social Security Amendments of 1983........................................................................ 20

The Social Security Disability Benefits Reform Act of 1984 ........................................... 21

Other Potential Factors ............................................................................................................ 26

Changes in the Health of the Working-Age Population .................................................... 26

Variation in the Disability Determination and Appeals Process ....................................... 27

Reform Proposals .......................................................................................................................... 28

Tighten Eligibility Criteria ...................................................................................................... 29

Eliminate Eligibility for SSDI Benefits at Age 62 or Later .............................................. 29

Increase the Recency-of-Work Requirement .................................................................... 30

Adjust the Age Categories for Vocational Factors ............................................................ 31

Improved Administration of the Program ............................................................................... 32

Permit SSA to Be Represented at the Hearing Level of the Appeals Process ................... 32

Update SSA’s Listing of Impairments............................................................................... 36

Update SSA’s Occupational Information System ............................................................. 38

Increase the Number of Full Medical CDRs Conducted by SSA ..................................... 39

Return-to-Work Incentives ...................................................................................................... 43

Increase Awareness of Return-to-Work Services .............................................................. 44

Benefit Offset .................................................................................................................... 45

Promote Supported-Work Policies .......................................................................................... 47

Experience Rate the Employer’s Portion of the Payroll Tax Rate .................................... 48

Employer-Sponsored Private Disability Insurance ........................................................... 49

Figures

Figure 1. SSDI Applications, Awards, and Incidence (Enrollment) Rates, 1980-2013 ................... 5

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Figure 2. Disabled-Worker Beneficiary Termination Rates, 1980-2013 ......................................... 6

Figure 3. Number of Full Medical CDRs Conducted by SSA, FY1990-FY2014 ........................... 8

Figure 4. SSDI Beneficiaries, by Type, 1980-2013 ......................................................................... 9

Figure 5. Gross and Age-Sex-Adjusted Prevalence Rates, 1980-2013 ......................................... 10

Figure 6. Growth in the Population Aged 20-64, 1980-2013 ......................................................... 11

Figure 7. Percentage of the Population Ages 15-64 Insured for Disability, by Sex, 19802014 ............................................................................................................................................ 12

Figure 8. Age-Adjusted Incidence (Enrollment) Rates by Sex, 1980-2013 .................................. 13

Figure 9. Percentage Distribution of SSDI Awards, by Age, 1980-2013 ...................................... 14

Figure 10. SSDI Applications and Awards During Economic Downturns, 1980-2013 ................. 16

Figure 11. Percentage Distribution of SSDI Awards, by Diagnostic Group, 1981-2013 .............. 24

Figure 12. SSDI Incidence Rates, by Diagnostic Group, 1981-2013 ............................................ 25

Figure 13. Basis for Decision of Initial SSDI Allowances, FY1980-FY2010............................... 37

Figure 14. Full Medical CDR Backlog, FY2002-FY2013 ............................................................ 41

Tables

Table 1. Hypothetical Disabled-Worker Replacement Rates at Age 55 ........................................ 17

Table 2. DDS Staffing, FY2008-FY2013 ...................................................................................... 41

Appendixes

Appendix. Acronyms ..................................................................................................................... 53

Contacts

Author Contact Information ........................................................... Error! Bookmark not defined.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Introduction

Concern among some Members of Congress and the public over the financial sustainability of the

Social Security Disability Insurance (SSDI) program has grown.1 Under current law, the Federal

Disability Insurance (DI) Trust Fund—which finances the benefits and administrative costs of the

SSDI program—is projected to be exhausted by the fourth quarter of calendar year 2016.2 If

depleted, the DI trust fund would be able to pay about 80% of scheduled SSDI benefits.

The declining solvency of the DI trust fund is the result of an increasing imbalance between

SSDI’s income and outlays. Between 1980 and 2013, non-interest income to the DI trust fund

(adjusted for inflation) increased 181%, while spending on benefits grew 219%.3 The increase in

spending is due largely to the growth in the number of beneficiaries on SSDI. Over the same

period, the number of disabled workers and their dependents more than doubled, rising from 4.7

million in 1980 to 11 million in 2013. Because benefit payments account for nearly all program

spending, the growth in the SSDI rolls has contributed heavily to the financial difficulties of the

DI trust fund.4

To assist lawmakers in addressing the sustainability of the program, this report provides an

overview of reform proposals to manage the long-term growth in the SSDI rolls. The report is

divided into four sections. The first section provides a brief background on SSDI, including

program eligibility criteria, benefits, and the initial determination and adjudication process. The

second section discusses the growth in the SSDI rolls since 1980 by examining historical entry

and exit trends in the program. The third section investigates some of the causes of growth in

SSDI, including changes in the demographic characteristics of the working-age population,

changes in opportunities for work and compensation, and changes in federal policy. The fourth

section examines various options to manage the growth in the SSDI rolls, namely, (1) stricter

eligibility criteria, (2) improved administration of the program, (3) stronger return-to-work

incentives, and (4) policies to encourage employers to help disabled workers continue to work.

Many of the options discussed in this report could reduce spending by slowing or even reducing

the growth of SSDI over the long term; however, such options are unlikely to produce savings in

time to prevent the projected exhaustion of the DI trust fund in 2016.5 For information on

See, for example, U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security, First in a

Hearing Series on Securing the Future of the Social Security Disability Insurance Program, 112th Cong., 1st sess.,

December 2, 2011 (Washington: GPO, 2012), pp. 4-5, http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg76319/pdf/

CHRG-112hhrg76319.pdf. See also U.S. Congress, Senate Committee on Finance, Social Security: A Fresh Look at

Workers’ Disability Insurance, 113th Cong., 2nd sess., July 24, 2014, http://www.finance.senate.gov/imo/media/doc/

07242014%20Wyden%20Hearing%20Statement%20on%20Keeping%20the%20Promise%20of%20Social%20Security

1.pdf.

U.S. Congress, House Committee on Ways and Means, The 2014 Annual Report of the Board of Trustees of the

Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, prepared by Board of

Trustees, Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, 113th Cong., 2nd sess., July

28, 2014, 113-139 (Washington: GPO, 2014), http://www.ssa.gov/oact/tr/2014/index.html (hereinafter cited as “2014

Trustees Report”). See also U.S. Congressional Budget Office (CBO), Old-Age, Survivors, and Disability Insurance

Trust Funds—CBO’s April 2014 Baseline, April 2014, http://www.cbo.gov/publication/43890. The Social Security

trustees project that the DI trust fund will be exhausted in the fourth quarter of 2016 under their intermediate

assumptions. Meanwhile, CBO estimates that the DI trust fund will be exhausted in early FY2017, which overlaps with

the fourth quarter of calendar year 2016.

See Social Security Administration (SSA), “DI Trust Fund, A Social Security Fund,” http://www.ssa.gov/oact/

STATS/table4a2.html. Figures are in 2013 dollars.

Ibid. In 2013, benefit payments accounted for 98% of total outlays from the DI trust fund.

For actuarial memoranda on Social Security reform proposals that affect the solvency of the Old-Age and Survivors

(continued...)

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

financing options to extend the solvency of the DI trust fund in the short term, see CRS Report

R43318, Social Security Disability Insurance (DI) Trust Fund: Background and Solvency Issues,

by (name redacted) .

Background on SSDI

Enacted in 1956 under Title II of the Social Security Act, SSDI is part of the Old-Age, Survivors,

and Disability Insurance (OASDI) program administered by the Social Security Administration

(SSA).6 OASDI is commonly called Social Security. Like Old-Age and Survivors Insurance

(OASI), SSDI is a form of social insurance that replaces a portion of a worker’s earnings based

on the individual’s career-average earnings in jobs covered by Social Security.7 Specifically,

SSDI provides benefits to insured workers under the full retirement age (FRA) who meet the

statutory test of disability and to their eligible dependents.8 FRA is the age at which unreduced

Social Security retirement benefits are first payable (currently 66).9 In November 2014, 10.9

million individuals received SSDI benefits, including 9 million disabled workers, 150,000

spouses of disabled workers, and 1.8 million children of disabled workers.10

Eligibility

To qualify for SSDI, workers must be (1) insured in the event of disability, and (2) statutorily

disabled. To achieve insured status, individuals must have worked in covered employment (i.e.,

jobs covered by Social Security) for about a quarter of their adult lives before they became

disabled and for at least five of the past 10 years immediately before the onset of disability.11

However, younger workers may qualify with less work experience based on their age. In 2014,

SSDI provided disability insurance to an estimated 151 million workers.12

To meet the statutory test of disability, insured workers must be unable to engage in any

substantial gainful activity (SGA) because of a medically determinable physical or mental

impairment that can be expected to result in death or has lasted or can be expected to last for at

least one year.13 In 2015, the monthly SGA earnings limit is $1,090 for most workers and $1,820

for statutorily blind individuals. In general, workers must have a severe condition that prevents

(...continued)

Insurance (OASI) and DI trust funds, see SSA, Office of the Chief Actuary, “Proposals Affecting Trust Fund

Solvency,” http://www.ssa.gov/oact/solvency/index.html.

For more information on the OASDI program, see CRS Report R42035, Social Security Primer, by (name redacted).

SSA’s Office of the Chief Actuary estimates that 165 million people worked in Social Security–covered employment

in 2014. For more information, see SSA, 2014 Social Security/SSI/Medicare Information, July 28, 2014,

http://www.ssa.gov/legislation/2014factsheet.pdf.

For more information on the SSDI program, see CRS Report RL32279, Primer on Disability Benefits: Social Security

Disability Insurance (SSDI) and Supplemental Security Income (SSI), by (name redacted) .

The FRA is currently 66; however, the FRA is scheduled to rise to 67 for workers born in 1960 or later. For more

information, see CRS Report R41962, The Social Security Retirement Age: In Brief, by (name redacted)

SSA, “Monthly Statistical Snapshot, November 2014,” December 2014, Table 2, http://www.ssa.gov/policy/docs/

quickfacts/stat_snapshot/ (hereinafter cited as “Monthly Statistical Snapshot”).

For more information, see SSA, “Benefits Planner: Number Of Credits Needed For Disability Benefits,” accessed

October 2014, http://www.socialsecurity.gov/retire2/credits3.htm.

SSA, “Disabled Insured Workers,” http://www.ssa.gov/OACT/STATS/table4c2DI.html.

42 U.S.C. §423(d)(1) and 20 C.F.R. §404.1505.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

them from doing any kind of substantial work that exists in the national economy, taking into

account age, education, and work experience.

Benefits

Cash benefits begin five full months after a beneficiary’s disability onset date.14 Initial benefits

are based on a worker’s career-average earnings, indexed to reflect changes in national wage

levels (up to five years of the worker’s low earnings are excluded).15 Benefits are subsequently

adjusted to account for inflation through cost-of-living adjustments (COLA), as measured by the

Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).16 However,

benefits may be offset if a disabled worker also receives workers’ compensation or other public

disability benefits. In November 2014, the average monthly benefit was $1,146 for disabled

workers, $309 for spouses of disabled workers, and $343 for children of disabled workers.17

In addition to cash benefits, disabled workers and certain dependents are eligible for health

coverage under Medicare after 24 months of entitlement to cash benefits (29 months after the

onset of disability).18 In 2012, Medicare spending per disabled beneficiary averaged about

$9,900.19

Some SSDI beneficiaries may also qualify for Supplemental Security Income (SSI).20 SSI

provides cash payments to aged, blind, or disabled individuals with limited income and assets.

Both programs are administered by SSA and use the same definition of disability; however,

unlike SSDI, SSI has no work or contribution requirements. In most states, SSI recipients are

automatically eligible for Medicaid.21 Over 1 million disabled workers ages 18-64 received both

SSDI and SSI benefits in December 2013.22

Determination and Adjudication Process

To apply for SSDI, an individual must first file an application with a local SSA field office.

Applications that meet the work history and earnings requirements are then forwarded to a state

For additional information on the five-month waiting period, see CRS Report RS22220, Social Security Disability

Insurance (SSDI): The Five-Month Waiting Period for Benefits, by (name redacted) .

For more information on dropout years, see CRS Report R43370, Social Security Disability Insurance (SSDI):

Becoming Insured, Calculating Benefit Payments, and the Effect of Dropout Year Provisions, by (name redac ted).

See CRS Report 94-803, Social Security: Cost-of-Living Adjustments, by (name redacted)

Monthly Statistical Snapshot, Table 2. Benefits for spouses and children of disabled workers are also subject to

certain maximum family benefit limits.

For more information, see SSA, “Medicare Information,” accessed November 2014, http://www.ssa.gov/

disabilityresearch/wi/medicare.htm. See also CRS Report R40425, Medicare Primer, coordinated by (name redacted)

and (name redacted).

Centers for Medicare and Medicaid Services (CMS), Medicare & Medicaid Statistical Supplement, 2013 edition,

Table 3.4, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/

MedicareMedicaidStatSupp/index.html. Figure is per enrollee and includes disabled workers, disabled widow(er)s,

disabled adult children, and individuals entitled to Medicare because of end stage renal disease only.

See CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and

Supplemental Security Income (SSI), by (name redacted) .

See CRS Report R43357, Medicaid: An Overview, coordinated by (name redacted). Individuals enrolled in both

Medicare and Medicaid are known as dual-eligible beneficiaries.

SSA, Annual Statistical Report on the Social Security Disability Insurance Program, 2013, December 2014, Table

66, http://www.ssa.gov/policy/docs/statcomps/di_asr/2013/index.html (hereinafter cited as “SSA, SSDI Annual Report

2013”).

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Disability Determination Services (DDS) office for a medical determination. DDSs—state

agencies that are fully funded by the federal government—decide whether applicants meet

national disability standards established by SSA. State DDS examiners and medical and

psychological consultants typically use medical evidence collected from the claimant’s treating

sources (physicians, psychologists, or other acceptable medical sources) to determine the severity

of the claimant’s impairment(s). If a claimant’s condition is determined to be severe and meets (or

is of equal severity to) the medical criteria in SSA’s Listing of Impairments, the claimant is

considered disabled and therefore eligible for SSDI. Claimants who do not meet the medical

criteria in the listings proceed to a more individualized assessment that examines their residual

functional capacity to perform any past relevant work or other work that exists in the national

economy. If a claimant cannot perform such work, the claimant is awarded benefits.

Claimants whose initial applications are denied may appeal. During the appeals process,

claimants may present additional evidence or arguments to support their case as well as appoint a

representative to act on their behalf. The appeals process is composed of four stages: (1)

reconsideration by a different examiner from the state DDS office, (2) a hearing before an

administrative law judge (ALJ), (3) a review before the Appeals Council, and (4) filing suit

against SSA in U.S. district court.23 Almost all appeals reach the ALJ stage; few proceed to the

Appeals Council or federal court.24

Trends in the SSDI Program Since 1980

Definitions

Insured-Worker Population: The total number of workers who meet the work-history requirements for disability

benefits (includes workers on SSDI).

Prevalence Rate: The ratio of the number of disabled-worker beneficiaries in current-payment status to the

insured-worker population.

Disability-Exposed Population: The total number of workers who are insured but not currently receiving benefits

(equal to insured-worker population minus workers on SSDI).

Incidence Rate: The ratio of the number of new disabled-worker beneficiaries awarded benefits each year to the

disability-exposed population.

Enrollment

Between 1980 and 2013, the number of SSDI applications submitted to SSA’s field offices

doubled, from 1.3 million to 2.6 million.25 As Figure 1 illustrates, most of that growth began

around 2000. The number of awards for SSDI increased 111% over this same period, from

420,000 in 1980 to 888,000 in 2013.26 At the same time, the overall incidence (enrollment) rate

In 1999, SSA eliminated the reconsideration step in 10 states as part of the Disability Redesign Prototype (Prototype)

initiative, which included Alaska, Alabama, California (Los Angeles West and North Branches), Colorado, Louisiana,

Michigan, Missouri, New Hampshire, New York, and Pennsylvania. For more information, see SSA, Program

Operations Manual System (POMS), DI 12015.100 Disability Redesign Prototype Model, January 2014,

http://policy.ssa.gov/poms.nsf/lnx/0412015100.

Social Security Advisory Board (SSAB), Aspects of Disability Decision Making: Data and Materials, February

2012, Chart 12, p. 17, http://www.ssab.gov/PublicationViewOptions.aspx?ssab_pub=115 (hereinafter cited as “SSAB,

Data and Materials 2012”).

SSA, Annual Statistical Supplement, 2014, Table 6.C7, http://www.ssa.gov/policy/docs/statcomps/supplement/2014/

6c.html#table6.c7, (hereinafter cited as “SSA, Annual Statistical Supplement 2014”).

Ibid.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

rose from 4.4 awards per 1,000 disability-exposed to 6.3. The incidence rate is the ratio of the

number of new beneficiaries awarded benefits each year to the number of workers who are

insured in the event of disability but not currently receiving benefits (i.e., the disability-exposed

population).

Figure 1. SSDI Applications, Awards, and Incidence (Enrollment) Rates, 1980-2013

(in millions)

(per 1,000 disability-exposed)

3.0

Applications

(millions)

2.5

2.0

Incidence Rate

(per 1,000)

1.5

1.0

Awards

(millions)

0.5

0.0

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Congressional Research Service (CRS) based on application and award data from SSA, Annual Statistical

Supplement, 2014, Table 6.C7, at http://www.ssa.gov/policy/docs/statcomps/supplement/2014/6c.html#table6.c7

and incidence rate data from Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability

Insurance Trust Funds, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors

Insurance and Federal Disability Insurance Trust Funds, Figure V.C3, http://www.ssa.gov/oact/tr/2014/index.html

(hereinafter cited as “2014 Trustees Report”).

Notes: “Applications” and “Awards” are in millions; the “Incidence Rate” is per 1,000 disability-exposed. The

incidence (enrollment) rate is the ratio of the number of new beneficiaries awarded benefits each year to the

number of workers who are insured in the event of disability but not currently receiving benefits (i.e., the

disability-exposed population).

Termination

Entitlement to benefits ends when a disabled worker no longer meets the eligibility criteria for

SSDI. Although the overall number of disabled-worker terminations increased 77% between 1980

and 2013, from 435,000 to 769,000, the ratio of annual disabled-worker terminations to the

average number of disabled-worker beneficiaries (the termination rate) actually decreased 41%,

from 145 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 86.27

As depicted in Figure 2, three main factors drive the termination rate: death, recovery, and

conversion. The beneficiary death rate decreased 42% between 1980 and 2013, from 48 disabled-

Tim Zayatz, Social Security Disability Insurance Program Workers Experience: Actuarial Study No. 114, SSA,

1999, Table 5, http://www.ssa.gov/oact/NOTES/actstud.html. See also SSA, SSDI Annual Report 2013, Table 50.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

worker terminations per 1,000 disabled-worker beneficiaries to 28, reflecting the trend in the U.S.

population of declining mortality rates across all age groups.28

Figure 2. Disabled-Worker Beneficiary Termination Rates, 1980-2013

(ratio of annual terminations to the average number of disabled-worker beneficiaries in a year)

(per 1,000 disabled-worker beneficiaries)

200

180

160

140

All Terminations (Total)

120

100

Conversion

Recovery

Other

1980

1984

1988

Death

1992

1996

2000

2004

2008

2012

Source: Compiled by CRS. Data for years 1980-2009 are from Tim Zayatz, Social Security Disability Insurance

Program Workers Experience, Actuarial Study No. 114, SSA, June 1999, Table 5, and subsequent editions. Data for

years 2010-2013 are from SSA, Annual Statistical Report on the Social Security Disability Insurance Program, 2010,

November 2010, Table 50, and subsequent editions.

Notes: The category “Other” includes disabled workers who have elected to take early retirement benefits.

Recovery refers to individuals whose benefits were terminated because of medical improvement

or earnings above SGA. From 1980 to 2013, the recovery rate declined 77%, from 29 disabledworker terminations per 1,000 disabled-worker beneficiaries to 6.7. A conversion termination

occurs when SSA automatically converts a disabled-worker benefit to a retired-worker benefit

due to a disabled worker reaching the FRA. Over this same period, the conversion rate fell 25%,

from 68 disabled-worker terminations per 1,000 disabled-worker beneficiaries to 51.

The rise in the recovery rate during the early 1980s stemmed mainly from the enactment of the

Social Security Disability Amendments of 1980 (P.L. 96-265), which expanded the use of

continuing disability reviews (CDR) for all non-permanently disabled beneficiaries.29 CDRs are

periodic medical reevaluations conducted to determine if beneficiaries continue to meet SSA’s

definition of disability. The frequency of CDRs is linked to a beneficiary’s probability of

recovery.30 A major review of the SSDI program after the passage of the 1980 amendments

Donna L. Hoyert, 75 Years of Mortality in the United States, 1935–2010, Centers for Disease Control and

Prevention: National Center for Health Statistics, 2012, http://www.cdc.gov/nchs/data/databriefs/db88.htm.

For more information on the 1980 amendments, see John R. Kearney, “Social Security and the ‘D’ in OASDI: The

History of a Federal Program Insuring Earners Against Disability,” Social Security Bulletin, vol. 66 no. 3 (August

2006), http://www.ssa.gov/policy/docs/ssb/v66n3/v66n3p1.html.

Disabled beneficiaries with a reasonable chance of recovery are scheduled to receive CDRs every three years.

Beneficiaries with a high probability of medical improvement are scheduled to receive CDRs at intervals between six

and 18 months, while beneficiaries with a low probability of medical improvement (permanently disabled) receive

CDRs less frequently (normally every five to seven years). For more information, see SSA, POMS, “DI 13005.010

(continued...)

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resulted in a marked increase in the recovery rate between 1980 and 1982.31 However, the

political backlash over the implementation of the reviews led to a temporary moratorium on

CDRs for most mental impairment cases as well as an increase in the percentage of beneficiaries

designated as “permanently disabled” and therefore subject to less frequent reviews.32 These

actions, coupled with changes to the disability determination and review process stemming from

the Social Security Disability Benefits Reform Act of 1984 (P.L. 98-460), contributed to the

subsequent decrease in the recovery rate.33

The 1997 increase in the recovery rate largely resulted from the passage of the Contract with

America Advancement Act of 1996 (P.L. 104-121), which terminated the benefits of SSDI and

SSI recipients whose drug addiction and alcoholism (DA&A) significantly contributed to their

disability.34 However, because DA&A beneficiaries represented less than 3% of all disabled

adults on SSDI and SSI in 1996 and new applicants could no longer claim disability based on

DA&A, P.L. 104-121’s impact on the overall trend in the SSDI recovery rate was minimal.35

Starting in 2002, the recovery rate contracted again, in part, because of a reduction in the number

of medical CDRs conducted by SSA. The Contract with America Advancement Act of 1996

authorized additional funds for CDRs but only for FY1996 through FY2002.36 In FY2003, the

additional funding for CDRs lapsed and SSA shifted its focus away from CDRs toward

processing the growing number of initial disability claims.37 As a result, the number of medical

CDRs performed by SSA dropped from an all-time high of 877,000 in FY2000 to 208,000 in

FY2007, before climbing back up to 526,000 in FY2014 (Figure 3).

(...continued)

Medical Improvement Diaries,” June 27, 2012, http://policy.ssa.gov/poms.nsf/lnx/0413005010.

According to SSA officials, the rise in the termination rate during the early 1980s is not entirely attributable to the

accelerated use of CDRs. An initiative begun in 1981 by SSA aggressively targeted beneficiaries whom the agency

deemed were unlikely to have a qualifying disability. This initiative, coupled with the increased use of CDRs, resulted

in an increase in the recovery rate in the early 1980s. For more information, see U.S. Government Accountability

Office (GAO), Social Security Disability Programs: Clearer Guidance Could Help SSA Apply the Medical

Improvement Standard More Consistently, GAO-07-8, October 3, 2006, p. 6, footnote 9, http://www.gao.gov/products/

GAO-07-8.

Kearney 2006, p. 16. See footnote 30.

The Disability Benefits Reform Act of 1984 (P.L. 98-460) enshrined some of the 1983 reforms into law. For more

information on how the 1984 amendments affected program participation, see the subsection of this report titled “The

Social Security Disability Benefits Reform Act of 1984.”

The act stopped awarding benefits to DA&A claimants on the day of enactment, March 29, 1996. DA&A

beneficiaries who appealed their termination continued to receive benefits while they waited for a decision. For more

information, see Paul Davies, Howard Iams, and Kalman Rupp, “The Effect of Welfare Reform on SSA’s Disability

Programs: Design of Policy Evaluation and Early Evidence,” Social Security Bulletin, vol. 63 no. 1 (July 2000), p. 4,

http://www.ssa.gov/policy/docs/ssb/v63n1/v63n1p3.pdf.

Ibid., p. 6.

See 42 U.S.C. §401(g)(1)(A).

SSA, Performance and Accountability Report for Fiscal Year 2003, November 10, 2003, p. 44, http://www.ssa.gov/

finance/2003/FY03_PAR.pdf.

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Figure 3. Number of Full Medical CDRs Conducted by SSA, FY1990-FY2014

(in thousands)

1,000

900

800

700

600

500

400

300

200

100

1990

1994

1998

2002

2006

2010

2014

Fiscal Year

Source: Compiled by CRS. Data for FY1990-FY2005 are from the Social Security Advisory Board (SSAB),

Aspects of Disability Decision Making: Data and Materials, February 2012, Chart 13. Data for FY2006-FY2007 are

from SSA, Performance and Accountability Report for Fiscal Year 2012, p. 80. Data for FY2008-FY2012 are from SSA,

Annual Performance Plan for Fiscal Year 2015 and Revised Performance Plan for Fiscal Year 2014 and Annual

Performance Report for Fiscal Year 2013, p. 119. Data for FY2013-FY2014 are from SSA, Agency Financial Report,

Fiscal Year 2014, p. 202.

Program Size

Between 1980 and 2013, the overall number of SSDI beneficiaries increased 134%, from 4.7

million to 11 million.38 Most of the growth in the program stemmed from disabled workers,

whose ranks tripled, from 2.9 million in 1980 to 9 million in 2013 (Figure 4). In contrast, the

number of spouses of disabled workers on SSDI decreased 66% during this period, from 462,000

in 1980 to 157,000 in 2013. The number of children receiving benefits grew rather modestly

compared with the number of disabled workers on SSDI, from 1.4 million children in 1980 to 1.9

million in 2013.

2014 Trustees Report, Table V.C5.

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Figure 4. SSDI Beneficiaries, by Type, 1980-2013

(in millions)

Children

Spouses

1980

Disabled Workers

1984

1988

1992

1996

2000

2004

2008

2012

Source: 2014 Trustees Report, Table V.C5, at http://www.ssa.gov/oact/tr/2014/lr5c5.html.

Notes: The category “Children” includes dependent children under age 18, dependent student children between

the ages of 18 and 19, and disabled adult children of disabled workers. Disabled adult children age 18 or older

can receive benefits if they are unmarried and their disability occurred before age 22. To qualify for spousal

benefits, the spouse of a disabled worker must either (1) have a child under age 16 or a disabled child in his or

her care, or (2) be at least age 62. Disabled widow(er)s and disabled adult children of retired and deceased

workers are not included in the graph above because their benefits are paid from the Old-Age and Survivors

Insurance (OASI) trust fund.

Prevalence Rates

The size of the SSDI rolls is largely the function of two factors: the incidence (enrollment) rate of

beneficiaries into the program and the termination rate of beneficiaries from the program. From

1980 to 2013, a marked rise in the incidence rate, coupled with a steady decline in the termination

rate, resulted in an appreciable increase in the number of beneficiaries on SSDI. The prevalence

rate measures the total number of disabled workers relative to the overall insured-worker

population at the end of the year. The insured-worker population is the sum of the disabilityexposed population and the number of individuals who are already receiving SSDI benefits.

Between 1980 and 2013, the gross (unadjusted) prevalence rate grew from 2.8% to 5.9% (Figure

5).39

When one adjusts the prevalence rate to control for the effects of changes in the age-sex

distribution of the insured-worker population, the upward trend is less pronounced. Age-sex

adjusting permits a more meaningful comparison over extended periods, insofar as it “isolates the

changing trend in the true likelihood of receiving benefits for the insured population, without

reflecting changes in the age distribution of the population.”40 From 1980 to 2013, the age-sexadjusted prevalence rate grew from 3.1% to 4.6%.

Ibid.

Ibid., p.136.

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Figure 5. Gross and Age-Sex-Adjusted Prevalence Rates, 1980-2013

(percentage of insured workers in receipt of SSDI benefits)

Gross (Actual)

Rate

Age-Sex Adjusted

Rate

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: 2014 Trustees Report, Table V.C5, at http://www.ssa.gov/oact/tr/2014/lr5c5.html.

Notes: The age-sex-adjusted rate is set to the age-sex distribution of the insured-worker population in 2000.

Insured workers are individuals who meet the work-history and contribution requirements for SSDI benefits.

The Social Security trustees denote prevalence rates per thousand insured workers, while the graph above refers

to prevalence rates per hundred insured workers.

Because the baby-boom generation is aging and older workers are more likely to qualify for

SSDI, the gross rate would have increased even if the rate for each age group remained constant.

The growth in the gross rate is due to both population aging (discussed below) and growth in the

age-sex adjusted rate. The gap between the age-sex-adjusted rate and the gross rate is the growth

that is attributable to changes in the age and sex distribution of the insured population.

Causes of the Growth in the SSDI Rolls

Ascribing shares of the growth in the SSDI program to specific factors has engendered

disagreement among researchers, advocates, and some Members of Congress.41 In general, people

who support higher spending on SSDI focus on changes in the demographic characteristics of

insured workers. In contrast, individuals who want to limit program spending typically focus on

For a range of views, see David H. Autor and Mark G. Duggan, “The Growth in the Social Security Disability Rolls:

A Fiscal Crisis Unfolding,” Journal of Economic Perspectives, vol. 20, no. 3 (Summer 2006), pp. 71-96,

http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.20.3.71; Mary C. Daly, Brian Lucking, and Jonathan A. Schwabish,

“The Future of Social Security Disability Insurance,” FRBSF Economic Letter, June 24, 2013, http://www.frbsf.org/

economic-research/publications/economic-letter/2013/june/future-social-security-disability-insurance-ssdi/; Kathy

Ruffing, How Much of the Growth in Disability Insurance Stems from Demographic Changes?, Center on Budget and

Policy Priorities, January 27, 2014, http://www.cbpp.org/cms/?fa=view&id=4080; and testimony of SSA Chief Actuary

Stephen C. Goss, U.S. Congress, Senate Committee on Finance, Social Security: A Fresh Look at Workers’ Disability

Insurance, 113th Cong., 2nd sess., July 24, 2014, http://www.ssa.gov/legislation/testimony_072414a.html (hereinafter

cited as “Testimony of Stephen C. Goss, 2014”).

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the effect of changes in the economic incentives to apply for SSDI and legislative changes to the

program’s eligibility criteria.

As Figure 5 highlights, some of increase can be explained by demographic factors such as the

aging of the workforce; however, the increase in the age-sex-adjusted rate means the growth in

the SSDI rolls is also attributable to non-demographic factors, some of which are not well

understood. This section examines some of the more salient explanations for the growth in the

program and discusses other potential factors.

Changes in the Demographic Characteristics of Insured Workers

Growth in the Working-Age Population

One factor behind the increase in the total number of beneficiaries on SSDI is the overall growth

in the working-age population (Figure 6).42

Figure 6. Growth in the Population Aged 20-64, 1980-2013

(in millions)

250

200

Working-Age Population

150

Insured Population

100

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Compiled by CRS. Working-age population data are from 2014 Trustees Report, Table V.A2. Insured

population data are from SSA, “Disability Insured Workers,” http://www.ssa.gov/OACT/STATS/index.html.

Note: Data are subject to revision.

From 1980 to 2013, the population ages 20-64 rose from 134 million to 192 million, while the

insured-worker population ages 20-64 grew from 94 million to 146 million.43 The growth in the

See David Pattison and Hilary Waldron, “Growth in New Disabled-Worker Entitlements, 1970–2008,” Social

Security Bulletin, vol. 73, no. 4 (November 2013), http://www.ssa.gov/policy/docs/ssb/v73n4/v73n4p25.html.

Insured population data are from SSA, “Disability Insured Workers,” accessed November 2014, http://www.ssa.gov/

OACT/STATS/index.html. Working-age population data are based on the Social Security Area Population for

individuals aged 20 to 64 from the 2014 Trustees Report, Table V.A2. The Social Security Area Population includes

(1) residents of the 50 states and the District of Columbia adjusted for net census undercount; (2) civilian residents of

Puerto Rico, the Virgin Islands, Guam, America Samoa, and Northern Mariana Islands; (3) federal civilian employees

and persons in the Armed Forces abroad and their dependents; (4) non-citizens living abroad who are insured for Social

Security benefits; and (5) all other U.S. citizens abroad.

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working-age population accounts for largest the share of the increase in the total number of

beneficiaries on SSDI.44

The Influx of Women into the Labor Force

The latter half of the 20th century witnessed a marked expansion of women in the workforce,

which has contributed to the growth in SSDI. Between 1950 and 1999, the annual labor force

participation rate for women age 16 and older nearly doubled, from 34% to an all-time high of

60%.45 As a result, the share of women ages 15-64 who were insured for disability increased from

51% in 1980 to 67% in 2014.46 The portion of men who were insured declined slightly over this

period, from 77% to 71% (Figure 7).

Figure 7. Percentage of the Population Ages 15-64 Insured for Disability, by Sex,

1980-2014

90%

Men

80%

70%

60%

Women

50%

40%

30%

20%

10%

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Compiled by CRS. Data for 1980-2010 are from SSAB, Aspects of Disability Decision Making: Data and

Materials, February 2012, Chart 2b. Data for 2011-2014 are from SSA, “Statistical Tables,” http://www.ssa.gov/

OACT/STATS/index.html.

Note: Data are subject to revision.

The growth in the share of women insured for disability coincided with an increase in the rate at

which insured women were awarded benefits. As Figure 8 shows, both male and female ageadjusted incidence rates increased markedly between the late 1980s and early 1990s. However,

male age-adjusted incidence rates declined following the 1990-1991 recession while female rates

held steady. Researchers refer to this trend as women’s “catch-up.”47 Since the late 1990s, ageadjusted incidence rates for women have been more or less at parity with men’s rates. Although

the reason for the gap between incidence rates during the 1980s is not entirely clear, researchers

See Testimony of Stephen C. Goss, 2014.

U.S. Bureau of Labor Statistics (BLS), Labor Force Statistics from the Current Population Survey,

http://data.bls.gov/timeseries/LNS11300002. In 2013, the annual labor force participation rate for women was 57%.

Figures reflect the working population aged 15-64. 1980 figure is from SSAB, Data and Materials 2012, Chart 2b.

2014 figure was computed using data from SSA, “Statistical Tables,” accessed December 2014, at http://www.ssa.gov/

OACT/STATS/index.html.

Daly, Lucking, and Schwabish, “The Future of Social Security Disability Insurance.”

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have speculated that past generations of women may have been less likely to know about SSDI

and more likely to turn to family members or means-tested programs, such as Aid to Families

with Dependent Children (AFDC), when affected by work-limiting impairments.48

Figure 8. Age-Adjusted Incidence (Enrollment) Rates by Sex, 1980-2013

(per 1,000 disability-exposed)

Men

Women

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Compiled by CRS. Data for years 1980-2009 are from Tim Zayatz, Social Security Disability Insurance

Program Workers Experience, Actuarial Study No. 118, SSA, June 2005, and subsequent editions. Data for years

2010-2013 were calculated by CRS using data from SSA, Annual Statistical Supplement, 2011, 2012, and subsequent

editions.

Notes: Incidences rates are adjusted to the age distribution of the male and female disability-exposed

populations in 2000. The disability-exposed population is the total number of workers who are insured but not

currently receiving benefits.

The Aging of the Workforce

The aging of the large baby-boom generation—individuals born between 1946 and 1964—played

a marked roll in increasing the number of individuals on SSDI.49 Beginning in 1996, working-age

baby boomers increasingly aged and became more prone to disability, resulting in a shift in the

age distribution of the insured-worker population from younger workers to older workers.50 This

Ruffing, footnote 6. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193)

replaced the AFDC program with the Temporary Assistance for Needy Families block grant. For more information, see

CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An Overview, by (name redacted).

2014 Trustees Report, p. 135. See also Xuguang (Steve) Guo and John F. Burton, Jr., “The Growth in Applications

for Social Security Disability Insurance: A Spillover Effect from Workers’ Compensation,” Social Security Bulletin,

vol. 72 no. 3 (August 2012), http://www.ssa.gov/policy/docs/ssb/v72n3/v72n3p69.html (hereinafter cited as “Guo and

Burton 2012”).

See CBO, Policy Options for the Social Security Disability Insurance Program, July 2012, p. 7, http://www.cbo.gov/

publication/43421 (hereinafter cited as “CBO, Policy Options 2012”). See also Mark Duggan and Scott A. Imberman,

“Why Are the Disability Rolls Skyrocketing? The Contribution of Population Characteristics, Economic Conditions,

and Program Generosity,” in Health at Older Ages: The Causes and Consequences of Declining Disability Among the

Elderly, ed. David M. Cutler and David A. Wise, National Bureau of Economic Research (University of Chicago Press,

2009), pp. 342-345, http://www.nber.org/chapters/c11119.

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shift helped to increase the gross incidence and prevalence rates, inasmuch as older workers have

a higher likelihood of benefit receipt relative to younger workers.51 Between 1996 and 2013, the

portion of SSDI awards to disabled workers ages 50 to FRA increased from 54% to 66% (Figure

9).52 One reason for this is that older workers report suffering from work-limiting disabilities at

higher rates relative to younger workers.53

Figure 9. Percentage Distribution of SSDI Awards, by Age, 1980-2013

100%

60 to FRA

90%

80%

70%

50-59

60%

50%

40%

40-49

30%

20%

30-39

10%

1980

Under 30

1984

1988

1992

1996

2000

2004

2008

2012

Source: SSA, Annual Statistical Report on the Social Security Disability Insurance Program, 2013, 2014, Table 39,

http://www.ssa.gov/policy/docs/statcomps/di_asr/2013/sect03c.html#table39.

Note: The full retirement age (FRA) was 65 for people born before 1938 and increased to 66 for those born

from 1943 through 1954.

Another factor is that the definition of disability is effectively less strict at higher ages. In making

a disability determination, DDS examiners take into account the claimant’s medical condition as

well as vocational factors such as age, education, residual functional capacity, and work

experience. Under its regulations, SSA considers advancing age to be a limiting factor in a

claimant’s ability to adjust to other work.54 Therefore, older workers are more likely to receive

benefits than are younger workers, even if they have the same disability. The trustees expect the

gross prevalence rates to grow at a slower pace in the future as baby boomers increasingly

become eligible for full Social Security retirement benefits.55

2014 Trustees Report, p. 136. See also CBO, Policy Options 2012, p. 7.

SSA, SSDI Annual Report 2013, Table 39.

“Prevalence and Most Common Causes of Disability Among Adults—United States, 2005,” Morbidity and Mortality

Weekly Report (MMWR), vol. 58, no. 16 (May 1, 2009), pp. 421-426, Table 1, http://www.cdc.gov/mmwr/preview/

mmwrhtml/mm5816a2.htm.

See 20 C.F.R. §404.1563.

2014 Trustees Report, p. 127.

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Changes in Opportunities for Work and Compensation

Changes in financial incentives also contributed to the growth in the program.56 In deciding

whether to apply, workers compare the value of SSDI benefits (cash payments and health

coverage) with their opportunities for work and compensation. When the economy is strong,

more individuals who could qualify for SSDI might decide to seek or continue employment. On

the other hand, when labor market conditions are adverse, more individuals may find SSDI

benefits preferable to the jobs and compensation available to them in the economy. Although the

initial determination process screens out most non-meritorious claimants, SSA may grant awards

to some claimants on the margin of program entry who could potentially work but choose not to

due to economic circumstances. This subsection outlines how changes in the financial incentives

to apply for SSDI likely increased the incidence of benefit receipt.

High Unemployment

During periods of economic weakness, individuals who might otherwise choose to work may be

more likely to apply for SSDI benefits as a form of unemployment assistance. There is a positive

relationship between the unemployment rate and the SSDI application rate.57 With the exception

of the period between 1980 and 1984, instances of high unemployment are associated with an

increase in SSDI applications. As shown in Figure 10, the recent recession (December 2007 to

June 2009) contributed to a conspicuous spike in the number of SSDI applications submitted to

SSA; between 2007 and 2010, applications for SSDI increased 32%, from 2.2 million to 2.9

million.58

The relationship between the unemployment rate and the approval rate is somewhat more

ambiguous, inasmuch as the award year may not coincide with the application year due to a

prolonged determination and appeals process.59 Several studies have found an inverse relationship

between the approval rate and the unemployment rate.60 In other words, a claimant’s likelihood of

receiving an award at the initial determination level decreases as the unemployment rate rises.

This is thought to occur because adverse labor market conditions induce more marginally

See Till von Wachter, Jae Song, and Joyce Manchester, “Trends in Employment and Earnings of Allowed and

Rejected Applicants to the Social Security Disability Insurance Program,” American Economic Review, vol. 101, no. 7

(December 2011), pp. 3308-3329.

See Kalman Rupp and David Stapleton, “Determinants of the Growth in the Social Security Administration’s

Disability Programs—An Overview,” Social Security Bulletin, vol. 58, no. 4 (October 1995), http://www.ssa.gov/

policy/docs/ssb/v58n4/v58n4p43.pdf; David H. Autor and Mark G. Duggan, “The Rise in the Disability Rolls and the

Decline in Unemployment,” The Quarterly Journal of Economics, February 2003, pp. 158-205; Duggan and Imberman,

“Why Are the Disability Rolls Skyrocketing?,” p. 356; and Guo and Burton 2012, p. 80.

SSA, Annual Statistical Supplement 2014, Table 6.C7.

Duggan and Imberman, “Why Are the Disability Rolls Skyrocketing?,” p. 355

Kalman Rupp, “Factors Affecting Initial Disability Allowance Rates for the Disability Insurance and Supplemental

Security Income Programs: The Role of the Demographic and Diagnostic Composition of Applicants and Local Labor

Market Conditions,” Social Security Bulletin, vol. 72 no. 4 (November 2012), p. 32, http://www.ssa.gov/policy/docs/

ssb/v72n4/v72n4p11.html. Rupp found that an increase in the state unemployment rate is associated with a decrease in

the initial allowance rate. The allowance rate is the number of medical allowances divided by the number of medical

decisions. Unlike the award rate (awards divided by applications minus pending claims), the allowance rate does not

include technical denials at the initial determination level. Technical denials are issued when a claimant fails to meet

the non-medical eligibility requirements for SSDI. See also Stephen C. Goss et al., Disabled Worker Allowance Rates:

Variation Under Changing Economic Conditions, SSA, Office of the Chief Actuary, Actuarial Note No. 153, August

2013, http://www.ssa.gov/oact/NOTES/pdf_notes/note153.pdf.

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disabled individuals to apply for benefits.61 Nevertheless, the overall number of SSDI awards

issued by SSA appears to increase during economic downturns.62 One possible reason for this is

that some individuals who could qualify for SSDI but choose instead to work when the economy

is strong are often less likely to find reemployment opportunities following a job loss when the

unemployment rate is high.63 Between 2007 and 2010, the number of SSDI awards granted by

SSA increased 22%, from 819,000 to 1 million.64

Figure 10. SSDI Applications and Awards During Economic Downturns, 1980-2013

(in millions)

3.5

12%

3.0

10%

2.5

Unemployment

Rate

2.0

1.5

1.0

Applications

Awards

0.5

0.0

1980

1984

1988

1992

1996

2000

2004

2008

2012

Source: Application and Award data compiled from SSA, Annual Statistical Supplement, 2014, Table 6.C7,

http://www.ssa.gov/policy/docs/statcomps/supplement/2014/6c.html#table6.c7. Unemployment data are from the

Bureau of Labor Statistics (BLS). Recession data are from the National Bureau of Economic Research (NBER).

Notes: The unemployment rate is the number of all unemployed individuals ages 16 and older as a percentage of

the civilian non-institutionalized labor force. BLS considers individuals to be unemployed if they (1) do not have

jobs, (2) have actively looked for work in the past four weeks, and (3) are currently available for work. Shaded

areas indicate a recession. NBER defines recession as a “significant decline in economic activity spread across the

economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income,

employment, industrial production, and wholesale-retail sales.”

The Value of Cash Benefits

Over the past few decades, SSDI appears to have become more attractive to lower-skilled

workers because their potential SSDI benefits replace a larger portion of their earnings than

before. The share of a worker’s pre-disability earnings replaced by cash benefits is known as the

replacement rate.65 Although the replacement rate depends on a worker’s past earnings, the Social

Rupp 2012.

See Rupp and Stapleton, “Determinants of the Growth in the Social Security Administration’s Disability Programs,”

p. 56.

Goss et al., Disabled Worker Allowance Rates, p. 1, footnote 1.

SSA, Annual Statistical Supplement 2014, Table 6.C7.

The computed replacement rate depends on the measure of pre-disability earnings. For more information, see

Andrew G. Biggs and Glenn R. Springstead, “Alternate Measures of Replacement Rates for Social Security Benefits

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Security benefit formula also reflects changes in the average earnings of all workers in the

national economy, as measured by the Average Wage Index (AWI).66 Due to the progressive

nature of the benefit formula, replacement rates are greater for workers with low lifetime wages

than for high-wage workers (Table 1).67

Table 1. Hypothetical Disabled-Worker Replacement Rates at Age 55

(by lifetime earnings level)

Lifetime Average Earningsa

Annual SSDI Benefitb

Earnings Replaced

$10,000

$8,856

89%

$20,000

$12,048

60%

$30,000

$15,240

51%

$40,000

$18,432

46%

$50,000

$21,624

43%

$60,000

$24,672

41%

Maximumc

$32,040

28%

Source: Michael Clingman, Kyle Burkhalter, and Chris Chaplain, Illustrative Benefits for Retired Workers, Disabled

Workers, and Survivors Scheduled Under Current Law, SSA, Office of the Chief Actuary, Actuarial Note No. 2014.4,

October 2014, Table 2, at http://www.ssa.gov/oact/NOTES/ran4/index.html.

Notes: Scaled earnings patterns reflect the actual work experience of insured workers during 1991-2010.

a. “Lifetime Average Earnings” reflect the average of the highest 35 years of earnings (wage-indexed to 2013

levels) expected for a hypothetical worker who survives to age 65 without having a period of disability.

b. Entitlement to benefit in 2014.

c. Refers to workers with earnings equal to the taxable maximum for each year through 2013. The taxable

maximum in 2013 was $113,700.

Some part of the growth in SSDI is driven by rising replacements rates for low-skilled workers,

which have made SSDI benefits more desirable than work for an increasing share of workers.68

The increase in the relative attractiveness of SSDI benefits was likely strongest for low-wage

workers, because they experienced slower real earnings growth over the last three decades than

medium and high-wage workers.69 This increase in wage inequality has interacted with the

structure of the benefits formula to increase replacement rates for lower-skilled workers.70 That

means that SSDI is more attractive to those workers than it had been in the past.

(...continued)

and Retirement Income,” Social Security Bulletin, vol. 68, no. 2 (October 2008), http://www.ssa.gov/policy/docs/ssb/

v68n2/v68n2p1.html.

See SSA, “National Average Wage Index,” http://www.ssa.gov/oact/cola/AWI.html.

For more information on how benefits are calculated, see CRS Report R43542, How Social Security Benefits Are

Computed: In Brief, by Noah P. Meyerson.

Autor and Duggan, “The Growth in the Social Security Disability Rolls.” See also Daly, Lucking, and Schwabish,

“The Future of Social Security Disability Insurance.”

See Autor and Duggan, “The Rise in the Disability Rolls and the Decline in Unemployment.” Between 1979 and

2009, the real weekly earnings of low-wage workers (20th percentile) grew 6.6%, whereas the real weekly earnings of

medium (60th percentile) and high-wage workers (95th percentile) increased 16% and 29%, respectively. For more

information, see CRS Report RL33835, Real Earnings, Health Insurance and Pension Coverage, and the Distribution

of Earnings, 1979-2009, by (name redacted)

. Estimates are for full-time, year-round workers.

Autor and Duggan, “The Growth in the Social Security Disability Rolls,” Table 2. See L. Scott Muller, “The Effects

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While researchers generally agree that replacement rates “are rising due to the widening

distribution of income,” there is some disagreement over the extent to which this increase induced

low-wage workers to apply for SSDI benefits.71

The Value of Health Coverage

Access to affordable health coverage also affects an individual’s decision to apply for SSDI, but

the net effect of changes in health policies on SSDI is unclear.72 As noted earlier, disabled

workers and certain dependents are eligible for coverage under Medicare after 24 months of

entitlement to cash benefits (29 months after disability onset). Congress extended Medicare to

SSDI beneficiaries under the Social Security Amendments of 1972 (P.L.92-603) because the “use

of health services by people who are severely disabled is substantially higher than that by the

nondisabled ... yet the disabled have limited incomes in comparison to those who are not

disabled, and most disabled persons are unable financially to purchase adequate private health

insurance protection.”73

Health care is generally more expensive for individuals with disabilities. One study found that

health care expenditures per capita were over four times greater for workers with disabilities than

those without disabilities.74 Persons with disabilities have higher health care expenditures because

they typically use more health services and have secondary conditions that further impair overall

health.75 These higher costs can make health care coverage prohibitively expensive for some

individuals with disabilities.76 In 2013, 39% of individuals with disabilities had private health

insurance coverage, compared with 71% of individuals without disabilities.77 The lower coverage

rate for individuals with disabilities under private health insurance is due, in part, to the

availability of government-sponsored health care coverage under Medicare and Medicaid.

Some research suggests that the desire to gain access to Medicare induced some individuals with

disabilities to apply for SSDI.78 However, it is difficult to know exactly how many individuals

(...continued)

of Wage Indexing on Social Security Disability Benefits,” Social Security Bulletin, vol. 68 no. 3 (December 2008),

http://www.ssa.gov/policy/docs/ssb/v68n3/v68n3p1.html.

Muller, “The Effects of Wage Indexing on Social Security Disability Benefits,” p. 25. See also Autor and Duggan,

“The Growth in the Social Security Disability Rolls,” pp. 82-83. Muller contends that “the magnitude of the increases

in replacement rates, on average, does not seem to offer large incentives to leave work for disability benefits.” Autor

and Duggan argue that the high-wage replacement of SSDI benefits relative to available compensation makes SSDI

enrollment particularly attractive to low-income workers.

See Jae Kennedy and Elizabeth Blodgett, Health Insurance–Motivated Disability Enrollment and the ACA, The New

England Journal of Medicine, September 20, 2012, http://www.nejm.org/doi/full/10.1056/NEJMp1208212.

U.S. Congress, House Committee on Ways and Means, Social Security Amendments of 1971, report to accompany

H.R. 1, 92nd Cong., 1st sess., May 26, 1971, H.Rept. 92-231 (Washington: GPO, 1971), p. 67.

David Stapleton and Su Liu, “Will Health Care Reform Increase the Employment of People with Disabilities?,”

Mathematica Policy Research, Inc, Center for Studying Disability Policy, November 2009, http://www.mathematicampr.com/~/media/publications/PDFs/disability/healthcarereform.pdf.

Wayne L. Anderson et al., “Estimates of National Health Care Expenditures Associated with Disability,” Journal of

Disability Policy Studies, vol. 21, no. 4 (March 2011), pp. 230-240.

See Jody Schimmel Hyde and Gina A. Livermore, “Gaps in Timely Access to Care Among Workers by Disability

Status: Will the Patient Protection and Affordable Care Act Reforms Change the Landscape?,” Journal of Disability

Policy Studies, August 28, 2014.

U.S. Census Bureau, Type of Health Insurance Coverage for Working-Age Adults: 2013, Table 3,

http://www.census.gov/hhes/www/hlthins/data/incpovhlth/2013/tables.html.

Autor and Duggan, “The Rise in the Disability Rolls and the Decline in Unemployment,” Table 1, p. 165. See also

(continued...)

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

awarded SSDI were motivated to apply in order to gain access to Medicare. One study found that

22% of SSDI beneficiaries ages 18-64 lacked health insurance coverage prior to their entitlement

to SSDI.79

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) is likely to

influence SSDI application rates in the future, though the law’s net effect on the SSDI prevalence

rate is difficult to determine.80 On the one hand, the ACA may reduce SSDI applications by

increasing access to affordable health coverage, making access to Medicare less valuable. On the

other hand, the ACA may increase SSDI applications by making it easier for individuals who get

health coverage through their work to apply, because they could obtain Medicaid coverage or

subsidized coverage in the exchange during the 24-month waiting period for Medicare.81 Recent

research indicates that the health care law’s effect on SSDI application rates is likely to vary by

locality due to factors such as (1) the availability of Medicaid in a state, (2) local health insurance

coverage rates,82 and (3) the availability and type of state Medicaid buy-in programs.83

Changes in Federal Policy

In addition to demographic and economic changes, various amendments to the Social Security

program played a role in increasing the number of people on SSDI. While some of the changes to

Social Security were designed to address specific issues with SSDI, modifications to other parts

of the program indirectly affected the incentives for individuals to apply for disability benefits.

The following subsection examines how changes in the full retirement age for Social Security

retired-worker benefits and in the evaluative criteria used to determine disability contributed to

the growth in the SSDI rolls.

(...continued)

Autor and Duggan, “The Growth in the Social Security Disability Rolls,” p. 81. The authors contend that the rising

value of Medicare benefits increased total replacement rates (cash benefits and health coverage), which, in turn,

induced some individuals to leave the labor force and apply for SSDI benefits.

Gina Livermore, David Stapleton, and Henry Claypool, Health Insurance and Health Care Access Before and After

SSDI Entry, The Commonwealth Fund, May 2009, p. 17, http://www.commonwealthfund.org/~/media/Files/

Publications/Fund%20Report/2009/May/

Livermore%20Health%20Insurance%20and%20Health%20Care%20Access%20Before%20and%20After/

1255_Livermore_hlt_ins_hlt_care_access_before_after_SSDI_entry.pdf.

CBO, Policy Options 2012, p. 5. For more information on the ACA, see CRS Report R43048, 2013 Overview of

Private Health Insurance Provisions in the Patient Protection and Affordable Care Act (ACA), by (name redacted)and

CRS Report R43564, The ACA Medicaid Expansion, by (name redacted).

CBO, Policy Options 2012, p. 6.

Nicole Maestas, Kathleen J. Mullen, and Alexander Strand, “Disability Insurance and Health Insurance Reform:

Evidence from Massachusetts,” American Economic Review, vol. 104, no. 5 (May 2014), pp. 329-335. See also RAND

Corporation, Effects of Health Care Reform on Disability Insurance Claiming, 2014, http://www.rand.org/content/dam/

rand/pubs/research_briefs/RB9700/RB9769/RAND_RB9769.pdf.

Melissa McInerney, The Medicaid Buy-In and Social Security Disability Insurance (DI) Beneficiaries: Lessons for

the 2014 Medicaid Expansion and Proposals to Reform DI, Center for Retirement Research, December 2013, p. 18,

footnote 25, http://crr.bc.edu/wp-content/uploads/2013/10/wp_2013-20.pdf. Medicaid buy-in programs allow certain

employed individuals with disabilities to obtain health care coverage through Medicaid when employer-sponsored

health insurance is not available. For more information on Medicaid buy-in programs, see Matthew Kehn, Enrollment,

Employment, and Earnings in the Medicaid Buy-In Program, 2011, Mathematica Policy Research, May 20, 2013,

http://www.mathematica-mpr.com/~/media/publications/PDFs/health/medicaid_buyin_enrollment.pdf.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

The Social Security Amendments of 1983

The Social Security retirement program faced serious financial challenges in the early 1980s.

High inflation and low wage growth starting in the 1970s had eroded the balance of the OASI

trust fund, which finances the benefits and administrative costs of the OASI program. 84 In 1982,

the Social Security trustees projected that the OASI trust fund would exhaust by the middle of

1983.85

To improve the financial condition of the OASI trust fund, Congress enacted the comprehensive

Social Security Amendments of 1983 (P.L. 98-21). Among the 1983 amendments’ many

substantial changes was an increase in the FRA from 65 to 67.86 Between 2002 and 2009, the

FRA gradually increased until it reached 66 for workers born between 1943 and 1954. The FRA

is scheduled to rise again, reaching 67 for workers born in 1960 and later.

Raising the FRA reduced OASI spending but increased DI spending in several ways.87 First, it

increased the number of workers who are eligible for SSDI. From 2003 to 2014, the number of

insured workers ages 65-FRA rose from over 200,000 to more than 2.4 million.88 Because

workers aged 65-FRA are more likely to have a qualifying disability, the increase in the number

of insured workers led to an increase in the number of workers awarded benefits. In 2013, over

7,400 workers aged 65-FRA were awarded benefits.89

Second, the increase in the FRA lengthened the duration of benefit receipt for SSDI recipients

near retirement age.90 Disabled workers move from SSDI to OASI when they reach the FRA. As

the FRA increased above 65, beneficiaries remained on SSDI longer. In December 2013, over

455,000 disabled workers ages 65-FRA received benefits.91

Third, the rise in the FRA increased the value of SSDI cash benefits relative to early retirement

benefits.92 Insured workers who choose to retire between the ages of 62 and FRA are subject to a

permanent reduction in their monthly cash benefits.93 Prior to the 1983 amendments, the

reduction for claiming retirement benefits at age 62 was 20%; with the increase in the FRA to 66,

the reduction at age 62 rose to 25%.94 That reduction will rise to 30% for workers whose FRA is

Legislative changes to the program that increased benefit amounts also contributed to the OASI trust fund’s

imbalance. For more information, see Patricia P. Martin and David A. Weaver, “Social Security: A Program and Policy

History,” Social Security Bulletin, vol. 66, no. 1 (2005), http://www.ssa.gov/policy/docs/ssb/v66n1/v66n1p1.html.

U.S. Congress, House Committee on Ways and Means, 1982 Annual Report, Federal Old-Age and Survivors

Insurance and Disability Insurance Trust Funds, prepared by Board of Trustees, Federal Old-Age and Survivors

Insurance and Disability Insurance Trust Funds, 97th Cong., 2nd sess., April 1, 1982, http://www.ssa.gov/history/reports/

trust/1982/1982.pdf.

See John A. Svahn and Mary Ross, “Social Security Amendments of 1983: Legislative History and Summary of

Provisions,” vol. 46, no. 7 (July 1983), http://www.ssa.gov/policy/docs/ssb/v46n7/v46n7p3.pdf. The FRA is the age at

which unreduced retirement benefits are first payable.

Although it may have reduced the overall balance of the DI trust fund, the increase in the FRA also raised payroll tax

revenues to the DI trust fund due to some people working longer before applying for full retirement benefits. For more

information, see CBO, Policy Options 2012, p. 9.

SSA, “Disability Insured Workers,” http://www.ssa.gov/oact/STATS/table4c2DI.html.

SSA, SSDI Annual Report 2013, Table 36.

CBO, Policy Options 2012, p. 9.

SSA, SSDI Annual Report 2013, Table 2.

Svahn and Ross, “Social Security Amendments of 1983.”

See SSA, “Early or Late Retirement?,” November 25, 2008, http://www.ssa.gov/OACT/quickcalc/early_late.html.

For additional information on the reduction in benefits at age 62, see SSA, “Retirement Planner: Benefits by Year of

Birth,” http://www.socialsecurity.gov/retire2/agereduction.htm.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

67. Because SSDI benefits are approximately the same as full retirement benefits, the increase in

the FRA likely impelled some additional workers to apply for SSDI benefits in order to maximize

their total cash benefits. Although recent studies suggest that an increase in the value of disability

benefits relative to early retirement benefits induces individuals to apply for SSDI benefits,

researchers are divided over whether such individuals are actually awarded benefits.95

The Social Security Disability Benefits Reform Act of 1984

As noted earlier, the Social Security Disability Amendments of 1980 (P.L. 96-265) markedly

expanded the use of continuing disability reviews (CDRs) as a means of reducing the growth in

program costs. CDRs are periodic medical reevaluations conducted to determine if beneficiaries

are still disabled. Between January 1982 and fall 1984, SSA issued benefit termination notices to

490,000 of the 1.2 million SSDI beneficiaries subjected to a CDR.96 However, the rise in

beneficiary terminations due to CDRs sparked a degree of public outcry and had “a very

damaging effect on the public perception of SSA’s administration of the disability program.”97

News stories at the time often depicted the financial and emotional difficulties faced by recently

terminated beneficiaries and their dependents.98 Ultimately, of the 490,000 beneficiaries who

received termination notices, approximately 200,000 had their benefits reinstated on appeal.99

In response to the contention over the increased use of CDRs, Congress unanimously enacted the

Social Security Disability Benefits Reform Act of 1984 (DBRA; P.L. 98-460). DBRA changed

the statutory standards for evaluating disability in a variety of ways.100 First, it revised the

medical eligibility criteria for CDRs so that SSA could terminate the benefits of a recipient due to

medical improvement only if the agency found substantial evidence of medical improvement

related to the recipient’s ability to work since the most recent favorable determination.101 Under

See Norma B. Coe and Kelly Haverstick, Measuring the Spillover to Disability Insurance Due to the Rise in the Full

Retirement Age, Center for Retirement Research at Boston College, December 2010, pp. 9-14, http://crr.bc.edu/

working-papers/measuring-the-spillover-to-disability-insurance-due-to-the-rise-in-the-full-retirement-age/. In addition,

see Mark Duggan, Perry Singleton, and Jae Song, Aching to Retire? The Rise in the Full Retirement Age and its Impact

on the Disability Rolls, National Bureau of Economic Research, Working Paper 11811, December 2005,

http://www.nber.org/papers/w11811. Using aggregate data, Duggan, Singleton, and Song found that the 1983

amendments increased SSDI enrollment by 0.58 percentage points for men (ages 45-64) and 0.89 percentage points for

women (ages 45-64) between 1983 and 2005. Using disaggregate data, Coe and Haverstick found that a one percentage

point decrease in the ratio of retirement to disability benefits resulted in a 0.28 percentage point increase in the twoyear SSDI application rate for individuals born between 1938 and 1943. However, the researchers found no evidence

that the increase in the FRA resulted in a rise in the incidence of SSDI receipt among individuals ages 55-FRA born

between 1938 and 1941. (The 1942 and 1943 cohorts had not reached FRA.)

Kearney 2006, p. 14.

Ibid., p. 15.

“Cutoffs for Mentally Ill Bring Moratorium Plea,” The New York Times, April 9, 1983, http://www.nytimes.com/

1983/04/10/us/cutoffs-for-mentally-ill-bring-moratorium-plea.html?n=

Top%2fReference%2fTimes%20Topics%2fSubjects%2fF%2fFinances. See also Edward D. Berkowitz, Disabled

Policy: America’s Programs for the Handicapped (New York City: Cambridge University Press, 1987), pp. 128-130

(hereinafter cited as “Berkowitz 1987”).

Berkowitz 1987, p.127.

100

See Katharine P. Collins and Anne Erfle, “Social Security Disability Benefits Reform Act of 1984: Legislative

History and Summary of Provisions,” Social Security Bulletin, vol. 48, no. 4 (April 1985), p. 5, http://www.ssa.gov/

policy/docs/ssb/v48n4/v48n4p5.pdf.

101

Department of Health and Human Services (HHS), SSA, “Supplemental Security Income; Disability and Blindness

Determinations,” 50 Federal Register 35038, December 6, 1985. The legal standard for determining if disability

continues is known as the Medical Improvement Review Standard (MIRS). For more information , see SSA, POMS,

“DI 28005.001 Legal Standard for Determining If Disability Continues ,” July 31, 2014, http://policy.ssa.gov/poms.nsf/

(continued...)

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the 1980 amendments, SSA had treated medical CDRs as a new determination and could revoke

benefits even if a beneficiary’s health had not changed.

Second, it required the Secretary of Health and Human Services to revise the criteria under the

“mental disorders” category in the Listing of Impairments.102 Before the reforms, disability

determinations relied primarily on medical factors, which tended to disadvantage claimants with

mental impairments from benefit receipt. The revised listings for mental impairments—first

published in 1985103—“reduced the weight given to medical factors and put a greater weight on

functional capacities, such as the applicant’s ability to perform activities of daily living.”104

Third, it required SSA to consider the combined effect of multiple non-severe impairments on the

claimant’s ability to engage in SGA.105 Prior to DBRA, a disability determination could not

proceed unless the claimant had one or more independently severe impairments.106 Lastly, DBRA

provided a temporary statutory standard (through the end of 1986) for evaluating pain. Before the

reforms, there was no “specific statement in the law” as to how pain should be evaluated.107 SSA

issued new pain regulations in 1991.108

In enacting DBRA, Congress sought to protect the rights of “those correctly and properly allowed

on the rolls” while continuing to remove non-meritorious beneficiaries from the program.109 To

accomplish this, Congress established a national, uniform process for determining disability,

which complemented objective medical criteria with more subjective criteria such as pain and

functional capacity. Congress, though, explicitly stated that the intent of DBRA was not to change

the basic standard of eligibility for SSDI.110

Nevertheless, a number of researchers argue that despite Congress’s intention, the establishment

of new evaluative criteria contributed to the growth in the disability rolls by making it easier for

claimants with “difficult-to-verify” impairments to qualify for SSDI, such as mental and

musculoskeletal disorders.111 For example, the revision to the “mental disorders” category in the

(...continued)

lnx/0428005001.

102

For information on the Listing of Impairments, please see the SSA publication Disability Evaluation Under Social

Security, available at http://www.ssa.gov/disability/professionals/bluebook/. This publication is commonly referred to

as the Blue Book. Prior to March 31, 1995, SSA was under the auspices of HHS (previously the Department of Health,

Education and Welfare). For more information on SSA’s organizational history, see SSA, “Organizational History,”

http://www.ssa.gov/history/orghist.html.

103

HHS, SSA, “Federal Old-Age, Survivors, and Disability Insurance; Listing of Impairments—Mental Disorders,” 50

Federal Register 35038, August 28, 1985.

104

Kearney, “Social Security and the ‘D’ in OASDI,” p. 17.

105

HHS, SSA, “Disability Insurance and Supplemental Security Income; Determining Disability and Blindness;

Multiple Impairments,” 56 Federal Register 8726, March 5, 1985.

106

SSA, A History of the Social Security Disability Programs, January 1986, http://www.ssa.gov/history/

1986dibhistory.html. For more information on the distinction between severe and non-severe impairments, please see

SSA, POMS, “DI 22001.015 Severe/Non-Severe Impairment(s),” March 12, 2013, http://policy.ssa.gov/poms.nsf/lnx/

0422001015.

107

U.S. Congress, Senate Committee on Finance, Social Security Disability Amendments of 1984, report to accompany

S. 467, 98th Cong., 2nd sess., May 18, 1984, S.Rept. 98-466, p. 23, http://www.finance.senate.gov/library/reports/

committee/ (hereinafter cited as “1984 Senate Committee on Finance Report”).

108

HHS, SSA, “Evaluation of Symptoms, Including Pain,” 56 Federal Register 57928, November 14, 1991.

109

1984 Senate Committee on Finance Report, pp. 6-7.

110

Ibid. See also U.S. Congress, House Committee on Ways and Means, Social Security Disability Benefits Reform Act

of 1984, report to accompany H.R. 3755, 98th Cong., 2nd sess., March 14, 1984, H.Rept. 98-618, p. 6.

111

David H. Autor, The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and

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Listing of Impairments, which gave greater weight to functional capacities, may have permitted

more claimants with mental impairments to qualify for SSDI. Similarly, the allowance of the

combined effect of multiple non-severe impairments and the evaluation of pain may have made it

easier for claimants suffering from musculoskeletal disorders (impairments involving bones,

muscles, tendons, or ligaments) to enroll in the program.

As Figure 11 illustrates, the percentage of awards due to mental and musculoskeletal

impairments increased markedly following the passage of DBRA. Between 1985 and 2001, the

share of newly awarded beneficiaries with mental impairments increased from 18% to 26%

before declining to 17% in 2013.112 According to one researcher at SSA, the increase in awards

resulting from mental disorders in 1986 “is directly attributable to changes in the decision making

process due to the 1984 Social Security Disability Benefits Reform Act.”113 From 1986 to 2012,

the share of all beneficiaries with mental impairments increased from 24% to 31%.114

(...continued)

Policy Options, MIT and NBER, November 2011, p. 5, http://economics.mit.edu/files/6880. See also Autor and

Duggan, “The Growth in the Social Security Disability Rolls,” p. 11; Duggan and Imberman, “Why Are the Disability

Rolls Skyrocketing?”; and U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security,

Fifth in a Hearing Series on Securing the Future of the Social Security Disability Insurance Program, Testimony of

Richard Burkhauser, Ph.D., 112th Cong., 2nd sess., September 14, 2012, http://waysandmeans.house.gov/uploadedfiles/

burkhauser_testimony_ss914.pdf (hereinafter cited as “Testimony of Richard Burkhauser, 2012”).

112

SSA, SSDI Annual Report 2013, Table 40.

113

L. Scott Muller et al., Trends in the Social Security and Supplemental Security Income Disability Programs, SSA,

August 2006, p. 44, http://www.ssa.gov/policy/docs/chartbooks/disability_trends/index.html.

114

HHS, SSA, Annual Statistical Supplement, 1987, December 1987, Table 103, (hereinafter cited as “SSA, Annual

Statistical Supplement 1987”) and SSA, SSDI Annual Report 2013, Table 21.

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Figure 11. Percentage Distribution of SSDI Awards, by Diagnostic Group, 1981-2013

100%

Musculoskeletal

90%

80%

70%

Mental Disorders

60%

Circulatory

50%

40%

Cancer

Respiratory

30%

Nervous System

20%

10%

1981

Other

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

Source: SSA, Annual Statistical Report on the Social Security Disability Insurance Program, 2013, 2014, Table 40,

http://www.ssa.gov/policy/docs/statcomps/di_asr/2013/sect03c.html#table40.

Notes: For information on the diagnostic categories, see the Listing of Impairments in the SSA publication

Disability Evaluation Under Social Security, available at http://www.SSA.gov/disability/professionals/bluebook/. This

publication is commonly referred to as the Blue Book.

The change in musculoskeletal impairments was even more pronounced. Between 1985 and 1994,

awards based on musculoskeletal disorders remained roughly constant, rising from 13% to

13.4%. However, due to a change in the reporting method for awards, the percentage of awardees

with musculoskeletal impairments jumped to 22% in 1995, later increasing to 36% in 2013.115

From 1986 to 2013, the share of all beneficiaries with musculoskeletal impairments grew from

18% to 31%.116

For an alternative perspective, Figure 12 shows the change in the incidence of various diagnostic

groups over time. Although the incidence of other diagnostic groups, such as circulatory-related

disabilities, stayed roughly constant over the past 30 years, the growth in musculoskeletal and

115

Tim Zayatz, Social Security Disability Insurance Program Workers Experience: Actuarial Study No. 122, SSA,

May 2011, p. 8. Prior to 1995, SSA reported the diagnosis of awards based on the distribution of allowances at the

initial level assuming that the diagnostic data for awards at the appeals level had the same groupings as those at the

initial level. Starting in 1995, SSA included diagnostic information from the reconsideration level of the appeals

process in its determination of the annual number of awards. In 2003, SSA developed a new way of incorporating

diagnostic information from all levels of the appeals process to report award data. Because claimants with

musculoskeletal impairments tend to have higher-than-average final allowance rates, the reporting changes resulted in

an increase in the annual number of newly awarded beneficiaries with musculoskeletal impairments. For more

information on outcome variation by diagnostic group, see Javier Meseguer, “Outcome Variation in the Social Security

Disability Insurance Program: The Role of Primary Diagnoses,” Social Security Bulletin, vol. 73, no. 2 (May 2013),

Chart 3, http://www.ssa.gov/policy/docs/ssb/v73n2/v73n2p39.html.

116

SSA, Annual Statistical Supplement 1987, Table 103, and SSA, SSDI Annual Report 2013, Table 21.

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mental awards was such that the share of awards based on other disabilities declined (Figure 11).

In other words, as mental and musculoskeletal awards increased in absolute terms, other

impairments remained generally steady. However, because the overall rate of mental and

musculoskeletal awards increased, the share of other impairments decreased.

Figure 12. SSDI Incidence Rates, by Diagnostic Group, 1981-2013

(per 1,000 disability exposed)

Total Incidence Rate

Musculoskeletal

Mental Disorders

Cancer

Circulatory

Respiratory

Nervous

Other

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

Source: Calculated by CRS based on data from SSA, Annual Statistical Report on the Social Security Disability

Insurance Program, 2013, Tables 1and 40, and SSA, “Disability Insured Workers.”

The growth in the share of beneficiaries with mental and musculoskeletal impairments may have

also increased the disability rolls by increasing the average length of time that beneficiaries stay

on SSDI.117 Mortality rates for beneficiaries with mental or musculoskeletal impairments are

lower than average, while their conversion rates are higher than average.118 As a result, they

experience a longer-than-average duration of benefit receipt.119 Furthermore, because

117

Kalman Rupp and Charles G. Scott, “Trends in the Characteristics of DI and SSI Disability Awardees and Duration

of Program Participation,” Social Security Bulletin, vol. 59, no. 1 (January 1996), pp. 6-7, http://www.ssa.gov/policy/

docs/ssb/v59n1/index.html. See also Autor and Duggan, “The Growth in the Social Security Disability Rolls,” p. 79.

118

Rupp and Scott, “Trends in the Characteristics of DI and SSI Disability Awardees and Duration of Program

Participation,” Table 1, p. 6. See also John C. Hennessey and Janice M. Dykacz, “A Comparison of the Recovery

Termination Rates of Disabled-Worker Beneficiaries Entitled in 1972 and 1985,” Social Security Bulletin, vol. 56, no.

2 (Summer 1993), pp. 60-61, http://www.ssa.gov/policy/docs/ssb/v56n2/v56n2p58.pdf.

119

Rupp and Scott, “Trends in the Characteristics of DI and SSI Disability Awardees and Duration of Program

Participation,” Table 2, p. 7.

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beneficiaries with mental impairments enter the program at younger-than-average ages, their time

on SSDI could last decades.120

Other Potential Factors

Changes in the Health of the Working-Age Population

It is unclear whether overall changes in population health have affected the size of the SSDI

program. Although mortality rates at all ages have fallen markedly over the last half-century,

indicating generally improved health, the rise in conditions such as obesity and diabetes—which

may increase the risk for certain diseases and other health problems—might have increased the

share of the population with severe disabilities.121

Thus far, researchers have failed to reach a consensus on whether working-age adults are

healthier or unhealthier.122 Some research indicates that reported rates of disability have grown,

especially among the younger working-age population.123 On the other hand, some researchers

have found that the likelihood of near-elderly individuals (ages 50-64) to report a work-limiting

disability has declined, while the health of younger workers has stayed roughly the same.124

Part of the problem in determining trends in the prevalence of disability in the working-age

population stems from the fact that there is no single, universally accepted definition or measure

of disability.125 Although many of the large surveys used by researchers specifically ask questions

pertaining to disability, the wording and complexity of the questions often differs. Because many

surveys are self-reporting, the definition of what constitutes a work-limiting disability often rests

entirely on the subjectivity of the respondent. As a result, trends in the prevalence of disability

vary by survey and by the definition of disability.126

Given the inconclusive literature, it seems unlikely that changes in the prevalence of disability in

the working-age population can adequately explain the growth in the SSDI rolls.

120

Ibid. Of a cohort of beneficiaries awarded benefits in 1972, the estimated average length of disability spells for

beneficiaries ages 18 to 34 with mental disorders was 25.5 years.

121

For a discussion of the relationship between obesity, health, and non-employment, see Kristin F. Butcher and Kyung

H. Park, “Obesity, Disability, and the Labor Force,” Economic Perspectives, vol. 32, no.1 (February 2008), Federal

Reserve Bank of Chicago, https://www.chicagofed.org/publications/economic-perspectives/2008/1qtr2008-part1butcher-park.

122

See H. Stephen Kaye, “Disability Rates for Working-Age Adults and for the Elderly Have Stabilized, but Trends for

Each Mean Different Results for Costs,” Health Affairs, vol. 32, no. 1 (January 2013), pp. 127-134. See also Linda G.

Martin et al., “Trends in Disability and related Chronic Conditions Among People Ages Fifty to Sixty-Four,” Health

Affairs, vol. 29, no. 4 (April 2010), pp. 725-731.

123

See Darius N. Lakdawalla, Jayanta Bhattacharya, and Dana P. Goldman, “Are the Young Becoming More

Disabled?,” Health Affairs, vol. 23, no. 1 (January 2004), pp. 168-176. See also John Bound and Timothy Waidmann,

“Employment Rates among Working-Aged Men and Women with Disabilities,” Journal of Human Resources, vol. 37,

no. 2 (Spring 2002), pp. 231-250.

124

See Duggan and Imberman, “Why Are the Disability Rolls Skyrocketing?,” p. 354. The authors found that the

improved health of individuals ages 50-64 might have slowed the growth in the SSDI rolls between 1984 and 2002.

125

Disability Statistics, “Frequently Asked Questions: What is the definition of disability?,” Maintained by Cornell

University, http://www.disabilitystatistics.org/faq.cfm#Q3.

126

See Andrew J. Houtenville et al., “Disability Prevalence and Demographics,” in Counting Working-Age People with

Disabilities: What Current Data Tell Us and Options for Improvement, ed. Andrew J. Houtenville et al. (Kalamazoo,

MI: W. E. Upjohn Institute for Employment Research, 2009), pp. 69-99.

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Variation in the Disability Determination and Appeals Process

Some researchers have suggested that inconsistency in the disability determination and appeals

process contributed to the growth in the program, but the evidence on the issue is inconclusive.

Depending on the case, variation can both increase and decrease the overall allowance rate.

Disability examiners and ALJs with high allowance rates may be offset by examiners and judges

with low allowance rates.

As earlier noted, DDS examiners use a combination of medical and functional evidence to

determine whether an impairment precludes a claimant from engaging in SGA. Although DDS

examiners base their initial determinations on uniform guidelines established by the SSA,

regional differences in demographic, health, and employment characteristics may produce

variation in initial allowance rates among DDS offices.127 However, one study found an

appreciable degree of variation in determination outcomes across examiners within the same DDS

office.128 The study estimated that up to 60% of applicants “could have received a different initial

determination from at least one other examiner in the DDS office.”129 Even though the appeals

process mitigated some of this variation, the study concluded that up to 23% of claimants could

have ultimately received different outcomes had other examiners in the DDS office performed the

determination.130

Some have speculated that the uncertainty of an outcome at the initial determination level due to

variation across DDS examiners likely encouraged denied claimants to pursue the appeals

process, increasing their likelihood of SSDI receipt.131 The aforementioned study found that

claimants denied by stricter examiners were more likely to appeal their determinations.132

Although most of the awards granted by SSA are made at the initial determination level, the

hearing level has the highest allowance rate of any step in the determination and appeals process.

In FY2013, the allowance rate at the hearing level was 48%, compared with 33% at the initial

level, 11% at the reconsideration level, 1% at the Appeals Council level, and 2% at the federal

court level.133 The study found that 75% of denied claimants who contested their initial

determinations had their denials overturned eventually on appeal.134

127

For additional information, see Alexander Strand, Social Security Disability Programs: Assessing the Variation in

Allowance Rates, SSA, ORES Working Paper no. 98, August 2002, http://www.ssa.gov/policy/docs/workingpapers/

wp98.html. See also Norma B. Coe et al., What Explains Variation in SSDI Application Rates?, Center for Retirement

Research at Boston College, http://crr.bc.edu/working-papers/what-explains-state-variation-in-ssdi-application-rates/.

128

Nicole Maestas, Kathleen J. Mullen, and Alexander Strand, “Does Disability Insurance Receipt Discourage Work?

Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt,” American Economic Review, vol. 103, no. 5

(August 2013), pp. 1797-1829..

129

Testimony of Nicole Maestas, in U.S. Congress, House Ways and Means, Social Security, Third in a Hearing Series

on Securing the Future of the Social Security Disability Insurance Program, 112th Cong., 2nd sess., March 20, 2012,

112-SS14, p. 3, http://waysandmeans.house.gov/uploadedfiles/nicolemaestas_ss_3_20_12s.pdf (hereinafter cited as

“Maestas Testimony, 2012”).

130

Ibid. Although the study found that 23% of applicants could have received different outcomes, there is no guarantee

that the applicants would have received different decisions had their cases been assigned to different DDS examiners.

131

Ibid.

132

Maestas, Mullen, and Strand, “Does Disability Insurance Receipt Discourage Work?,” p. 1821.

133

SSA, Justification of Estimates for Appropriations Committees Fiscal Year 2015, March 2014, p. 144, Table 3.26,

http://www.ssa.gov/budget/. The allowance rate includes SSDI, SSI, and concurrent initial disability determinations

and appeals decisions.

134

Maestas, Mullen, and Strand, “Does Disability Insurance Receipt Discourage Work?,” p. 1806.

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Others contend that variation in the allowance rates at the hearing level of the appeals process

contributed to the number of workers on SSDI. A 2013 report by SSA’s Office of the Inspector

General (OIG) discovered wide variances in the allowance rates among some ALJs within the

same hearing office.135 Additionally, an earlier OIG report found a direct relationship between the

number of cases adjudicated by outlier ALJs (i.e., judges at the extreme ends of the distribution

scale) and allowance rates.136 ALJs with the highest allowance rates adjudicated more dispositions

relative to the office average, while ALJs with the lowest allowance rates adjudicated fewer

dispositions compared with the office average.137 A 2014 OIG report estimated that judges with

700 or more dispositions and allowance rates of 85% or higher improperly allowed benefits in

approximately 24,900 cases over a seven-year period, resulting in “questionable costs” of more

than $2 billion.138

Even in the absence of such variation, those claimants improperly granted awards by outlier

examiners and judges might have eventually been found disabled in the future. One study found

that over 60% of claimants denied at the hearing level of the appeals process were later awarded

benefits within 10 years.139 One possible explanation is that the health of some initially rejected

claimants with marginal disabilities may deteriorate to the point that they meet SSA’s definition

of disability several years later. Therefore, inconsistency in the disability determination and

appeals process may simply accelerate receipt of benefits for some workers.

Reform Proposals

This section examines options to manage the long-term growth in the SSDI program. These

options have been proposed by numerous sources, including researchers, advocacy organizations,

federal agencies, and the Social Security Advisory Board (SSAB).140 For an overview of options

to reduce benefit levels or to increase program revenues, see CBO’s 2012 report, Policy Options

for the Social Security Disability Insurance Program, available at https://www.cbo.gov/

publication/43421.

As noted previously, while many of the proposals discussed in this report have the potential to

slow or even reverse the prevalence of SSDI receipt and thus generate savings to the program

over the longer term, such proposals are unlikely to produce savings in time to forestall the

135

SSA, Office of the Inspector General (OIG), Identifying and Monitoring Risk Factors at Hearing Offices, Audit

Report A-12-12-11289, January 2013, p. 7, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-12-12-11289.

136

SSA, OIG, Congressional Response Report: Oversight of Administrative Law Judge Workload Trends, A-12-1101138, February 14, 2012, p. 8, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-12-11-01138.

137

Another study found a small but statistically significant correlation between the number of cases adjudicated by

ALJs and their allowance rates. However, the study’s authors noted that this relationship could account for only about

2% of the variance in allowance rates. For more information, see Harold J. Krent and Scott Morris, Achieving Greater

Consistency in Social Security Disability Adjudication: An Empirical Study and Suggested Reforms, Draft Report,

March 3, 2013, p. 24, http://www.acus.gov/sites/default/files/documents/

Achieving_Greater_Consistency_Draft_Report_3-3-2013.pdf. See also Robert Nakosteen and Michael Zimmer,

“Approval of Social Security Disability Appeals: Analysis of Judges’ Decisions,” Applied Economics, vol. 46, no. 23

(May 6, 2014), pp. 2783-2791.

138

SSA, OIG, Congressional Response Report: Administrative Law Judges with Both High Dispositions and High

Allowance Rates, A-12-14-24092, November 14, 2014, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-1214-24092.

139

Eric French and Jae Song, “The Effect of Disability Insurance Receipt on Labor Supply,” American Economic

Journal: Economic Policy, vol. 6, no. 2 (May 2014), pp. 291-337.

140

SSAB is an independent board charged with advising the commissioner of Social Security on issues related to the

OASDI and SSI programs (42 U.S.C. §903). For more information, visit http://ssab.gov/.

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projected exhaustion of the DI trust fund. To avoid a 20% cut in benefits in 2016, lawmakers

would likely need to enact some kind of short-term financing, such as a reallocation of the Social

Security payroll tax rate or interfund borrowing.141

Tighten Eligibility Criteria

One policy option to reduce the growth in the SSDI rolls is to tighten the program’s eligibility

requirements. In general, the aim of tightening eligibility criteria is to mitigate the number of

marginally disabled individuals on the program while continuing to grant awards to the most

severely disabled individuals. Because marginally disabled individuals have some remaining

capacity to work, rejecting their applications would generally cause less harm to them than to

more severely disabled individuals.142 That said, there is no guarantee that all marginally disabled

individuals can work. Although it is difficult to discern which type of claimants would be affected

by more stringent eligibility requirements, a recent study found that marginal program entrants

are more likely to be younger, suffer from mental impairments, and have low earnings

histories.143 Henry Aaron, chair of the Social Security Advisory Board, summarized that “the

challenge for society is to choose a definition that best balances its willingness to award benefits

to some people who do not ‘deserve’ them and to deny benefits to some who do.”144

Enacting stricter eligibility criteria would also affect other federal spending and tax programs.145

On the one hand, tightening standards would not only directly reduce spending through a higher

rejection rate; it would also likely discourage some individuals from applying for SSDI in the first

place.146 Additionally, stricter standards would likely encourage some prospective applicants to

continue to work, which would increase tax receipts.147 On the other hand, some people who

could no longer qualify for SSDI would seek other federal support. For example, individuals with

sufficiently low income and assets could potentially qualify for SSI, increasing federal

spending.148

Eliminate Eligibility for SSDI Benefits at Age 62 or Later

As noted earlier, workers between the ages of 62 and FRA who apply for early Social Security

retirement benefits are subject to a reduction in their monthly benefits. In contrast, workers

between the ages of 62 and FRA who apply for SSDI benefits receive about the same benefit that

they would have received had they applied for retirement benefits at their FRA. Some Members

141

For more information, see CRS Report R43318, Social Security Disability Insurance (DI) Trust Fund: Background

and Solvency Issues, by (name redacted).

142

Maestas, Mullen and Strand, “Does Disability Insurance Receipt Discourage Work?,” p. 1818. The authors found

that the employment of marginal program entrants would have been, on average, 28 percentage points higher two years

after the initial determination had they not received SSDI. This figure dropped to 16 percentage points four years after

the initial determination.

143

Ibid., p. 1801.

144

Henry J. Aaron, “With Disability Benefits Running on Fumes, What to Do?,” Brookings Institution, October 28,

2014, http://www.brookings.edu/research/opinions/2014/10/28-disability-benefits-aaron.

145

CBO, Policy Options 2012, pp. 8-9.

146

Susan E. Chen, “Rejection from the Disability Insurance Program and Dependency on Social Support,” University

of Michigan Retirement Research Center, 2014, http://www.mrrc.isr.umich.edu/publications/papers/pdf/wp305.pdf.

147

Maestas, Mullen and Strand, “Does Disability Insurance Receipt Discourage Work?” See also David H. Autor et al.,

“Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings

of Disability Applicants,” January 2015, http://economics.mit.edu/files/10336.

148

Chen, “Rejection from the Disability Insurance Program and Dependency on Social Support,” p. 18.

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of Congress have expressed concern that the differential between disability and early retirement

may induce workers between the ages of 62 and FRA to apply for SSDI as a means of increasing

their total benefits.149 In 2013, 9% of the nearly 869,000 awards issued by SSA went to

individuals between the ages of 62 and FRA.150

To reduce the growth in the SSDI rolls, policymakers could eliminate eligibility for SSDI benefits

starting at age 62. Instead, workers between the ages of 62 and FRA would be eligible only for

early retirement benefits. Under current law, the penalty for taking early retirement at age 62 is a

25% to 30% monthly reduction in cash benefits, depending on year of birth. CBO recently

estimated that preventing workers from applying for SSDI benefits after their 62nd birthday or

receiving SSDI benefits if they became eligible after that date starting in 2016 would reduce

federal outlays by $10.6 billion between 2015 and 2024, or 0.6% of scheduled outlays for

SSDI.151

One reason to eliminate eligibility starting at age 62 is that it could “encourage individuals that

seek disability benefits as an early retirement program to remain in the work force.”152 However,

opponents point out that this option would adversely affect older workers with little or no

capacity to work in the national economy, especially those workers near or below the poverty

line.153

Increase the Recency-of-Work Requirement

To become insured under the Social Security program, workers must accrue work credits—

known as quarters of coverage—based on their earnings in covered employment.154 In 2015,

workers are credited with one quarter of coverage for each $1,220 in earnings, up to the

maximum of four quarters of coverage per year.155 To qualify for SSDI, workers must have earned

a minimum number of quarters of coverage based on their age and generally must have earned at

least 20 quarters of coverage during a 40-calendar quarter period ending with the quarter in which

their disabilities began.156 In other words, disability claimants must have worked for five of the

past 10 years to be eligible for SSDI. That “recency-of-work” requirement—sometimes known as

the 20/40 rule—restricts the program to individuals who have worked of late and for a reasonable

length of time in covered employment.

149

For an example, see Senator Tom Coburn, “Back in Black: A Deficit Reduction Plan,” July 2011, p. 554,

http://www.coburn.senate.gov/public/?p=deficit-reduction.

150

SSA, SSDI Annual Report 2013, Table 39. Starting in 2007, age is based on date of entitlement and not date of

award.

151

CBO, Options for Reducing the Deficit: 2015 to 2024, November 2014, p. 14, http://www.cbo.gov/budget-options/

2014 (hereinafter cited as “CBO, Options for Reducing the Deficit 2014”). Estimates are relative to CBO’s August

2014 baseline projections and do not include any effects on spending for other federal programs, such as Medicare,

Medicaid, and SSI.

152

Coburn, “Back in Black,” p. 554.

153

Kathy Ruffing, “Disability Insurance Provides Vital Benefits to Vulnerable Workers,” Center on Budget and Policy

Priorities, July 15, 2013, http://www.offthechartsblog.org/disability-insurance-provides-vital-benefits-to-vulnerableworkers/.

154

For more information, see SSA, How You Earn Credits, 2014, http://www.ssa.gov/pubs/EN-05-10072.pdf.

155

The amount of earnings needed for a quarter of coverage is adjusted annually based on the average wage index. For

more information, see SSA, “Quarter of Coverage,” http://www.ssa.gov/oact/cola/QC.html.

156

42 U.S.C. §423(c) and 20 C.F.R. §404.130.Younger workers may meet the recency-of-work requirement with fewer

quarters of coverage based on their age.

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CBO recently estimated the impact of increasing the recency-of-work requirement on beneficiary

enrollment. According to the agency, requiring non-blind disability claimants to have worked four

of the past six years (instead of five of the past 10) starting in 2016 would reduce federal outlays

by $32.4 billion between 2015 and 2024, or 1.8% of scheduled outlays for SSDI.157

The stricter recency-of-work requirement would likely affect individuals with intermittent work

histories, specifically workers with prolonged and sustained bouts of absence from covered

employment due to unemployment or withdrawal from the labor force.158 One study found that

while working-age men (ages 25-54) report leaving the labor force primarily because of

disability, working-age women typically report leaving the labor force to care for someone in

their household.159 Consequently, the more stringent recency-of-work requirement may

disproportionately affect women who drop out of the labor force to act as caregivers.160

Adjust the Age Categories for Vocational Factors

Another option is to raise the age categories for “vocational factors.” In addition to assessing an

applicant’s medical condition, DDS examiners take into account the individual’s ability to

perform any past relevant work or other work that exists in the national economy. Vocational

factors such as age, education, and work experience—in combination with the individual’s

residual functional capacity—help an examiner to determine whether an applicant’s impairment

precludes him or her from engaging in SGA. Since vocational factors such as education and work

experience typically become less stringent with age, SSA is more likely to award benefits to older

insured workers.

Currently, SSA categorizes older workers across four age ranges: 45-49, 50-54, 55-59, and 60 and

older.161 CBO examined the effects of increasing the 45-49 and 50-54 age ranges by two years to

47-51 and 52-56 and making 57 to FRA the new maximum range, thereby eliminating the 45, 46,

and 60 and older categories. According to CBO, if this option had been implemented in 2013, it

would have decreased the number of SSDI beneficiaries by 50,000 or 0.5% in 2022, as well as

reduced program expenditures by $1.0 billion in that year.162

157

CBO, Options for Reducing the Deficit 2014, p. 14. Estimates are relative to CBO’s August 2014 baseline

projections and do not include any effects on spending for other federal programs, such as Medicare, Medicaid, and

SSI.

158

Unemployment refers to all individuals aged 16 and older who (1) do not have a job, (2) have actively looked for

work in the prior four weeks, and (3) are currently available for work. Individuals out of the labor force are currently

not working and not actively looking for a job. For more information, see BLS, “How the Government Measures

Unemployment,” June 12, 2014, http://www.bls.gov/cps/cps_htgm.htm.

159

Julie L. Hotchkiss, M. Melinda Pitts, and Fernando Rios-Avila, A Closer Look at Nonparticipants During and After

the Great Recession, Federal Reserve Bank of Atlanta, Working Paper 2012-10, August 2012, p. 6,

http://www.frbatlanta.org/pubs/wp/12_10.cfm.

160

For an example, see Sarah E. Hoffman, “Falling Through the Cracks: How the 20/40 Rule Discriminates Against

Women Seeking Social Security Disability Insurance Benefits and What Congress Can Do About It,” Penn State Law

Review, vol. 113, no. 2 (2008).

161

20 C.F.R. §404.1563. See also SSA, POMS, “DI 25001.001 Medical-Vocational Quick Reference Guide,” January

17, 2014, http://policy.ssa.gov/poms.nsf/lnx/0425001001. In general, SSA categorizes claimants based on three age

ranges: under age 50, age 50-54, and age 55 or over. However, the agency uses the subcategory “age 45-49” in

assessing a claimant’s capacity to do sedentary work and the subcategory “age 60 or older” in determining a claimant’s

ability to perform medium level work.

162

CBO, Policy Options 2012, p. 18. Adjusting the age ranges of vocational factors would have also decreased outlays

to Medicare.

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SSA explored raising the age categories in the past but ultimately decided against it. In 2005, SSA

issued a Notice of Proposed Rulemaking (NPRM) to increase the age categories for older insured

workers by two years.163 However, after collecting feedback from the public, SSA withdrew the

NPRM in 2009.164

Improved Administration of the Program

One option is to improve the way in which SSA administers the program so that fewer nonmeritorious people receive benefits. Variation in the application of program rules can distort the

disability determination and adjudication process, resulting in SSA granting awards to nonmeritorious claimants or denying benefits to claimants with little or no capacity to work.

Similarly, diminished program integrity—whether through waste, fraud, or abuse—may permit

some beneficiaries to remain on SSDI even after their health improves. This subsection outlines

reforms to the administration of the program that could conceivably reduce the growth in the

SSDI rolls.

Permit SSA to Be Represented at the Hearing Level of the Appeals Process

In general, a claimant displeased with the decision at the reconsideration level of the appeals

process may request a hearing before an ALJ, in writing, within 60 days upon receipt of the

previous determination.165 At the hearing level, a claimants may present additional evidence or

arguments to support the case and appoint a representative to act on his or her behalf. Most

claimants are represented by attorneys at ALJ hearings.166 Since SSA is not represented at the

hearing, the proceeding is considered inquisitorial or non-adversarial.167 Under the inquisitorial

process, an ALJ investigates the merit of an appeal by informally questioning the claimant and

any scheduled witnesses (e.g., medical or vocational experts).

Proponents of this process argue that the informal nature of the proceedings and lack of crossexamination by an opposing attorney encourages claimants to share more information with the

ALJ.168 Moreover, supporters note that in Richardson v. Perales, the Supreme Court found that

SSA hearings should be “understandable to the layman claimant, should not necessarily be stiff

and comfortable only for the trained attorney, and should be liberal and not strict in tone and

operation. This is the obvious intent of Congress so long as the procedures are fundamentally

fair.”169

Opponents contend that inquisitorial process makes it harder for ALJs to make informed

decisions on a consistent basis, because they must remain impartial while simultaneously

163

For more information, see SSA, “Age as a Factor in Evaluating Disability,” 70 Federal Register 67104, November

4, 2005, http://www.gpo.gov/fdsys/granule/FR-2005-11-04/05-21975/content-detail.html.

164

SSA, “Age as a Factor in Evaluating Disability,” 74 Federal Register 21563, May 8, 2009, http://www.gpo.gov/

fdsys/granule/FR-2009-05-08/E9-10733/content-detail.html.

165

SSA eliminated the reconsideration step of the appeals process in 10 states. As a result, claimants who are denied at

the initial determination level in these states may appeal directly to an ALJ. For more information, see footnote 23.

166

SSAB, Data and Materials 2012, p. 60.

167

See 20 C.F.R. §§404.900(b) and 405.1(c).

168

Testimony of Ethel Zelenske in U.S. Congress, House Committee on Ways and Means, Subcommittee on Social

Security, Fourth in a Hearing Series on Securing the Future of the Social Security Disability Insurance Program, 112th

Cong., 2nd sess., June 27, 2012, http://waysandmeans.house.gov/uploadedfiles/zelenske_testimony.pdf.

169

Richardson vs. Perales, 402 U.S. 389, 400-401 (1971).

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representing the interests of both claimants and SSA.170 According to the Association of

Administrative Law Judges (AALJ), having to wear all three “hats” during a hearing sometimes

places an ALJ in an untenable situation, in which the judge must represent clients whose interests

are at odds with one another.171 The difficulty of maintaining impartiality while simultaneously

representing the interests of both parties may cause an ALJ to overlook a key piece of evidence or

argument, thereby affecting the outcome of the decision.

To improve the accuracy of ALJs’ decisions, the AALJ,172 the SSAB,173 and some Members of

Congress174 have advocated switching from an inquisitorial to an adversarial process in which

claimants and SSA are each afforded representation. The AALJ and SSAB argue that the vigorous

cross-examination of claimants by SSA representatives would provide ALJs with additional

information, resulting in better decisions. According to SSAB, under the inquisitorial process,

some ALJs may be reluctant to question claimants aggressively for fear of appearing to be

biased.175 SSAB contends that switching to an adversarial process would allow ALJs to

investigate the history and extent of claimants’ medical impairments more thoroughly, resulting in

better-reasoned decisions and greater judicial consistency.

Another potential advantage of the adversarial process is that government representation may

reduce the number of cases that an ALJ would need to hear, which could further improve the

quality of their decisions.176 In 2013, SSA Deputy Commissioner Glenn Sklar testified that the

agency expects ALJs to issue 500-700 decisions annually.177 Some researchers speculate that the

pressure to adjudicate a high number of disability claims quickly has led to poorer ALJ decisions

and consequently a higher allowance rate.178 According to a 2013 Senate report, this pressure

170

See SSAB, Charting the Future of Social Security’s Disability Programs: The Need for Fundamental Change,

January 2001, p. 19, http://www.ssab.gov/Publications/Disability/disabilitywhitepap.pdf (hereinafter cited as “SSAB,

Fundamental Change 2001”). See also material submitted for the record by the Honorable D. Randall Frye, U.S.

Congress, House Committee on Ways and Means, Subcommittee on Social Security, Fourth in a Hearing Series on

Security the Future of the Social Security Disability Insurance Program, 112th Cong., 2nd sess., June 27, 2012, H. Doc.

112-SS18 (Washington: GPO, 2012), http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg80262/pdf/CHRG112hhrg80262.pdf (hereinafter cited as “Testimony of D. Randall Frye, 2012”).

171

Testimony of D. Randall Frye, 2012, p. 58.

172

Ibid. See also AALJ, Newsletter and President’s Report, November 24, 2014, pp. 9-10, http://www.aalj.org/system/

files/documents/aalj_newsletter_november_24_2014.pdf.

173

See SSAB, Fundamental Change 2001, p. 19.

174

See, for example, remarks of Rep. Trey Gowdy, in U.S. Congress, House Committee on Oversight and Government

Reform, Social Security Administration Oversight: Examining the Integrity of the Disability Determination Appeals

Process, 113th Cong., 2nd sess., June 10, 2014, Serial No. 113-128 (Washington: GPO, 2014), p. 58,

http://www.gpo.gov/fdsys/pkg/CHRG-113hhrg89597/pdf/CHRG-113hhrg89597.pdf.

175

SSAB, Fundamental Change 2001, p. 19.

176

Testimony of D. Randall Frye, 2012, p. 209.

177

Testimony of Glenn Sklar, Deputy Commissioner, Office of Disability Adjudication and Review, SSA, U.S.

Congress, House Committee on Oversight and Government Reform, Subcommittee on Energy Policy, Health Care and

Entitlements, Continuing Oversight of the Social Security Administration’s Mismanagement of Federal Disability

Programs, 113th Cong., 1st sess., November 19, 2013, http://www.ssa.gov/legislation/testimony_111913.html

(hereinafter cited as “Testimony of Glenn Sklar, 2013”).

178

Jagadeesh Gokhale, “SSDI Reform: Promoting Gainful Employment while Preserving Economic Security,” Cato

Institute, October 22, 2014, p. 15, http://object.cato.org/sites/cato.org/files/pubs/pdf/pa762_1.pdf. See also U.S.

Congress, House Committee on Oversight and Government Reform, Misplaced Priorities: How the Social Security

Administration Sacrificed Quality for Quantity in the Disability Determination Process, staff report, 113th Cong., 2nd

sess., December 18, 2014., http://oversight.house.gov/wp-content/uploads/2014/12/2014-12-18-Misplaced-Priorities.How-SSA-Sacrificed-Quality-for-Quantity.pdf.

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stems from a 2007 plan by SSA to reduce its backlog of disability hearings.179 One reason why

the pressure to hear a large volume of cases may have increased the overall allowance rate is that

issuing an award is generally not appealed by a claimant and is therefore subject to less scrutiny

than a denial would be. A 2014 story on SSA’s disability backlog in the Washington Post noted

that “judges complain that saying ‘yes’ is a lot easier—and faster—than saying ‘no.’ A negative

decision often requires a lengthier write-up, which goes through all the different ailments that

might have rendered this person disabled. That means 10 pages of text to prepare for a future

appeal. A ‘yes’ decision is rarely appealed. So, they say, it takes less writing.”180 The AALJ

contends that switching to an adversarial process would allow government attorneys to settle

cases with a high probability of reversal before the hearing level, giving ALJs more time to

adjudicate complicated cases or ones with a lower likelihood of being reversed.181 By allowing

government representatives to decide which cases to defend, the adversarial process could reduce

the pressure for ALJs to decide a high number of claims, which, in turn, could improve the quality

of their decisions.

At a hearing in November 2013, SSA refuted the characterization that it is sacrificing quality by

granting claims “too readily” and insisted that it is “making quicker, higher quality disability

decisions.”182 The agency also noted that between FY2007 and FY2013, the share of ALJs with

allowance rates of 85% or greater fell from 20% to 3%.183

Difficulties with Switching to an Adversarial Process

Successfully implementing an adversarial process at the hearing level poses several challenges for

SSA. First, it would require additional expenditures to hire attorneys and appropriate staff.184

Disability hearings are already quite costly for SSA. In FY2011, the unit cost of adjudicating a

disability hearing was about $2,750, compared with about $1,060 to process an initial disability

claim.185 Those extra costs would offset any savings from reduced benefit outlays.186

179

U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, How Some Legal, Medical, and

Judicial Professionals Abused Social Security Disability Programs for the Country’s Most Vulnerable: A Case Study of

the Conn Law Firm, staff report, 113th Cong., October 4, 2013, p. 16, http://www.hsgac.senate.gov/hearings/socialsecurity-disability-benefits-did-a-group-of-judges-doctors-and-lawyers-abuse-programs-for-the-countrys-mostvulnerable. At the end of FY2014, the hearings backlog stood at close to 1 million, 15% higher than at the end of the

previous fiscal year. For more information, see SSA, Agency Financial Report, Fiscal Year 2014, November 10, 2014,

p. 127, http://www.ssa.gov/finance/.

180

David A. Fahrenthold, “Waiting on an Appeal to Social Security for Disability Benefits? Get in a Very Long Line,”

Washington Post, October 18, 2014, http://www.washingtonpost.com/sf/national/2014/10/18/the-biggest-backlog-inthe-federal-government/.

181

Testimony of D. Randall Frye, 2012, p. 58.

182

Testimony of Glenn Sklar, 2013.

183

Ibid. Figures reflect ALJs with at least 100 dispositions in the fiscal year and exclude dismissals.

184

See testimony of Jeffrey Lubbers, Professor, American University Washington College of Law, in U.S. Congress,

House Committee on Ways and Means, Subcommittee on Social Security, Fourth in a Hearing Series on Securing the

Future of the Social Security Disability Insurance Program, 112th Cong., 2nd sess., June 27, 2012, p. 16,

http://waysandmeans.house.gov/uploadedfiles/lubbers_testimony.pdf.

185

SSAB, Filing for Social Security Disability Benefits: What Impact Does Professional Representation Have on the

Process at the Initial Level, September 2012, p. 6, footnote 9, http://www.ssab.gov/Reports/Third-Party-2012-Full.pdf.

186

Under an adversarial process, SSA may be required to pay additional fees to claimants’ representatives. For a

discussion of the applicability and cost of fees permitted under the Equal Access to Justice Act, see Frank Bloch,

Jeffrey Lubbers, and Paul Verkuil, Introducing Nonadversarial Government Representatives to Improve the Record of

Decision in Social Security Disability Adjudications, SSAB, 2003, pp. 47-51, http://www.ssab.gov/documents/BlochLubbers-Verkuil.pdf. See also SSA, POMS, “GN 03990.001 Equal Access to Justice Act—General,” February 11,

(continued...)

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SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Second, a federal judge issued an injunction against SSA’s previous adversarial pilot program in

1986, so an adversarial process might require new legislative authority.187 In 1982, SSA initiated

the Social Security Administration Representation Project (SSARP) in five hearing offices across

the country to test “whether the participation of SSA representatives in disability cases at the

administrative hearing level can contribute toward improving the quality and timeliness of

hearing dispositions.”188 Under the SSARP, government representatives reviewed hearing

requests, initiated case development, and represented the agency whenever a claimant had an

appointed representative at a hearing.

The SSARP sparked concern among some Members of Congress and the public over the “fairness

of SSA’s disability adjudication process.”189 One month into the pilot program, seven disability

claimants challenged the SSARP in the Western District of Virginia seeking injunctive and

declaratory relief.190 In Salling v. Bowen, a district judge issued an injunction against the SSARP,

finding that its procedures did not meet the standard for due process and were not “fundamentally

fair.”191 The judge also held that the pilot program violated the Social Security Act and intruded

on the independence of ALJs. Although SSA appealed the court’s decision, the agency ultimately

discontinued the SSARP and revoked its regulations in 1987.192 According to the General

Accounting Office (GAO; now the Government Accountability Office), the preliminary results of

the pilot were never verified and a final report was never issued.193

Third, the effects of switching to an adversarial process are difficult to predict. To determine the

effectiveness of government representation, SSA would need to know:



whether representation can improve the quality of ALJ decisions, and if so,

whether higher-quality decisions reduce the overall allowance rate, and if so,

whether the adversarial process can be done in a cost-effective manner.

(...continued)

2008, http://policy.ssa.gov/poms.nsf/lnx/0203990001.

187

Bloch, Lubbers, and Verkuil, Introducing Nonadversarial Government Representatives to Improve the Record of

Decision in Social Security Disability Adjudications, pp. 11-19.

188

HHS, SSA, “Federal Old Age, Survivors and Disability Insurance and Supplemental Security Income for the Aged,

Blind, and Disabled; Project To Improve the Hearing Process Through the Involvement of SSA Representatives,” 47

Federal Register 36117-36118, August 19, 1982.

189

U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security, Current Problems in the

Social Security Hearings and Appeals Process , 99th Cong., 2nd sess., March 18, 1986, H.Hrg. 99-63 (Washington:

GPO, 1986), pp. 2-57.

190

Bloch, Lubbers, and Verkuil, Introducing Nonadversarial Government Representatives to Improve the Record of

Decision in Social Security Disability Adjudications, p. 60.

191

Salling vs. Bowen, 641 F. Supp. 1046 (W.D. Va. 1986).

192

HHS, SSA, “Federal Old Age, Survivors and Disability Insurance and Supplemental Security Income for the Aged,

Blind, and Disabled; Final Rule, Discontinuance of the SSA Representation Project,” 52 Federal Register 1728517286, May 7, 1987.

193

GAO, Social Security Disability: SSA Must Hold Itself Accountable for Continued Improvement in Decisionmaking, HEHS-97-102, August 12, 1997, p. 43, http://www.gao.gov/products/HEHS-97-102. According to SSA,

preliminary data indicated that the ALJ error rate for favorable decisions issued under the SSARP was 50% lower than

the national error rate. For more information, see U.S. Congress, House Select Committee on Aging, Government

Representatives: Advocates or Adversaries, 99th Cong., 1st sess., March 18, 1985, H.Hrg. 99-504 (Washington: GPO,

1985), p. 27.

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Update SSA’s Listing of Impairments

During the disability determination process, DDS examiners and medical and psychological

consultants typically use medical evidence collected from the claimant’s treating sources to

determine the severity of the claimant’s impairment.194 To assess whether the impairment

precludes the claimant from working, state disability examiners evaluate it against SSA’s Listing

of Impairments (hereinafter “listings”). The listings describe medical impairments that are

considered severe enough to prevent an individual from performing any gainful activity for each

of the 14 major adult body systems.195 Most of the impairments described in the listings are

permanent or expected to result in death.196 All other listings must show that the impairment has

lasted or is expected to last for at least one year. If the claimant’s impairment meets (or is of equal

severity to) the criteria in the listings, SSA considers the claimant disabled and therefore eligible

for benefits. Claimants who do not meet the medical criteria in the listings proceed to a more

individualized assessment that examines their remaining ability to work, taking into account

certain vocational factors.197

Although the listings serve as a useful guide for DDS examiners, the percentage of awards

determined at the listings stage has decreased substantially over the years. Between FY1980 and

FY2010, the share of initial allowances based on claimants meeting the medical listings declined

from 58% to 38%, while the portion based on claimants having an impairment equal in severity

fell from 16% to 8% over the same period (Figure 13).198 SSAB, GAO, and SSA’s OIG all

attribute this decline to the increasingly outdated nature of the listings. In 2000, the OIG found

that SSA had not updated certain listings in over 10 years; moreover, SSA had not updated the

listings for mental disorders in 15 years.199 In 2003, GAO identified SSDI as a high-risk program

because it relied on listings that did not reflect the impact of medical and technological advances

on work-limiting impairments.200

194

If the evidence from a claimant’s medical sources is insufficient to make a disability determination, DDS examiners

can arrange for a consultative examination. For more information, see SSA, “Consultative Examinations: A Guide for

Health Professionals, Part III - Consultative Examination Guidelines,” accessed December 2014, http://www.ssa.gov/

disability/professionals/greenbook/ce-guidelines.htm.

195

For information on the Listing of Impairments, see SSA, “Disability Evaluation Under Social Security,”

http://www.ssa.gov/disability/professionals/bluebook/. See also GAO, Modernizing SSA Disability Programs: Progress

Made, but Key Efforts Warrant More Management Focus, GAO-12-420, June 19, 2012, p. 3, http://www.gao.gov/

products/GAO-12-420.

196

For more information, see SSA, POMS, “DI 34001.001 Listing of Impairments—Purpose, Parts and Use,” February

26, 2013, http://policy.ssa.gov/poms.nsf/lnx/0434001001.

197

SSAB, The Social Security Definition of Disability, October 2003, p. 4, http://www.ssab.gov/documents/

SocialSecurityDefinitionOfDisability.pdf (hereinafter cited as “SSAB, Definition of Disability 2003”).

198

SSAB, Data and Materials 2012, Table 40, p. 45.

199

SSA, OIG, The Social Security Administration’s Listing of Impairments, A-01-08-18023, March 27, 2009, p. 4,

http://oig.ssa.gov/social-security-administrations-listing-impairments.

200

GAO, High Risk Series: An Update, GAO-03-119, January 1, 2003, pp. 20-21, http://www.gao.gov/products/. GAO

designates certain federal programs as “high risk” in order to draw attention to issues related to efficiency,

effectiveness, and accountability.

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Figure 13. Basis for Decision of Initial SSDI Allowances, FY1980-FY2010

80%

70%

60%

Vocational

Considerations

Meets Listings

50%

40%

30%

20%

Equals Listings

10%

1980

1984

1988

1992

1996

2000

2004

2008

Source: SSAB, Aspects of Disability Decision Making: Data and Materials, February 2012, Table 40,

http://www.ssab.gov/PublicationViewOptions.aspx?ssab_pub=115.

Note: Data do not reflect medical allowances made at the appeals levels.

To improve the quality and accuracy of disability determinations, SSA initiated a two-tiered

process for updating its medical listings beginning in 2003.201 Under the new process, the agency

is to first complete a comprehensive revision of each listing category, taking into account any

medical disorder or disease that may inhibit an individual’s ability to work.202 Once the

comprehensive update is complete, SSA is to conduct periodic reviews of each listing category to

ensure that the listings are current.203 SSA has completed comprehensive revisions to nine of the

14 major adult body systems.204

SSA has experienced delays in completing comprehensive updates to the remaining five major

adult body systems.205 For example, SSA has still not completed a final revision of the listing for

mental disorders—SSDI’s second most diagnosed impairment—which last received a

comprehensive update in 1985.206 SSA officials attribute the delay to a shortage of qualified staff

and to the enormous complexity of implementing and revising new medical listings.207

201

GAO, Modernizing SSA Disability Programs, p. 5.

Ibid., pp. 5-8. In 2010, SSA set a five-year cycle for updating listings following a comprehensive review.

203

SSA, “Appendix: Business Plan for Updating the Medical Listings,” http://www.ssa.gov/open/regsreview/EO13563-Med-Lstngs-Biz-Prcss-4-15-11.html.

204

Information based on personal communication with a SSA official on June 6, 2014.

205

Ibid. SSA is still in the process of completing comprehensive revisions to the following adult body systems: mental

disorders, hematological disorders, the respiratory system, neurological disorders, and musculoskeletal disorders. The

agency has issued proposed rules for all the remaining adult body systems except for the musculoskeletal body system,

which is still under internal review. For more information on the status of proposed and final rules concerning adult and

child body systems, see SSA, “Executive Order 13563 on Improving Regulation and Regulatory Review: Final Plan:

Update of Progress on Final Plan for Retrospective Review,” August 8, 2014, http://www.ssa.gov/open/regsreview/EO13563-Final-Plan-Progress-Update.html.

206

GAO, Modernizing SSA Disability Programs 2012, p. 11. According to GAO, SSA published a limited update to

(continued...)

202

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Updating the listings to take into account medical and technological advances, as well as changes

in the labor market, could allow DDS examiners to better identify individuals with severe worklimiting disabilities, while screening out non-meritorious claimants who could potentially engage

in SGA. The impact of updated medical listings on the prevalence of benefit receipt remains

unclear, because claimants denied at the medical listings stage of the determination process may

still be awarded benefits based on vocational factors.

Update SSA’s Occupational Information System

If a claimant fails to meet the eligibility criteria described in the medical listings, SSA is to

proceed with a more individualized assessment that examines the claimant’s ability to engage in

SGA. To “minimize subjectivity and promote national consistency,” SSA employs a system of

medical and vocational rules designed to assist examiners in discerning whether a claimant can

perform any past relevant work or other work that exists in the national economy. 208 SSA

considers claimants who cannot perform such work to be disabled and therefore eligible for

SSDI.

Currently, SSA uses the Department of Labor’s (DOL) Dictionary of Occupational Titles (DOT)

to determine the physical and mental demands of available work in the national economy.

Because DOT last received a major update in 1977, its occupational information is considered

largely outdated.209 Although DOL replaced DOT with the Occupational Information Network

(O*NET) in 1998, SSA concluded that O*NET’s occupational information was insufficient to

meet its requirements.210 A 2012 Senate report expressed concern that DOT’s increasingly

outdated information may result in awards to claimants who could work in unlisted

occupations.211

To improve program integrity, SSA in December 2008 established the Occupational Information

Development Advisory Panel to develop a new occupational information system (OIS) for use in

the vocational stages of the disability determination process.212 In July 2012, SSA signed an

interagency agreement with the Bureau of Labor Statistics (BLS) to test the viability of using

BLS’s National Compensation Survey (NCS) to collect occupational data for the new OIS. In

FY2013, SSA and BLS conducted a three-phase test to assess the NCS’s accuracy and reliability

(...continued)

the “mental disorders” listing in 2000.

207

Ibid., p. 12.

208

U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security, The Third in a Hearing

Series on Securing the Future of the Social Security Disability Insurance Program , Testimony of Michael J. Astrue,

Commissioner of the Social Security Administration, 112th Cong., 2nd sess., March 20, 2012, http://www.ssa.gov/

legislation/testimony_032012.html. See also GAO, Modernizing SSA Disability Programs 2012, p. 4.

209

GAO, Modernizing SSA Disability Programs 2012, p. 6. DOT received a minor update in 1991, albeit for only

about 20% of all occupations covered in the database.

210

Ibid., p. 14.

211

U.S. Congress, Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on

Investigations, Social Security Disability Programs: Improving the Quality of Benefit Award Decisions, Minority Staff

Report, 112th Cong., 2nd sess., September 13, 2012, p. 5, http://www.hsgac.senate.gov/subcommittees/investigations/

hearings/social-security-administrations-disability-programs.

212

SSA, “Occupational Information System Project,” http://www.ssa.gov/disabilityresearch/

occupational_info_systems.html.

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

in capturing occupational data that are relevant for disability determinations.213 SSA expects to

start developing the new OIS in FY2015 and implement it by FY2016.214

In the future, SSA’s updated OIS may help to mitigate the growth in the SSDI rolls. According to

SSA, the occupational information in DOT reflects an industrial economy, whereas today’s

economy has become more service oriented.215 Therefore, modern occupations that require less

physical exertion may allow individuals with certain disabilities to remain in the labor force. On

the other hand, some individuals may be more likely to qualify for SSDI when evaluated using

the updated OIS.216 For example, older individuals with disabilities may have difficulty adjusting

to the intensity and pressure of many of today’s employment opportunities, while individuals with

less extensive education may be less suited to “cognitively demanding” work.217

Another complicating issue is that individuals with disabilities still tend to work in occupations

that require physical labor.218 For instance, one study found that individuals with cognitive or

multiple disabilities are more likely to work in physically demanding, low-skilled jobs.219

Consequently, an updated OIS may not reduce the number of individuals with certain chronic

conditions from applying for benefits.

Increase the Number of Full Medical CDRs Conducted by SSA

As noted earlier, medical CDRs are periodic reevaluations conducted to determine if beneficiaries

are still disabled.220 If SSA finds substantial evidence of medical improvement related to a

beneficiary’s ability to work, the agency typically considers the beneficiary no longer disabled.

By increasing the number of full medical CDRs conducted each year, SSA could increase the

recovery rate of beneficiaries with work-related medical improvements, which would help to

reduce the disability rolls.

According to SSA, periodic medical evaluations are one of the most cost-effective tools for

improving program integrity.221 Of the more than 443,000 full medical CDRs conducted in

213

BLS, BLS FY 2012 Interagency Agreement Deliverable for the Social Security Administration, September 28, 2012,

http://www.ssa.gov/disabilityresearch/documents/Plans%20for%20FY2013%20Testing%202012-09-28.pdf.

214

SSA, Social Security Administration (SSA) Service Delivery Plan, February 20, 2013, p. 19, http://www.ssa.gov/

open/SDP/SDP_022013.pdf.

215

Robert Pfaff, Prior SSA Work to Address the DOT Concerns, SSA, Occupational Information Development

Advisory Panel, February 24, 2009, slide 2, http://www.socialsecurity.gov/oidap/Documents/

Social%20Security%20Administration.%20Prior%20SSA%20Work%20to%20Address%20th.pdf.

216

U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security, Chairman Johnson

Announces Hearing on the Challenges of Achieving Fair and Consistent Disability Decisions, Testimony of Kathy

Ruffing, Senior Fellow at the Center on Budget and Policy Priorities, 113th Cong., 1st sess., March 20, 2013,

http://waysandmeans.house.gov/uploadedfiles/ruffing_testimony32013.pdf (hereinafter cited as “Testimony of Kathy

Ruffing, 2013”).

217

Richard W. Johnson, Gordon B.T. Mermin, and Matthew Resseger, Employment at Older Ages and the Changing

Nature of Work, The AARP Public Policy Institute, November 2007, p. 1, http://www.urban.org/UploadedPDF/

1001154_older_ages.pdf.

218

See David C. Stapleton, “Bending the Employment, Income, and Cost Curves for People with Disabilities,”

Mathematica Policy, Inc., April 2011, p. 3, http://www.mathematica-mpr.com/publications/PDFs/disability/

disability_bendemploy_ib.pdf

219

Michelle Maroto and David Pettinicchio, “Disability, Structural Inequality, and Work: The Influence of

Occupational Segregation on Earnings for People with Different Disabilities,” Research in Social Stratification and

Mobility, vol. 38 (2014), p. 86.

220

CDRs are generally conducted by DDSs.

221

SSA, Agency Financial Report, Fiscal Year 2014, November 10, 2014, p. 190, http://www.ssa.gov/finance/

(continued...)

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

FY2012, SSA estimates that it will cease paying benefits to over 76,000 individuals and their

eligible dependents after all appeals (a cessation rate of 17%).222 For every dollar spent on CDRs

in FY2012, the agency estimates approximately $14.60 in future savings to the federal

government.223 Prior to that, the CDR process yielded an estimated savings-to-cost ratio of $10 to

$1.224 (Note that benefit savings from CDRs are not counted for congressional scorekeeping

purposes.225)

However, a loss of dedicated funding for program integrity activities between FY2003 and

FY2008 left SSA with fewer resources with which to conduct disability reviews, resulting in a

CDR backlog (Figure 14).226 In 2010, the OIG estimated that if SSA had conducted all full

medical CDRs when they were originally scheduled between 2005 and 2010, the agency would

have removed an additional 90,000 to 180,000 SSDI and SSI beneficiaries from the rolls, thereby

avoiding between $1.3 billion and $2.6 billion in benefit payments from 2005 to 2010.227 Despite

recent efforts to reduce the backlog, SSA estimated that there were 1.3 million pending medical

CDRs at the end of FY2013.228

(...continued)

(hereinafter cited as “SSA, Agency Financial Report, FY2014”).

222

SSA, Annual Report of Continuing Disability Reviews, Fiscal Year 2012, October 23, 2014, http://www.ssa.gov/

legislation/FY%202012%20CDR%20Report.pdf (hereinafter cited as “SSA, FY2012 CDR Report”). Figures reflect

CDRs of SSDI, SSI, and concurrent recipients.

223

Ibid. Projected savings reflect the present value of future benefits for the OASDI, SSI, Medicare, and Medicaid

programs. Projected savings do not take into account the lifetime benefits of terminated beneficiaries processed outside

SSA’s central release system. The $14.60 to $1 savings-to-cost ratio is calculated by dividing the estimated present

value of total lifetime benefits savings ($7 billion) by the amount spent to conduct CDRs in FY2012 ($447 million).

224

Ibid. Figure reflects the savings-to-cost ratio for FY1996-FY2011. According to SSA, “the higher savings-to-cost

ratio in FY2012 is attributable to a variety of factors, including changes in the specific mix of CDR cases conducted,

revised economic assumptions, refinements in the models used to estimate the CDR benefit savings, and variation in

the cost of conducting these reviews.”

225

See letter from Douglas W. Elmendorf, Director, Congressional Budget Office, to the Honorable John A. Boehner,

Speaker of the U.S. House of Representatives, and the Honorable Harry Reid, Majority Leader of the U.S. Senate,

August 1, 2011, p. 4, http://cbo.gov/sites/default/files/budgetcontrolactaug1.pdf. See also Office of Management and

Budget (OMB), Circular No. A-11: Appendix A–Scorekeeping Guidelines, July 2014, scorekeeping guideline 3,

http://www.whitehouse.gov/sites/default/files/omb/assets/a11_current_year/app_a.pdf.

226

U.S. Congress, House Committee on Oversight and Government Reform, Subcommittee on Energy Policy, Health

Care and Entitlements, Examining Ways the Social Security Administration Can Improve the Disability Review

Process, 113th Cong., 2nd sess., April 9, 2014 (Washington: GPO, 2014), p. 72, http://www.gpo.gov/fdsys/pkg/CHRG113hhrg87819/pdf/CHRG-113hhrg87819.pdf.

227

SSA, OIG, Full Medical Continuing Disability Reviews, March 30, 2010, p. 2, http://oig.ssa.gov/full-medicalcontinuing-disability-reviews. Savings do not include projected avoided payments made under Medicare or Medicaid.

228

SSA, OIG, The Social Security Administration’s Completion of Program Integrity Workloads, August 2014, Table

C-1, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-07-14-24071 (hereinafter cited as “OIG, 2014 Report

on CDR Workloads”).

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

Figure 14. Full Medical CDR Backlog, FY2002-FY2013

(in thousands)

1,600

CDR Backlog

1,400

1,200

1,000

Medical CDRs

Completed

800

600

400

200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal Year

Source: Office of the Inspector General (OIG), The Social Security Administration’s Completion of Program Integrity

Workloads, August 2014, Table C-1, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-07-14-24071.

Reducing the CDR backlog has posed a challenge for SSA, in part because of a reduction in DDS

staffing levels over the years. In response to budget deficits following the last recession, some

states instituted furloughs or hiring freezes of state employees, including DDS examiners. The

reduced staffing at DDSs limited SSA’s ability to conduct periodic medical reviews and

contributed to the backlog of CDRs. To address the lower staffing levels, SSA transferred a

portion of disability cases from furloughed DDS offices in some states to non-furloughed DDS

offices in other states.229 Additionally, the agency received funding in FY2009 and FY2010 to

increase the number of DDS staff by more than 2,900 employees.230 However, due to an agencywide hiring freeze that began in FY2011, SSA did only limited critical hiring between FY2011

and FY2013.231 The combination of attrition and hiring freezes during this period resulted in a net

decline in DDS staffing levels (Table 2).

Table 2. DDS Staffing, FY2008-FY2013

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

15,361

16,814

18,268

17,064

16,075

15,285

Source: SSA, OIG, The Social Security Administration’s Progress in Reducing the Initial Disability Claims Backlog, 2014,

Table 1, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-07-13-13073.

229

SSA, OIG, The Social Security Administration’s Response to State Furloughs Impacting its Disability Programs, A01-11-11116, March 22, 2011, p. 6, http://oig.ssa.gov/social-security-administration%3Fs-response-state-furloughsimpacting-its-disability-programs (hereinafter cited as “OIG, State Furlough Report 2011”).

230

SSA, OIG, The Social Security Administration’s Progress in Reducing the Initial Disability Claims Backlog, April

28, 2014, Table 1, p. 5, http://oig.ssa.gov/audits-and-investigations/audit-reports/A-07-13-13073.

231

SSA, Agency Financial Report, Fiscal Year 2013, December 9, 2013, p. 117, http://www.ssa.gov/finance/

fy13_AFR.html.

Congressional Research Service

SSDI Reform: An Overview of Proposals to Manage the Growth in the SSDI Rolls

To address the mounting backlog of CDRs and enhance program integrity, advocacy

organizations,232 researchers,233 and the Obama Administration234 have all expressed their support

for increasing CDR funding. The Budget Control Act of 2011 (BCA; P.L. 112-25), which places

caps on discretionary spending, includes a provision to adjust the caps to permit additional

appropriations to SSA for program integrity activities such as CDRs and SSI redeterminations.235

SSI redeterminations are periodic reviews to ensure that beneficiaries meet SSI’s financial

eligibility requirements.236

The Consolidated Appropriations Act, 2014 (P.L. 113-76) appropriated a total of $1.197 billion

for CDRs and SSI redeterminations, which was the maximum amount allowed under the BCA for

FY2014.237 With this level of funding, SSA completed nearly 526,000 full medical CDRs and 2.6

million SSI redeterminations (see Figure 3).238 The FY2014 appropriation also allowed the

agency to hire about 2,600 DDS employees, including both replacement staff and additional

hires.239

For FY2015, the Administration requested the full amount authorized for program integrity

activities under the BCA: $273 million in base funding and $1.123 billion in cap adjustment

funding. The Administration estimates that the $1.396 billion in total program integrity funding

would allow SSA to perform at least 888,000 full medical CDRs and 2.6 million SSI

redeterminations in FY2015.240 Congress appropriated the maximum amount for FY2015 in the

Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235).

According to SSA, the agency would need $11.8 billion in program integrity funding during

FY2014-2023 to eliminate the CDR backlog by FY2018 and prevent it from growing back again

through FY2023.241 This level of funding would allow SSA to conduct an estimated 8.8 million

full medical CDRs. However, at the funding levels prescribed in the BCA, SSA projects that it

would be able to conduct only 7.8 million full medical CDRs at a cost of $10.3 billion.

For FY2016, the Administration proposes replacing the discretionary spending caps established

under the BCA with a dedicated source of mandatory funding to enable SSA to conduct more

CDRs and SSI redeterminations on a consistent basis.242 Under this option, SSA estimates that it

232

Statement for the record from the Consortium for Citizens with Disabilities, U.S. Congress, House Committee on

Ways and Means, Subcommittee on Social Security, First in a Hearing Series on Securing the Future of the Social

Security Disability Insurance Program, 112th Cong., 1st sess., December 2, 2011, Serial 112-SS11 (Washington: GPO,

2012), pp. 61-65, http://www.gpo.gov/fdsys/pkg/CHRG-112hhrg76319/pdf/CHRG-112hhrg76319.pdf.

233

Testimony of Kathy Ruffing, 2013, p. 15.

234

OMB, Fiscal Year 2015 Budget of the U.S. Government, 2014, pp.149-150, http://www.whitehouse.gov/sites/

default/files/omb/budget/fy2015/assets/socsec.pdf.

235

For more information on SSA budgetary issues, see C

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