Monday, December 9, 2013

New Social Security Study Explains the "Explosion" in Disability Benefits

Its time to put all the misinformation regarding the Social Security Disability programs to rest.  Fraud or laziness are not the reasons for the explosion in Social Security Disability claims.  A new study conducted by two economist confirms, once again, that this rise in disability claims has been caused by the changing demographics of the American population.
A copy of this study can be found here.  Economists David Pattison and Hilary Waldron examined 36 years of demographic data and made the following findings:
We find that three factors—(1) population growth, (2) the growth in the proportion of women insured for disability, and (3) the movement of the large baby boom generation into disability-prone ages—explain 90 percent of the growth in new disabled-worker entitlements over the 36-year subperiod (1972–2008). The remaining 10 percent is the part attributable to the disability “incidence rate.” Looking at the two subperiods (1972–1990 and 1990–2008), unadjusted measures appear to show faster growth in the incidence rate in the later period than in the earlier one. This apparent speedup disappears once we account for the changing demographic structure of the insured population. Although the adjusted growth in the incidence rate accounts for 17 percent of the growth in disability entitlements in the earlier subperiod, it accounts for only 6 percent of the growth in the more recent half. Demographic factors explain the remaining 94 percent of growth over the 1990–2008 period.

The "disability incident rate" was lower between 1990 to 2008 than it was between 1972 to 1990

The most significant part of this report is the section where the authors discuss the actual "disability incident rate".  This is the rate at which disability claims increased if one takes the demographic changes out of consideration.  This factor is extremely important because it can shed light as to whether factors other than demographics (i.e. fraud, abuse or lax application of the rules for eligibility) are causing the disability claims to raise.  For this reason, the authors of the study found that it was important "to be able to calculate an incidence rate that shows the changes in disability incidence that are not due to the shifting age composition of insured workers". 
The report found that the "disability incidence" rate has been falling over the past 18 years; not "skyrocketing" or "exploding" as critics of the Social Security Disability programs suggest.   
Pattison's and Waldron's work is specially important at this particular moment, when SSDI is under heavy attacks from uninformed critics like Sen. Tom Coburn from Oklahoma.  The Republican Senator went  on "60 Minutes" and, in a sensationalistic fashion, exclaimed out loud: "where all the disabled people came from?".   Well, Senator, here is the answer!  Read the study!  The Senator's suggestion that the increase in disability claims was a result of fraud or laziness was completely shameful and baseless.