Does Disability Insurance=Welfare?

, Spencer Irvine, 2 Comments

Younger people are staying on federal  disability insurance rolls longer than in previous years, leading to bigger government payouts overall.

In a forum at the libertarian Cato Institute, MIT professor David Autor delved deeper into the problems with disability insurance, pointing out that their “outmoded…definition…prevents the program from helping people” on the margin of disability and functional workforce. It is based on one’s inability to work, which actually creates “a very powerful disincentive for the group.” A scary statistic is that the fraction receiving these payments is “rising steeply” and that it has increased by a third among men but doubled among women.

Autor criticized The Washington Post’s take on disability insurance, titled “Simple Boring Reason.” The Post talked about how the aging demographic is to blame. He asked why people like him know that “this is a myth.” It is simple arithmetic that proves the Post wrong. The Post relies on highly and typically inaccurate government projections on growth of the disability insurance rolls, which said that at one point, enrollment will decrease.

The bottom line is that “we don’t have good policy control” over this issue. Other countries that have listened to the music and have shown that this is “not an insurmountable problem.” The Netherlands, which used to call disability insurance “the other national disease,” forced employers to undertake the burden. Australia and Sweden are following suit and initial results are encouraging. The bottom line is that  “disability is not a medical disorder” but more of a social issue, said Autor.

At the same Cato forum where Autor spoke, University of Chicago professor Harold Pollack went into the constructs and processes surrounding disability insurance. He said that the stereotypes, which are propagated by “unfortunate media portrayals,” make Americans think that these disability insurance programs are “more generous than they are.”

But even if they aren’t as generous as subsidies in the golden age of disability insurance in Scandanavia, is that the direction where America should be heading? As we reported in April, Cornell University economist Richard Burkhauser undertook a study that looked at the number of people who reported a disability the previous week and checked to see whether they were employed the following week or on SSI. He found that in 1981 and 1990, about one-third of those reporting a disability one week were applying for SSI benefits the following week. Last year, half of the disabled in Burkhauser’s survey were on SSI the week after reporting a disability.

Moreover, “Those conditions that are hard to assess have risen dramatically,” Burkhauser observes. “Others have not gone up that much.”

 

Spencer Irvine is a staff writer at Accuracy in Academia.
If you would like to comment on this article, e-mail mal.kline@academia.org.

 

2 Responses

  1. Thomas

    January 30, 2014 2:42 am

    This article got me to thinking. If I plan to retire in May, should I decline my company’s optional disability insurance coverage in the year I plan to retire? Would I essentially be paying for nothing in that final partial year of employment?

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