Disability Reform – Welfare Reform as a Model

The caseloads and total expenditures of  Social Security Disability Insurance and Supplemental Security Income for disabled adults  have nearly doubled in size

[Second in a five part series – previous article Disability Reform – A Matter of Policy, Not Fraud]

Welfare Reform as a Model

By Richard V. Burkhauser – The caseloads and total expenditures of the two major federal transfers programs targeted on that portion of the disabled population that is unable to work — Social Security Disability Insurance and Supplemental Security Income for disabled adults and the families of disabled children — have nearly doubled in size (13 million people in 2008) and program costs ($135 billion in 2008) since 1993.

This program growth was not caused by a deterioration in the health of the working age population but by the unintended consequences of public policy. While the added funds for compliance officers in President Obama’s proposed budget may reduce fraudulent disability claims, this will do little to reduce disability program growth.

President Obama could be the same agent of change toward disability policies as President Clinton was on welfare reform. The key is recognizing that most working age people with disabilities could and would work, if work paid. It took systemic reforms based on two decades of research that showed that if you made work pay, welfare mothers could and would work, rather than a crackdown on welfare fraud for President Clinton to successfully change welfare as we knew it.

Health-based impairments can lead people to leave the work force permanently, but this need not happen. Incentives matter, and our current disability system encourages impaired workers, their employers and state governments to invest their time and energy in showing that impaired workers can’t work rather than in the accommodation, rehabilitation and access to health care that could keep them in the labor force.

Such a system is bad for taxpayers because it is an ineffective way to provide social protection for the minority of disabled workers who no longer can work and it is bad for benefit recipients since, like welfare mothers, their economic well-being would be greater if they worked.

Richard V. Burkhauser is the Sarah Gibson Blanding professor of public policy in the department of policy analysis at Cornell. He is co-author, with Mary Daly, of the forthcoming book “The Declining Work and Welfare of People with Disabilities: What Went Wrong and a Strategy for Change.”

Next in the series – Disability Reform – Identifying Who Is Disabled