Thursday, October 10, 2013

Disability Insurance's Real Fraud is How Stingy It Is

I am personally acquainted with people who fraudulently applied for disability insurance they didn't qualify for, and were justifiably denied.

I am personally acquainted with people who correctly applied for disabiity insurance they did qualify for, but were unjustifiably denied, and ended up penniless, homeless and hopeless.

I am personally acquainted with people who were unjustifiably denied but who persisted in appealing that denial and eventually got the disability insurance to which they, as disabled members of the community, were entitled.

But I have never yet met or seen good evidence of that mythical creature, the person who fraudulently applied for disability insurance they didn't quality for, but received anyway.

George Zornick at The Nation:

It certainly gave a frightening impression. But viewers got little valuable information about the actual fraud rates for SSDI. Kroft didn’t interview any policy experts, nor any spokespeople for the program nor anyone who actually receives benefits.

Had he done so, viewers might have learned the following:

- According to the OECD, the United States has among the most restrictive and least generous disability benefit systems in the developed world—behind only South Korea.

- Two-thirds of SSDI applicants are denied on the first application. More than 60 percent are denied even after all appeals are complete.

- SSDI is funded through payroll tax contributions, and is provided to workers who have contributed enough through payroll taxes to be insured.

- There is an answer to Coburn’s question of “where did all these disabled people come from?” Demographics explain nearly all of it, and this rise in SSDI applicants was predicted as far back as 1994. Growth in the US population, the baby-boom generation entering its high-disability years and the surge of women who entered the workplace in the 1970s and 1980s and became insured under SSDI all contributed to the natural rise in beneficiaries.

- As baby boomers reach the retirement age, the SSDI growth has already begun to level off and will decline in coming years.

- There will be a shortfall in SSDI benefits beginning in 2016, but the program can pay 79 to 80 percent of benefits through 2086.

- To reach solvency, Congress would simply have to enact a modest reallocation of payroll taxes from the retirement side of Social Security to the disability side, as it has done eleven times in the past to respond to demographic changes. In other words, SSDI is a very strict program that denies far more people than it accepts, and needs a modest congressional fix to stay at full solvency. An interesting issue, for certain—but nothing like the benefit-sucking dystopia portrayed by 60 Minutes.


Advocates like Vallas are naturally frustrated. “These media reports do a tremendous disservice to viewers as well as to people with disabilities,” she told The Nation. “Any misuse of these vital programs is unacceptable; however, it is unfortunate and disappointing when media reports mislead their viewers by painting entire programs with the brush of one or a few bad apples, without putting them in the context of the millions of individuals who receive benefits appropriately, and for whom they are a vital lifeline.”

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