Friday, January 4, 2013

Disability Coverage for Me, But Not Thee

I have to admit I've felt twinges of discomfort with the increasing number of people applying for (and getting) Social Security Disability Income or SSDI, beyond U.S. population growth and, possibly, beyond what might be expected from the Baby Boom bulge. Wednesday's Star Tribune included an op-ed by economics professor Edward Glaeser, decrying this as part of the "jobless trap."

With that on my mind, I happened to listen to Kerri Miller's Daily Circuit show on MPR as I drove to work. The topic was the aftermath of the Fiscal Cliff vote, and how to solve our larger budget problems. I didn't hear much of the show, but I did catch this caller:

Steve in Stillwater: My feeling is that all parties seem to dance around the greatest entitlement of all, Social Security. It appears to be an untouchable thing that nobody talks about dismantling. It's the greatest tax, and it is a tax, it's the Social Security tax on the American public. And if you amortize the amount that you put into SS over a period of your work career, at least mine as a middle incomer, ends up to be approximately three-quarters of a million dollars. It all ends up in the government's pocket.

Kerri Miller: But then you get the benefits back, Steve.

Steve: And the benefit ends up to be the government's tax. My greatest issue is, I have friends who are ex-drug addicts and alcoholics who are on SSDI who have worked very little and draw from that system for a lifetime, who could work. They sit home and watch TV during the daytime.
Hearing Steve brought me back to my senses. First, Steve, if you are in truth a "middle incomer," you don't know how to do math. Let's say you make around Minnesota's median household income of $50,000 a year. If those were your average wages over your whole career (unlikely, since you would have made less when you were younger, but I'm being as fair as possible to Steve), you'd be paying in a total of $155,000 at 6.2 percent, or $310,000 if you include the employer match or if you're self-employed. Neither number is anywhere near three-quarters of a million dollars.

You'd need average annual wages over $240,000 to pay in that much, excluding the employer match, or $120,000 a year if we're talking about a self-employed person. Not really what anyone would have had in mind when Steve said he was a "middle incomer." And both those salary amounts are higher than the current cap on Social Security wages, so what's up with your three-quarters of a million bloviating, Steve? Maybe you should read this advice on how much the average person pays in and how much s/he gets out.

And then there's Steve's attack on his TV-watching friends and their SSDI. I wondered about that, so I looked it up. It turns out that people who receive SSDI must have worked at least half of the previous 10 years before they can apply -- not exactly Steve's statement that they "worked very little." They have to meet pretty stringent requirements, showing medical evidence they can't work at any job available in the nation. Many, many people are turned down for SSDI benefits: only 39 percent are successful, even after a series of possible appeals.

As one woman (a Republican) who successfully filed for SSDI wrote in the Strib last fall,
I wonder how anyone pulls off a fraudulent disability claim. The process is daunting, with mounds of paperwork; letters and forms from multiple physicians explaining your disability; painful statements from friends and family about how your disability affects not only you, but them; access to all medical records; a required examination by a SSA doctor, and much more. The [Social Security Administration] also has an active fraud department. Nobody is declared disabled because his "back hurts from time to time."
Drug addiction and alcoholism are not considered to be disabilities under SSDI, but damage done by drugs or alcohol that prevent a person from working and are not reversible by stopping consumption can make a person eligible. So an alcoholic with cirrhosis might be eligible if it's severe enough, including esophageal bleeding and excess fluid in the abdomen. They would have to show with medical evidence that they can't work, but I guess Steve would like for that person to work until he drops dead.

As with the 1 percent fraud rate within SNAP (food stamps), calling attention to cases of SSDI fraud that may exist plays on our brains' tendency toward loss aversion and dislike of unfairness. We focus on the outliers instead of the 99 percent who really need the benefits.

In looking into these issues, I came across the excellent Inequalities blog, written by a bunch of sociologists and policy wonks in the U.K. and the U.S. One post, called Perceived Fraud in the Benefits System, described these findings from the British Social Attitudes series: When asked how many of each 100 claimants of disability or unemployment benefits were falsely claiming them, the average response was 30 and 35, respectively.

The actual numbers: 1.2 and 3.3.

And those single-digit numbers include any kind of false claim, from working a little extra on the side or mistakes in the paperwork -- not the straight-up fraud most people would have in mind.

The same writer told of interviewing a woman on disability who, to all appearances, was not disabled.
But afterwards, she mentioned as an aside that the interview was the main thing she was able to do that day – it had taken up all  her energy. It became clear that the same was true when she saw her friends; she would see them for an hour or two when she was feeling well, but they would never see her at her lowest....

From the outside, in those two hours, Rachel would seem ‘undeserving’ – she wasn’t working, yet she was bright, articulate, funny, and capable of doing a variety tasks around the house. It’s only when you spoke to her more closely that you realised that it was impossible for her to work in any realistic scenario.
In fact, I'm so inclined to think the vast majority of claimants are on the up and up, I don't even have a problem with that Right-wing militia guy collecting SSDI. He sounds like he needs it.

A Seattle Times op-ed, written by two people who work with Washington state's homeless, made this point:
Earlier this year, the National Law Center on Homelessness & Poverty released a report showing that denying Social Security Disability Insurance benefits perpetuates homelessness. The study stated that up to 40 percent of the national homeless community could qualify for Social Security Disability Insurance benefits, but only 14 percent actually receive them.
As with SNAP, it's likely there are many more people eligible for SSDI than get it, or even apply for it. So in a sense, the single-digit false claim incidence doesn't even matter from a financial standpoint, relative to the money that's not being paid to people who could be collecting it.

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