dismantling the poverty trap: addressing the “non-work” mentality of disability programs david...
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Dismantling the Poverty Trap: Addressing the “Non-Work” Mentality
of Disability Programs
David C. Stapleton
NDI Congressional Educational Briefing
Rayburn House Office BuildingWashington, DC
August 2, 2011
Overview
● Many people with disabilities are trapped in poverty by outdated policies
● Public expenditures are large and growing unsustainably– Unlikely to escape the budget knife– Policy design is the root cause of unsustainable
expenditure growth
● Major structural changes might improve outcomes for people and reduce expenditure growth
● Need to move forward with determination, caution, and all due speed
The Poverty Trap● The options for many under current policies
– Work hard and struggle economically– Receive benefits, work little and struggle
economically
● Causes:
– The main gateway to benefits defines disability as inability to work
▪ Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)
▪ Door to health insurance (Medicare and Medicaid) and other benefits
– Past Congresses and Administrations have created a mishmash programs
▪ Reflects high public commitment to support this population
● Poor incentives to work– Low expectations– Work often doesn’t pay– Waste of a productive resource
● Fragmentation– Confuses people, service providers and program
administrators– Makes benefit management a full time job– Promotes unproductive cost shifting
Why Policy Creates a Poverty Trap
● Low and declining economic wellbeing
● High and rising government expenditures– Reflects high public commitment
● Long lines at Social Security offices
● SSDI Trust Fund exhausted in 2018– OASI: 2038– Combined: 2036
Prominent Symptomsof the Poverty Trap
Growth in SSDI Beneficiaries
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
Thou
sand
s of B
enefi
ciar
ies
SSDI Worker Beneficiaries under Age 65, 1970 - 2010
SSDI Worker Beneficiaries Under Age 65
Projected at 1980 Participation Rates
Source: Analysis of published statistics from SSA (details available on request).
Growth in Federal Expenditures
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1970 1980 1990 2000 2010
Perc
enta
ge
SSDI and Medicare Expenditures for People Under Age 65 Relative to GDP and Federal Outlays, 1970 to 2010
SSDI + Medicare: % of Federal Outlays
SSDI: % of Federal Outlays
Sources: Published SSA and CMS statistics. Details available on request.
A Policy Dilemma
● Policymakers need to address rapid expenditure growth for the support of this population
● Two approaches– Trim/tighten/tax– “Win-win” structural changes
▪ Reduced expenditure growth▪ Improvement in economic wellbeing
● Both have significant problems
● Probably
● Current programs are inefficient
● Productive capacity of many people with disabilities is wasted
Are there win-win structural changes?
● No
● Some good ideas
● If we knew how, could we?
● Might take 20 years
But do we know how to make win-win structural changes?
● Social Security Advisory Board (2006)
● Being American: public earnings support insurance (MacDonald and O’Neill)
● Universal short-term private disability insurance (Autor and Duggan)
● Experience rate the payroll tax (Burkhauser & Daly)
(See Stapleton and Wittenburg issue brief)
Addressing SSDI/Medicare growth: Early Intervention for Workers
● Maintain SSDI and Medicare benefits as early retirement benefit for some older workers
● Repackage funding as state block grants– Funded like TANF, but different program model– SSI, Medicaid, vocational rehabilitation, housing,
food, transportation, etc.
● States deliver integrated support, within federal rules
● Federal agencies provide technical assistance and measure outcomes
More Ambitious Approach
● Needed because of risks– Potential harm to population– Accelerated expenditure growth
● 10 years to test– Waivers– Federal, state, private collaboration
● 10 years to gradually implement
● Requires determined effort
20-year Transition
● Stapleton, David C. “Bending the Employment, Income, and Cost Curves for People with Disabilities.” Issue Brief 11-01. Washington, DC: Mathematic Policy Research, Center for Studying Disability Policy, March 2011.
● Stapleton, David C. and David C. Wittenburg. “The SSDI Trust Fund: New Solutions to an Old Problem.” Issue Brief 11-02. Washington, DC: Mathematic Policy Research, Center for Studying Disability Policy, June 2011.
● Livermore, Gina A., Meghan O’Toole and David C. Stapleton. “Federal and State Expenditures for Working-age People with Disabilities.” Working Paper, Mathematica Policy Research, 2010.
References
Contact Information
David StapletonCenter for Studying Disability PolicyMathematica Policy Research600 Maryland Ave., SW, Suite 550Washington, DC 20024(202) 484-4224
www.DisabilityPolicyResearch.org