U.S. Social Security: Suggested Reforms

Numerous individuals have predicted that the U.S. Social Security system will run out of money within a few decades if nothing changes in the way it operates. It is already starting to happen to the Social Security Disability Insurance (SSDI) program.

SSDI is open to individuals who experience disability, who have a recent work history, and who have paid into the system. The Social Security Administration reports that the SSDI program's outgoing funds exceeded its incoming funds in 2005 when the calculations excluded Social Security's trust fund interest; or if calculations include trust fund interest, SSDI's outgoing funds will exceed its incoming funds in 2014. More significantly, SSA predicts that the SSDI program will become insolvent in 2027.

A second program for individuals with disabilities, the Supplemental Security Income (SSI), which is open to individuals who do not have a solid work history and who have limited resources, is in less danger of fiscal crisis because its funds are generated by U.S. Treasury general funds. The predicted upcoming bankruptcy of the SSDI is an urgent issue that needs to be addressed. This train is barreling toward a fiery end, with few ideas of how to stop the wreck. Here are four changes that could be made to reduce the likelihood that the SSDI program will go bankrupt.

The first idea involves restructuring current processes to put vocational rehabilitation, which helps individuals with disabilities obtain work, at the front end of applying for SSDI. Vocational rehabilitation is a process that can include receiving vocational training or education, personal counseling, assistive technology or accommodations (i.e. alterations in work environments), which help individuals with disabilities gain and maintain work.

Currently, vocational rehabilitation is offered to SSDI beneficiaries at the back end of SSA's benefit process under the "Ticket to Work" program. The Ticket to Work program offers a range of incentives to SSDI and SSI beneficiaries, yet there is no obligation that any of them participate. Not surprisingly, the rate of participation and success (i.e. returning to work) is low in the Ticket to Work program. (A 2006 report by Cornell University indicated a 1.1 percent rate of participation in this program despite all of the incentives related to monetary benefits and medical insurance.)

This suggests that, once individuals start receiving SSDI benefits, most will not return to work and will remain on SSDI payments. Hence, vocational rehabilitation should be offered to SSDI applicants beforebenefits are given because accommodations and assistive technology can often provide the means by which individuals with disabilities can maintain employment. Because every state has a vocational rehabilitation system that provides free services to individuals with chronic illnesses and disabilities, they can partner with SSA to change the referral process, requiring individuals to go through vocational rehabilitation before applying for SSDI. SSDI should be the last resort. The end result of such a change may mean that more individuals with disabilities maintain work and fewer are receiving SSDI benefits.

A second idea involves altering the standards by which individuals with disabilities are deemed eligible for disability payments, which often become a permanent source of income for individuals. Currently, if a person with a disability cannot work 40 hours a week in a competitive job due to disability-related issues, then they may be awarded SSDI benefits during the appeals process. This 40-hour-per-week standard (40 hours a week at minimum wage of $7.25 equals $1160 per month) does not take into account that many people earn more per hour than minimum wage in both skilled and unskilled work. Individuals with disabilities frequently state during SSA appeals court hearings that they could work, but "just not 40 hours a week." This is another reason why a greater emphasis on vocational rehabilitation should be placed at the front-end of the application process for SSDI, because vocational rehabilitation involves vocational training or education that often can help individuals with disabilities obtain higher-paying jobs.

A third idea is related to the brutal cycle that many SSDI applicants are caught in: They cannot work because of an untreated illness. If they had medical coverage, they could then work and/or manage their chronic illness or disability (diabetes, schizophrenia, depression, posttraumatic stress disorder, back pain). Many individuals with disabilities testify in appeals hearings about this vicious circle: They could work if they received specific types of treatments (surgical, pharmacological or psychological). They express a desire to work but testify to SSA judges about their untreated medical conditions and lack of medical insurance as the major reasons why they cannot return to work. Thus, one solution would be an SSA program that provides short-term health coverage that is contingent upon the individual seeking work or going through vocational rehabilitation. The immediate receipt of healthcare would be dependent on an agreement to enter the vocational rehabilitation process and to create a return-to-work plan. Providing treatment may prevent a long-term, or even lifetime, dependency on SSDI benefits.

A fourth idea is related to the concept that many chronic illnesses and disabilities are highly responsive to treatment and therefore returning to work is entirely plausible, given the provision of appropriate medical and/or psychological treatment. SSA does have a system of Continuing Disability Reviews, which may range from every three to seven years. But research often indicates that if an individual does not return to work within a year of stopping, they often lose the motivation to do so. SSA should requireparticipation in vocational rehabilitation for individuals whose conditions are stable with treatment.

SSA could institute benefit-reviews that are tied to compliance with required vocational rehabilitation. Granted, some individuals with certain disabilities have a poor prognosis and may result in death, but this recommendation does not include such individuals; rather, it relates to a large portion of SSDI beneficiaries who could benefit from specialized assistance in returning to work. SSA could track individuals who have shown lack of adherence to vocational rehabilitation and put those individuals on probation. If they do not adhere to treatment and vocational rehabilitation, SSA could deduct a percentage of their SSDI benefits. This would help to reduce the entitlement mentality that prevents many individuals from seeking work once they start receiving SSDI benefits.

In summary, the front-end loading of vocational rehabilitation before the provision of SSDI and tying vocational rehabilitation with the provision of SSDI benefits will help to reduce the risk that the SSDI system will run out of money. Further, providing more widespread vocational rehabilitation will help people with chronic illnesses and disabilities gain the work skills that the average adult is expected to have, in addition to receiving assistive technology and work-place accommodations that will help them find their places in the work force. The four ideas proposed here may help SSA curtail the pending bankruptcy of the SSDI program. SSDI was originally created only for individuals with disabilities who were no longer able to participate in the work force, not for those who could work if they had the right support and treatment.