Saturday, September 8, 2012

Social Security Disability Costs Soar

I whole-heartedly support all of the established social safety nets in this country:  Medicare, Social Security and Social Security Disability Insurance (SSDI).  I've paid into these programs all of my life and I'm "vested" in their continuation.  I will likely need them!!

I worry when I see costs and enrollment soaring at unsustainable rates.

SSDI Costs Soar
As of July 2012, it is reported (Table 2) that there are now 11 million beneficiaries on SSDI and the program is now paying out over $200 billion per year in benefits.   This means that, during the Obama administration (and prolonged recession), the number of beneficiaries has risen by about 50% and cost of the SSDI program has doubled from about $100 billion to $200 billion now.  But the rise of beneficiaries accelerated under Bush and is going "parabolic" under Obama.

These benefits last each beneficiary until retirement since rarely do beneficiaries return to the workplace (which is another "warning flag" with regard to appropriate administration and policy).  This means that the expenditures are now permanent and rising rapidly.

1.4 Million With Mood Disorders
According to the Social Security Administration here, that 1.4 million people are collecting SSDI benefits because of "mood disorders,"  This is a further "red flag" making me wonder how well the agency is stewarding taxpayer money.  You can see that the category of "mental disorders" is now about 44% of the beneficiaries and has risen rapidly in recent years.  I have no doubt that many of these are valid but why have they risen so significantly in recent years?  You can imagine that there is huge room for fraud in this (and other) categories. 

Here's the breakdown of SSDI beneficiaries by diagnosis as of December 2011 (as always, click to enlarge):

The Disabled Supressing Headline Unemployment Figures
Those going on Disability drop off from the workforce and are no longer counted as "unemployed."  The following graph from SSA shows the number of people in the program.  Note that the total is now 11 million today not 10 million persons as shown on the graph.  Maybe this is what happens when the baby boomers age and become infirm.

It would appear that about 2.5 million people have gone on disability since the recession starting in 2008 (from about 8.5 million to 11 million today).  If these people were added back to the labor force and counted as unemployed, the unemployment rate reported in August 2012 would be 9.5%.    

This is not good news for the nation and, of course,  for those who are truly disabled.  For what's it worth, the suppressed unemployment rate helps the President in this political election cycle--but to be fair it would have helped Bush too.  

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