Academic journal article Social Security Bulletin

The Issue Unresolved: Innovating and Adapting Disability Programs for the Third Era of Social Security

Academic journal article Social Security Bulletin

The Issue Unresolved: Innovating and Adapting Disability Programs for the Third Era of Social Security

Article excerpt

The history of the Social Security programs in the United States falls into several distinct eras, defined by changing social, demographic, and economic conditions. At present the retirement component of these programs is moving into a stage of program maturation, which poses certain relatively well-understood changes to policymakers. The disability programs are also moving into the same set of societal conditions, but their impact is considerably more difficult to predict. Already disability incidence rates have experienced disturbingly large and poorly understood shifts. Developing a way to predict these shifts and to deal with the challenges that they make for existing programs is therefore a major priority of Social Security's current research agenda.

The growth of the programs collectively called "Social Security" in the United States has been one of the major accomplishments of 20th-century public policy. From a limited program covering only wage and salary workers in commerce and industry, making payments to 220,000 persons in its first year of operation, Social Security has become a set of programs covering 133 million workers and paying benefits to about 42 million former workers and their dependents--including more than 360,000 outside the United States.

Today's programs represent three great achievements. First, the 1935 vision of a system that would protect workers and their families from the economic impact of old age, death, disability, and poor health has been realized. Second, through the development of the tax system, ways have been found to bring in the self-employed, farm workers, and domestic workers so that the vast majority of current workers now participate in their own social insurance. Third, the challenges of implementing ways to define and measure disability have been met in a program that extended new benefits to workers, which totaled more than 600,000 disabled workers in 1993. Moreover, the programs now paid out of the Social Security trust funds are closely linked with others that provide virtually universal health care to the elderly and means-tested income support to both the elderly and disabled.

Reflecting the characteristic political culture of the United States, these programs are structured so that benefits are perceived as an earned right. To this end, they are, by and large, (1) a mandatory form of contributory insurance for nearly the entire labor force, (2) funded almost entirely by employer and employee contributions placed in trust funds that use surplus funds to hold government securities, and (3) paying old-age, survivor, and disability benefits calculated on the basis of past earnings histories. This has won them the widespread support among the U.S. population, which is essential to the long-term functioning of the program. A, system that collects payments during a worker's entire working career and pays them out through subsequent years of life (and to survivors) must be planned in terms of generations rather than months or years. A broad social consensus that insures the necessary degree of stability has indeed been achieved. About 3 in 4 Americans report being favorably impressed with Social Security, and, on the occasion of its 50th anniversary, a resounding 92 percent judged the program a success.

This high level of approval applies to the largest components of the system, which pay benefits to retired workers and their dependents and survivors. The status of the disability programs is more ambiguous. There are two of these programs, of roughly comparable size, using the same definition of disability, and administered by the same field offices and State disability determination agencies. The Disability Insurance (DI) program is available to workers with "currently insured" status, essentially a test of recent and substantial participation in the labor force. Benefit amounts are calculated in the same way as retirement benefits, on the basis of past covered earnings. …

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