Determinants of the Growth in the Social Security Administration's Disability Programs-An Overview

Article excerpt

The Federal Government provides cash benefits for persons with severe disabilities through two Social Security Administration (SSA) programs--the Social Security Disability Insurance (DI) program under Title II of the Social Security Act, and the Supplemental Security Income (SSI) program under Title XVI. Both programs use the same definition of disability, but other eligibility criteria differ. In particular, DI is a social insurance program with disabled-worker eligibility based on prior Social Security covered employment. Prior work experience is not required under SSI, but the program is means tested, using income and asset eligibility criteria. Some persons may be eligible under both programs and receive DI and SSI benefits concurrently. DI benefits stop when a DI beneficiary reaches age 65 and he or she is transferred to the Old-Age and Survivors Insurance program (OASI). SSI disability recipients may continue to receive benefits past age 65, if they continue to meet the income and asset tests. Children with qualifying disabilities are eligible for SSI payments on their own right subject to income and eligibility requirements.

About 20 years ago a series of econometric studies, primarily using aggregate time series techniques (Lando 1974; Hambor 1975; Thompson and Van de Water 1975), were conducted, focusing on the effects of the business cycle on the growth of the DI program. This heightened interest coincided with a peak in the number of new awards in 1975 (chart 1).(All charts omitted) SSA actuaries continued to monitor the growth of the DI program on an ongoing basis, focusing on demographic and legislative changes that shape program growth. Academic interest in the DI and SSI programs waned during the late 1970's and early 1980's, as applications and awards started to decline, but the recent growth in both programs refocused attention on them. The upsurge was particularly notable in the number of children on the SSI disability rolls.

A better understanding of the factors affecting program growth is necessary to improve our ability to make predictions about future growth both in the short and long run. The number of applications has a direct effect on SSA's administrative costs and ability to process applications in a timely fashion, while the number of new awards and length of stay determine caseload growth and program cost. SSA prepared a report (Department of Health and Human Services (DHHS) 1992) summarizing existing knowledge about the growth of the DI program and providing a comprehensive list of various demographic, economic, and programmatic factors hypothesized to affect caseload growth. After receiving the 1992 report, the Board of Trustees of the Federal OASI and DI Trust Funds recommended that SSA initiate a research effort to establish whether the growth represents a temporary phenomenon or a longer-term trend. in response to this recommendation, and in cooperation with the Office of the Assistant Secretary for Planning and Evaluation at DHHS, SSA initiated a series of research projects conducted through a combination of in-house analyses and several contracts with Lewin-VHI, focusing on application and award growth to produce an assessment of the reasons for disability program growth.

This additional research was needed to assess the causal role of various factors and to quantify their effects. In particular, it was important to assess whether various factors are primarily responsible for short term temporary or cyclical changes in caseload growth or for permanent changes. To improve future projections, it is also important to identify factors unaccounted for or improperly included in previous models. Improved knowledge about caseload growth might also facilitate useful policy interventions related to particular factors, the identification of programmatic options to control future growth, and the improvement of the incentives associated with disability programs. This article summarizes what we currently know about the factors affecting caseload growth. …