Federal Disability Insurance:
The Social Security Act
Amendments of 1956
Few prospects are more frightening than becoming unable to work because of a disability. Although some employers offer insurance for such an eventuality, and private disability insurance is available, even today only about one in four working Americans are covered under such insurance.1 Unless one is wealthy, suffering a disability without insurance could mean an ensuing lifetime of unemployment and poverty. The original Social Security Act included no provisions for disability, except for the Title X grant-in-aid program for the blind. In 1956, this was rectified. The Old-Age and Survivors Insurance program (OASI) was refashioned to include disabled workers. Not only was the first major new federal program added to Social Security since its passage in 1935, but it has become the primary financial protection against job loss due to disability for most working Americans. Social Security disability insurance today covers 95 percent of American workers. The 1956 amendments thus filled a serious gap in America's system of social insurance.
The lack of a disability plan in the original Social Security Act was not because the dire situation of disabled workers was unrecognized. In fact, by the mid-1920s virtually every state did have a worker's compensation program for those who had suffered injuries on the job. Vocational rehabilitation programs were also being passed. The problem, rather, was financial and political. The Depression had been catastrophic for the existing private disability insurance industry. Claims, and industry losses, were huge. This seemed to offer the lesson that, under the wrong conditions, a disability insurance system could be extremely expensive. The poten