Non-demographic Factors and the Growth of the Disability Insurance (DI) Rolls

Changing workforce demographics, such as women in the workforce and the aging population of baby boomers, account for much of the post-1980 increase in the number of DI beneficiaries. But demographics do not tell the whole story. Today, we will examine some of the non-demographic factors that have led to the increase in DI recipients.

1. Legislation

President Reagan’s 1984 Social Security Disability Benefits Reform Act made the termination of disability benefits process harder for the Social Security Administration (SSA) and modified eligibility criteria such that many injured workers whose injuries had not previously qualified them for disability benefits (certain kinds of mental impairments and combinations of multiple, non-severe impairments) now were eligible. The law, passed unanimously by both houses of Congress, placed more emphasis on subjective or qualitative factors (such as the self-reporting of pain levels) and less on quantitative medical data.

2. Technology and the Global Labor Market

In spite of technological advances, many jobs still require a considerable amount of physical labor and/or require workers to function in difficult and dangerous work environments. The jobs that have been most affected by new technology and now require less physical labor are no less dangerous, as sedentary work contributes to a host of disabling health conditions (such as obesity).

The new global labor market, combined with technological advances, have perhaps hurt older, less-educated workers, especially those with mental impairments, the most. This alone has likely increased the number of disability insurance beneficiaries considerably.

3. Health Insurance

Some studies have suggested that Medicare eligibility figures prominently into the growth of the disability rolls; disability insurance beneficiaries become eligible for Medicare after two years. With fewer employers providing health insurance for their employees, and the rising cost of individual policies, it is no surprise that accessibility to health insurance becomes a factor in many injured workers’ decision to claim disability insurance. It is still unclear whether the Affordable Care Act will ease the pressures plaguing the disability insurance program.

4. The Retirement Age

The full retirement age is now 66 and will reach 67 sometime in the next ten years. The amount of money a disabled worker receives in basic disability benefits is equivalent to that which a non-disabled worker receives in full retirement benefits. So while someone can file for reduced retirement benefits at age 62 (full benefits become available at age 66), that same person could choose instead to file for disability benefits and if he or she qualifies, receive more money by doing so without waiting the additional 4 years for full retirement benefits.

5. The Economy

The poor economic climate has certainly contributed to the growing number of disability benefit recipients. However, economists have often found that while a poor economy generates more disability applications, those applications are more likely to be denied due to applicant ineligibility.