As unemployment benefits claims decline, disability claims rise

The Takeaway

Unemployment claims have been trickling down over the past few months, which most agree is good news.

But in tandem with that decrease, another public benefit has been increasing. Since 2007, some 3.4 million Americans have been added to the list of those receiving Social Security Disability Insurance. SSDI, as it’s know, pays out some $1,000 a month and also gives people access to Medicare and Medicaid.

About 10.6 million Americans now receive SSDI benefits which has raised new fears that the Social Security Trust Fund may go broke as early as 2017. According to two new studies, many of those new claimants ran out of unemployment benefits before they applied for SSDI.

Mark Duggan, a professor at the Wharton School of Business at the University of Pennsylvania, said SSDI has always been greatly impacted by economic downturns. The length and size of the current recession, he said, had magnified the impact on SSDI.

A complex set of federal criteria determine whether someone who is disabled can have access to the Social Security and Medicare or Medicaid retirement programs before they would normally retire.

“If you look at the social security program as a whole, SSDI accounts for more than 18 percent of spending,” Duggan said. “That’s compared to 10 percent 20 years ago. It’s been growing extremely rapidly.”

With the economy in such a prolonged downturn, the long-term unemployed have had to do more just to put food on the table. Duggan said people are more likely than ever to appeal SSDI rejections now, perhaps because of the dire straights they’re in, and therefore more people are getting benefits.

Duggan said the SSDI program has also expanded to pay benefits to people that have maladies that previously wouldn’t have ever been covered before.

“If you looked 20 years ago this, this was a program that…paid benefits to people with cancer, heart attacks, strokes and the like,” he said. “It’s morphed into a program that…pays benefits to people with mental disorders, back pain and other musculoskeletal conditions.”

Duggan said reforming the entitlement programs, including SSDI, will have to happen as the cost of benefits spiral upward. So far, however, no one is talking about SSDI reform, while they are talking about Social Security and Medicare reform.

“If you look at the Social Security Trust Fund, the DI component is running a huge deficit at present. That basically hastens the date at which the Social Security Trust Fund as a whole runs out of funds,” he said.

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