Showing papers on "Disability insurance published in 1995"

Subjective health measures and state dependent reporting errors

Abstract: The use of subjective health measures in empirical models of labour supply and retirement decisions has frequently been criticized. Responses to questions concerning health may be biased due to financial incentives and the willingness to conform to social rules. The eligibility conditions for some social security allowances, notably Disability Insurance benefits, are contingent upon bad health. Even if the decision to apply for a disability allowance is to some extent motivated by financial considerations or a relatively strong preference for leisure, respondents will be inclined to play down these motives and emphasize the importance of their health condition. As a consequence, reporting errors may depend on the labour market status of the respondent and self-reported health variables will be endogenous in labour supply and retirement models. The objective of this paper is to assess the importance of state dependent reporting errors in survey responses and to propose and estimate a model that can be used to account for this kind of systematic mis-reporting. The estimation results indicate that among respondents receiving Disability Allowance, reporting errors are large and systematic. Using such subjective health measures in retirement models may therefore seriously bias the parameter estimates and the conclusions drawn from these.

Determinants of the growth in the Social Security Administration's disability programs--an overview.

Abstract: This article examines factors affecting the growth in the Social Security Administration's disability programs. We synthesize recent empirical evidence on factors affecting trends in applications and awards for Disability Insurance and Supplemental Security Income (SSI) benefits and duration on the rolls. Econometric analyses of pooled time-series, cross-sectional data for States provide strong evidence of business cycle effects on applications and, to a lesser extent, on awards. Substantial effects of cutbacks in State general assistance programs are also found, especially for SSI. Estimated effects of the aging of the baby boomers, growth in the share of women who are disability insured, the AIDS epidemic, and changes in family structure are also presented. Indirect evidence suggests the importance of programmatic factors, especially for awards, and especially in the mental and musculoskeletal impairment categories. The decline in the average age of new awardees has substantially increased duration, particularly for SSI. As a result, caseload growth would be expected to continue even in the absence of future award growth.

Modeling SSA's sequential disability determination process using matched SIPP data.

Abstract: We model the Social Security Administration's (SSA's) disability determination process using household survey information exact matched to SSA administrative information on disability determinations. Survey information on health, activity limitations, demographic traits, and work are taken from the Survey of Income and Program Participation (SIPP). We estimate a multistage sequential logit model, reflecting the structure of the determination procedure used by State Disability Determination Services agencies. The findings suggest that the explanatory power of particular variables can be appropriately ascertained only if they are introduced at the relevant stage of the determination process. Hence, as might be expected by those familiar with the process, medical variables and activity limitations are major factors in the early stages of the process, while past work, age, and education play roles in later stages. The highly detailed administrative information on outcomes at each stage allows clarification of the roles of particular variables. Panned future work will include policy estimates, such as the number of persons in the general population eligible for the disability programs, as well as analysis of applications behavior in a household context. 1. Introduction The Social Security Administration (SSA) administers two programs providing cash assistance to persons unable to work due to severe health impairments: Disability Insurance (DI) and Supplemental Security Income (SSI). Over 7 million disabled adults now receive benefits and more than 2 million applicants are evaluated for disability annually. Between 1988 and 1993, disability benefits under the two programs grew from $31.9 billion to $54.6 billion, a 70-percent increase in 5 years. Total benefits for the disabled under the SSI program doubled over the same period.(1) Researchers are trying to understand and quantify the causes of program growth so that policymakers can respond. There are a number of hypotheses concerning the program growth. They involve changes in (1) eligibility criteria, (2) factors affecting administration of the programs, and (3) incentives to apply for benefits. Eligibility changes have occurred as a result of actions taken by Congress and the courts. For example, Congress mandated changes in the evaluation of mental impairments and multiple impairments; also, court rulings have liberalized the programs, especially in the areas of children's disability, benefits to addicts, and the evaluation of evidence from applicants' treating physicians. In terms of administrative factors, SSA has faced major reductions in staff, consequent claims backlogs, and increases in litigation. For the impaired, incentives to apply for benefits have probably been affected by changes in institutional, economic, and demographic factors. Institutional factors include trends in State or State/Federal programs serving the impaired, specifically, General Assistance, workers' compensation, unemployment compensation, Medicaid, treatment programs for addiction and alcoholism, or Aid to Families with Dependent Children. Economic and demographic factors include an aging population, the loss of blue collar jobs, high unemployment, and the loss of health insurance coverage for workers.(2) Several of the hypotheses relating to program growth involve changes in program eligibility. The eligibility criteria for a public program implement basic normative decisions; they act as a gatekeeper for the program, defining the population the program is intended to serve. To be sure, recent program growth cannot be attributed solely to changes in eligibility. Administrative factors affect backlogs and may affect eligibility determinations. Moreover, considerations such as the loss of a job by a member of the household or the loss of General Assistance benefits increase incentives to apply for benefits; such incentive factors are distinguishable from eligibility effects because they primarily affect applicant behavior. …

The effect of vocational rehabilitation and work incentives on helping the disabled-worker beneficiary back to work.

Abstract: This article is the second in a series of articles that use data from the New Beneficiary Followup survey to analyze the work efforts of the Social Security Administration's Disability Insurance beneficiaries. Survival analysis techniques are used to determine the effect of vocational rehabilitation efforts and work incentive program provisions on actual work outcomes. The findings indicate that the demographic variables of age, gender, race, education, and marital status affect the tendency to return to work in the expected way. The results suggest a possible disincentive effect may be built into certain work incentive provisions of the program. The encouraging news is that the vocational rehabilitation efforts seem to have a positive effect on the tendency to return to work. Physical therapy, vocational training, general education, and job placement efforts all seem to increase the tendency to go back to work. The growth of the Social Security Administration's Disability Insurance (DI) program has been a topic of much debate over the past few years. Applications have increased dramatically since 1999, from fewer than 1 million to more than 1.4 million in 1993. The increase in applications led to increased numbers of persons on the program rolls and higher expenditures for disability benefits. Between 1989 and 1993, the number of persons in current pay-status rose by nearly 30 percent, from 2.9 million beneficiaries to 3.7 million. Trust fund expenditures rose by more than half, from 22.9 billion in 1989 to 34.6 billion in 1993. Chart 1 shows that the number of beneficiaries in pay status each year had been growing over the years, except for a decline in the late seventies and early eighties.(chart 1 omitted) At the same time, the chart indicates that, while the number of program terminations each year had exhibited modest growth up to 1982, the number of recoveries has declined, though not consistently, since that time. The decline in recoveries occurred despite a consistent growth in the beneficiary population from 1989 to 1993. According to an earlier study of a cohort of 1972 entitlements,(1) the vast majority of an entitlement cohort of disabled-worker beneficiaries leave the DI program by conversion to the retirement program at age 65 (53 percent) or by death (36 percent). Only a small percentage (11 percent) leave the program because of a work or medical recovery. Clearly, the number of medical and work recovery terminations has not kept pace with the increasing size of the DI program. Despite improvements in medicine, technology, and vocational rehabilitation techniques, there has been a decline in the proportion of beneficiaries who terminate from the program because of a medical or work recovery. As policymakers seek to control growth through a more efficient and responsive program, they must examine the work incentive structure and address concerns that entrance into the DI program is viewed as a permanent removal from the labor force. Without this focus on return to work the increase in allowances, coupled with a population whose average age at entitlement has become younger, will serve to continue the recent growth in program benefit costs. A careful examination of the work attempts of disabled workers to identify factors that help and/or hinder their ability to go back to work is an important step in this direction. The experience of persons interviewed for the New Beneficiary Followup (NBF) survey should provide some clues to effective return to work efforts. An earlier study,(2) using the NBF survey data examined the work efforts of disabled-worker beneficiaries who were entitled to benefits for the first time from June 1980 to June 1981. The study considered beneficiaries' experience with, and effectiveness of, such interventions as vocational rehabilitation (VR) services (including physical therapy, vocational training, job counseling, general education, and job placement) and work incentive provisions (including the trial work period (TWP), the extended period of eligibility (EPE), and extended Medicare eligibility). …

Musculoskeletal disability, employment, and rehabilitation.

Abstract: Objective. To determine which, if any, baseline social and disease characteristics can be used to identify persons with musculoskeletal disabilities accepted for state-federal vocational rehabilitation services who are most likely to return to work. Methods. A database of case closures from the Alabama Vocational Rehabilitation Service was analyzed using segmentation modelling. This included all persons (n=4093) with musculoskeletal disability who were accepted by the Alabama Vocational Rehabilitation Agency in 1987-91. Demographics, income, type of disability, severity of disability, medical insurance, similar benefits, benefit status, and referral source were independent variables. Outcome (dependent) variable was work status at end of agency services. Results. Overall, 71% of persons with arthritis and musculoskeletal disorders who were accepted for vocational rehabilitation services in 1987-91 returned to work at the end of agency services. Segmentation modelling created a tree in which certain baseline characteristics formed subgroups with differing rates of successful rehabilitation. Social Security Disability Insurance (SSDI) status was the single best predictor of rehabilitation. Seventy-three percent of nonbeneficiaries were rehabilitated compared to 55% of beneficiaries (p<0.00001). For non-SSDI beneficiaries, education level ≥ grade 12 was associated with better rehabilitation outcome (p<0.00001). SSDI beneficiaries with nonback disorders fared better than those with back disorders (p<0.05). Disease severity, assessed by Federal Special Programs criteria, was not associated with rehabilitation outcome at any level of the tree. Conclusion. Simple baseline social and disease characteristics can be used to identify groups of persons accepted for vocational rehabilitation services with musculoskeletal disability with differing rates of vocational rehabilitation. Disability benefit status and education level are important predictors of return to work after agency services. These findings can lead to the development of strategies to improve the efficacy of vocational rehabilitation services

Length of stay on the Supplemental Security Income Disability Program.

Abstract: This article analyzes duration on the Supplemental Security Income (SSI) disability rolls prior to age 65 among children and working-age adults, based on a 10-year followup of 1974-82 cohorts of new awardees by utilizing monthly data from administrative records for 1974-92, and on statistical projections beyond the followup period. Although SSI means testing is responsible for a high proportion of early suspensions, when multiple spells are accounted for, long stays dominate. The estimated mean length of all first SSI spells is 5.5 years. It is 11.3 years for disabled children, 1.3 years for disabled adults eligible for both the Social Security Administration's Disability Insurance (DI) and SSI, and 6.4 years for adults eligible for SSI only. When multiple spells are accounted for, the projected mean total pre-retirement-age SSI disability stay almost doubles to 10.5 years for all awardees an increases to 26.7 years for children. This article examines the contribution of long program stays to the cost of the SSI disability program, as well as the patterns of length of stay in other means-tested government programs. The article focuses on the following questions: * How long do people stay on SSI during the first 10 postward years? * What are the main reasons for leaving SSI? * What is the length of first benefit recipiency spell? * What is the expected lifetime number of benefit years for new awardees before age 65? * How do length-of-stay patterns vary by age and by diagnosis? * How do SSI length-of-stay patterns compare with those of other means-tested welfare programs and to the Social Security Disability Insurance program (DI)? Answers to these and similar questions are of great potential policy importance, primarily because program costs are directly related to the length of program stay. Because of the strict disability test applied in SSI, few awardees are expected to have a full medical recovery. Many of those who do not leave the program due to death will face long-term disabilities. Long stayers (persons with a first spell of disability that lasted at least 10 years), even if they form a small fraction of new awardees, contribute disproportionally to the caseload and, therefore, to SSI program cost. Expected future program outlays are largely a product function of the number of new awardees entering the rolls and their lengths of stay. The recent sharp rise in the number of persons awarded SSI benefits has been accompanied by an increasing proportion of children and young adults. To the extent that young people stay in benefit status longer than older awardees, there is concern that the recent explosion in the number of awards to younger persons will eventually have a magnified effect on program costs, because of the coincident rise both in the number of new awards and expected lengths of stay. Therefore, projection of future program outlays critically depends on assumptions about length of stay. Policymakers might also be interested in how length of stay varies by subgroup characteristics (such as age and diagnosis). There are two distinct questions concerning length of stay: What is the distribution of new enrollees by expected length of stay? And what is the contribution of long stayers to the beneficiary rolls? In our analysis we will analyze length of stay from both of these perspectives, and will also provide information on the length of initial stays, return to the rolls, and total time spent in benefit receipt status. The proportion and characteristics of long stayers are important in addressing policy options for containing caseload growth. For example, policies that prevent the entry of potential long stayers or induce earlier exits might have substantial effects on caseloads. To the extent that there are no feasible policies to induce earlier exits among potential long stayers, a high proportion of potential long stayers among new awardees is expected to result in difficulties in containing future caseload growth. …

Disability patterns among SSI recipients.

Abstract: In December 1993, about 3.8 million persons under age 65 received Supplemental Security Income (SSI) payments because of a disability. More than half of these recipients had some form of mental disorder. In recent years, the number of disabled SSI recipients has climbed sharply. At the same time, there has been a change in the disability patterns among these recipients. The proportion of recipients with mental disorders, particularly those with psychiatric illness, is increasing steadily. Many of these recipients enter the SSI program in their youth and may stay in the program for many years. Similar increases and disability patterns in the Social Security Administration's Disability Insurance (DI) program imply program related causes, including recent changes to the disability requirements and outreach efforts. These changing disability patterns have implications for the size and shape of future SSI caseloads. The Supplemental Security Income (SSI) program provides monthly cash payments to aged, blind, or disabled persons with limited income and resources. Of the nearly 6 million SSI recipients in December 1993, about 3.8 million were eligible solely because they were blind or disabled.(1) In this article, both blind and disabled recipients will be referred to as "disabled." One of the most important pieces of information about disabled recipients is the type of disabling condition involved. This information tells us many things about these recipients, including the permanence and severity of their disabilities, the length of time they are likely to remain on the program rolls, the amount of lifetime benefits they will receive, and the likelihood of their returning to the labor force. For many years, the age and disability patterns among SSI disabled recipients changed very little. In the last several years, however, there has been a sharp increase in the numbers of SSI recipients. The newer recipients exhibit age and disability patterns that are different from their predecessors. These changes in patterns have profound implications for the size and shape of future SSI caseloads. This article presents diagnostic information on disabled individuals receiving federally administered payments. It also describes the current age ranges and types of disabilities for SSI recipients, compares SSI disability patterns with those for other disabled populations, summarizes increases in SSI caseloads during the 1987-93 period, and relates those increases to changing age and disability patterns. Methodology and Definitions This study is based on the 10-Percent SSI Disability Sample File(2) which is taken from the Supplemental Security Record (SSR)--the main administrative computer file used by the SSI program. The prominent feature of this sample file is that it captures the disability diagnosis on several other administrative files for all sample recipients. Diagnostic groups are represented by categories from the International Classification of Diseases(ICD). Social Security Administration uses a version of the ICD to classify diagnoses of individuals applying for SSI payments on the basis of blindness or disability.(3) Except for mental disorders, the diagnostic distributions shown here are limited to the 12 major classifications in ICD-9. More detail was provided for mental disorders because they are more prevalent among SSI disabled recipients. The diagnostic distributions presented reflect primary diagnoses. Standard errors for estimated counts and percents are in the Technical Note at the end of this article. Disability Categories For the 3.8 million SSI disabled recipients in December 1993, the leading cause of disability was some form of mental disorder (chart 1, table 1).(chart 1 and table 1 omitted) About 58 percent of all SSI disabled recipients had a mental disorder, which was equally divided between mental retardation and psychiatric illness.(4) The most common form of psychiatric illness was schizophrenia, with about 33 percent of those with psychiatric illness having some form of it. …

Annual versus lifetime income redistribution by social security

Abstract: In this study we compare the redistributive impact of the Dutch social security on an annual basis with the lifetime redistributive impact. The analysis confirms the theoretical notion that the lifetime impact is smaller than the annual incidence studies suggest. This holds especially for old-age pensions and social assistance and, to a lesser extent, the disability state pension. We also find that, for the Netherlands, the younger the cohort is, the larger the difference. However, employee insurances do not necessarily imply a smaller redistributive impact on a lifetime basis. The results are of course affected by the discount rate used and the assumptions with respect to economic growth. The discount rate generally appears to be negatively correlated with the redistributive impact, whereas the effect of growth is less straightforward.

The influence of OASDI and SSI payments on the poverty status of families with children.

Abstract: This is the second of two articles concerning the effects of Old-Age, Survivors, and Disability Insurance (OASDI) benefits and Supplemental Security Income (SSI) payments on the poverty status of families with children.(1) The primary data source for the first article was the second wave of the 1990 panel of the Survey of Income and Program Participation (SIPP). The principal findings from that evaluation were that OASDI and SSI payments in May 1990 maintained the income of 1.1 million children in families above the poverty threshold and alleviated the effects of poverty on an additional 1.3 million children in families with income that remained below the poverty level. However, since the article was based on survey data alone, it provided only limited information regarding the impact of benefit payments on families with children in relation to the type of recipiency or the category of benefits paid. The principal data source for this article is a file created by matching records from the second wave of the 1990 SIPP panel with records from Social Security Administration's (SSA) Master Beneficiary Record (MBR) and Supplemental Security Record (SSR).(2) The MBR and SSR are the major SSA administrative records for the OASDI and SSI programs. Like the first article, this one focuses on payments in May 1990, but it presents more detailed information. Many of the figures cited in the article are based on distributions of families by type. It should be noted that the Census Bureau defines a family as two or more persons residing together who are related by blood, marriage, or adoption. The 1990 SIPP matched file distributes family types as "headed by husband/wife," "male reference person," or "female reference person." Although most children reside with one or both parents, family types have been defined so as to include those in which neither parent is present. Thus, families are differentiated in this article as being "headed by a couple" or "headed by a single adult." Among families headed by a single adult, the head-of-household in most instances (87 percent) was female. Some discrepancies appeared in matching survey data to administrative records. An examination of discrepant cases made it clear that any effort to resolve this problem on a case-by-case basis would entail a great deal of guesswork. We decided that it would be preferable to apply a uniform rule to each discrepant case, even though the result might prove incorrect in some instances. Therefore, we opted to use data from the administrative record rather than the survey response whenever the records did not agree. The Rise in Child Poverty Rates Data from the Current Population Survey (CPS) indicate that the proportion of children living in poverty has been increasing steadily since the mid-1970's. The most recent data available show an increase in the child poverty rate from 20.l percent in 1989 to 22.5 percent in 1993. This increase corresponds to a 7-percent drop in real income to households and an increase of 2-percentage points (from 13.1 percent to 15.1 percent) in the overall poverty rate. Thus, while mean household income has declined sharply in recent years, and the overall poverty rate has grown, the poverty rate among children has remained higher than the rate for other age groups. Although the poverty rate is highest among children in families with a female head-of-household (52.5 percent), the poverty rate among families with both parents present, or with a single male householder, has also been increasing. For these families, the poverty rate rose from 10.4 percent in 1990 to 12.4 percent in 1993.(3) The increase in poverty among children over the past several years has been attributed primarily to changes in family structure. However, a secondary reason is the decline in real wages of individuals with limited education. Between 1980 and 1991, it became more difficult for individuals without a high school diploma to lift themselves and their families out of poverty by working full time. …

Medicare and the Social Security Disability Insurance program

Abstract: This DataWatch traces changes over time in the age and health characteristics of persons awarded Social Security Disability Insurance (SSDI) benefits. SSDI beneficiaries are increasingly younger and more likely to be incapacitated by health conditions that at any age lengthen spells of disablement. These changes have had a significant impact on SSDI operations; they also have important implications for financing the Medicare program.

The issue unresolved: innovating and adapting disability programs for the third era of Social Security.

Abstract: 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. …

OASDI Beneficiaries and SSI Recipients with Representative Payees

Abstract: Most persons under the Old-Age, Survivors, and Disability Insurance (OASDI) program or the Supplemental Security Income (SSI) program receive the checks in their own name and make their own decisions as to the use of the funds. However, there has always been a portion of the beneficiary population who, for a variety of reasons, are not able to manage their benefits alone. To protect the interests of these persons, the Social Security Act provides for the appointment of a representative payee. Section 205(j)(1) and section 1631(a)(2)(A) of the Act provide broad authority for the Social Security Administration (SSA) to determine whether an individual beneficiary should have a representative payee, and, if so, who the payee should be. In addition, SSA has been given the responsibility to monitor the use of payments by these payees. This note gives an overview of the representative payee program, including a program description and brief history, a "snapshot" of some characteristics of the population receiving Social Security benefits and SSI payments through a representative payee, recent trends in the number of persons with payees receiving such benefits or payments, and legislative and policy responses to these trends. The data in this note, with the exception of table 6, come from December 1994 sample extracts of the Master Beneficiary Record (MBR) and the Supplemental Security Record (SSR), the main administrative files for the OASDI and SSI programs, respectively. (table 6 omitted) Standard errors for estimated counts and percentages are shown in the Technical Note on page 123. Background Since monthly payments under the Social Security program first began, the law has recognized that there would be some beneficiaries unable to manage their Social Security benefits in their own best interests. Section 205(j)(1) of the Act provides for the appointment of a representative payee if it is determined "that the interest of the individual under this title would be served thereby... regardless of the legal competency or incompetency of the individual."(1) As noted previously, SSA is responsible for determining the need for a payee. SSA almost always decides to appoint a payee for certain definable groups, such as children under the age of 18, those persons a court has judged incapable of handling their own affairs, and those whose mental or physical incapacity prevents them from acting on their own behalf. In addition, since the SSI program began in 1974, a payee has been required for SSI recipients whose disability is based on a diagnosis of drug addiction and/or alcoholism (DA&A). Beginning March 1, 1995, those OASDI beneficiaries for whom DA&A is material to the finding of disability must receive their payments through a representative payee (P.L. 103-296). Once the need for a payee has been determined, SSA identifies persons who are both able and willing to serve in this capacity. Whenever possible, the preferred payee is a family member or friend who has shown interest in the well-being of the beneficiary. Alternatives to preferred payees include medical or other custodial institutions, and financial, social, or religious organizations. An individual who serves as representative payee undertakes certain obligations, both to the beneficiary and to SSA. The payee must manage OASDI benefits and/or SSI payments for the "use and benefit" of the person for whom the benefits are intended and conserve any funds that are not needed for ongoing expenses. In addition, the payee must account to SSA annually for the amount of benefits received and report to SSA any change of circumstances that could affect eligibility for, or amount of, benefits. Characteristics of the Population In December 1994, approximately 46.7 million persons received a payment from the OASDI program, the SSI program, or from both programs. Of this total, about 6.1 million beneficiaries (13. …

Increased physician disability claims causing 'crisis'. High utilization of disability insurance may leave physician groups fewer options in the future.

Abstract: With physician claims on the rise, disability insurers are adjusting rates, provisions and benefit plans that are offered to those in the medical field. Physicians are being hit the hardest, experiencing premium increases, benefit reductions and stricter qualifications for coverage. There are only a few carriers who have not changed their rate structures and benefit plans. Now is the time to review the quality of your disability programs and establish how your carrier is reacting to this trend.

The ADA and Disability Benefits Policy Some Research Topics and Issues

Abstract: Despite passage of the Americans With Disabilities Act (ADA) of 1990, there still remain substantial impediments to the attainment of employment and a normalized lifestyle for persons with significant disabilities. The major income support programs (Social Security Disability Insurance [SSDI] and Supplemental Security Income [SSI]) and health care financing programs (Medicare and Medicaid) create major disincentives both at the time of application and while persons are receiving benefits. These disincentives discourage accepting employment or, if employment is accepted, will often discourage persons from exceeding a level of earnings that would end their eligibility for benefits. In addition, the SSI and Medicaid programs have other adverse effects such as discouraging saving, encouraging unwise spending habits, discouraging adults from naming children on SSI as heirs to their estates, and imposing financial penalties on beneficiaries who marry. There are many promising areas for additional research to se...

Public Social Welfare Expenditures, Fiscal Year 1992

Abstract: Expenditures for social welfare under public law amounted to $1,265.1 billion in fiscal year 1992, an increase of 8.9 percent over the previous year. The 1992 amount represented 21.3 percent of the national output of goods and services, as measured by the gross domestic product (GDP). Social insurance programs accounted for about one-half of all expenditures, followed in magnitude by the education and public aid categories. Social welfare expenditures, which are defined in this series as the cash benefits, services, and administrative costs of public programs that directly benefit individuals and families, have been fairly stable since 1980. The average annual growth in such spending between 1980 and 1990 was 11 percent, and half of that is accounted for by increases in the cost of living. Table 1 shows the individual program components of the series. (Table 1 omitted) Overall spending for social welfare rose $103 billion from 1991 to 1992. Of that increase, $55.8 billion--or 54 percent--was accounted for by social insurance programs. By far the largest of these are the Social Security (Old Age, Survivors, and Disability Insurance) and Medicare (Hospital Insurance and Supplemental Medical Insurance) programs. Together, these two programs were responsible for 33.3 percent of the total increase in social welfare spending. Public aid accounted for a further 25.8 percent of the increase, and education for 14.6 percent. Chart 1 shows the component elements of the series as percentages of the 1991-92 increase, and of total social welfare spending in 1992. Table 2 shows the relationship of social welfare outlays to the GDP. (Table 2 omitted) The growth of social welfare expenditures as a percent of GDP from 1991 to 1992 was related inversely to the effects of the economic recession. GDP grew only 4.5 percent over the time period. At the same time, the effect of the downturn was to increase spending for employment-sensitive programs, resulting in a growth of 8.9 percent in social welfare expenditures. Unemployment insurance expenditures, for example, rose $12.8 billion in 1992, nearly 45 percent of the previous year' s total. Spending for food stamps increased $3.8 billion. The amount spent on public assistance medical payments, chiefly under the Medicaid program, increased $15.7 billion. Some of the increase in medical assistance costs was due to the rising cost of all health care, but the number of people receiving Medicaid also rose from 28.3 million to 30.9 million over the year--an increase of nearly 10 percent. These factors combined produced the highest ratio of social welfare to GDP in the history of the series. Social welfare spending per capita was $4,863 in 1992, 7 percent higher than the year before. In constant (1992) dollars, that increase was still 7 percent. Table 3 shows that even with the effects of inflation removed, all of the categories increased from 1991 to 1992, some of them at greater rates than in any previous period. (Table 3 omitted) "Social insurance" grew 8 percent in real terms, while public aid grew 14 percent. The increase in public aid was largely due to the increase in medical assistance and food stamp costs. …

Role of the Private Sector in Financing Social Welfare Programs, 1972-92

Abstract: The private sector continues to play an increasingly important role in financing the Nation's aggregate social welfare programs. This note provides estimates of private spending for social welfare programs in the United States, from 1972-92, and complements the public social welfare expenditures series. (1) Private outlays include a large share of health and medical care expenditures, as well as income-maintenance benefits, the latter in areas of employment-related pensions, group life insurance, and group sickness payments. The private sector is also an important source of financing for education and social services. Viewed as a share of gross domestic product (GDP) as shown in table 1, (all tables omitted) private sector support of social welfare has gradually but substantially increased from 8.0 percent in 1972 to 13.7 percent in 1992. In calendar year 1992, total expenditures were $824.9 billion compared with $767.6 billion in the previous year (an increase of 7.5 percent). During relatively the same period, public expenditures for social welfare programs increased from 16.6 percent of GDP in fiscal year 1972 to 20.5 percent in 1991. Total spending for social welfare programs, both public and private, increased from 23.8 percent of GDP in 1972 to a 32.4 share in 1991. Private expenditures can be grouped into four major program categories: Health and medical care, welfare and other services, education, and income maintenance. In 1992, the health and medical care expenditures category claimed the largest dollar amount-$462.9 billion (table 2)--56.1 percent of the total. Private sector funds paid 57.1 percent of all personal health care expenditures, mostly private health insurance and out-of-pocket expenditures of individuals and private health insurance. From 1972-92, health expenditures as a percent of total private social welfare spending declined slightly from 59.0 percent to 56.1 percent. The "welfare and other services" category includes individual and family social services, residential care, child day care, recreation and group work, and job training and vocational rehabilitation services. In 1992, expenditures for these items were $75.8 billion, 9.2 percent of the year's total private social welfare spending. Private expenditures for education in 1992 were $100.5 billion--12.2 percent of all private social welfare expenditures for that year. Of this amount, $51.2 billion was spent on higher education, $27.8 billion on elementary and secondary education, and $16.8 billion on commercial and vocational schools. Since 1972, private sector outlays for education have declined from 15.6 percent of total private sector spending to 12.2 percent in 1992. Private income-maintenance expenditures are payments made under employee benefit plans in the private sector. These expenditures include private pension plans, group life insurance, cash disability insurance, paid sick leave, and supplemental unemployment benefits. Of the $185.7 billion in private income-maintenance expenditures in 1992 (table 1), private pension plan benefits accounted for $157.3 billion. Health and Medical Care The Health Care Financing Administration (HCFA) prepares annual estimates of health and medical care expenditures from both public and private sources. (2) HCFA's estimates are based on the National Health Accounts, which provide a schema for understanding the nature of health care spending. In 1988, the benchmark was revised to incorporate information from more reliable data bases, such as the Survey of Service Establishments conducted by the Bureau of the Census, and the Consumer Expenditure Survey by the Bureau of Labor Statistics. The National Health Accounts continue to employ a two-dimensional classification matrix with categories of providers or services along one dimension, and sources of funds across the other. In 1992, total health care expenditures for both public and private sectors amounted to $820. …

Social Security Administration Created as an Independent Agency: Public Law 103-296

Abstract: At an historic White House bill-signing ceremony on August 15, 1994, Public Law 103-296--Social Security Independence and Program Improvements Act of 1994--was signed into law. President Bill Clinton symbolically used one of the pens President Franklin Roosevelt had used when he signed the original Social Security Act 59 years ago, on August 14, 1935. The new legislation officially separates the Social Security Administration (SSA) from the Department of Health and Human Services (HHS), effective March 31, 1995, and restores the SSA to its original status as an independent Federal agency. (Since 1939, SSA has operated under the direction of a "parent" agency.) A single administrator will lead the agency with a seven-member bipartisan advisory board. Also contained in the new law is a number of other major changes affecting the Social Security and Supplemental Security Income (SSI) programs. Historical Background What is today the Social Security Administration was established in 1935 as the Social Security Board, managed by a three-member bipartisan board, and operated as a e-standing entity within the Executive Branch. The Social Security Board chairman reported directly to the President. The members of the board, including the chairman, were nominated by the President, and appointed with the advice and consent of the Senate. In the 1939 U.S. Government Reorganization Act, the Federal Security Agency was created and the Social Security Board became one of its components, no longer reporting directly to the President. In 1946, the three-member Board was abolished and an Office of Commissioner of Social Security was created to run what became the Social Security Administration, still a part of the Federal Security Agency. In 1953, the agency was replaced with the creation of the cabinet-level Department of Health, Education, and Welfare (HEW), and SSA consequently became a component of HEW. When in 1979 the educational components of HEW were spun off and reorganized into a new cabinet-level Department of Education, the remaining components (SSA, Public Health Service, Health Care Financing Administration, Office of Human Development Services, and Office of the Secretary) were reconstituted as the Department of Health and Human Services, which continued as SSA's parent agency until March 31, 1995. Since the Social Security Board was abolished in 1946, 18 persons have served in the position of Commissioner or Acting Commissioner of Social Security, with tenure in office ranging from as little as a few months to as long as 11 years. The agency's internal organizational structure has also undergone many changes. The most recent reorganizations occurred in 1975, 1977, 1979, and 1994. In its nearly 60 years of operations, SSA has been assigned diverse responsibilities under a myriad of programs (see Milestones). Currently, SSA has principal responsibility for Old-Age, Survivors, and Disability Insurance (OASDI), Supplemental Security Income (SSI) and Black Lung art B) programs. It receives support from the Treasury Department--which collects Social Security taxes and disburses benefit check--the Postal Service, General Services Administration, and the Office of Personnel Management. Independent Agency Issue The impetus behind an independent SSA emanated primarily from a desire to separate Social Security policymaking from economic and budgetary decisions affecting the rest of the Federal Government. Considering Social Security unique among Federal social programs because of its self-financing nature and "implied compact' with the Nation's workers to pay "earned" retirement, survivor, and disability benefits, proponents of SSA's independence wanted to insulate it from everyday political, fiscal, and operational policy decisions of the Government. Support for independence began to emerge in the early 1970's. It can be traced to the decision taken under the Johnson Administration to create a Unified Federal Budget in which Social Security program revenues and outlays were shown together with other government operations. …

An Analysis of Compositional Trends in Social Security Disability Insurance Awards, 1960-1991:

Abstract: This paper analyzes historical trends in the demographic and health-related characteristics of disabled worker beneficiaries of the Social Security Disability Insurance (SSDI) program since 1960. Descriptive trend data show SSDI awards are increasingly made not only to younger persons, but also to persons with health impairments that at any age typically require longer durations of program entitlement. As a result, the expected number of years a new awardee stays on the rolls has risen over time, putting additional pressure on already strained program financing. A time-series regression analysis suggests that these compositional trends are shaped by a complex set of external and internal forces, not just a single source of change such as the growth in the population insured for work disability. Health status trends turn out to be especially significant determinants of awards to younger beneficiaries. Some policy implications of compositional changes and their determinants are discussed.

Cross-coding from the Swiss Disability Insurance listing to the ICIDH.

Abstract: SummaryIt has been suggested that converting, via a process of cross-coding, the listing used by the Swiss Disability Insurance (SDI) for their statistics into codes of the International Classification of Impairments, Disabilities, and Handicaps (ICIDH) would improve the quality and international comparability of disability statistics for Switzerland. Using two different methods we tested the feasibility of this cross-coding on a consecutive sample of 204 insured persons, examined at one of the medical observation centres of the SDI. Cross-coding is impossible, for all practical purposes, in a proportion varying between 30% and 100%, depending on the method of cross-coding, the level of disablement and the required quality of the resulting codes. Failure is due to lack of validity of the SDI codes: diseases are poorly described, consequences of diseases (disability and handicap, including loss of earning capacity), insufficiently described or not at all. Assessment of disability and handicap would provide...

Disability insurance in an optimal pension scheme

Abstract: “Disability” or “poor health” is traditionally associated with a complete loss of earnings capacity and/or prohibitive increases in the disutility of labor. Thus, it invokes a necessity to withdraw from the labor market. A number of empirical and theoretical studies have questioned this conventional view and suggested instead that the use of disability-contingent allowances for early retirement mainly reflects the leniency of the eligibility rules. This raises the issue of designing incentive-compatible health-contingent retirement rules and questions concerning the resulting characterization of optimal pension systems. The study shows that the presence of moral hazard induces an overinsurance of normal retirees, raises the optimal contribution-rate, and lowers the optimal normal benefit level and the normal retirement age. Moreover, even if the realization of an ex-ante uncertain health shock increases the disutility of labor only slightly, the disability-contingent retirement age and the date when this health shock occurs will coincide — given that the system entails normal retirement provisions as well. Thus, minimum eligibility ages and other arrangements to induce prolonged work of actually disabled persons can very generally be demonstrated to be suboptimal.

Disability insurance overview.

Abstract: In summary, I think the industry is doing the right things to return to profitability Rates are increasing, underwriting and products are tightening, claim administration is becoming more proactive, and reserves are being strengthened I think this will lead to future profitability, and future profitability will attract some new companies into the marketplace The real long-term question is, once profitability has returned, will the industry shoot itself in the foot again in its efforts to do competitive battle?