Rising unemployment rates and state budget cuts are threatening to make Social Security Disability Insurance program application backlogs even worse than they are today.

Witnesses talked about the problems at SSDI Thursday at a hearing organized by the House Ways and Means Social Security subcommittee.

The SSDI program provides monthly benefits for workers who have health problems that keep them from working. Many private disability insurers coordinate their benefits with SSDI benefits, and workers who get SSDI benefits get Medicare medical coverage within 2 years of qualifying for SSDI.

To get SSDI benefits, workers must prove they are severely disabled, and the claims process often takes years.

In fiscal year 2009, the Social Security Administration received 2.8 million initial SSDI claims, up 15% from the 2008 total, witnesses said.

The SSA held the number of pending claims below 800,000, and it reduced the average initial claim processing time by 5 days, according to SSA Commissioner Michael Astrue.

But the recession probably will send 2010 SSDI claims soaring, warned Barbara Kennelly, acting chair of the Social Security Advisory Board.

SSDI already has been expecting rising claims levels because of the aging of the baby boomers.

But, today, “the most obvious factor impacting the volume of disability applications … is the recession, with its significant increase in unemployment,” Kennelly said, according to a written version of her testimony posted on the Social Security subcommittee website. “Recent history demonstrates that disability applications generally rise and fall in tandem with the unemployment rate. The DI application rate per 1,000 workers among non-elderly adults rose 37% from 1989 to 1993 (from 8.3 per 1,000 workers to 11.5), and by 49% from 1999 to 2003 (from 8.8 per 1,000 workers to 13.1).”

Meanwhile, witnesses warned, the SSDI program is suffering because the SSA pays states to handle SSDI claims.

Cash-strapped states are applying statewide furlough programs – partial layoff programs – to the employees handling SSDI claims, even they get federal funding specifically for those employees’ salaries, witnesses said.

One report, for example, “estimates that 53,136 cases will be delayed in 2009 as a result of the state of California’s furloughs,” said Rep. Robert Filner, D-Calif.

“Currently there are 13 states with full or partial furloughs,” said Ann Robert, vice president of the National Council of Disability Determination Directors, Springfield, Ill.

A 1-day furlough in Ohio, for example, can affect 731 claims and delay the payment of $149,000 in monthly benefits, Robert said.

States that furlough all disability determination employees have an average of 14% less capacity than they need to handle claims, said Patrick O’Carroll, the inspector general for the SSA.

Links to copies of the written versions of the testimony and other hearing documents are available here.

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