The Social Security Disability Insurance (SSDI) can make it.
Steve Goss, the chief actuary for the Social Security Administration, gave that assessment today during an SSDI hearing organized by the House Ways and Means Committee Social Security subcommittee.
Rep. Sam Johnson, R-Texas, the subcommittee, said he hopes the hearing will be the first of a series of hearings on SSDI, which serves as a public income protection safety net program for U.S. workers.
Like Medicare and the Social Security retirement benefits program, SSDI faces solvency concerns, Goss testified, according to a written version of his remarks posted on the committee website.
Private disability insurers have a stake in the fate of SSDI because many coordinate the benefits they pay with SSDI benefits. Some private disability insurers make a point of helping claimants with the notoriously slow, difficult process of qualifying for SSDI benefits.
Congress created the SSDI program, and the program now is providing benefits for 8.5 million disabled workers and 2 million dependent spouses and children, committee staffers say in a background report.
The government imposes a 12.4% payroll tax on workers and their employers, and the revenue from 1.8 percentage points of that tax goes to the Social Security Disability Insurance Trust Fund. The program also gets funding from income taxes on SSDI benefits and interest earnings on program assets.
The trust fund trustees reported earlier this year that the SSDI trust fund could run dry as early as 2018, and that, at that point, revenue will cover only 86% of the promised benefits.
Goss said the situation is better than it looks, because the imbalance is mainly the result of the aging of the baby boomers and can be addressed with a one-time program adjustment.
“Disability insurance is arguably the most difficult form of insurance to administer,” Goss said. “It is easy to determine whether an insured person has reached retirement age or has died. It is also easy to determine whether a car is wrecked or a house destroyed. It is even relatively easy to determine if health insurance should cover doctor and hospital bills. However, disability is by nature a very subjective concept.”
In spite of those difficulties, SSDI administrators make efficient use of the program’s funding, and only 2.5% of expenditures go toward administrative expenses, Goss said.
“Sustainable solvency can be restored for the disability insurance program with a 16% reduction in benefits, a 20% increase in revenue, or some combination of these changes,” Goss said.