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Disability Insurance Observer: Cutting SSDI

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The idea of governments helping workers who are too disabled work is old.

Some of the earliest articles published in National Underwriter — one of the print publications that feeds articles into the website — dealt with debates about whether government protection of workers’ income was a practical social welfare strategy or a socialist plot that would lead to rampant malingering.

Now the debate is heating up again as government budget document fans are noticing that the Social Security Disability Insurance (SSDI) program is on track to exhaust its trust fund in 2016, about 20 years before the Social Security retirement program trust fund is due to go bust.

The program is going broke because the average age of the U.S. worker is increasing, the labor force has grown quickly, SSDI eligibility rules have changed, and the weak economy is affecting the ability of workers with disabilities to get and keep jobs, according to analysts at the Congressional Budget Office (CBO).

The CBO analysts recently looked at 7 ideas for fixing the SSDI program and concluded that they aren’t sure how to get the train back on track quickly enough to do much good in the short run.

SSDI managers have, by definition, classified SSDI recipients as being people incapable of earning a meaningful amount of income from any job.

The CBO analysts looked at the idea that SSDI could stretch out its funds by, for example, moving to a partial disability system that would provide bigger benefits for the seriously disabled workers with even more serious disabilities and than other seriously disabled workers.

SSDI also could put more emphasis on getting workers with new disabilities back to work, the analysts say.

“Many of those alternatives have been implemented in various European nations,” the analysts say. “But the changes in policy that those countries have instituted generally have been in place for such a short time that their fiscal impact is uncertain.”

The CBO analysts say (in so many carefully worded words) that they think changes along those lines could help in the long run but probably aren’t going to work miracles by 2016.

We all have a stake in this because we all could become disabled, and most of us reading this pay payroll taxes that are being used to fund the SSDI program.

Private disability insurers have a stake in this because they often design benefits in such a way that SSDI benefits offset part or all of the private disability benefits total.

My proposal for solving the problem: Reality day. 

One day, let’s pile all the things we want to do in a pile on one side and pile our resources together on the other side and get real about how much of the things we want to do the pile of resources can actually pay for.

Either we raise taxes and fees to pay for the benefits we’re promising, or we admit we messed up and admit that we have to default on the promises.

Either way, let’s get real.

Intentionally promising benefits that we have no way of delivering (without inflating our currency beyond the point that it loses its purchasing power) is just silly, not generous. 


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