Congress should think carefully before trying to lower Social Security Disability Insurance (SSDI) benefits costs by giving employers “more skin in the game.”
Joyce Manchester, an analyst at the Congressional Budget Office (CBO), made that argument today at a hearing on the SSDI program organized by the House Ways and Means Social Security subcommittee.
Stephen Goss, the chief actuary at the Social Security Administration (SSA), testified that the Disability Insurance Trust Fund trustees expect fund reserves to be adequate until 2016. If the reserves run out, the program should have enough tax revenue to pay 79 percent of scheduled benefits starting in 2016, Goss said.
Because the current SSDI budget problems are caused mainly by a one-time, well-understood event — the drop in the birth rate that started in 1965 — “restoring sustainable solvency for the DI program will not require continually greater benefit cuts or revenue increases,” Goss said, according to a written version of his testimony posted on the Ways and Means website.
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“A one-time change to offset the drop in birth rate and past shifts in other ‘drivers’ is all that is needed to sustain the DI program for the foreseeable future,” Goss said.
Manchester noted that many policymakers would like to try to get some of the needed improvement in SSDI’s financial position by reducing the number of workers who need SSDI benefits, rather than solely by increasing payroll taxes and holding down the amount of benefits paid to the workers who need the benefits.
One way to reduce the number of workers who need SSDI benefits in the first place would be to encourage employers to do more to keep workers healthy and support workers who do develop disabilities, Manchester said.
Federal law already requires employers to make reasonable accommodations for workers with disabilities, Manchester said.
Employers with private group disability plans may find that the private insurers give them strong financial incentives to keep workers with disabilities working.
But the SSDI program is funded through a flat-rate payroll tax on employers and employees.