April 11, 2016

SSDI Reform Proposals Released This Week Convey Sense of Urgency

Despite last year’s Bipartisan Budget Act extending reserves for the Disability Insurance Trust Fund from 2016 to 2022, a sense of urgency remains in Washington, D.C., on the issue of reforming the Social Security Disability Insurance (SSDI) program.

On Wednesday, April 6, my colleague Mary Dale Walters and I joined a roomful of policy analysts, researchers, and lawmakers as the McCrery-Pomeroy SSDI Solutions Initiative unveiled a set of reform ideas at the Hyatt Regency Washington on Capitol Hill. Speakers included the Initiative’s co-chairs former Congressmen Jim McCrery, R-La., and Earl Pomeroy, D-N.D., as well as Henry Aaron, Chairman of the Social Security Advisory Board.

Presented as a bipartisan project, lawmakers crossed the aisle to join the discussion with a highly credentialed committee of people and attendees who seemed to agree on the magnitude of issues being discussed. They include insurance industry representatives, former and current Social Security Administration employees, and executives with a history of examining program issues and solutions.

Presenters with the SSDI Solutions Initiative, a project of the Committee for a Responsible Federal Budget, refrained from singling out one solution for the SSDI program, and instead encouraged a range of approaches to address needs in the six-year window available.

Three areas committee members emphasized were:

  • Program efficiency. As one speaker shared, the tedious, complex and “sometimes unfair” nature of the SSDI decision-making process demands attention.
  • Program integrity. Measures introduced with the Bipartisan Budget Act must be reinforced with ongoing efforts to address waste in the program and reduce fraud.
  • Return to work. More exploration is necessary to determine what steps, when enacted, will get more beneficiaries back to work and will intervene early enough to ensure individuals with work capacity can remain employed.

The committee also highlighted the renewed authority available to the Social Security Administration to conduct demonstration projects. Selected proposals in the manual, “SSDI Solutions: Ideas to Strengthen the Social Security Disability Insurance Program,” covered early intervention, administrative changes, structural reforms, benefits coordination and other topics.

For example, group disability income protection was discussed in the paper, “Expanding Private Disability Insurance Coverage to Help the SSDI Program.” The authors, David Babbel and Mark Meyer, estimated savings of $500 million to $700 million annually for the SSDI program if private disability coverage increased to just over 50 percent of private sector employees. The paper explores a coverage opt-out model, similar to the experience of 401(k) opt-out plans.

Two days ahead of the event, Social Security’s Chief Actuary Stephen Goss released a preliminary analysis of estimates of the financial effects on Social Security for more than 70 measures outlined in the manual. Examples included raising the disability insurance payroll tax, offsetting for earnings, changing work history requirements to receive SSDI benefits, eliminating the Reconsideration level in the disability adjudication process, and many others.

The Initiative’s Conclusion warns, however, “no silver bullet exists to ‘fix’ the SSDI program or to improve it for everyone.” Regarding proposed reforms, they continue to caution “it seems unlikely that enough savings would appear by the time trust fund reserves are exhausted in about 6 years.”

Steve Perrigo
Written by

Steve Perrigo

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