According to a June 14, 2011 Government Accountability Office (GAO) report, the Social Security Disability Insurance (SSDI) trust fund is on track to run out of money by 2018. Although the SSDI’s financial woes have been exacerbated by a dramatic increase in claims resulting from a weak economy, the program’s problems run much deeper.

SSDI was created in 1954 to deliver cash benefits to workers whose physical impairments rendered them unable to work. At the program’s outset, benefits were primarily delivered to disabled individuals above the age of 50 employed in low-wage, low-skill professions. During the 1980s, the program liberalized its eligibility criteria to include mental illnesses, which made authenticating an individual’s disability claim much more difficult. While diseases such as schizophrenia are instantly recognizable, certain mood disorders (such as anger management or depression) are not as easy to diagnose.

According to a May 21, 2011 Daily Caller article, “…in 1984, about 64,000 people were awarded SSDI benefits due to ‘mental disorders’; by 1986 it had jumped to about 124,000. In 2009, it was over 216,000, resulting in an unsurprising cumulative effect of over 2.4 million people receiving SSDI benefits for ‘mental disorders other than retardation.’” An August 24, 2011 article in USA Today reported that about 3.3 million people are expected to apply for federal disability benefits in 2011; 1 million more applicants than one decade ago.

Due to a flawed benefit approval process, legitimate SSDI claimants often must wait years to receive payments; at the same time, many unqualified persons receive benefits. First-time SSDI applicants are required to seek authorization from state officials, but any applicants who are twice denied can later appeal to one of the Social Security Administration’s (SSA) 1,500 Administrative Law Judges (ALJs). Although ALJs, on average, grant benefits in slightly more than half of appeal cases, the criteria used to determine rulings is hardly objective.

The 1946 Administrative Procedures Act grants ALJs “decisional independence” in approving or disapproving cases; this flexibility can often result in judicial decisions that are the product of individual guesswork. Furthermore, this “decisional independence” stipulates that ALJs cannot be punished by the SSA for disproportionately granting or rejecting benefits, regardless of the process through which they arrive at their decision. As the Wall Street Journal reported on May 19, 2011, certain judges have abused this systemic flaw by granting benefits at astronomically high rates. Judge David Daugherty, who sits in Huntington, West Virginia, awarded benefits in 1,280 of the 1,284 cases he decided in fiscal year 2010.

In 2010, the SSA detected $1.4 billion in overpayments to disability beneficiaries. Primary recipients of overpayments fall into two main categories: individuals who have returned to work, but are still receiving payments, and people who are no longer eligible for benefits due to medical improvement. These overpayments stem largely from the SSA’s inconsistent handling of Continuing Disability Reviews (CDRs), which are statutory, periodic examinations to determine whether current beneficiaries still qualify for benefits under the SSDI program. In 2011, 2.8 million beneficiaries are scheduled to receive a CDR, but the SSA will likely only complete 50 percent of this amount; creating a projected backlog of 1.4 million cases, causing millions of dollars in overpayments to ineligible beneficiaries.

Amplifying the SSDI program’s mountainous backlog problem is the addition to the applicant pool of a generation of retiring baby boomers, as well as disabled workers laid off from their jobs during the recession who are struggling to find new work. According to an August 23, 2011 analysis by the Heritage Foundation, “Just as unemployed older workers have been forced to apply for Social Security retirement benefits earlier than they expected, thousands of other unemployed people who have disabilities, or hope that they might qualify, are applying…” for SSDI benefits.

The trustees who oversee Social Security are calling on Congress to stabilize the SSDI program by reallocating money from the larger, yet still financially strapped, Social Security retirement program. This sort of myopic solution would provide only temporary relief and would expedite the inevitable bankruptcy of the Social Security retirement trust fund, which is currently projected to run dry by 2037.

In his July 2011 Back in Black budget plan, Sen. Tom Coburn (R-Okla.) proposed several thoughtful solutions to fix the problems facing the SSDI program, including implementing reforms to the review process of enrolled beneficiaries, developing a treatment plan for disabled benefit recipients in cases where medical improvement is possible, and simplifying the convoluted benefit appeal process. Sen. Coburn’s recommendations would allow the SSDI trust fund to remain solvent for 75 years. Whether or not Sen. Coburn’s reforms are adopted, the longer Congress waits to modernize and increase the efficiency of the SSDI program, the larger in scale and scope the program’s problems will become.

  -- PJ Austin