In 1956, the Social Security Disability Insurance (SSDI) was introduced to protect individuals with disabilities against earnings loss. Since its installation, the program has rapidly grown due to expanding eligibility, a growing workforce, and aging of the overall population. Despite large changes in health, medical technology, and job demands, SSDI has not seen a substantial reform since the 1980s.
In The Annals of The American Academy of Political and Social Sciences, associate professor of health care policy and director of the NBER Retirement & Disability Research Center Nicole Maestas, PhD, suggests two interlocking reforms that could modernize the program.
The first step would be to improve the process that determines whether an individual with a disability has the ability to continue working. The current medical-vocational guidelines used to assess whether a SSDI applicant is able to perform any job in the national economy are outdated and rely on heuristics such as age. A better system would measure the full range of individual work abilities using validated methods and compare these abilities to the specific ability requirements of jobs in the U.S. economy for which the applicant is qualified.
Once measurement of work capacity is improved, partial disability benefits could be introduced. These would allow beneficiaries to combine their SSDI benefits with earnings. Beneficiaries that retained partial work capacity would receive partial benefits to supplement their lost earnings. Those that were completely unable to work would continue to receive full benefits, as under the current system.
The institution of these two reforms could eliminate the Social Security Administration’s complex, antiquated work-related rules, including the requirement that applicants must not be working when they apply for benefits. SSDI beneficiaries that still had the capacity to continue to work could receive SSDI support while still participating in the workforce, allowing them to maintain valuable employer connections and accommodations.
Maestas presented this proposal at the Brookings/American Enterprise Institution “Entitlement reform: The effectiveness of the safety net and evidence for responsible policy” forum in Washington, DC.