Demographics, Not Fraud, Driving Disability Claims

Demographics, Not Fraud, Driving Disability Claims

Originally published on The State on Jan 3, 2014

Columbia, SC — The recent 60 Minutes report “Disability, USA,” led some viewers to conclude that fraudulent Social Security disability claims have become prevalent. However, the broadcast overlooked some essential points. The fact is that the disability program has high standards, low fraud rates and very modest benefits. Furthermore, award rates throughout the process fell by 6 percent during the recession, and award rates by administrative law judges fell by more than 10 percent.

According to the Organisation for Economic Co-Operation and Development, the U.S. disability benefit system is the most restrictive and least generous of all member countries, excluding Korea. Fewer than four in 10 applicants are approved, even after appeals.

Former Social Security Commissioner Michael Astrue, a George W. Bush appointee, estimated that fraud amounts to less than 1 percent of the disability program. The agency’s watchdog agrees that fraud is extremely rare.

Social Security actuaries say most of the recent growth in the disability rolls is due to demographics, including baby boomers aging into high-disability years, women who became eligible for disability insurance after they entered the workforce in greater numbers during the 1970s and ’80s and the increase in the Social Security retirement age.

Disability-insurance benefits are very modest and average $1,130 a month, just over the federal poverty level for a single person, or about $37 per day. Disability insurance typically replaces less than half of an individual’s previous earnings.

As baby boomers age into retirement, the number of Americans approved for disability is leveling off and is projected to decline. Congress easily can fix the impending exhaustion of the disability trust fund by reallocating payroll tax revenues between the retirement and disability trust funds, as it did in 1994.

The Social Security Administration must be on constant guard against fraud and abuse, but just because 60 Minutes uncovered one sensational instance of alleged fraud doesn’t mean that the entire disability system is rotten. The facts paint a different picture than the one on TV.