TY - JOUR AU - Autor,David AU - Duggan,Mark TI - The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding JF - National Bureau of Economic Research Working Paper Series VL - No. 12436 PY - 2006 Y2 - August 2006 UR - http://www.nber.org/papers/w12436 L1 - http://www.nber.org/papers/w12436.pdf N1 - Author contact info: David Autor Department of Economics MIT, E52-371 50 Memorial Drive Cambridge, MA 02142-1347 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu Mark Duggan The Wharton School University of Pennsylvania 1452 Steinberg Hall-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215-898-0928 Fax: 215-898-7635 E-Mail: mduggan@wharton.upenn.edu AB - More than 80 percent of nonelderly U.S. adults are insured against the risk of disabling physical or mental illness by Social Security Disability Insurance (SSDI). This article evaluates the causes of the extraordinary growth in SSDI enrollment, considers its fiscal ramifications, and discusses potential policy responses. While aggregate population health has improved by most measures in recent decades, the rate of SSDI receipt among nonelderly adults has nearly doubled since 1984. We project that SSDI receipt will rise by an additional seventy percent before reaching a steady state rate of approximately 6.5 percent of adults between the ages of 25 and 64, with cash benefit payments exceeding $150 billion annually (excluding Medicare). We trace the rapid expansion of SSDI to: (1) congressional reforms to disability screening in 1984 that enabled workers with low mortality disorders such as back pain, arthritis and mental illness to more readily qualify for benefits; (2) a rise in the after-tax DI income replacement rate, which strengthened the incentives for workers to seek benefits; (3) and a rapid increase in female labor force participation that expanded the pool of insured workers. Notably, the aging of the baby boom generation has contributed little to the growth of SSDI to date. Among several avenues for reducing SSDI growth, we suggest that the most promising are revamping the disability appeals process--in which the Social Security Administration currently loses nearly three-quarters of all appeals--and reducing the attractiveness of DI benefits for work-capable disabled individuals by providing additional access to public health insurance. By contrast, previous efforts to reduce the SSDI rolls by discontinuing benefits or by providing stronger return-to-work incentives have proved remarkably unsuccessful. ER -