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76–319 2012

FIRST IN A HEARING SERIES ON SECURING THE 

FUTURE OF THE SOCIAL SECURITY DISABILITY 

INSURANCE PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

DECEMBER 2, 2011 

Serial 112–SS11 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON SOCIAL SECURITY 

SAM JOHNSON, Texas, Chairman 

KEVIN BRADY, Texas 

PATRICK J. TIBERI, Ohio 

AARON SCHOCK, Illinois 

RICK BERG, North Dakota 

ADRIAN SMITH, Nebraska 

KENNY MARCHANT, Texas 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

SHELLEY BERKLEY, Nevada 

FORTNEY PETE STARK, California 

JON TRAUB, Staff Director 

JANICE MAYS, Minority Staff Director 


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C O N T E N T S 

Page 

Advisory of December 2, 2011 announcing the hearing ....................................... 2 

WITNESSES 

Stephen C. Goss, Chief Actuary, Social Security Administration .................... 18 

Virginia P. Reno, Vice President for Income Security Policy, National Academy of Social Insurance ................................................................................... 31 

Andrew G. Biggs, Ph.D., Resident Scholar, American Enterprise Institute ... 43 

SUBMISSIONS FOR THE RECORD 

Allsup, Statement .................................................................................................... 58 

Consortium for Citizens with Disabilities, Statement .......................................... 61 

Home Dialyzors United, Statement ....................................................................... 66 


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FIRST IN A HEARING SERIES ON SECURING 

THE FUTURE OF THE SOCIAL 

SECURITY DISABILITY INSURANCE PROGRAM 

FRIDAY, DECEMBER 2, 2011 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON SOCIAL SECURITY, Washington, DC. 

The subcommittee met, pursuant to call, at 10:34 a.m., in Room 

B–318, Rayburn House Office Building, the Honorable Sam Johnson [Chairman of the Subcommittee] presiding. 

[The advisory of the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

Chairman Johnson Announces the First in a 

Hearing Series on Securing the Future of the 

Social Security Disability Insurance Program 

December 2, 2011 

U.S. Congressman Sam Johnson (R–TX), Chairman of the House Committee on 

Ways and Means Subcommittee on Social Security, today announced a hearing series on Securing the Future of the Social Security Disability Insurance (SSDI) Program. The first hearing of the series will focus on the history of the disability insurance program, the income security it provides and its financing challenges. The hearing will take place on Friday, December 2, 2011, in 

B–318 Rayburn House Office Building, beginning at 10:30 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. However, any individual or organization 

not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing. 

BACKGROUND: 

The Social Security Act Amendments of 1956 (P.L. 84–880) created the SSDI program to provide protection against economic insecurity resulting from a disabled 

worker’s loss of earnings. The SSDI program pays benefits to those who have 

worked in the past but are determined to be unable to work because of a severe 

medical condition that is expected to last more than a year or result in death. 

Monthly cash benefits are payable to disabled workers and their families after a 

five month waiting period. These benefits currently average $1,070 per month for 

disabled workers. Social Security is an important source of income to SSDI beneficiaries. According to the Social Security Administration (SSA), almost half of families receiving SSDI benefits rely on Social Security for the majority of their family 

income. 

After a two year waiting period, most SSDI beneficiaries are also eligible for 

Medicare. On average, each disability benefit award is valued at $250,000 in SSDI 

and Medicare benefits over a beneficiary’s lifetime. 

In September 2011, $9.7 billion in benefits were paid to 8.5 million disabled workers and 2.0 million of their spouses and dependent children. According to the Congressional Budget Office (CBO), the cost of Medicare benefits for those receiving 

SSDI benefits in fiscal year 2009 totaled about $70 billion. 

SSDI benefits are primarily financed through the Social Security payroll tax, but 

the Disability Insurance Trust Fund also receives income from the partial income 

taxation of SSDI benefits, and interest earnings on its assets. Of the total tax rate 

of 12.4 percent (or 6.2 percent paid by employers and employees, each), 1.8 percentage points are allocated by law to the Disability Insurance Trust Fund, while the 

rest funds the Old-Age and Survivors Insurance Trust Fund. In their 2011 Annual 

Report, the Social Security Trustees project that the Disability Insurance Trust 

Fund will become exhausted in 2018, at which point revenues will cover only 86 percent of benefits. 

According to CBO, between 1970 and 2009, the number of people receiving disability benefits more than tripled from 2.7 million to 9.7 million. During the same 

period, inflation-adjusted expenditures for the SSDI program, including administrative costs, climbed from $18 billion to $124 billion. The reasons for this apparent 

growth are complex, and demographic changes play an important role. During this 

same four-decade period, the size of the overall workforce has grown, the large babyboom generation has aged into its most-disability-prone years, women have entered 

the workforce and become insured for benefits should they become severely disabled, 

and Congress has periodically revised eligibility guidelines. In addition, wage levVerDate Mar 15 2010 09:31 Oct 23, 2012 Jkt 076319 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\76319.XXX GPO1 PsN: 76319

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els—which are the basis for both the program’s financing and its benefit levels— 

have also risen substantially. 

In announcing the hearing series, Social Security Subcommittee Chairman Sam 

Johnson (R–TX) said, ‘‘Disabilities have a devastating effect on individuals and their 

families, and Social Security Disability Insurance benefits provide important income 

security that they rely on. Yet in just seven years the disability program will be unable to pay full benefits unless changes to the law are made. Through this hearing 

series the Subcommittee will lead a much-needed conversation about the challenges 

facing this vital program and solutions that can meet the needs of those with disabilities and the workers who support the program through their hard-earned tax 

dollars.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the history of the SSDI program, the importance of its 

benefits, the growth of the program and the drivers of that growth along with program’s current and future financing challenges. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by the close 

of business on Friday, December 16, 2011. Finally, please note that due to the 

change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical 

problems, please call (202) 225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov/. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

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Chairman JOHNSON. This hearing will come to order. 

Good morning to all of you. 

The Social Security Disability Insurance program has been the 

source of great debate before and since its cash benefit program 

was signed into law in 1956 by then-President Eisenhower. 

Soon after Social Security was established in law in 1935, serious 

discussion emerged whether to expand the program to workers who 

became permanently and totally disabled before age 65 and to their 

dependents. While some urged action to establish these benefits, 

others were concerned about the subjectivity in determining whether a person was truly disabled. 

Not surprisingly, this debate came to a head in a post-World War 

II society. In the mid-20th century, still living in a world created 

by the American industrial revolution, if the sole breadwinner was 

disabled, there were few options. 

The world in 1956 is a far cry from the world we live in today, 

where we are connected not just by highways but by bandwidth, 

where the Internet has redefined our idea of our local neighborhoods, where modern medicine has extended our lifespan well beyond anything conceived by our grandparents, and where technology has opened up opportunities that are as life-altering as the 

Model T was in the beginning of the last century. 

I had a Model A. I tried to get them to put that in there. 

The global economy has changed too. Like Europe, we need foreigners to buy our debt in order to finance our government. Today, 

46 percent of our debt is held by investors outside the United 

States. The debt crisis facing Europe, where bond buyers refuse to 

buy more debt, is forcing many in the European Union to make 

changes to their social benefit programs. Greece and other European nations remind us of the price America will have to pay if we 

delay reform. 

Against this backdrop, the disability debate still rages on. And, 

today, the Social Security Disability Insurance program pays benefits to individuals with a disability that meet certain medical criteria as long as they worked long enough and paid Social Security 

taxes. 

The continuing growth of the program is striking. At a time 

when workers paying into the system has increased nearly 70 percent between 1970 and 2010, the number of people receiving disability benefits increased by almost 300 percent, from 2.6 million 

to nearly 10 million. By 2020, the number of beneficiaries will continue to increase by 18 percent, to 11.8 million. By then, total benefits paid will reach $188 billion. That is a 52 percent increase over 

the $124 billion paid in benefits just last year. 

Experts tell us the program’s growth is due to the changing 

workforce, including the aging of the baby boomers, changes in disability policy, and the still struggling economy. That continued 

growth is putting a massive strain on the Social Security Disability 

Insurance program. 

According to the 2011 Trustees Report, without congressional action, the Disability Insurance Trust Fund will be unable to pay full 

benefits beginning in 2018. That is only 6 years from now. The 

path we are on is unsustainable, and we are putting individuals 

with disabilities at risk if we don’t act soon. 


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This subcommittee, through this hearing series, will lead a 

much-needed conversation about the challenges facing this important program and solutions that can meet the needs of those with 

disabilities and workers who support the program through taxes on 

their hard-earned wages. 

We begin today with an examination of the history of the Disability Insurance program, the income security it provides, and its 

financing challenges. Through future hearings, we will explore the 

inner workings of the program, including vulnerabilities to fraud, 

the criteria used to determine benefit eligibility, how decisions are 

made in the appeals process, and the good thinking that is taking 

place about possible solutions. 

At a time when Washington doesn’t seem to be able to agree on 

much, I know that all the members of this subcommittee agree on 

the importance of coming together to ensure that this program 

stays strong for those who truly cannot work. 

[The prepared statement of Chairman Johnson:] 


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I thank you again for being here. 

And I now recognize the ranking member of the Subcommittee 

on Social Security, Mr. Becerra, for his opening statement. You are 

recognized for 5 minutes. 

Mr. BECERRA. Mr. Chairman, thank you very much for calling 

this hearing. 

Today, nearly every working American and his or her family is 

protected against the devastating consequences of premature 

death, career-ending disability, and insufficient retirement savings. 

They have earned the protection; they paid for it. It is called Social 

Security. The benefits, they are basic. Nobody gets rich from Social 

Security. But they are reliable, and they are part of why America’s 

families in the middle class grew so strong. 

Today we are beginning a series of hearings focused specifically 

on Social Security Disability Insurance, or DI. I am glad that we 

are because I believe in the program. It is vital. It provides irreplaceable economic security to those who have paid in but are no 

longer able to work through no fault of their own. 

At the same time, let’s be as honest as we are human. There is 

always room for improvement. And that, Mr. Chairman, is the operative word for these hearings, ‘‘improvement.’’ 

Are we here today as representatives of those American workers 

to strengthen Social Security’s DI program, to re-enforce that cando optimism flowing through our own DNA? Or are we signaling 

retreat—retreat from the protections, retreat from the services and 

benefits Americans paid for? 

Without Social Security, about half of Americans who receive its 

benefits would be living in poverty. This is particularly true for 

Americans who have become severely disabled and who often have 

families to care for. 

Remember, workers paid for their benefits. Over its lifetime, Social Security has taken in $14.6 trillion and so far has only had to 

pay out to contributing Americans $12 trillion. That is pretty good 

surplus. 

Let’s be clear. It is not easy to qualify for disability benefits, and 

rightly so. DI is usually only for people who have paid into the system—not usually, it is only for people who have paid into the system. And it is only available to those with the most severe impairments—Americans who are dying or who genuinely can’t earn a living wage and whose disabilities are disabling for at least a year. 

When considering whether you can work, the Social Security Administration looks at whether you can do any job in the economy, 

even if it is not in your profession or pays a lot less than your old 

job or requires you to move to a different city. In fact, most people 

with illnesses and disabilities do not receive DI benefits; only the 

sickest people do. How sick? About one in seven Americans dies 

within a few years of becoming eligible for benefits. The benefits 

are not overly generous either, averaging about $13,000 a year. 

If you simply compare the number of people getting DI benefits 

40 years ago to the number getting benefits today, it seems large, 

but that is a loaded way of looking at it. A lot has changed in 4 

decades. 


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For starters, women have entered the workforce in large numbers. In 1975, there were about 37 million women in the workforce; 

today, 72 million. 

Baby boomers—we all know about the baby boomers. I certainly 

do; I am one of them. We are not at the age of eligibility for retirement benefits yet, but, more and more, my cohort is beginning to 

become disabled or ill. A 50-year-old today is roughly twice as likely as a 40-year-old to be severely disabled, and a 60-year-old today 

is twice as likely to be disabled as that 50-year-old. 

In addition, we have had this great recession. Some people who 

held a job in spite of very severe illnesses and disability have lost 

those jobs and have not been able to secure employment since. 

Once you take into account these demographic changes—a larger 

workforce, an older population, more working women—the rate at 

which newly disabled workers begin receiving benefits today compared to the working population is below what it was in the mid1970s. 

Having said all this, SSA needs to have enough people and technology to do a good job of managing the DI system. Unfortunately, 

today SSA is operating under a budget that this Congress cut imprudently. The result? The number of disabled Americans awaiting 

a decision from SSA on their application for earned benefits is 

again on the rise, despite previous years of progress in reducing the 

backlogs. Today, more than 1.5 million Americans are awaiting a 

decision on their application for benefits. 

Some Americans have lost their homes, their families, and even 

their lives waiting for the benefits they have earned. An Army veteran in Maryland became homeless and in dire need of medical 

care because her hearing was not held. A gentleman in Texas had 

to file for bankruptcy during the 6 years it took before he received 

the benefits he had earned. 

Mr. Chairman, we have a lot to do. And there are a lot of good 

people who paid into the Social Security system. For the smallest 

share of those Americans who are disabled, whose cancer, traumatic brain injury, or arthritis is so severe that they cannot work, 

we have a Social Security disability benefit—benefits workers can 

pay for while working and count on when they can’t work. 

And for that reason, the operative word for these hearings really 

should be ‘‘improvement,’’ improvement of the Disability Insurance 

program. 

I yield back, Mr. Chairman. 

[The prepared statement of Mr. Becerra follows:] 


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Chairman JOHNSON. The gentleman’s time has expired. Thank 

you, Mr. Boomer. 

As is customary, any Member is welcome to submit a statement 

for the hearing record. 

Chairman JOHNSON. Before we move on to our testimony 

today, I want to remind our witnesses to please limit their oral 

statement to 5 minutes. However, without objection, all written 

testimony will be made a part of the hearing record. 

We have one panel today, and our witnesses who are seated at 

our table are: Steve Goss, who is the chief actuary at the Social Security Administration—thank you for being here; Virginia Reno, 

vice president for income security policy at the National Academy 

of Social Insurance; and Andrew Biggs, resident scholar at the 

American Enterprise Institute. 

Thank you all again. 

Mr. Goss, welcome, and you may proceed. 

STATEMENT OF STEPHEN C. GOSS, CHIEF ACTUARY, SOCIAL 

SECURITY ADMINISTRATION 

Mr. GOSS. Thank you very much, Chairman Johnson, Ranking 

Member Becerra, Members of the Committee. It is a pleasure to be 

here, and thanks for the opportunity to come and talk to you today 

about the Social Security Disability Insurance program. 

I would like to talk to you about a couple of things today. 

First of all, as has been stated, the Social Security Disability Insurance program provides benefits to almost 9 million workers 

today, a total of 11 million beneficiaries, including their family 

members, to the tune of about $130 billion of expenditures—essential benefits for people who have been found to be quite severely 

disabled and not able to work. 

It is clearly true that the administration of the Disability Insurance program, of any disability insurance program, is a challenge 

and is difficult. It is not like a retirement program, where we know 

when you reach 62. It is not like a life insurance program; we know 

when you die. Disability insurance is inherently more difficult to 

administer. And I am not here to be a cheerleader, but I would suggest that, in the years of experience I have seen, the Social Security Administration and the State disability determination services 

are doing a pretty good job of administering this program. 

There are lots of challenges, though. I would like to talk to you 

about two things. One is the actuarial status of the Disability Insurance Trust Fund, and the other is the drivers that have really 

driven the cost of the program to be what it is today. 

I have a slide, Figure 1 in the written testimony, which gives an 

illustration of what the trust fund levels are projected to be for the 

Social Security Disability Insurance program. 

As Chairman Johnson mentioned, we are projecting about 2018 

will be the year at which the trust fund will become exhausted for 

the Disability Insurance program. However, at that time, continuing tax income will still be sufficient to pay 86 percent of 

scheduled benefits. And, more important, that percentage does not 

decline very much. By the year 2085, we project we will still have 

enough tax income in to cover 83 percent of scheduled benefits. So 


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the program is on a sustainable course; it is just a little shy of 

funding. 

In order to fully finance the program, we would have to have as 

much as a 16 percent reduction in benefits over the next 75 years 

or a 20 percent increase in revenue or some combination of the two. 

This next slide, which is Figure 3 in the written testimony, puts 

in perspective what has happened with the Disability Insurance 

program. And it is the first look at what the drivers of the cost of 

the Social Security program are. We can break those into two kinds 

of drivers for the cost of the Social Security program. 

One is the basic demographic drivers, which we have all talked 

about. We have heard mention of the baby boomers. The baby 

boomers are coming up into our retirement system over the next 

20 years. But the real news to the Disability Insurance program is 

that they are already here. The baby boomers have already had 

maximum impact as of today for the cost of the Social Security Disability Insurance program. From 1990 to the year 2010, over that 

20-year period, the baby-boom generation moved from ages 25 to 

44, where not many people are disabled, to ages 45 to 64, where 

disability is highly prevalent. So we have already moved into the 

worst of times in terms of disability problems. The boomers are 

there. 

And, thereafter, you can see on this chart that the cost of the Social Security Disability Insurance program as a percentage of our 

gross domestic product is about level, in fact even declining slightly. So we are at the peak of cost of Social Security now, and, actually, the cost goes down somewhat. We are at a shortfall, so it is 

something that needs to be addressed, but at least it is not projected to be getting worse. 

So why is this? Well, we know on the basic demographic driver 

of population, we have already reached the worst. So where do we 

go from here? The next driver that is really worth looking at that 

is more disability-specific is one that is related to something that 

Mr. Becerra mentioned. More women have been working over the 

last 20 years, but, more importantly, more women have been working consistently enough to be insured for benefits under the Disability Insurance program. 

And you can see on this chart, from 1970 to 2010, the percentage 

of women in our population who are insured for disability benefits 

should they become disabled has jumped from 35 percent to 70 percent. It has doubled. For men, the percentage has stayed about the 

same. And, at this point, men and women are very close together, 

and, therefore, we do not expect a lot of change in the future. We 

have had a massive increase in the number of women who are insured for disability. Men have stayed about the same. And, in the 

future, we expect this to be basically stable. 

A second driver that we can look at for the cost of the program 

that has had a lot of influence over time is, of course, becoming disabled. If you are insured, the next step is, have you become disabled? We look at the number of people who become disabled each 

and every year. 

You can see in this chart how up and down the numbers have 

been in the past, our percentage of people in the population that 

become disabled. They bounce around quite a bit between 1975 and 


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2010. But if you look at the line for the males, they have been 

around, 5 per 1,000 over the past 20 years, on average, and that 

is about what we project it will be in the future. So we don’t expect 

a lot of change for the probability of becoming disabled amongst 

men. 

Women, however, used to be much less likely to become disabled 

at any given age than men, but they have moved up. Just like with 

the insurance status, women have moved toward parity with men. 

We are reaching a point where women and men are now similar. 

And, going to the future, we expect stability on this too. 

We have a chart here that gives some explanations of why we 

have moved up and down so much in terms of the disability incidence rates or the probability of becoming disabled. There are 

many factors: economic recessions; changes in policy that we will 

be talking more about. 

But getting back to the basic drivers that have driven what has 

happened in the past, we have had the basic population, the tendency to become disabled, and the insured status, and when we put 

all those together, they explain a lot of why the female percentage 

of the population that is disabled, the probability of being disabled, 

has risen so much over the last 20 years. 

Chairman JOHNSON. Can you sum up? 

Mr. GOSS. Absolutely, yes. Virtually done. Thank you very 

much. 

One additional change has occurred, that explains why even 

males have increased their percentage of the population that is disabled over this time. We have had a shift in our probability of becoming disabled toward younger ages for both men and women. 

Hopefully that is something we can talk more about. 

These are the basic drivers that have driven the cost of Social 

Security up over the last 20 years. And we expect that it will be 

relatively stable in the future. 

Thank you very much. 

[The prepared statement of Mr. Goss follows:] 


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Chairman JOHNSON. Thank you. 

We are facing a vote here in about 10 or 15 minutes. And what 

we intend to do is go ahead with your testimony, and, should a vote 

be called, it will be a long one and we will not continue this hearing. What we will do is ask our members to submit questions to 

you in writing, and hopefully you all will be able to answer them. 

Mr. BECERRA. And, Mr. Chairman, to clarify, we will go as long 

as we can before the votes are—— 

Chairman JOHNSON. Yes, of course. 

Ms. Reno, welcome. Please go ahead. 

STATEMENT OF VIRGINIA P. RENO, VICE PRESIDENT FOR INCOME SECURITY POLICY, NATIONAL ACADEMY OF SOCIAL 

INSURANCE 

Ms. RENO. Thank you. Thank you, Chairman Johnson, Ranking 

Member Becerra, and other Members of the Committee. I am delighted to have the chance to talk to you today about the Disability 

Insurance program. 

I will make the following points very quickly. First, the growth 

in the program is due largely to demographics, and I will skip over 

that because Steve Goss has covered that very well. Second, people 

who get the benefits rely very heavily on them, and, as a society, 

we need this protection. Third, the eligibility rules for getting benefits are very strict, and they do not appear to have become more 

lenient over time. Lastly, the program does appear to be affordable 

out into the long-term future, as the actuarial projections show, if 

we are willing to pay for it. And, yes, there is room for improvement. 

On the question, ‘‘do people need the benefits?,’’ benefits are an 

essential lifeline to those who receive them. That is nearly 9 million Americans. Nearly half of the people who get benefits rely on 

those benefits for almost all their income. 

The benefits, yet, are modest: an average of less than $13,000 a 

year for a disabled worker, which is a little more than the poverty 

threshold for one living alone. For a disabled worker with eligible 

children, the average benefit is under $20,000 a year. That is a little more than the poverty threshold for a family of three, but not 

much. But the disability program helps account for the fact that 

Social Security lifts over 5 million working-age people out of poverty. 

This is insurance that people pay for through premiums that 

come out of their paychecks. And the fact that it is insurance is 

critically important. People simply can’t save enough on their own 

to cover the risk of disability. This is a risk that absolutely requires 

insurance, because few of us do become disabled but the results are 

devastating when it happens. 

This insurance is also most efficient if it is universal through Social Security. We all need it and it is important to preserve this. 

On the eligibility rules, they are very strict: inability to engage 

in any substantial gainful activity by reason of an impairment that, 

as determined by medical evidence, is expected to last at least a 

year or result in death. ‘‘Substantial gainful activity’’ in this context means ability to earn a $1,000 a month or more. 


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The test considers your capacity to do any work that exists in the 

national economy, not just work you have done before. So this test 

is stricter than in private disability insurance systems, in most 

cases. It is stricter than workers’ compensation and veterans’ compensation, which pay partial benefits for partial disabilities. And it 

does require clear medical evidence to document the existence of 

the condition and the functional limitations imposed by that condition. 

As partial evidence of the strictness of the rules, we have looked 

at research over the years about what happens to people who are 

denied benefits. A new RAND study issued just this year looked at 

people denied benefits and found that 20 to 30 percent of those who 

had been denied did engage in substantial gainful activity. 

What does this mean? It means that, for that 20 or 30 percent, 

Social Security’s decision to deny the benefits was correct. They 

can, in fact, work, according to the rules of the program. But, at 

the same time, 70 to 80 percent of the people turned down for benefits did not go back to work. This suggests that many people who 

have applied for benefits and are being denied do, nonetheless, 

have significant impediments to work. This does not necessarily 

mean we should be liberalizing the rules, but it is simply a cautionary tale about the notion that the program is becoming too lenient. 

A blue-ribbon panel of the National Academy of Social Insurance 

reviewed all past studies of the program of denied applicants for 

disability insurance benefits from 1964 to the 1990s. It found that 

fewer than half of denied applicants later worked. The nonworking 

denied applicants were generally poor; they relied mainly on income of other family members or limited welfare payments. 

So, to recap, the history of our DI outlays, as Steve Goss pointed 

out, shows that, by and large, the program is keeping up with our 

growing workforce and our aging workforce, as boomers are passing 

through their high disability years. Clearly, people need the benefits, and, as a society, we need the protection. The rules for getting 

benefits appear to be very strict. The program is affordable and 

sustainable going forward if we are willing to pay for it. And, yes, 

there is room for improvement. 

[The prepared statement of Ms. Reno follows:] 


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Chairman JOHNSON. Thank you, ma’am. 

Dr. Biggs, you are recognized for 5 minutes. 

STATEMENT OF ANDREW G. BIGGS, PH.D., RESIDENT 

SCHOLAR, AMERICAN ENTERPRISE INSTITUTE 

Mr. BIGGS. Thank you very much. 

Chairman Johnson, Ranking Member Becerra, Members of the 

Committee, thank you for the opportunity to testify today with regard to the future of the Social Security Disability Insurance program, which pays benefits to almost 9 million disabled Americans 

and, perhaps more importantly, provides protection against disability to over 150 million workers. 

Much of the increase in Disability Insurance costs, as documented by Steve Goss, are attributable to the aging of the population, as individuals shift into the years in which they are most 

likely to become disabled. But much of the cost increase is attributable to increases in disability over and above what an aging population would imply. 

These increases are puzzling, given that self-reported disability 

rates recorded by the Census Bureau have remained roughly constant over the past 3 decades. Given the aging of the population, 

these self-reported disability rates, in which individuals report 

whether they suffer from a disability that impairs their ability to 

engage in work—given the aging of the population, these self-reported rates should have risen. So we have a puzzle. This implies 

that the age-adjusted disability rates likely have fallen in terms of 

self-reported rates—the opposite of what we have seen in terms of 

program allowances. 

Lower self-reported disability rates makes sense, though, when 

you consider higher incomes, improved technologies in health, and 

less physically demanding jobs. Remember that in the past many 

Americans worked in factories, mills, and mines, which exacted a 

significant cost to their health. If there is an upside to this shift 

to a service economy, it is that the health of workers should improve. 

Whatever the causes, the data seem to reflect improving health 

and lower self-reported disability among working-age Americans, 

and yet caseloads continue to increase. The percentage of Americans with self-reported disabilities who are in the workforce today 

dropped by almost half since 1980. 

The key to reform is incentives for employers to provide rehabilitation and accommodation rather than to shift disabled employees 

out of the workforce and onto the DI rolls. Under current law, a 

disabled employee represents a cost to employers that can be eliminated if the employee goes on DI. SSA, likewise, cannot provide reemployment assistance until after an individual has been approved 

for DI, a process that can take years, during which time the worker’s skills and motivation decline. At the crucial time in which a 

disabled worker might be helped to remain a worker, no one really 

has the incentive to do so. 

Proposed reforms are designed to give employers greater incentives to keep workers working. Disability reforms passed in the 

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ability rates in the world to levels that are comparable to those in 

the United States. 

The lesson is that reform cannot think solely in terms of the program’s finances—of finding a combination of tax rates and benefit 

levels that keep the system solvent over the long term. A sustainable solution goes beyond simply saying ‘‘no’’ to DI applicants but 

finding ways to keep Americans with disabilities on the job and integrated into society. 

Thank you very much. 

[The prepared statement of Mr. Biggs follows:] 


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Chairman JOHNSON. Thank you, sir. I appreciate your testimony. 

I am not sure that we have time to go into questions. I think we 

are voting. 

Mr. BECERRA. What if we agree to just, all of us, agree to just 

2 or 3 minutes instead of 5? 

Chairman JOHNSON. That is okay with me. Can you all agree 

to 2-minute questions? Ask one question? We will try to do that. 

Thank you. I appreciate you all being here. 

Mr. Goss, let me ask you, on page 1 of your testimony, you say 

the 3.6 percent cost-of-living adjustment for December 2011 was 

larger than expected and wages grew slower than expected, both of 

which may cause the trust fund reserves to exhaust earlier than 

is currently expected. 

Can you tell me how much earlier? 

Mr. GOSS. Yes, I think I can, Chairman Johnson. Our projection 

in the 2011 Trustees Report was that we would be solvent, that we 

would still have trust fund assets in the DI program into 2018, but 

only just barely. 

The level of our trust fund assets was projected to be only 5 percent of annual program cost at the beginning of 2018. So it doesn’t 

take much of a shortfall to bring us back into 2017. And it looks 

as though the higher-than-expected cost-of-living adjustment, 

which provides higher benefits to all of our beneficiaries, would be 

sufficient in and of itself to bring us into 2017. 

I might also mention that OMB and CBO are both, at this point, 

projecting 2017 for the exhaustion date. But, again, at that point, 

we would still have enough tax revenue coming in to pay 86 percent of benefits. 

Chairman JOHNSON. Yes, there is not as much payroll tax 

going into that system these days. 

Mr. Becerra, you are recognized for 1 minute. 

Mr. BECERRA. Chairman, thank you very much. And thank you 

for indulging us here. 

Mr. Goss, a question. Dr. Biggs pointed out the issue of self-reporting. As an actuary, are you and those who work with you to 

come up with these estimates estimating that we are going to see 

a drop in the number of people who are classifiable as disabled 

over the years as the baby-boom generation ages into that range? 

Mr. GOSS. Well, we are not really projecting that. And I am sure 

that Dr. Biggs would agree, self-reporting is a tricky issue, especially when you are looking over a period of decades. The way people view disability and whether or not you are disabled can change 

at a societal level over periods of time. 

When we look at the disability incidence rates that we were talking about before, the probability of becoming disabled, we have 

seen that it has been really quite stable for men on an age- and 

sex-adjusted basis over time. And for women, the rates of becoming 

disabled have risen quite substantially, but only just up to about 

the level of men. 

So we feel fairly confident that, given that men have been pretty 

stable for a long period of time in their tendency to become disabled and women, who used to have a much lower tendency, have 

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abled, that they will probably continue to be marching at about the 

same rates into the future. And we are not expecting surprises. 

Mr. BECERRA. Thank you very much. 

I yield back, Mr. Chairman. 

Chairman JOHNSON. Thank you. 

Mr. Schock, you are recognized. 

Mr. SCHOCK. I will yield back. 

Chairman JOHNSON. One minute? 

Mr. SCHOCK. No, I am good. 

Chairman JOHNSON. Are you? 

Mr. SCHOCK. Yep. 

Chairman JOHNSON. You don’t question the disability system 

at all? 

Mr. SCHOCK. I got so many questions that—— 

Chairman JOHNSON. Okay—— 

Mr. SCHOCK. Why don’t we start with—— 

Chairman JOHNSON. Wait a minute. Are you going to ask a 

question now? 

Mr. SCHOCK. Well, I mean, with 1 minute, I will just yield. I 

needed 20 minutes. 

Chairman JOHNSON. Mr. Marchant, can you question? 

Mr. MARCHANT. Mr. Biggs, in your testimony, you say that disability is a subjective condition and that government isn’t good at 

making subjective judgments, leaving room for discretion, error, 

and variability. What do you mean by this? 

Mr. BIGGS. Well, disability covers a range of infirmities that can 

go from a slight impairment of your ability to work to a total impairment. And, ultimately, Congress has to decide where on that 

spectrum they are going to draw the line and say that people on 

one side of that line are going to qualify for benefits and people on 

the other side of the line are not going to qualify for benefits. So 

it is a subjective judgment, where to draw that line. And, obviously, 

opinions can differ with that. 

One of the difficulties, though, is in applying this in practice, 

that we see variability in acceptance rates from examiner to examiner. So it means that, even given the rules set down by Congress, 

there is subjectivity in terms who is accepted and who is denied. 

I don’t think you can get rid of that. It is just the nature of what 

we are looking at. 

But one of the points I make in my written testimony is that 

Congress has to be very aware that it is the ones that makes the 

decisions. The Congress has been elected to decide how we are 

going to run this program. And so it should try to be as concise and 

specific as it can be in laying out the criteria by which people will 

be accepted for DI benefits so that we are not simply passing that 

off to SSA or to examiners or to ALJs, because I think that is not 

their job. And so I think Congress should give them as much specific guidance as they can based on the values and judgments that 

it comes to in terms of where we draw that line. 

Mr. MARCHANT. Thank you. 

Chairman JOHNSON. Mr. Schock, you may question. 

Mr. SCHOCK. I have a question for any of the three panelists. 

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there is higher rates of unemployment, more joblessness, you could 

speculate that perhaps more people decide that they are unemployable because of a disability. 

Mr. GOSS. Well, we certainly have seen with the most recent recession, which started in 2008 and reached the bottom of the recession in mid-2009, a significant increase in the number of claims for 

disability for both the Title II DI program and for the Title XVI, 

as you might expect. 

There are a substantial number of people in our population who 

have medically determinable impairments, and many of these people, through force of will, through just being very, very determined, 

work anyway. But, clearly, the nature of the program is such that 

people who are in that position have very strong medically determinable impairments. If they lose their job, they will have a greater opportunity than somebody who does not have a medically determinable impairment to come and apply for benefits and perhaps 

get them. 

The other thing that I think is really important to keep in mind 

about the Disability Insurance program and medically determinable impairments is that most of these impairments are things 

that do progress over time. If a person has a medically determinable impairment to a certain degree, which, as Dr. Biggs indicates, may not cross the threshold of qualifying for disability, a 

year or 2 later it may, in fact, cross that threshold. That is probably why through the determination process sometimes people get 

allowed a year or 2 after they first apply when they were not allowed initially. 

But, certainly, at a time of recession—and on some of the charts 

we have, we show this—the number of people who file for disability 

benefits and end up getting benefits clearly rises. This is in large 

part just because when employment is good, when employers are 

trying to employ lots of people, people with impairments and everybody else find it relatively easy to get a job. When we hit a strong 

recession, as we have now unfortunately, with lots of people out of 

work, people will still look for a way to put bread on the table. And 

Social Security disability benefits are available for those who would 

qualify. 

But I would hasten to say that I do not think that anybody 

would suggest that the criteria used at Social Security, at the DDS 

examiners, and elsewhere is modified at all at time of recession. It 

is really just a matter of having more people apply who would qualify in any case. 

Mr. SCHOCK. So is it your estimation that the same criteria is 

used to determine whether or not they qualify, but those who wish 

to apply goes up because they are out of work? 

Mr. GOSS. Exactly. 

Mr. SCHOCK. Is this one form of receiving assistance? 

Mr. GOSS. I would suggest, I think it is clear that everybody in 

our population—the United States has a very strong work ethic if 

we compare ourselves to many other countries, especially on the 

other side of the Atlantic. And given that strong work ethic, virtually everybody in this country, given the opportunity for a goodpaying job versus taking benefits from Social Security, will take the 

good-paying job. So—— 


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Mr. SCHOCK. I agree. 

Mr. GOSS [continuing]. People who really find their ways onto 

the disability rolls, I think, in general, as Virginia Reno indicated, 

are people who really are having a very hard time finding a job, 

and for a very good reason: because they qualify with a medically 

determinable impairment for—— 

Chairman JOHNSON. Thank you for your testimony. 

Mr. SCHOCK. So I am hearing you say you don’t think Americans are lazy? 

Mr. GOSS. I would concur with that completely. 

Mr. SCHOCK. I agree. Thanks. 

Chairman JOHNSON. Thank you all for bearing with us. We are 

in a little bit of a time compression today. And thank you for your 

testimony. 

And the Members will have some time to write questions, if you 

all will answer them. 

Chairman JOHNSON. And so I thank you for being here, and I 

look forward to working with you and our colleagues as we continue to examine the challenges facing this program and solutions. 

With that, the committee stands adjourned. 

[Whereupon, at 11:12 a.m., the subcommittee was adjourned.] 

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[Submissions for the Record follow:] 


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Allsup, Statement 


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Consortium for Citizens with Disabilities, Statement 


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Home Dialyzors United, Statement 

Æ 


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