Transforming Economic Security for People with Disabilities

1
Transforming Economic Security for People with
Disabilities

• Presented to participants of the
• 2005 White House Conference on Aging
• Mini-conference on Disability and Aging
• Seeking Solutions to Improve Health,
  Productivity, and Community Living
• Arlington, VA
• Presented by
• David C. Stapleton
• Cornell University
• Institute for Policy Research
• July 21, 2005

2
Background Material

• Stapleton, ODay, Livermore and Imparato, 2005
  Dismantling the Poverty Trap Disability Policy
  for the 21st Century, Policy Brief.
  http//www.ilr.cornell.edu/edi/pubs.cfm
• Stapleton and Burkhauser (eds.), 2003, The
  Decline in Employment of People with
  Disabilities A Policy Puzzle, Kalamazoo W. E.
  Upjohn Institute.
• Goodman and Stapleton (forthcoming) Federal
  Program Expenditures for Working-age People with
  Disabilities. J. of Disability Policy Studies.
• Stapleton, Will Work Incentives Work?
  Presentation to Disability Research Institute
  Symposium, April 2005

3
Overview

• Why we need to transform the way that we provide
  economic security for people with disabilities
• How we can do it -- in 10 years

4
What we know from 20 years of research

• There are many working-age SSDI and SSI
  beneficiaries who could earn more from work than
  they do probably millions
• For many of these, substantial work would be a
  significant and unreasonable hardship
• For many others, work disincentives and
  limitations of the support system deter work

5
Work disincentives are strong

• SSDI benefit cliff
• SSI 50 tax on SSI benefits asset test
• Medicare and Medicaid eligibility linked to SSDI
  and SSI
• Food stamps, housing subsidies, transportation
  assistance, workers compensation, private
  disability benefits

6
The Support System is Inadequate

• Incredibly complex
• Anti-work bias
• Consumers often have limited options and control
• Why would anybody work under these circumstances?

7
Employment of people with disabilities is low and
has been declining

• Measurement is problematic and controversial
• Causes are unclear
• New evidence firmly rejects the hypothesis that
  the ADA is the cause
• Reductions in the incentive to work are the most
  likely cause
• People with disabilities, as a group, did not
  benefit from the 1990s economic expansion

8
The support system is out of step with

• The ADA, the Rehab Act, and IDEA
• Advances in the understanding of disability
• Advances in medicine and technology

9
Public disability expenditures are high and
growing faster than GDP and other federal outlays

• 226B federal expenditures to support working-age
  people with disabilities in 2002
• 11.3 of federal outlays
• 2.2 of GDP
• 97 for income support and health care
• 75 is income support and health care for 8.7
  million SSI and DI beneficiaries
• Almost 20,000 per beneficiary
• 50B of state expenditures on federal/state
  programs
• Since 1986, federal disability expenditures have
  grown much more rapidly than total federal
  outlays or GDP
• From 6.1 of GDP to 11.3
• From 1.4 of GDP to 2.2

10
The economic security system for people with
disabilities is on a collision course with the
deficit bus

• The factors driving large deficits will only get
  worse as the baby boom generation retires
• Disability expenditures are growing much faster
  than total outlays
• Already significant discussions of cuts to
  Medicaid, SSI
• Cuts will be painful because the only options
  Congress has are to tighten eligibility and
  reduce payments

11
The Potential for a Win-Win Policy Change

• Premise There is some change in program design
  that would
• Make many people with disabilities who can work
  better off
• Increase their economic security, and
• Reduce the growth rate of government spending
• The resources such change would draw on
• The underutilized abilities of this population
• The waste in the current support system
• A new work benefit would provide economic
  security by
• Making work pay
• Fixing the support system for participants

12
Challenges to Change

• Applied indiscriminately, such changes would harm
  many people those we would not expect to
  contribute substantially to their own support
• History and competing interests suggest that the
  multiple federal and state agencies responsible
  for the relevant programs will have a difficult
  time cooperating

13
A 10-year Strategy

• Years 1 2 Launch demonstration(s) for targeted
  populations
• To show that
• Significant numbers of people with disabilities
  will work if work pays and better supports are
  provided
• Some configuration of such a system will, in
  fact, be less expensive
• Start with narrow, easy target populations
• Participation by the target population would be
  voluntary, to ensure they are better off
• Best opportunities
• SSA demonstrations
• Benefit Offset/Early Intervention
• Youth Transition
• Mental Health Treatment Study
• State demonstrations under federal waivers
• FL, WI, VT, perhaps others

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A 10-year Strategy (cont.)

• Years 3 to 5
• Evaluate
• Improve
• Build confidence and support
• Years 6 to 8
• Expand to broader populations
• Expand gateways to entry
• Improvements and adaptations
• Build confidence and support
• Years 9 and 10
• Enact new program into law

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Conclusion

• The new program could become a gateway for entry
  into the traditional programs
• The traditional programs could be simplified
  get rid of work incentives that have not worked
• At the end of 10 years, Congress would have a
  better cost-saving option encouraging use of the
  new program