Employment among Social Security disability program beneficiaries, 1996-2007

We use linked administrative data from program and earnings records to summarize the 2007 employment rates of Social Security disability program beneficiaries at the national and state levels, as well as changes in employment since 1996. The findings provide new information on the employment activities of beneficiaries that should be useful in assessing current agency policies and providing benchmarks for ongoing demonstration projects and future return-to-work initiatives. The overall employment rate--which we define as annual earnings over $1,000--was 12 percent in 2007. Substantial variation exists within the population. Disability Insurance beneficiaries and those younger than age 40 were much more likely to work relative to other Social Security beneficiaries. Additionally, substantial regional variation exists across states; employment rates ranged from 7 percent (West Virginia) to 23 percent (North Dakota). Moreover, we find that the employment rates among beneficiaries were sensitive to the business cycle and persistent over time.     

Transitions from AFDC to SSI before welfare reform

The Supplemental Security Income (SSI) and Aid to Families with Dependent Children (AFDC) programs serve populations with similar characteristics. SSI serves adults and children with disabilities who are in low-income families, and AFDC serves low-income families with children. Because of that overlap, policy changes in one program can affect the other. In 1996, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act, which transformed AFDC into the Temporary Assistance for Needy Families (TANF) program. Many people have expected that implementing that welfare reform legislation would eventually increase SSI participation, for two reasons. First, TANF includes new work requirements and time limits that induce more AFDC/TANF recipients with disabilities to obtain SSI benefits. Second, the change in the funding mechanism--from open-ended funding on a matching basis for AFDC to cash assistance block grants for TANF--gives states a stronger incentive to shift welfare recipients to SSI. This article examines the interaction between the SSI and AFDC programs in the prereform period (1990 to 1996) and discusses the potential implications of welfare reform on that interaction. Using matched data from the Survey of Income and Program Participation and Social Security Administration (SSA) records, our analysis focuses on how the interaction of those programs affects young women (aged 18 to 40) and children (aged 0 to 17). We find a very strong link between AFDC and SSI for young women and children. Significant portions of young female and child SSI beneficiaries in the 1990-1993 period were in AFDC families or had received AFDC in the past. In addition, a substantial share of young women and children who received AFDC during that period eventually entered SSI. Because the SSI program is now serving a much larger population of families with young women and children than in the past, SSA might need to develop policies to better serve that group. The findings also suggest that the prereform period is a poor baseline against which to measure the impact of TANF, primarily because of the instability in programs and policies.     

How raising the age of eligibility for Social Security and Medicare might affect the disability insurance and Medicare programs

The normal age of retirement is scheduled to increase to 67 by 2022, and several proposals to increase it to age 70 are being considered. The Medicare eligibility age is not scheduled to increase under current law, but proposals to raise it in step with the retirement age were recently considered by the National Bipartisan Commission on the Future of Medicare (1999). This article examines how raising both the normal retirement age and the Medicare eligibility age would affect Social Security Disability Insurance (DI) eligibility, Medicare eligibility, and Medicare expenditures under two hypothetical policy scenarios. The first (the 2022 age-67 scenario) assumes that the eligibility age is raised to 67 by 2022, in step with the scheduled increase in the normal retirement age. The second (the 2040 age-70 scenario) assumes that the eligibility ages are increased to 70 by 2040. The findings are based on a summary of two reports. The earlier one (Wittenburg and others 1999) describes a series of microsimulation models developed from data in the Survey of Income and Program Participation (SIPP) and the Medicare Current Beneficiary Survey (MCBS). The base simulations in that report assume that the normal retirement and Medicare eligibility ages had already been increased in 1993, when the SIPP and MCBS respondents were observed. In the later report (Wittenburg, Stapleton, and Scrivner 2000), adjustment factors were developed to reflect future increases in Medicare expenditures, population growth, and increased participation in DI. The base simulations were then adjusted by those factors, yielding a final set of annual projections under the two policy scenarios. The hypothetical policy scenarios illustrate that the major cost reductions from jointly raising the Medicare eligibility age and the normal age of retirement would not be realized until after 2020, when the increases are fully phased in and a large portion of baby boomers have reached age 65. Although the projections provide important cost estimates, the equity and efficiency of those policies must be studied before the desirability of any specific proposal can be evaluated fully.