Transcript The Financing Challenges Facing the Social Security Disability

Social Security Disability Insurance Program
Why Has Cost Risen So Much,
and What Is Next?
Steve Goss, Chief Actuary,
Social Security Administration
MAAC September 12, 2013
1
How have we done projecting DI Trust Fund solvency?
Figure 1: DI Trust Fund Ratio in 1995, 2008, 2012 Trustees Reports
Reserves as % of Annual Cost
250
1995TR
2008TR
2012TR
200
"New Economy"
irrational exuberance
150
100
2008
Recession
back to reality
50
0
1990
1995
2000
2005
2010
2015
2020
2025
2
Most of the change since 1980 is due to increased
population, population aging, and women working more
consistently
3
Is DI out of control, taking over OASDI?
(Note 5% increase in DI cost for 2010 due to recession)
20
Chart 1: DI Cost as a Percent of Total OASDI Cost
1995 TR
18
2012 TR
17.9
16
16.9
14
12
12.8
12.6
12.4
10
8
6
4
2
0
1980
2010
2040
4
As usual, it is mostly about aging
(Note the progression of the boomers from 1970-2030)
100
Figure 2: Age Distribution of the Population Age 25+, 1940 to 2100
(2012TR)
85+
Boomers
become
65-84
90
Percent of Population at Ages 25+
80
70
65-84
Boomers
become
45-64
60
45-64
50
40
Boomers
become
25-44
30
25-44
25-44
20
10
0
1940
1950 1960
1970
1980
1990 2000
2010
2020
2030
2040 2050
2060
2070
2080 2090
2100
5
Increased work by women raised insured;
partially offset by more undocumented
Figure 5: Percent of Population that is Insured for Disability
85%
80%
Male
75%
70%
65%
60%
55%
Female
50%
45%
40%
35%
6
Incidence rates for women have risen to male
level
Figure 8: New Disabled Workers per 1,000 Exposed (Incidence)
Age-Adjusted (2000) - 2012 Trustees Report
7
Male
6
5
4
Female
3
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
2
1975
New Awards per 1,000 Exposed
8
7
Then Maybe it is Not all Due to
Increased Awards Based on
Mental Impairments and “Back
Pain”?
8
Young females: steady distribution by medical
impairment
Figure 12: Female Age 30-39 disabled worker new entitlement distribution by primary diagnosis (awarded through June 2012)
9
9
Young males: steady but for HIV bulge in
1986-2000
Figure 13: Male Age 30-39 disabled worker new entitlement distribution by primary diagnosis (awarded through June 2012)
10
10
Older females: increased musculoskeletal but
less circulatory and neoplasms
Figure 14: Female Age 50-59 disabled worker new entitlement distribution by primary diagnosis (awarded through June 2012)
11
11
Older males: increased musculoskeletal
impairment; less cardiovascular
Figure 15: Male Age 50-59 disabled worker new entitlement distribution by primary diagnosis (awarded through June 2012)
12
12
One More Thought
• How will ACA affect Disability cost?
– Will low-cost or no-cost health insurance
available to fill the gap until Medicare comes
in make more able to stop working earlier to
apply for disability?
– Or will near universal medical insurance and
preventive care reduce the incidence of
progressive disabling impairments???
• Which will be the stronger effect?
So where are we on DI?
• Is the sky falling, cost out of control? No.
• Or are we following a path foreseen? Yes.
• Actuarial deficit for DI is 0.32 percent of
payroll (0.12 percent of GDP) so we could:
• Increase tax rate or eliminate the tax max for DI
• Lower the monthly benefit (PIA level)
• Time-limit benefits, increase vocational grid ages,
experience rate employers, and/or adversarial ALJ
(these would have some small effects)
• Note that increasing NRA shifts cost to DI
14