Saturday, March 30, 2013

Disability insurance as welfare ("Unfit for Work: The Startling Rise of Disability in America")

Chana Joffe-Walt of National Public Radio wrote an in-depth look at people receiving government assistance for disability. It's a depressing piece, focusing less on the people who are physically unable to work-- those intended to receive disability, and those who could work but don't because it would reduce their disability benefit. NPR has aired interviews with many in the article, so you can hear their conflicted emotions about the perverse incentives to which they're responding.

"As far as the federal government is concerned, you're disabled if you have a medical condition that makes it impossible to work. In practice, it's a judgment call made in doctors' offices and courtrooms around the country. The health problems where there is most latitude for judgment -- back pain, mental illness -- are among the fastest growing causes of disability."

Welfare reform is often trumpeted as having seen a decrease in the state welfare rolls across the country, with the assumption often being that they force themselves to find work. But Walt found that States had simply shifted the burden onto the federal government, finding ways for many of their welfare recipients to be declared "disabled" in order to shift them onto the federal rolls.
Walt provides testimony from workers in the South, where the rates of workers on disability are highest, who have seen their plants close. Facing unemployment and low-wage alternative because they are aged, unskilled, or uneducated, workers were actually advised by their company's HR reps to get onto the disability rolls instead of looking for a new job.

The part of the piece that struck me most was the plight of children. Children with physical disabilities and learning disabilities serious enough to threaten the child's ability to perform well at school also qualify for disability. Their parents receive a check to help offset hypothetical missed work due to the extra work to help their child. Some families in poverty, however, have come to rely so much on their child's disability check that they have an incentive NOT to see their child improve. An improvement in their grades and development would result in a reduction of the disability check.

There has been a 700% increase in the number of children on disability since the late 70's.

Some of the kids with disabilities can work low-skilled jobs like other teenagers-- at McDonalds, for example. But the family essentially faces a high marginal tax rate, the teenager's wages wouldn't offset the amount their disability check would be reduced by-- hence disincentivizing work.

This struck me the most because we have a special needs child who has qualified for state-provided free preschool for special needs children in Kentucky. While we're seeking a professional diagnosis for him in order to better learn how to help him develop and "reach his potential," we could very well be faced with the same perverse incentive-- he could qualify for disability and the income would help us substantially, and the worse he does the larger the help. 

In an interview with Ezra Klein, the author points out that many in the disabled community, who advocated for the Americans with Disabilities Act, have a goal of getting more disabled people into regular jobs along side non-disabled colleagues. The current disability system, however, works against their goal. It's an ironic challenge for reform.

The problem, if it's not obvious to you, is that you have an increasing number of able-bodied people who are no longer producing-- making the country less wealthy-- and no longer contributing via payroll tax to Medicare and Social Security, but receiving benefits from them, a further drain on the system. It's also parents, particularly those in poverty, who have a disincentive to see their challenged child visibly improve or move onto work-- to possibly break that same cycle of poverty. Some on the Left have criticized the piece by saying it's not an expensive enough problem to care about or the the problem will mostly go away when the economy resumes its normal rate of growth. But there seems to be very little discouraging the U.S., or the world for that matter, from its current slow rate of growth. Exactly how expensive does misuse of government funds have to be in order to seek reform?

"I'm guessing a large majority of Americans would be in favor of some form of government support for disabled children living in poverty. We would have a hard time agreeing on exactly how we want to offer support, but I think there are some basic things we'd all agree on.
Kids should be encouraged to go to school. Kids should want to do well in school. Parents should want their kids to do well in school. Kids should be confident their parents can provide for them regardless of how they do in school. Kids should become more and more independent as they grow older and hopefully be able to support themselves at around age 18."

I highly recommend the piece to everyone, it's very thought-provoking.

1 comment:

Seth S said...

Interesting story. This blog also looks at the problem with unemployment v's disability numbers. http://www.statisticsblog.com/2013/03/minding-the-reality-gap/