Disability enrollment declines amid funding debate

Disability beneficiaries would feel nearly 20 percent cut without action.

The number of people receiving disability insurance payments from the Social Security Administration declined last year for the first time since 1983, a reduction that comes as Congress faces a deadline to fund the program or risk cutting benefits to millions of Americans.

The decline, attributed in large part to economic and demographic trends, follows years of staggering growth that made the nearly $140 billion program a target of criticism by Republicans.

Now lawmakers are drawing battle lines with the White House over how to replenish the program's funding. Without an agreement, benefits would be cut 19 percent by late next year, trustees of the Woodlawn-based agency have warned.

President Barack Obama called last week for diverting money from Social Security's retirement fund to cover losses in the disability program, created during the Eisenhower administration to help workers who become disabled. But many Republicans describe the idea as "raiding" the popular retirement program; they want changes to disability insurance before agreeing to fund it.

As Washington prepares for a confrontation on the issue, agency data show the number of beneficiaries fell by half a percent in 2014 to 10.9 million. The number of new applicants, meanwhile, dropped 14 percent from 2010.

If those reductions hold in coming months, it could quiet criticism of the program and make it easier to strike a deal, observers said.

"It matters most of all politically because there's this debate that's taking place about what should be done about disability funding," said Charles T. Hall, a Raleigh, N.C., disability attorney who writes a blog about Social Security. "If the number of people drawing benefits is going down, it could have implications for the outcome" of the debate.

Republicans have long questioned the program's spiraling growth, which has outstripped the increase in the nation's working-age population. Enrollment grew 50 percent — from 7.2 million to 10.9 million — from 2002 to 2012. The value of benefits paid out over that period also grew, from $66 billion to $137 billion.

Kentucky Sen. Rand Paul, who is considering a run for the Republican presidential nomination in 2016, has criticized the agency's oversight and said last month that "over half of the people on disability are either anxious or their back hurts." The statement has been widely discredited by fact-checkers.

Rep. Sam Johnson, chairman of the House Ways and Means subcommittee on Social Security, has described the program as "plagued by major fraud." The Texas Republican previously proposed increasing penalties for providing false information on applications and requiring Social Security to monitor determination hearings more closely.

Independent auditors such as the Government Accountability Office have found problems may not be as dire as some critics suggest. A 2013 GAO report estimated the agency made $1.3 billion in overpayments to 36,000 people — roughly 0.4 percent of all beneficiaries. Most of the improper payments resulted from people exceeding wage limits before their benefits began.

Analysts point to a wide range of factors to explain the rapid increase in enrollment of past years, including a soft economy that pushed marginally disabled workers out of jobs and into the program. Baby boomers, meanwhile, began to hit an age when they became more susceptible to debilitating injuries.

"We're seeing the baby boomers move through their 50s and early 60s, which we often think of as the prime disability years," said T.J. Sutcliffe, director of income and housing policy at The Arc, a Washington-based group that advocates for the disabled.

But now the leading edge of the boomer generation is aging out the disability program and into retirement. That, combined with a better economy, is putting the brakes on disability's rapid growth.

In 2013, the number of beneficiaries increased by less than 1 percent — the smallest increase in 26 years — a slowdown that presaged the decrease in 2014.

"They've just moved seamlessly from the disability program to the retirement program, and they're being followed by a smaller cohort," said Paul N. Van de Water, a senior fellow at the Center on Budget and Policy Priorities who served as an assistant deputy commissioner at Social Security during the 2000s.

Experts predict the enrollment reduction will continue in the short term, putting a halt to the rise in the program's costs through about 2035. The number of beneficiaries will begin to rise again after that, but at a rate consistent with overall population growth.

"The disability applications we have coming in now are even lower than we were assuming," Stephen C. Goss, the chief actuary at the Social Security Administration, said in an interview. "We feel pretty confident about saying that, in the future, we're going to have essentially stable growth."

The decline in enrollment could give a political lift to Democrats' arguments that the program is not as poorly managed as critics say and that the best way to address the looming shortfall is with a quick fix of the kind Obama is proposing.

Supporters of that idea note that Washington has made similar adjustments nearly a dozen times before.

Sen. Ben Cardin, a Maryland Democrat and a member of the Senate Finance Committee, said that if Republicans would agree to adequately fund the agency's administrative costs, officials could invest more in reviews to confirm thatapplicantsare eligible.

"It's never been a controversial issue to make adjustments within the system," Cardin said of moving money from the retirement fund.

"It seems to us that the Republicans, particularly in the House, are trying use this as a way to force change in the Social Security Administration," he said. "But I don't think it's a genuine concern that they're expressing."

House Republicans acknowledge the demographic factors at play, but say the program is still ripe for improvement. The House approved a rule last month that will complicate efforts to bring a funding transfer to the floor.

"There is no denying that this broken, but critical, program faces a significant shortfall that cannot by fixed by the accounting gimmicks that Washington has relied on for too long," said Brendan Buck, a spokesman for House Ways and Means Chairman Paul Ryan, a Wisconsin Republican.

The Senate Budget Committee is set to hold a hearing on the funding issue on Wednesday.

Congress created the program in 1956, though it was controversial even then. It requires extensive reviews to determine whether people qualify. Because assessing eligibility for retirement is relatively straightforward — a person's age is easy to document — the more complicated disability program was an unfamiliar mission for Social Security.

The agency has struggled for years with a backlog in the program. The number of cases awaiting a hearing grew from about 694,000 in mid-2010 to about 955,000 last year, according to the agency's inspector general. The average processing time for a hearing increased from 415 days to 437 days during that period.

Caught in the debate over funding the program are the beneficiaries themselves.

Crosby King, a Towson resident, has relied on the program on and off for years. A longtime advocate for the disabled who works part time at the Maryland Disability Law Center, King is a paraplegic who lost the use of his legs after a roofing accident during his college years.

King said he receives about $800 a month from the program. A 19 percent cut would mean burning through savings far faster than he does now.

"I can't work as much as I need to," he said. "Social Security has a lot of flaws. But, for me, it works the way it's supposed to."

john.fritze@baltsun.com

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Disability beneficiaries by year

The number of Social Security disability insurance beneficiaries declined last year for the first time since 1983.

2010 — 10,185,886

2011 — 10,614,398

2012 — 10,890,896

2013 — 10,988,269

2014 — 10,931,092

Source: Social Security Administration

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