How to fix SSDI and save billions

A number of years ago, an acquaintance of mine said that his lawyer was finally able to persuade a judge that he was disabled so he could collect SSDI, Social Security Disability Insurance. SSDI is one of many programs designed to help people in need. I didn’t think much about it at the time, but when I did, and did some research I was shocked.

The key problem with the program is that after being approved for receiving a nice monthly check, there is no provision for ever getting people off the program. That means recipients will never stop receiving money and if they work, they’ll do so in the cash economy.

The procedure is straight forward. Make a claim and expect to be denied. It takes a long time to work a case through the system, as the system is backlogged with so many cases that personnel cannot clear them quickly.

Nearly three in four are turned down. Of those, one-third appeal and one in seven are approved. Nearly all of the people who are declined see ads for lawyers who “work to get the person’s rightful benefits,” and their cases move on to the hearing stage of the process. The lawyers get up to $6,000 per successful case, paid by the taxpayers. A nice business.

The court procedure is a little different from what you see on TV, as the government does not have an attorney to represent its position! The judge is the sole advocate for the government. Three in five people win their appeal. And they, with their attorneys laugh all the way to the bank, as the attorneys receives a percentage of the “back pay” from when the original claim was made. From the lawyers point of view it’s a numbers business. Lots of claimants equals lots of (government) money. Three in five claimants are approved.

The few people who lose can go to an Appeals Council, where about one-third are finally approved. The only redress after that is going to district court but that’s usually the end of it as I don’t think that attorneys want to go to court, as it’s too time consuming and expensive. It’s all about the low hanging fruit. There is a lot to eat without really reaching up into the money tree.

I’ll translate this into numbers. If 100,000 people file an initial claim, statistically 49,900 eventually get paid. Of those 100,000 claimants, 10,800 will have succeeded using a lawyer. By 2020, 32 million Americans will have tried to get a lifetime check; 16 million will get one and the lawyers will collect on 1.6 million cases! In essence, it takes effort to get on SSDI, but it’s like taking turn at bat. With enough swings you’re going to hit the ball. And to hit it once, is a home run out of the park and the ball will fly forever, for the rest of the claimant’s life.

As being approved can take years because of the huge number of claimants, there is a big payout at the end of the process as benefits are paid from the original claim date. That means that beneficiaries may get tens of thousands of dollars in a single payment plus monthly checks forever.

Even more astounding, by the year 2020, the equivalent of these entire state populations will be on SSDI – Nebraska, West Virginia, Idaho, New Hampshire,  Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, DC, Vermont and Wyoming! That’s every man, woman and child. Using these statistics, the equivalent of the entire populations of Mississippi, Arkansas, Kansas, Utah, Nevada and half of Iowa tried to get paid but did not qualify!

And that’s the problem. Once a recipient receives an average of $1,100 a month on SSDI, our government has no provision for ever not paying it! It’s a lifetime payout.

At this time about 11 million Americans collect a monthly check. That’s about $145 billion a year and increasing rapidly. By 2020, there will be about 16 million Americans getting a nice check, or about $265 billion annually in benefits. That’s almost 1/2 of our current defense budget.

I don’t mind that people get some assistance from the government, but I do mind that they all get checks forever. Under our current system there is no provision to ever get off of SSDI!

Here’s how I would fix this problem.

After a detailed study, I would create a path to regular employment. If a person on SSDI wants to go back to work, I would allow them to wean themselves from the free money by reducing the government check by a factor of what they earn. For example, if they find a job paying $2,000 a month, then it’s not unreasonable for the SSDI check to be cut by 1/3, $3,000, 1/2, $4,000, 3/4 and at $50,000, no government check at all.

I’d also end the single check back-payment from original claim to when approved part of the system. The payouts would start from the approval date, not the claim filing date.

The people can rejoin the workforce when they recover and make more than a subsistence income. The public will benefit for not mindlessly paying out untold billions of (borrowed) dollars, forever.

At this time, a person is likely to stay “disabled” just to collect a check, and if they work it’s for cash paid under the table. We need to change this. If elected, I will work to do just that.