Disability expenditures

American Rehabilitation, Spring, 1989 by Monroe Berkowitz, Carolyn Greene

Disability Expenditures

Benefit payments under Social Security Disability Insurance (SSDI), perhaps our largest single government disability program, have exhibited trends that are not satisfactorily explained by changes in economic or demographic conditions. The number of monthly beneficiaries and the amount of the awards under SSDI increased dramatically from its inception in 1957, peaked in fiscal year 1975, and now shows signs of increasing again.

One aspect of disability expenditures that stands out is that so much is being expended in this area. Disability is an expensive phenomena - a fact that is not always appreciated when we look at one program or one area in isolation. What unites these expenditures for the more than 75 programs? What allows us to group these sums together?

In work done under an NIDRR financed project entitled, "Enhanced Understanding of the Economics of Disability," we have examined total disability expenditures for the population 18-64 years of age from 1970 to 1986.[1] We define disability expenditures as those sums that would be eliminated if, by some magic, disabilities were to disappear from the face of America. There is neither a universal definition of disability expenditures nor an agreement on how they should be calculated. Neither are these disability expenditure data represented in one place; what follows are necessarily estimates.

We recognize that our estimates of total disability expenditures are conservative due to missing and unavailable information. Most notable is the lack of complete coverage of data about expenditures made by private organizations (either through services or actual payments to disabled people), housing and transportation expenditures and out-of-pocket expenses paid by disabled people themselves. However, our estimates have been generated regularly using an estimation methodology that has remained consistent in each year.

Total Disability Expenditures - 1986

We estimate the value of disability expenditures in 1986 was over $169.4 billion (See Chart 1). This amount is made up of three types of expenditures. The first type is transfer payment expenditures, which totalled over $86.5 billion in 1986. Transfer payments are the actual funds that are allocated each year to people, because of disabilities. We have divided the transfers into four categories, which emphasize the major reasons why monies are transferred to disabled people. This division is only one of the many possible ways that transfer payment programs could be grouped.

Programs that pay money for a disability because their participants are insured against that contingency occurring fall under two categories: social insurance programs, such as Social Security Disability Insurance, under which there is compulsory coverage of the working population; and individual and employer provided insurance, which an individual buys or an employer provides to employees. A third category is the indemnity programs, in which disabled people receive funds if they are involved in accidents where some other person is at fault. The programs under income support, the fourth category, pay disabled people who can demonstrate that they are without sufficient resources. An example of this category is Supplemental Security Income (SSI) for disabled and blind recipients. Table 1 displays the four categories of transfer payments and the programs within each category.

  Table :         Table 1
        Transfer Payment Expenditures - 1986
                                             Amount in Thousands

Social Insurance

  Disability                                         $20,124,114
  Survivors                                            1,839,055
  Retirement                                             511,324
                                                      22,474,493

Individual and Employer-Provided Insurance

Whole Life                                               540,000
Health / Long-term Disability                          2,085,583
Accidental Death and Dismemberment                       391,160
Federal Life                                              88,274
Federal Civil Service                                  1,665,960
Railroad Retirement                                      358,974
Armed Forces Retirement                                  970,726
Other Federal Retirement                               1,479,870
State and Local Retirement                             1,386,844
Private Pensions                                       1,872,120
                                                      10,839,511

Indemnity Workers' Compensation:

Federal:

    FECA                                                 845,160
    Longshoremen and Harborworkers                        49,486
    Black Lung Benefits                                  768,887
  State Workers' Compensation                         10,706,440
Veterans' Compensation                                 5,727,276
Automotive Bodily Injury                               9,330,867
Miscellaneous Bodily Injury                           17,558,964
                                                      44,987,080