Misleading 60 Minutes Report Hypes Rise In Disability Claims

CBS News' 60 Minutes Misleadingly Hyped “Waste And Fraud” In Federal Disability Benefits. A misleading CBS News 60 Minutes report on Social Security disability relied on anecdotal evidence from a bipartisan investigation led by Sen. Tom Coburn (R-OK) and Sen. Carl Levin (D-MI) to deceptively portray the vital program as wasteful and unsustainable, representing the growth in the program as linked to “waste and fraud,” despite the fact that disability award rates have fallen since the recession and that fraud is less than one percent of the program. The report was denounced by national disability organizations as misleading and “sensational.” [Media Matters, 10/7/13]

Fox Hypes Discredited Disability Report To Link Growth In Benefits To Unemployment

Fox Business' Stuart Varney Cited Discredited Disability Report To Claim Obama Admin Pushing Disability Benefits To Lower Unemployment Rate. On Fox & Friends, Fox Business host Stuart Varney used the inaccurate 60 Minutes report to claim the administration was not interested in enforcing the rules prohibiting ineligible individuals from receiving benefits. Varney noted that the number of people receiving disability benefits has increased in recent years, and claimed, “It helps the unemployment statistics to get people on disability ... is it in the administration's interest to change things? If you can push more people onto disability, don't you get the unemployment rate down, which makes you look good in terms of recovery? It's a contradiction here. Why enforce this? Why clamp down?” [Fox News, Fox & Friends, 10/8/13]

Rate Of Approval For Disability Claims Has Fallen Since Recession

Social Security Actuaries: Percentage Of Approved Claims Has Fallen Since 2008. According to a report released by the Social Security Administration's actuaries, though the number of people applying for disability benefits tends to increase during periods of higher unemployment, the total allowance rate, or percentage of disability claims that are actually approved, falls. The report included the following chart, which shows that the current total allowance rate has fallen significantly since 2008, and from its peak in 2001, and that it is consistently harder to receive disability benefits in periods of higher unemployment:

[Social Security Administration, Actuarial Note, August 2013]

Center On Budget And Policy Priorities: “Standards Don't Become More Lax In Recessions.” The Center on Budget and Policy Priorities explained that agencies that screen disability applications for the strict eligibility requirements do not relax their standards during economic downturns, when they receive more applications for benefits:

We've noted before that economic downturns generally spur more applications for Social Security disability benefits -- but have a much smaller effect on awards. That usual pattern is based on several decades' worth of recessions and expansions.  And it seemed to be holding true in the Great Recession that officially began in late 2007.

Now the Social Security actuaries have confirmed what our earlier post implies:  allowance rates tend to fall in economic downturns.  That is, when the unemployment rate rises, the state and federal agencies that sift applications for disability benefits allow a smaller fraction of claims.

[...]

In short, the disability programs do a pretty good job of weeding out people who don't meet the strict eligibility criteria.  Standards don't become more lax in recessions, and stories that focus only on the growth in applications omit that crucial fact. [Center on Budget and Policy Priorities, 9/3/13, emphasis added]

Experts: Disability Benefits Are Not Luring Away The Labor Force

Wash. Post's Wonkblog: Disability Benefits Are Not “Luring Away People Who Could Work.” Washington Post's Wonkblog interviewed Harold Pollack, an expert on disability policy at the University of Chicago's School of Social Service Administration, who explained that data show federal disability benefits are “not pulling people out of the workforce who would otherwise be there”:

[Brad Plumer]: Now there's another big concern that once workers qualify for disability, they leave the labor force altogether. They never work again. Is that a real worry? Is the disability program really luring away people who could work? 

[Harold Pollack]: I don't think so. One way to see this is to look at the employment rates for people who applied for disability but were then denied. And those are actually quite low, below 50 percent. That suggests we're not pulling people out of the workforce who would otherwise be there. [The Washington Post, Wonkblog, 3/28/13, emphasis original]

CEPR: Study Shows If More Individuals On Disability Benefits Worked It Would Have Minor Effect On Employment Figures. In response to a Washington Post column by Charles Lane, which misleadingly cited research to claim that Social Security disability payments harmed the economy and erodes the workforce, the Center for Economic and Policy Research's Dean Baker pointed out that the study actually showed increasing employment rates among people receiving federal disability benefits would have a relatively minor effect on the employment-to-population ratio:

Lane's big club in his attack on the disability system is a new study from the University of Michigan. He quotes from the study:

“the employment rate of new beneficiaries would have been 28 percentage points higher in the absence of benefit receipt.”

He then adds:

“SSDI is one reason, in addition to recession and aging, that the U.S. ratio of employment to population declined from 62.5 percent to 58.5 percent in the past 10 years.”

This sure sounds like an interesting study. If we go to the study itself, we find in the abstract:

“We find that among the estimated 23% of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits.”

This means that we would see an increase in employment rates of 28 percentage points among the 23 percent who are considered marginal applicants if they had not received benefits. That translates into an increase in employment among all applicants of 6.4 percentage points. If we applied this to the entire population of 9 million workers getting disability, it would mean that employment would rise by about 580,000, or just over 0.25 percentage points of the civilian population. 

[...]

In short, the paper cited by Lane implies that the bonanza for the government from cracking the whip is much smaller than he claims. It also suggests that any efforts to further tighten eligibility (only 40 percent of claims are approved) is likely to lead to many more people with real disabilities being denied benefits. [Center for Economic and Policy Research, Beat the Press, 4/9/13]

Wall Street Journal: Claims That Disability Benefits Are To Blame For The Shrinking Labor Force Are “Exaggerated.” The Wall Street Journal reported that federal disability benefits are not to blame for the shrinking labor force, explaining that the recent decrease in labor force participation -- the number of employed and unemployed Americans who are currently seeking work -- “has more to do with retiring baby boomers than frustrated job seekers abandoning their searches.” The article noted that claims that Americans are voluntarily leaving the workforce to receive Disability Insurance instead of working, for example, “may be exaggerated,” and also noted that disability was the least common reason for individuals leaving the workforce in March 2013. [The Wall Street Journal, 4/29/13, via Media Matters]

Eligibility Criteria Are Strict, And Majority Of Claims Are Denied, Even After Appeals

SSA: “Denied Disability Claims Have Averaged Nearly 53 Percent.” According to the most recent data available from the Social Security Administration, only 34.8 percent of applicants were successfully awarded disability benefits in 2010, down from 56.1 percent a decade earlier. Between 2001 and 2010, "[d]enied disability claims have averaged nearly 53 percent." From SSA:

The final award rate for disabled-worker applicants has varied over time, averaging nearly 45 percent for claims filed from 2001 through 2010. The percentage of applicants awarded benefits at the initial claims level averaged 28 percent over the same period and ranged from a high of 37 percent to a low of 26 percent. The percentage of applicants awarded at the reconsideration and hearing levels are averaging 3 percent and 13 percent, respectively. Denied disability claims have averaged nearly 53 percent. [Social Security Administration, July 2012]

CBPP: Even After Appeals, Only 4 In 10 Applications Are Approved. The Center on Budget and Policy Priorities explained the process by which people can apply for disability benefits, noting that “of about 1,000 initial applications, about 410 are awarded benefits,” with 590 denied, even after multiple rounds of appeals:

Claimants apply to the SSA, which rejects people who are technically disqualified (chiefly because they lack insured status) and submits the remaining applications to each state's disability determination service (DDS) for medical evaluation.  If denied at the DDS level, the applicant may appeal. Ultimately, of about 1,000 initial applications, about 410 are awarded benefits -- more than one-third of them on appeal (see Figure 5). 

Typical processing times at the DDS level are three to four months, and processing times at the hearing level average about a year. The allowance rate at the Administrative Law Judge (ALJ) level (also known as the hearing level, generally the second level of appeal) is quite high, which has led to some valid concerns about inconsistency in decisions; yet it is important to remember that ALJs are often seeing claimants whose condition has deteriorated since their application was turned down and whose case file is better documented when it reaches the ALJ (often with the help of an attorney) than it was at the DDS stage. [Center on Budget and Policy Priorities, 8/9/12]

CBPP: “Eligibility Criteria Are Stringent” And Waiting Periods Are Typically Months Long. The Center on Budget and Policy Priorities noted that the eligibility criteria for disability insurance applicants are “stringent,” that “applicants must show that they suffer from a 'severe, medically determinable physical or mental impairment that is expected to last 12 months or result in death,'” and that applicants must endure a significant waiting period:

The law requires that the impairment must already have lasted for at least five months before the applicant can qualify for DI.  Together with the requirement that the impairment must be expected to last another 12 months or result in death, this emphasizes that DI is not a program for the temporarily disabled.  SSI may be available during that period for very poor applicants; sick leave, private insurance, family resources, or savings might tide over others. The waiting period provides an intuitive reason why applications rise during recessions.  In a robust economy, few workers will quit a job to subsist on little or nothing for five months with an uncertain prospect of a DI award; but in a recession, a spell of unemployment can last long enough for a disabled worker to be able to satisfy the waiting-period requirement.

[...]

Typical processing times at the DDS level are three to four months, and processing times at the hearing level average about a year. The allowance rate at the Administrative Law Judge (ALJ) level (also known as the hearing level, generally the second level of appeal) is quite high, which has led to some valid concerns about inconsistency in decisions; yet it is important to remember that ALJs are often seeing claimants whose condition has deteriorated since their application was turned down and whose case file is better documented when it reaches the ALJ (often with the help of an attorney) than it was at the DDS stage. [Center on Budget and Policy Priorities, 8/9/12]

For more information on misleading media reports on disability benefits, click here.