Urban Wire With Social Security Disability Insurance in a stronger position, reforms should turn to early intervention
Jack Smalligan
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Federal disability policymaking has focused on the growth in the Social Security Disability Insurance (SSDI) program, which replaces lost wages for workers and their family members if workers become disabled and cannot work.

The focus on the program’s finances has led to reforms in the program’s administration, but a more fundamental issue has been overlooked: the need for more effective strategies to support the employment of people at risk of dropping out of the labor force because of a new health impairment.

As a career official with the Office of Management and Budget (OMB) for 27 years and now a policy fellow for a new Urban Institute project focused on Social Security, I have been involved in efforts to reform SSDI. New reforms are needed that reach beyond SSDI and focus on early intervention, building on promising evidence that shows this strategy’s effectiveness in helping newly at-risk workers.

The importance of early intervention

Research shows that early intervention is the most effective strategy to help newly injured or ill workers stay in the workforce. Yet, little progress has been made on incorporating those strategies into federal and state employment support programs.

Investments made in SSDI-based return-to-work demonstration programs and incentives have yielded little to no impact because they intervene too late—generally only after workers have begun receiving benefits.

Programs outside of SSDI such as Vocational Rehabilitation and Workers’ Compensation—administered, respectively, by the US Departments of Education and Labor—can intervene earlier, and promising models for early intervention exist. But significant programmatic, legislative, and budgetary challenges impede their ability to provide early intervention services for all workers.

Paid leave as a path forward

A new national paid medical leave benefit offers a possible path forward. In recent years, political support has grown for paid family and medical leave. A paid medical leave benefit could provide an important avenue for targeting newly at-risk workers for early intervention services.

Most workers who take paid medical leave will be able to return to their jobs, yet some workers will face more difficulty returning to work because of the nature of their illness or injury. Intervening soon after workers become seriously ill or injured is the best time to support their continued employment.

While a worker takes paid medical leave, he or she is still attached to an employer and the employer is still invested in the worker. With the right early intervention strategy, it’s possible to identify workplace accommodations and manage expectations on both sides.

One approach to expanding early intervention is to pair a new national paid medical leave benefit with grants to states to test promising approaches. States could leverage their workers’ compensation system, innovate through vocational rehabilitation agencies, or develop new interfaces with the health care system.

A rigorous evaluation requirement attached to state grants could expand the evidence base on effective approaches to early intervention and allow states to expand what works.

SSDI is stronger and more stable than it has been in many years

Controversy about the SSDI program over the past two decades stemmed from concerns about growth in the number of workers claiming benefits while the country’s labor force participation rate declined. The trust fund that finances benefits also faced a financial shortfall.

The reforms made in response to these concerns, largely through administrative actions under the Obama administration, strengthened the claims review and appeals processes and made other important updates to the program.

Legislation also extended the trust fund’s solvency. Through the 2015 Bipartisan Budget Act (BBA), Congress and the Obama administration extended program finances to 2022.

Today, the SSDI trust fund is projected to remain solvent until 2032, 10 years longer than what was projected at the BBA’s enactment. In fact, the data show that since 2010, SSDI application and award rates have fallen, even as the economy has recovered.

SSDI now stands on stronger footing than was anticipated only a few years ago, surpassing even what was expected to occur from the economic recovery. At the same time, we should recognize where the focus on SSDI’s finances has not yielded results and may have impeded progress on helping people with disabilities stay in the labor force.

Efforts to expand the evidence base on early intervention is already under way

The Washington State Center of Occupational Health and Education model and a recent early intervention proposal from the Trump administration suggests there is an opportunity for bipartisan collaboration on early intervention policies. Congress also funded an ambitious Department of Labor proposal in the fiscal year 2018 president’s budget to test state-run early intervention demonstration projects for newly injured and ill workers, and in September, eight states were awarded grants.

Having led the work on this budget proposal while at OMB, I’m optimistic these state grants will be a critical first step in building the evidence base on early intervention.

Millions of people with disabilities can and want to contribute to the workforce, and innovative strategies are being tested and evaluated. Let’s seize this moment to advance evidence-based policies to help this vulnerable population stay connected to work.

Research Areas Social safety net
Tags Social Security Retirement policy
Policy Centers Income and Benefits Policy Center