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Congress Should Reform Social Security Disability Insurance | Commentary

On the 23rd anniversary of the ADA, Congress should reaffirm its commitment to removing social barriers for people with disabilities by comprehensively reforming SSDI’s flawed structure. Shifting the SSDI payroll tax to an experience rated system along the lines of state workers compensation would more closely assign to employers the costs of their workers coming onto SSDI. Under such a system, employers would pay higher tax rates if their employees come onto the SSDI beneficiary rolls at higher than average rates. This would encourage employers to engage with private disability insurers to more actively support workers at the onset of a work impairment. The result would be more accommodation, more rehabilitation and a substantial decrease in SSDI enrolment.

Such “work first” policies have been successful in other countries. The Dutch now require employers to provide accommodation to workers who become impaired. The government also requires these employees to make a good-faith effort to return to work. Only after these work-first requirements have been met are workers who fail to return to work considered for disability benefits. Those reforms have both improved the employment rates of Dutch citizens with disabilities and slowed their enrolment onto the disability rolls.

SSDI provides a critical safety net for Americans whose impairments prevent them from working. But its incentive structure pushes away from employment many who could work. This reverse encouragement deprives many impaired Americans of the social, economic and mental-health benefits that working provides. The failure to adjust this outmoded incentive structure to one more in keeping with ADA principles is now a major barrier to the employment of Americans with disabilities. Congress should act soon.

Richard V. Burkhauser is the Sarah Gibson Blanding professor of policy analysis at Cornell University and an adjunct scholar at the American Enterprise Institute.

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