Health Care Management Papers

Document Type

Journal Article

Date of this Version

2006

Publication Source

Journal of Economic Perspectives

Volume

20

Issue

3

Start Page

71

Last Page

96

DOI

10.1257/jep.20.3.71

Abstract

The U.S. Social Security Disability Insurance (DI) program has grown dramatically over the last 20 years in size and expense. This growth poses significant risks to the finances of the DI program and the broader Social Security system, and raises troubling questions as to whether the program is being misused by claimants. This article first provides an overview of the Disability Insurance program, describing who qualifies for the program, how an individual applies for benefits and how the level of benefits is determined. Next, we summarize the factors responsible for the growth in the DI rolls and discuss how the characteristics of DI recipients have changed as a result. We then explore the extent of moral hazard in the DI program and the effectiveness of the screening process in distinguishing meritorious from nonmeritorious claims. Finally, we identify the challenges that the DI program creates for Social Security finances and Social Security reform, and discuss potential reforms to the DI program.

Copyright/Permission Statement

Copyright © 2016 AEA

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Date Posted: 27 November 2017

This document has been peer reviewed.