Incentives to disability in federal disability insurance and supplemental security income

Between 1989 and 1994, Disability Insurance and Supplemental Security Income, the 2 federal programs that provide disability benefits, expanded rapidly. The largest growth has been among recipients with mental disorders in the Disability Insurance program and among children with learning disabilities in the Supplemental Security Income program. The expansion was partly due to changes in eligibility rules and partly to other factors including outreach efforts by the Social Security Administration and a lack of funds to review and terminate cases. Factors that keep many of the disabled from seeking work include a fear of being unable to obtain health insurance, which is provided to beneficiaries under Disability Insurance and Social Security Insurance, and the fear of being unable to obtain and keep stable employment. Although children's Supplemental Security Income benefits have reduced poverty in families with disabled children, there is some evidence that parents are encouraging their children to behave poorly so they can qualify. Replacing present welfare and disability programs with national health insurance and a guaranteed annual income would eliminate the work disincentives, but such dramatic restructuring is unlikely in the context of present political debates.