Dismantling the Poverty Trap: Addressing the “Non-Work” Mentality of Disability Programs David C. Stapleton NDI Congressional Educational Briefing Rayburn House Office Building Washington, DC August 2, 2011

Overview ●Many people with disabilities are trapped in poverty by outdated policies ●Public expenditures are large and growing unsustainably –Unlikely to escape the budget knife –Policy design is the root cause of unsustainable expenditure growth ●Major structural changes might improve outcomes for people and reduce expenditure growth ●Need to move forward with determination, caution, and all due speed

The Poverty Trap ●The options for many under current policies –Work hard and struggle economically –Receive benefits, work little and struggle economically ●Causes: –The main gateway to benefits defines disability as inability to work ▪Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) ▪Door to health insurance (Medicare and Medicaid) and other benefits –Past Congresses and Administrations have created a mishmash programs ▪Reflects high public commitment to support this population

●Poor incentives to work –Low expectations –Work often doesn’t pay –Waste of a productive resource ●Fragmentation –Confuses people, service providers and program administrators –Makes benefit management a full time job –Promotes unproductive cost shifting Why Policy Creates a Poverty Trap

●Low and declining economic wellbeing ●High and rising government expenditures –Reflects high public commitment ●Long lines at Social Security offices ●SSDI Trust Fund exhausted in 2018 –OASI: 2038 –Combined: 2036 Prominent Symptoms of the Poverty Trap

Growth in SSDI Beneficiaries

Growth in Federal Expenditures

A Policy Dilemma ●Policymakers need to address rapid expenditure growth for the support of this population ●Two approaches –Trim/tighten/tax – “Win-win” structural changes ▪Reduced expenditure growth ▪Improvement in economic wellbeing ●Both have significant problems

●Probably ●Current programs are inefficient ●Productive capacity of many people with disabilities is wasted Are there win-win structural changes?

●No ●Some good ideas ●If we knew how, could we? ●Might take 20 years But do we know how to make win-win structural changes?

●Social Security Advisory Board (2006) ●Being American: public earnings support insurance (MacDonald and O’Neill) ●Universal short-term private disability insurance (Autor and Duggan) ●Experience rate the payroll tax (Burkhauser & Daly) (See Stapleton and Wittenburg issue brief) Addressing SSDI/Medicare growth: Early Intervention for Workers

●Maintain SSDI and Medicare benefits as early retirement benefit for some older workers ●Repackage funding as state block grants –Funded like TANF, but different program model –SSI, Medicaid, vocational rehabilitation, housing, food, transportation, etc. ●States deliver integrated support, within federal rules ●Federal agencies provide technical assistance and measure outcomes More Ambitious Approach

●Needed because of risks –Potential harm to population –Accelerated expenditure growth ●10 years to test –Waivers –Federal, state, private collaboration ●10 years to gradually implement ●Requires determined effort 20-year Transition

●Stapleton, David C. “Bending the Employment, Income, and Cost Curves for People with Disabilities.” Issue Brief Washington, DC: Mathematic Policy Research, Center for Studying Disability Policy, March ●Stapleton, David C. and David C. Wittenburg. “The SSDI Trust Fund: New Solutions to an Old Problem.” Issue Brief Washington, DC: Mathematic Policy Research, Center for Studying Disability Policy, June ●Livermore, Gina A., Meghan O’Toole and David C. Stapleton. “Federal and State Expenditures for Working-age People with Disabilities.” Working Paper, Mathematica Policy Research, References

Contact Information David Stapleton Center for Studying Disability Policy Mathematica Policy Research 600 Maryland Ave., SW, Suite 550 Washington, DC (202)