Disability Inference

By Bill Maher

NPR's This American Life has an eye-opening piece on disability insurance: "Since the economy began its slow, slow recovery in late 2009, we have been averaging about 150,000 jobs created per month. In that same period every month, almost 250,000 people have been applying for disability."

Whoa.

They focus on Hale County, Alabama, where one in four people of working age are on disability (which is paid through Social Security). Apparently, this isn't uncommon. There are 14 million Americans on disability, and that number has been doubling every 15 years. And come to think of it, I'm feeling some tightness in my back.

It's easy to just throw this problem on "takers" gaming the system in a bad economy. And that's one big problem: the minimum wage is so low, a lot of people are like, "Why should I bust my ass working full-time at McDonald's making $14,000 a year when I can make $12,000 without it?" But it's much more complicated than that.

Another problem: "welfare reform." Bill Clinton said we ended welfare, but we didn't; we just changed the name to disability. There's no solid metric for what determines whether someone is eligible for disability -- it's a loose definition which just basically means you're incapable of working, so it's become a catch-all, default welfare designation.

The welfare reform bill of 1996 says states have to pay a lot more for welfare if they fail to get people work over a period of time. But the Feds still pay for disability -- which is not counted as "welfare" -- so companies get big contracts with states to move people from welfare to disability. A company called "The Public Consulting Group" has contracts with 17 states and counties and it gets $2,300 for each person it moves into disability. Once a person moves to disability, they almost never get off it. The benefits can be four times what they are on welfare. Here's the scope of the economic problem: "If someone is awarded disability benefits, that person will receive an average of $250,000 to $350,000 from the government in benefits and health care over a lifetime."

Two questions:

1) Although one of the few things Republicans and Democrats agree on is that welfare reform was the most awesome thing ever, wouldn't states -- and definitely the federal government -- be better off going back to the traditional version? It might even save money.

2) It seems like we're always going to have people that, for whatever reason, whether it's an actual physical disability or just a complete lack of skills, won't be able to work. Nobody knows exactly what that number is, but it's many millions. What do we do with those people? Is having a catch-all welfare program like disability actually a good thing?