US Disability Benefits

April 8th, 2013 at 10:00 am by David Farrar

In case you needed convincing about the need for , this story from the should help convince you.

It was an exclusive story for Planet Money on National Public Radio. It has had great resonance in the US, as it has exposed how great the growth in numbers on disability has been.

Some key findings:

  • 14 million people a month now get a disability check from the Government.
  • In one county in Alabama, 25% of working adults are on a disability benefit.
  • That the proportion of those claiming a disability benefit with a difficult to test problem (back pain, mental illness) has increased from 18% in 1961 to 53% in 2011.
  • That some states have as many as 9% of their adults on a disability benefit.
  • Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce since then.
  • The disability benefit pays $13,000, just $2,000 less than the minimum wage, plus Medicare so some are better off financially not working.
  • The number of children on a disability benefit has increased seven fold since 1974 to over 1.2 million.
  • If these children with learning or other disabilities get a job, their parents lose the $700 a month disability check.
  • Disability welfare now costs $260 billion a year, and will run out of reserve duns by 2016.

People should remember this story, when Labour and Greens constantly say there is no need for welfare reform in New Zealand. Note that the numbers receiving the Invalids Benefit in NZ has increased eight fold since 1976 from 10,000 to 84,000. Now by no means should anyone conclude this means everyone on that benefit shouldn’t be there. To the contrary I know some people on that benefit who would love to be able to work, or work longer hours than they can. So we need to be careful not to stigmatize those who are in genuine need.

However as the US story shows, the growth in the level of such benefits has been massive, and I encourage people to read the full story about what happens when the incentives to be on welfare are greater than to be in work.

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27 Responses to “US Disability Benefits”

  1. toms (209 comments) says:

    Is it that time already? Key must be in trouble – time for some beneficiary bashing!

    [DPF: 20 demerits for trolling]

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  2. krazykiwi (8,040 comments) says:

    Burgeoining classes of welfare and numbers of beneficiaries dependent of the state is a symptom of democracy being manipulated by the ruling classes.

    There will be no meaningful reform, because those who have the power to instigate this reform secure their power through a subtle threat of reduced entitlements

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  3. Judith (8,534 comments) says:

    Why are we constantly being weighed up against the U.S.A?

    Just what do we have in common with that country that makes it some sort of measure of our eventual fate?

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  4. Silly Will Bunions (143 comments) says:

    time for some beneficiary bashing!

    Yes, very definitely so.
    Also well overdue is time for some bashing of people who use the term beneficiary bashing.

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  5. scrubone (3,097 comments) says:

    To the contrary I know some people on that benefit who would love to be able to work, or work longer hours than they can. So we need to be careful not to stigmatize those who are in genuine need.

    Yea, he’s really sticking the boot in today /sarc

    I’ve noticed that while the right talks about people who abuse the system, the left always paints this as attacking people in genuine need. Funnily enough, the left rarely if ever wants to talk about people who abuse the benefit system.

    I know which approach I find more balanced.

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  6. somewhatthoughtful (472 comments) says:

    Yes, reading that article the logical conclusion is certainly that this is a failure of incentives in the welfare system, and almost certainly not a symptom of an economy and political system that has evaporated millions of working class jobs and left a large number of people in a situation so bad that disability benefits are their best option.

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  7. Data (22 comments) says:

    The article is about the decline of jobs for unskilled workers and the flaws in the state verses federal welfare system in America. The article says:

    “Somewhere around 30 years ago, the economy started changing in some fundamental ways. There are now millions of Americans who do not have the skills or education to make it in this country.”

    and

    “A person on welfare costs a state money. That same resident on disability doesn’t cost the state a cent, because the federal government covers the entire bill for people on disability. So states can save money by shifting people from welfare to disability.”

    Just a humble suggestion to maybe reread the article DPF, you seem to have missed the point.

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  8. BigFish (132 comments) says:

    Sounds like a good time to increase their minimum wage. That would incentivise people to work.
    Who could honestly survive on $15k per year. Cost of living isn’t that cheap there.

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  9. scrubone (3,097 comments) says:

    Sounds like a good time to increase their minimum wage. That would incentivise people to work.
    Who could honestly survive on $15k per year. Cost of living isn’t that cheap there.

    By my calculations, it’s 24,088.80 – about $2,000 per month. Not sure where you’re missing the $9,000.

    But even then I disagree with you. My calculations suggest that $15k is quite reasonable for a young person to live on in a flatting situation.

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  10. HC (154 comments) says:

    Some FACTS about beneficiary benefits, in the US and for comparison in NZ: The 14 mio. receiving such “benefits” are 4.43 of a total population of 316 million in the US. In NZ the numbers are (Dec. 2012): Invalid’s benefit recipients were 84,000, sickness benefit recipients were 61.000, and that is for a population of now 4.45 million NZers. This represents about 1.81 per cent of NZ’s population being on IB and 1.37 per cent on SB, which combined is 3.26 per cent of NZ’s total population. Naturally per centage rates of the working age population will be a bit higher, but so it would be in the US.

    Of the IB recipients in NZ about 31 per cent have mental health conditions as primary one, and of the SB recipients 42 percent have such a condition (often such are part of a more complex set of conditions). While about a third of IB recipients have been on that benefit for over ten years (given severity and duration of conditions, often if not mostly truly permanent and substantially incapacitating), only 38.9 SB recipients received such a benefit 1 to 4 years, while 42 per cent on SB received it for less than a year.

    Hence long term disabled and sick are a tiny per centage on SB, and IB recipients generally are truly severely incapacitated. According to strict requirements of medical certification by experts or at least competent, trusted, vocational GPs, to “cheat” and freeload on such benefits must be truly marginal, especially since Future Focus was introduced in 2010, where it is now enforced “relentlessly” that doctors look at what people can do rather than what they cannot do.

    Check details via the MSD website: http://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/benefit/2012-national-benefit-factsheets.html

    The ‘Social Security (Benefit Categories and Work Focus) Amendment Bill’, now going to bring in draconian, outsourced UK style assessments (read all about ATOS, DWP, Dr Mansel Aylward, reviews, scandals, sucides and medicals condemning assessments there), as Paula Bennett has stated, is NOT going to offer any assistance to affected disable to help them find suitable work, it is just going to add pressures and will solve little.

    It is not true that the Greens and Labour, nor benefit advocates oppose reforms, it is the type and way of reforms that are needed that are at issues. Barriers (discrimination, stigmatisation, work place issues) need removing, fair support given, not just more pressure.

    Hand picked figures from the US say nothing much about NZ. Here the regime is robust already.

    Also perhaps “google” Dr David Bratt, the MSD Principal Health Advisor, who in a presentation called ‘Ready Steady, Crook’ compares benefit receipt to drug addiction, then one must ask after seeing that, how “balanced” or not the WiNZ approach is now!

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  11. Data (22 comments) says:

    HC, well put. Not to mention the differences between our ACC system and the accident regime in Britain and the United States. There is no Public Consulting Group or Binder and Binder equivalent in New Zealand. The disability-industrial complex does not exist in any real way in New Zealand. Thanks in part to the different regime under ACC.

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  12. labrator (1,851 comments) says:

    the numbers receiving the Invalids Benefit in NZ has increased eight fold since 1976 from 10,000 to 84,000

    Population change over the same time was 3,163,400 to 4,463,100 so 0.3% to 1.88% of the population. (Gross population not working population).

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  13. HC (154 comments) says:

    labrador: In all fairness, yes, figures may speak something, but compare health care with then, diagnosic capabilities then and now, and compare especially mental health care then and now. I have met a few Kiwis, who grew up in the 1960s and 1970s, and they developed mental health issues, some may have had them all along. I heard dramas and horror stories, about how they were neglected, abused, and treated as outcasts and “problems” even by their own parents.

    They were often told to “toughen up” and get on with life, while they got no treatment. Some did not cope and a fair few institutionalised. So bear in mind that people in institutions were then likely not in the community living on benefits, this must be considered. Also did working life change over time since then, with more industrialised, mass production, which meant workers doing the same movements day in and out at high paces, which led to increases in repetitive stress disorders and what else such conditions are known as, same as back problems and the likes.

    Unhealthy, US style ways of living came to NZ, with endless car driving, more fast food, cheap booze and also people indulging in drugs. That led to other issues, some of which have led to people becoming addicted, extremely obese, having serious heart and sundry other conditions. This continues to this day.

    A focus on prevention has only been adopted years ago. We have in part higher benefit numbers as a ratio of the population, because of these developments, and better diagnosis of illnesses and disabilities not known well before.

    This happened in other countries as well.

    Yet compared amongst many OECD countries, disability and sickness benefit recipients are comparatively lower, or in other cases similar to other countries. This hype about the “escalation” of benefit dependency is largely a myth, promoted by either cost concern driven, or simply ideologically driven (or both) politicians.

    If they want to change things, present the treatment programs! But with such 5-year plans like ‘Rising to the Challenge’ for mental health and addiction treatment (from the Ministry of Health, presented under the radar by Peter Dunne just before Xmas, receiving little or NO media scrutiny), where NO extra funding, and only some vague, undefined, sloganised solutions are presented, which professional organisations have severely criticised, we get NO improved treatment solutions.

    http://www.health.govt.nz/publication/rising-challenge-mental-health-and-addiction-service-development-plan-2012-2017

    So NO disabled in NZ can have much trust and faith in getting fair and better help to return to work under the proposed “welfare reforms”!

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  14. Data (22 comments) says:

    Not to mention that extensive deinstitutionalisation occurred over that period. Large changes were also made to the classification and diagnosis of disabilities. There is also the effects of an aging population. The biggest increases have been in the older age ranges. 15,703 people between the ages of 60 to 64 were receiving the Invalid’s Benefit out of a total of 82,879 in 2008. Edit; you largely bet me to it HC, well said.

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  15. BigFish (132 comments) says:

    By my calculations, it’s 24,088.80 – about $2,000 per month. Not sure where you’re missing the $9,000.

    But even then I disagree with you. My calculations suggest that $15k is quite reasonable for a young person to live on in a flatting situation.

    The federal minimum wage is $7.25 / hour or $15,080 per annum for a 40 hour week.
    Unfortunately, many on that wage are well past that stage of life.

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  16. krazykiwi (8,040 comments) says:

    So NO disabled in NZ can have much trust and faith in getting fair and better help to return to work under the proposed “welfare reforms”!

    That’s a reason to do nothing if the individual believes is it’s the governments responsibility to provide work. However that’s not an impediment if the individual believe it’s their responsibility to find work.

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  17. HC (154 comments) says:

    krazykiwi: So if a person has a disability that does cause work incapacity, but that could perhaps be treated or moderated, so some kind of “suitable” work may be considered, who as an employer will pay the extra money to perhaps make fit the workplace so that such a disabled person can then work there?

    Do you expect the disabled to pay out of his or her own pocket to make such arrangements (e.g. wheelchair access, special fittings here or there, computers purchased to be able to be used by blind people, and the list can go on)? Where does such a disabled person get the money from, or is she/he supposed to starve to save for this?

    What about mentally ill or unstable, likely to be marginalised and stigmatised due to “odd”, instable, inconsistent behaviour or work patterns? Do you expect such a person to put up with jobs on the open market, where no extra measures are taken to ensure the person will not be treated with contempt or otherwise badly and unfairly by fellow staff or a supervisor?

    There are barriers, and some of them are work-place related. Others are social and condition related. I know few if any employers who will retrofit a work place, train their staff and enforce fair rules, where extra costs and efforts are required.

    Fit and healthy struggle to get jobs they can and want to do. So why expose disabled and seriously sick to pressures, when they will not have barriers removed?

    I gather you have no disability and know not what disabled face as hurdles.

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  18. labrator (1,851 comments) says:

    @HC I wasn’t passing judgement. I just thought that raw population numbers were completely useless so added the percentage of population figures to the debate. 1.88% of the population doesn’t seem overly concerning to me. We should track this against the OECD.

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  19. krazykiwi (8,040 comments) says:

    HC – You’re right that there are barriers and challenges, but you’re wrong suggest I don’t know of hurdles faced by disabled people. I have two disabled relatives – one with a physical disability, the other a mental disability. While both will use whatever family and/or government assistance is available, to their credit both regard it as their responsibility to find suitable work, often despite government schemes that are supposedly designed to support them.

    The point I was making is that it’s firstly the individual’s responsibility to overcome obstacles to secure work. For some these obstacles are physical (ability), others intellectual (capacity), and others it’s attitudinal (inclination). Anyone who decides that it’s the government role to bridge the gap – however big or small – between their readiness for employment, and actual employment is destined for ongoing disappointment.

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  20. edhunter (554 comments) says:

    And still no one prepared or willing to talk about the real welfare elephant in the room.. Universal Pension.
    currently 1 in 8 65+, by 2051 it will be 1 in 4.
    In 1999 there were 45,000 aged over 85 i.e. collecting a benefit for 20+ years by 2051 it will be 300,000
    In 1999 there were 300 aged 100+ by 2051 there’ll be 12000+

    I dont have the answer but unless we start asking questions & talking about it soon we’re heading towards a hugh fucking cliff without even the benefit of an ambulance at the bottom.

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  21. Data (22 comments) says:

    Employment relies on employees finding employers who will hire them. Research suggests that many employers will not hire disabled employees (labour demand problems). Where is the labour demand for disabled people, especially those with mental illnesses? Below is a quote from recent research into employer attitudes.

    http://www.thinkdifferently.org.nz/employer%20research

    “However, where employers indicated that employees could do the work, many said that they would be unlikely or be less likely to employ disabled people if they:
    Had a mental illness such as schizophrenia (65 per cent)
    Were moderately intellectually disabled (60 per cent)
    Had a moderate to high speech impairment (60 per cent)
    Had a mental illness such as depression (47 per cent)
    Had a moderate to high sight impairment (41 per cent)
    Had a moderate to high hearing impairment (41 per cent)
    Were severely disfigured in some way (38 per cent)
    Were in a wheelchair (36 per cent).”

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  22. HC (154 comments) says:

    krazykiwi: Thanks for your clarifications, and I respect you have familiar cases of disability in your family. I missed one major category though, when you listed obstacles as physical, intellectual and attitudinal ones. You did not mention psychiatric (incl. also psychological). There are admittedly a fair few disabled and sick (often with complex conditions), who have mental health issues.

    The proposed Social Security (Benefit Categories and Work Focus) Amendment Bill does have a very draconian approach, introducing yet more very severe sanctions for alleged non-compliance with “reasonable” expectations to be available for work. The regime is simply bizarrely severe and will lead to inhumane treatment in some cases.

    Also are they going to bring in more discretionary laws to allow the Chief Executive of WINZ (that is all staff working under her/his authority), to examine and have examined or assessed clients on not only familiar medical grounds, but also separately for general “capacity” to work. There are no details made available how this will be done, what regime will be followed, what assessments criteria will be set, and who it will at least in part be outsourced to.

    Even under Labour the MSD and WINZ did 2007 bring in stricter processes for assessing and re-assessing sick and disabled, and they introduced Principal and Regional Health and Disability Advisors. The senior Principal Health Advisor Dr David Bratt is in charge of instructing, advising, mentoring, train and assisting the Regional Advisors on how to assess, and how to recommend on cases and generally. Separate Health and Disability Coordinators are also supposed to liaise with and cooperate with GPs, the mostly chosen “designated doctors” that WINZ use. I have heard of some appalling decisions, and the Medical Appeal Boards they use, are again mostly staffed by MSD trained and selected GPs as “designated doctors”.

    We have already now Dr Bratt show a very severe bias by comparing benefit dependence to drug dependence, and his many presentations repeat the same again all over:

    See this presentation (pages 3, 16 and 33):
    http://www.gpcme.co.nz/pdf/2012/Fri_DaVinci_1400_Bratt_Medical%20Certificates%20are%20Clinical%20Instruments%20too%20-%20June%202012.pdf

    GPs are generally not that good on assessing mentally unwell and sick patients, and as long as MSD and WINZ continue relying on GP designated doctors and Dr Bratt to decide who is fit or not fit for work, I have NO faith in them.

    Outsourcing them to ATOS Origin Healthcare or similar “assessors” using nurses and the likes will make it even worse, under so much discretion that is dangerous!

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  23. cha (4,138 comments) says:

    From the transcript:

    Chana Joffe Joseph and Ethel Thomas live in a depressed town in a poor state in a national economy that is basically in the process of fully abandoning every kind of job they know how to do. Being poorly educated in a rotten place, that in and of itself has become a disability.

    This is a new reality. This gap between workers who are fit for the US economy and millions of workers who are increasingly not. And it’s a change that’s spreading to towns and cities that have thrived in the American economy. Places that made cars and steel and batteries and textiles.

    The disability programs are acting like a sponge, sopping up otherwise desperate people. This is happening so often in so many parts of the country, this shift from work to disability programs, that I have actually been reporting on it for years, and I didn’t even know it.

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  24. joana (1,983 comments) says:

    HC
    Good you mentioned Dr Bratt..Why is he being allowed to build a little empire.? Why are 55 consultants needed? There are already plenty of staff in Winz offices working at a leisurly pace. There is also Workbridge and various other agencies whose role it is to find work for people with disabilities..I think the number of these agencies increased under Labour, not sure..Labour and lefties are /were seriously big on people with physical and intellectual disabilities..Waving this flag made them feel good..as per usual no one was too interested in people with psych problems..
    If you go to someone at Winz about work..they will sit there and say..”Go to this website..go to that website..how about going to that website”..Absolutely useless..I had an experience a few years back where I was making a complaint. I went thru all the layers and eventually spoke to a very over paid woman in Wgtn who said..”Have you been to our website? I won’t repeat what I said. It is my belief that a great number of public servants could be replaced by recordings telling people which websites to go to.
    Sadly Dr Bratt won’t be replaced by a recording anytime soon.

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  25. HC (154 comments) says:

    If anyone has doubt about how harsh the regime already is in NZ, look at this document the Auckland City Mission has issued, giving advice on the present handling of cases, where clients see a doctor at their Medical Service for health reasons, likely to entitle them to the sickness benefit:

    http://www.aucklandcitymission.org.nz/uploads/file/Calder%20Centre/Sickness%20Benefit%20explanation.pdf

    Now with that in place, does anyone here seriously think that disabled and seriously ill people in NZ have a “lifestyle choice” to go on a benefit?

    The bill presently in 3rd Reading before Parliament will make things yet harsher, so I will expect that there will be an increase of self harm, suicide, substance abuse and so forth. That can hardly be the goal of “assisting” sick and disabled on benefits back into work, can it?

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  26. UpandComer (537 comments) says:

    HC given the number of people who have depression if everyone took your attitude, no one would be in the workforce.

    Being a beneficiary in and of itself is a disability. Sometimes you have to make people realise they can do things.

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  27. cathrine87 (1 comment) says:

    @UpandComer
    Getting Social Security Disability benefits isn’t disability in itself. There are many people who genuinely need such benefits. The only point to focus on is to decide which person really is in need , help them and try to create work opportunities for them.

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