Saving Social Security Disability Insurance: Designing and Testing Reforms Through Demonstration Projects

Abstract

The Bipartisan Budget Act of 2015 partially addressed the poor state of the Social Security Disability Insurance (SSDI) Trust Fund, over the short run and the medium run. At the time of the act, the fund was roughly one year from depletion. Over the short run, Congress reallocated some portion of the payroll tax funds from the Old-Age and Survivors Insurance (OASI) Trust Fund to the Disability Insurance (DI) Trust Fund to allow the continued payment of full benefits under the current system through fiscal year 2022. According to the most recent report (2017) of the Social Security Board of Trustees, the DI Trust Fund will be depleted in 2028. Looking toward the longer run, Congress took the opportunity to provide a mandate and resources for program redesign. Sections 821–23 of the Bipartisan Budget Act granted expanded authority for the Social Security Administration to engage in demonstration projects aimed at improving the opportunity for disability beneficiaries to remain attached to the labor force or return to work. In this working paper we build on our earlier writing, which proposes reforms to the SSDI program, and consider demonstration project designs that promote the testing of salient aspects of our proposals. We emphasize both a modular design for demonstration projects and the sequence of projects as important for designing effective demonstrations that speak to both administrative and congressional needs for information in the 2018–2028 time frame. We also consider other critical tenets that project designers should consider before fielding projects in the very near future.

Keywords: Social Security, disability insurance, SSDI, Social Security Disability Insurance reform, demonstration projects, retirement, Social Security reform

JEL Classification: H55