This is the eighth in a series of posts that discuss how possible changes in Social Security will affect the residents of Champaign-Urbana, Illinois. The entire series is archived here.
Throughout this year’s debate on Social Security, there has been almost no mention of the other parts of the program—survivors’ and disability benefits. The purpose of Social Security was to protect people not only from loss of income due to old age, but also loss of income when the breadwinner died or when a worker became disabled. However, a New York Times op-ed last week by former Obama budget director Peter Orszag fired the opening shot in what could become a battle to privatize Social Security’s disability program.
Fifty-three year old Jim Dobbs knows a lot about that part of Social Security. He became disabled, and the $1330 a month he receives in Social Security disability benefits makes it possible to keep his family going. Until he qualified for benefits—not easy to do—things were really rough financially, and at one point Dobbs considered suicide. He said his family, including two kids, survived entirely on help from family and friends. He also had to cash out his retirement savings—people on disability must often do that, which leaves them with little cushion in retirement. His wife teaches voice lessons and brings in about $800 a month, but her business has suffered during the recession.
Dobbs’s journey from making a decent living as a salesman to living on disability benefits was a long one, but it’s typical of what people face when a serious illness strikes. A twenty-year-old worker today has a three in ten chance of becoming disabled. Eight or nine years ago, Dobbs told me, he was making around $70,000 a year selling computers and digital video systems. He also spent several years selling insurance and annuities, a job he said he hated. Before he qualified for the disability benefit, he was selling grand pianos. Music is his hobby. But commissions from selling grand pianos were also dwindling as the recession engulfed residents of Champaign-Urbana. When Dobbs left that job, two-thirds of his monthly take-home pay went to pay his health insurance—$680 a month.
“I really liked the piano job better than any other job in the last few years,” he told me. “But my health was so bad, I couldn’t do it anymore. I stopped working in June of last year. I was one of the top salesmen, but they wanted me out because I was falling asleep.” He also said he would fall asleep on the phone, at the computer, behind the wheel of his ’93 Buick, whose primary color he describes as rust. “I would just go to sleep.”
Dobbs suffers from severe sleep apnea, and explained that the treatment he’s had has been ineffective. “If I had had effective treatment ten years ago, I would be in a different place. I had a lousy doctor. Sleep apnea is the central villain,” he explained. Dobbs had a heart attack ten years ago, and says that his other ailments—diabetes, depression, COPD—are related to the sleep disorder. As a result, he is in and out of the hospital, and had just been discharged the day before we chatted. “A lot of my problems have been stress-related for trying to live on nothing,” he said.
He has Medicaid to pay for his health needs and gets $650 a month in food stamps, which helps the family buy food. For now, the family is stable, even if his health is not.
Some nine million Americans now get Social Security disability benefits. The number of applications is rising now, reaching more than 750,000 each quarter, an increase of over fifty percent from four years ago. It takes three years to determine eligibility. More than 60 percent of applicants fail to qualify on the first review. For those who ask for a reconsideration—the first level of appeal—the denial rate is about 80 percent. Dobbs was lucky. He had good documentation for his ailments and help in navigating the cumbersome process.
Orszag tossed out some ideas that, if enacted, could make it even harder to get disability benefits, at least from the government. He argued that once people begin to receive benefits, they will probably never enter the work force again. “Recipients become permanently dependent on the program,” he wrote.
One idea is to privatize disability benefits by requiring employers to offer their workers private disability insurance. Such policies are sold now; they are expensive and filled with lots of provisions that make it hard for workers to qualify for benefits. Since people applying for disability benefits usually have little income, it’s hard to see where they can come up with the dough to buy one of the most expensive products in the insurance industry’s product line. In the privatized arrangement, they would get limited benefits to replace their lost wages, but help with job retraining and workplace accommodation. After two years of this privatized arrangement, they could do on a government program. Sounds so simple. How people like Dobbs would fare under a changed disability system is not an academic exercise for think tank types. It could be a matter of survival.
“I did not choose to be disabled,” Dobbs said. ‘I didn’t want the stigma of being disabled.” As for privatizing any part of the system, he said: “I worked for an insurance company. They fired 10 percent of the twenty-five- and thirty-year people so their stock would go up. If you privatized it, those are the bastards who would run it.”
For more from Trudy Lieberman on Social Security and entitlement reform, click here.