Privatization? What About the Backlog?
This short article discusses proposed changes to Social Security disability. Most importantly, it focuses on former Obama budget director Peter Orszag’s recommendation on privatization of the disability process:
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.
This solution, however, fails to address a key problem facing the Social Security disability process today—the enormous backlog. Orszag himself notes that disability applications have reached more than 750,000 a quarter. While Orszag’s privatization proposal focuses on getting the disabled back into the work force, it says nothing about the millions of Americans currently pursuing their disability claims.
Social Security has taken the initiative to reduce the backlog. But the addition of 750,000 applications every three months is going to take its toll on the system. I’m not sure privatization is the answer.
Social Security in the Heartland: Jim Dobbs
Peter Orszag: Making Disability Work