Will work incentives work?

1
Will work incentives work?

• Presented to participants of the
• Disability Research Institute Symposium
• Washington, DC
• Presented by
• David C. Stapleton
• Cornell University
• Institute for Policy Research
• April 5, 2005

2
Overview

• We need a bold test of work incentives for people
  with disabilities
• Illustrate a testable benefit design with strong
  work incentives

3
Work disincentives are strong

• Work does not pay
• SSDI benefit cliff
• 50 tax on SSI benefits
• Medicare and Medicaid eligibility linked to SSDI
  and SSI
• Food stamps, housing subsidies, transportation
  assistance, workers compensation, private
  disability benefits
• Why would anybody work under these circumstances?

4
We need a bold work incentive test

• We have never had a bold test
• Efforts to break down other barriers have had
  limited success
• How can they be successful if work doesnt pay?
• Work incentives might deliver more bang per buck
  than efforts to addressing other barriers
• The most efficient policy is likely a mix of work
  incentives and efforts to address other barriers

5
Questions for a bold work incentive test

• How would strong work incentives affect
  employment, well-being, and program cost?
• What is the efficiency trade-off between work
  incentives and other approaches?
• Can we successfully administer such a program?
  How?
• How much would it cost to significantly improve
  the lives of many people with disabilities and do
  little or no harm to others, using an efficient
  mix of work incentives and other supports? Are
  savings possible?

6
What should/could we test?

• Ticket Act demonstration authority
• Illustration of what could be tested
• Focus on SSDI
• Arguably within SSAs current authority
• Simplifies presentation
• Extension to SSI desirable

7
What should/could we test? (cont.)

• Beneficiaries choose between
• Existing benefit
• New work-incentive benefit that
• Fully replaces current benefit rules and work
  incentives (TWP, IRWEs, EPE)
• Option to return to the existing benefit, with
  rules that prevent gaming

8
Illustrative work-incentive benefit for SSDI

• 15 benefit offset
• Individualized earnings disregards for severe
  functional limitations
• Work-entry incentive
• Higher initial disregard, phased out

9
Illustrative work-incentive benefit for SSDI
(cont.)

• Immediate access to health insurance
• Termination due to medical recovery, age, or
  death only
• Periodic benefit reviews

10
Illustrative work-incentive benefit for SSDI
(cont.)

• Expectations for participating beneficiaries
• Good faith effort
• Timely and accurate reporting
• Benefit penalties for egregious violations
• Expectations for SSA
• Timely and accurate administration
• Timely and accurate payments
• Benefit credits for egregious violations

11
Illustrative Options

• Employment support
• Early eligibility
• Workers compensation and private disability
  insurance

12
Conclusion

• Many variants and options are worth considering
• Need to test several versions of such a design
• Some features may prove problematic or
  unproductive

13
Conclusion (cont.)

• If we want to develop a policy that
• Improves the lives of many
• Does not harm many others
• Is reasonably efficient
• Is politically sustainable
• We need to either test bold incentives, or

14
Conclusion (cont.)

• Pray for a miracle.