comes up is the number of work we have for each beneficiary. back when the baby boomers were in the prime working ages we had a lot of workers for every beneficiary and that made the cost of the relative gdp relatively low. you can see how we are now moving across time into a position of having of having a lower ratio of workers per beneficiary. this has happened precisely as the baby boomers have moved from where they were 20 years age, ages 25 to 44, which are ages where there's not a lot of disability but people do work to ages 45 to 64, which is where the baby boomers are essential now or in 2010 or 2011. those are ages which are prime ages for people receiving disability benefits. so let me flip to what we refer to as sort of our first cost of social security disability. and beyond those demographic

factors, just the ages of the baby boom and being replaced by smaller generations coming from behind. the first one of these drivers is just being insured. being a person of an age to steve disability benefits isn't enough to get benefits. you have to be insured and there are certain work requirements. the percentage of the population male and female has been rather constant for men up around 75%. we project that into the foout. over the last 25 to 30 years the percentage of women has rhode island inquite dramatic alally. the reason is certain work requirements and there's a recent see requirement you have to work essentially five out of the last ten years. in the past women when they got into 40s and 50s many of them did not satisfy that work requirement. we have moved over the last 25 years to a point where women are at parity with men in terms of

satisfyi satisfying. that is project into the future. the other real driver of disability costs is that given the that it's males and it bounces around a lot for a lot of reasons. it's sort of staying there at 5 per 1,000 on the males. females, however, if we go back to the 1990 period it's been rising quite dramatically. female disability incidence rates, the likelihood of becoming disabled given you're insured, used to be on the order of half or more than half of what male disability rates were. they also have moved up to essential parity with men over time.

both of these factors where women move up fighter with men, we don't expect a crossover. basically this change has occurred and played out. we don't expect further changes. this is an interesting slide you might want to look at later. this is essential sli a slide showing the ups and douwns of or disability costs and recessions like the most recent ones obviously have a lot to do with this. there's a number of changes in the nature of how we define disability. going a little bit further on these drivers so the effect of these drivers has resulted in our having disability prevalence rate, which is the percentage of people who are insured that are actually receiving disability benefits. our disability prevalence rates have been rising for males and female the last 20 years, and you'll not be surprised to see what we project them to be platt in the future. the drivers of aging baby boom and increasing didn't rates for

females have all really happened already. you can see for the males, though, where most of neez haven't been operating, the male prevalence rates have been rising, too. that brings us to one more driver that i'd like to put up here to show you. one other thing thing ha happens, and there's a shift ♪ disability incident towards a higher extent of disability incident in ages. it was mainly people 50 and over. we had somewhat of an increase in the number of people at younger ages. this slide shows you back in 1980 for both men and women, the disability incidence rate was only about one-fifth, only 20% as large for people at ages 25 to 44 as compared to the incidence rate for people at 45 to 64. it was much, much lower. by 2010 and we project it will stay that in the future, that ratio has changed.

now at age 25 to 44 are closer to one-third as likely. that's a pretty big change. the shift toward disability rolls at younger ages of course means they tend to receive benefits for a longer period of time. they assume they don't recover. let me film to one last little slide and i'll slip over to a couple we had here. the one last slide i like to show you is the history and what our projections are for once people receive disability benefits, they stop receiving benefits, of course, if they reach retirement age. they are transferred over to retirement status. our disabled workers like everybody else have a chance of dying but also of recovering. the recovery rate has been around 1% of people on our disability rolls and we project it will stay at around that level. since i am out of time, i will just completely conclude with repeating one side that you've already seen showing you what our projections are, and you've

now seen the basis for it. we've had a dramatic rise in the cost of social security disability program over the last 20 years, we believe that the components of that increase have basically completed themselves and we expect the cost of percentage of gdp to be stableh necessary should be looked at in that light. let me stop there and pass the torch. >> thank you, steve. next we hear from lisa ecmman from health and disability advocates. lisa. >> good morning. thank you for that great presentation. i'm going to start out by talking a little bit about the importance of the social security disability insurance program to people with disabilities. it is vitally important. it provides critical income support for many people with

disabilities and their families. in fact, it lifts many people out of poverty. almost half of beneficiaries rely on critical income for 90% of the total income. it's the one thing that keeps many people from disabilities from having a life of poverty and homelessness. in both kaiss it did prevent them from being homeless. s.first is a man named henry and he was in his 50s and he had severe cardiac problems and had worked in the insurance industry for a very long timd, paid into the social security system and earned his disability benefits until the point at which his heart condition made it no longer healthy for him to work. he amied for benefits -- he stopped working and didn't apply for benefits right away. tried to make a go of it without

them. went through his 401(k) and all of his savings and became homeless and lived in his car for almost a year before he finally took the step to apply for benefits. after being quickly approved, he got an apartment and his ssi/di benefits allowed him to have a home after that. another story is woman named angela, she had type 1 diabetes she developed as a teenager. she worked for many years, and eventually she became ill with diabetes-related complications. she continued to work when she stopped working to take care of herself sxended up being hospitalized. while she was in the hospital, she applied for social security disability benefits, and she was approved for them. in the meantime she didn't have the savings to rely on that ren hi did. she had to get help from a charity.

they paid a rent for a couple of months until her benefits were used and she used her social security disability benefits to pay for rent. the importance of these benefits to people with disabilities and their families cannot be overstated. why have the rolls grow? i think steve goss did a great job laying this out, but i want to go over a little bit of a recap for you. more women qualifying for benefits has led to a big increase. the baby boomers entering their high disability years, the increase in the normal retirement age is something that steve didn't actually mention but as you know the retirement age is going up from 65 and it's now 66 for people retiring. for people born at 1960 it will be 67. the way disability benefits work is you get them until you reach your normal retirement age. for every month that the retirement age goes up, that's another month that benefits come

out of the disability trust fund instead of the retirement trust fund. in 2009 approximately 300,000 people received benefits from the disability trust fund that under previous law would have received benefits from the retirement trust fund. that does also contribute to the increase in cost and the growth in the numbers of people receiving disability benefits. as steve said, we've really hit the top of the increase. it's going to level off and then will go down. but there are other factors that do contribute as well. and as steve also mentioned. the economy is one of them. we expect applications to increase during times of economic downturns, and steve showed you that ka chart and you can track when there are recessions. we see an increase in the number of of applications and people that are approved. employers are less likely to hire and more likely to fire people during times of a weak

economy. when there are a surplus of workers applies for every job there's a huge loss of productivity. when there's increased concerns although they show people with disabilities are no less productive than nondisabled peers, there's a perception among employers and fear among employers. when times are tough it's less likely that people with disabilities will get hired. if they have to let someone go, some of those perceptions around the productivity of people with with disabilities can lead tell me to be the first let go. it's harder to find a job if you're laid off if you're a person with a disability. that's true it if you're an older worker with a disability. now you have two potential things that an employer might consider when they're looking at a huge pool of applicants about who to place in the job that they might look at and view negatively, even though they shouldn't and there aren't any

real concerns, the perceptions are enough to make employers make different choices. there are a couple other reasons ipts i want to highlight why the r e rolls have grown over the past couple decades. in the past decades we see a decline in the number of people are health insurance coverage and a decline in employers offering health insurance coverage. if you have a disability having health insurance coverage is not an option. it is life or death situation. you need to be able to get your treatments and afford your prescription medication. if you can't get health insurance through a job, people get health insurance through applying for ssi/di and get access to medicare. that's an easy choice. if my choice is death or applying for benefits, i apply to get ssi/di benefits. there's a leg forgiving workplace. the emphasis on global competition and the productivity

concerns -- perceived concerns that i saw a few moments ago make the workplace let forgiving. it's harder for people receiving the benefits to compete in the less forgiving workplace. most is placed on misperceptions, but if the perception means you don't get hired, you don't get a job. the americans with disabilities act has done a fantastic job in helping people with disabilities get the reasonable accommodations they need and be able to sue when they are fired for disability discrimination. it is also available for discrimination in hiring, but unfortunately, it is extremely hard to prove in terms of discrimination and hiring, especially if you have 1,000 applications for a particular job. it's really hard to prove that. it has not eliminated by the

mernled with disability act. to a much lesser extent but still to some extent there are other programs that require people to apply for social security benefits. there are a hand of workers comp programs that require you apply for ssd sxi they offset your worker's compensation benefit amount based on the receipt of disability events and the same is true for private disability insurance. many policies will require someone receiving private disability shurnts benefits and also apply for ssdi and many have the same kind of offset. what does this increase mean for the future? as sfeem pointed out, it is levelly off. it's not expected to continue into the future. it does not mean that the program is not affordable or sustainable. sustainability and affordability

are both a matter of priorities in poll after poll, americans say they would rather see their taxes for social security to go up than to see benefit cuts and they support doing that. steve also mentioned that we can solve this by reallocating some of the current taxes in the retirement that go into the retirement trust fund into the disability fund as we have done in the past. obviously the political situation is different than in 1994. it's a matter of political will but not a matter of it being hard to do. i want to go over a few beneficiary characteristics, and that is that people who receive benefits are very diverse. you can see the list of different types of disabilities that people have, and so some are terminal as steve discussed. some have very debilitating disabilities and when we reform

social security disability, and this is not a homogeneous group. every individual is different and their situation is different, their condition is different. the likely track that their condition will take if they have the same condition is different. it's an individual situation, and we have to it keep that in mind. some beneficiaries are termally ill. about 1 in 5 male and 1 in 7 female beneficiaries die within seven years to get benefits. they tend to be oeltder. in 2010 the average age was 53. 7 in 10 beneficiaries are over the age of 50 and nearly 3 in 10 are over the age of 60. many have low educational attainment. two-thirds have a high school diploma and although a third did not complete high school. when we think about trying to find work for folks in this changing technology-based,

skill-based economy we have to keep in mind what the characteristics of people receiving benefits of. can they work and become self-supporting? ssdi beneficiaries should be given every service support and encouragement to go to work. as i've got through the reasons why it's unlikely that a large percentage have the capacity for ongoing work at a significant level. ssdi does not present a disincentive to work. the benefits are modest. it's $1,100 per month. in february of 2012, and that is more than 10% less than a person working full time at a low age. it's a modest benefit. doesn't need reform. ssdi is functioning as it should. it provides vital wage replacement to millions with

disabilities and their families who need it. more must be done to stay at work to it acquire a disability and more is done to provide supports and services to ssdi beneficiaries. with more capacity to obtain and maintain employment. that is not the role of an income support program. it's not the role of ssdi nor should it be. we should do everything that we can to help people with disabilities work. the employment situation for them is not good, and we should do more. that is not the role of an income support program that people pay into and earn a benefit through. i want to end with some principles for reform that if we think about reform, we ought to really think about these as we evaluate from the perspective of people with disabilities as we evaluate the reform proposals. any reform should preserve the structure of ssdi program, including the definition of disability. it's appropriate. it's a wage replacement program for people who don't have work capacity, so the division of

disability and the structure of the program are appropriate for that function. efforts to increase employment opportunities and improve employment outcomes for people with disabilities receiving ssdi shoonlt be achieved through tightening eligibility criteria, narrowing health care benefits, removing the entitlement to benefits or deinvolving responsibility to the states. ssdi benefit receipts should not be time-limited. we can't predict the course of a person's disability, and so that is what governs whether or not a person can work, is what their health condition is. we can't predict it, so we shouldn't try to put limits on benefits. work activities and work preparation activities should be voluntary for ssdi beneficiaries. a person, their family and health care providers are in the best position to decide whether or not a work attempt is a healthy thing to do for work

disability. should give them ad resources to perform all the program integrity functions before we begin reform. e we should allow them to have enough resources to complete determinations in a timely manner. do reviews to ensure that people continue to have a disability so that the people who are receiving benefits are entitled to them. we should provide them with adequate staff and resources to prevent overpayments to people who do try to work because that's a huge disincentive to people. i have a couple more slides talking about the specific reforms but i encourage you to take a look at them. i have run out of time. but just want to close by reiterating how important the ssdi program is to people with disabilities as we think about any type of reforms, we have to

remember that these benefits represent the difference between being poor and homeless and being able to live independently in the community for millions of people with disabilities and their families. thank you. >> thank you, lisa. next we will turn to dave stapleton. >> thank you. and thanks for setting this up. i'm glad to see a great crowd here. this is terrific. so so far, we have heard from steve about the financing and the history of the ssdi program, which i think is the issue that's really brings us here. and things look a better in the future than they have in the past. and i agree with that. we have also heard from lisa that the ssdi program is extremely important for people

with disabilities. i have fundamental disagreements on the issue of the structure of the program. it's not just the ssdi program alone, but it needs to be seen in the context of the larger disability policy picture. so i'm not going to focus on ssdi. i will talk about it, but i'm going to talk about why i think the disability policy in general is failing people with disabilities and it's also failing taxpayers. and i'm going to brush over fairly quickly a number of ideas for reform. there's not enough time to look at all of them. but i'm going to close by saying we're not really ready for reform. a lot of my remarks are based on a paper that i wrote with david man, who is sitting here in the third row.

there's also an issue brief chrks you may have picked up on the way in. i have to give them credit, but you're not allowed to give them blame. so current policies are failing people with disabilities. i think exhibit number one is this chart which has been around and keeps getting updated. it looks at the relative employment rate for people with disabilities. the working age population e relative to those without disabilities. it goes back to 1981, the first year we had data. what you can see is there's been a steady decline in the employment rate that started in the late 1990s where it peaked in 19 88 at about 38% and is now down to 22% in 2010. and allow with that relative decline has been the decline in

the relative household incomes of people with disabilities. here the situation is a little better. income support plays a big part in why it's better, but there's been a decline to about 52% today. so the other really important set of information about how current policies are failing concerns poverty rates. so my colleague did a recent study looking at the long-term pover poverty. that's household incomes below the federal poverty line for at least three years in a row. so they found that 65% of those people who are in long-term poverty have a significant disability of some sort. we have also done work, and they have been doing this using

social security survey we did of the beneficiary population, and we found in that survey and this was from, i believe, 2005 that 50% of all ssdi and ssi recipients combined lived in households whose incomes were below the poverty line. if we just looked at ssi only, it's more like 30%. but that's very high poverty rate. there's also been a body of research, it's not on this slide, about the hardships that people with disabilities who live in impoverished households experience. they experience hardships such as not being able to get medicine and going without food much more frequently than people without disabilities who live in poverty with the same level of income. so i think going back, i think

this is enough of a reason to consider disability policy broadly and whether or not it needs restructuring. but the thing that's deriving interest isn't these factors, which i think they should be. they have been around for a long time. we have known about them for a long time. but it's the fiscal situation. it's the perception that current policies are failing taxpayers. so now we're going to look at the ssdi program. these numbers are going to be consistent with what steve told you earlier. this chart just shows you the number of beneficiaries on the roles of working age population starting with -- and i want to focus attention for a minute on 1980. so 1908 and '81 was the last time that congress and the administration were so concerned about growth and expenditures for this program that there were significant cuts in eligibility. and you can see that after 1980,

there was actually a significant drop in the number of people on the rolls. this happened during the worst recession since the great depression up to that point. it's still the worst recession except for the recent one. and after that, there was such a political backlash that congress in 1984 enacted amendments to the social security act, which basically reversed what had happened earlier in the decade. and some people would say it more than reversed. it's difficult to determine, but the growth in roles was moderate after that period, but we had a pretty strong economy up to 1990. starting in 1990, there's this acceleration of growth on the number of people on the rolls and that growth has continued pretty solidly ever since then for the last three decades. as steve explained, a lot of that has to do with the number

of people who are disability insured, and it also has to do with the ageing of the baby boom population. my generation. so we're more prone to disability than we were when we were younger unfortunately. we did some calculations to show you what the effects of those factors are. so that's what this red line is showing you. and we anchored this red line in 1980. so what it shows you is how the number of people on the rolls would have grown if the prevalence rates for those who are disability ensured qualified for the program. the prevalence of those on the program within the categories stayed the same as they were in 1980. what you can see here is there would have been overall growth and it would have been substantial over the year since 1980, but not nearly as large as we have seen the growth be since the early 1990s. and in fact, the difference

between the values in 2010 is 28% or 2.2 million beneficiaries. if we rolled back the clock, we would have 2.2 million fewer people. that amounts to $50 billion in benefits if you count the ssdi benefits and the medicare benefits that these people are eligible for. that's a big number. but it turns out that the medicare benefits and the ssdi benefits received by beneficiaries is less than half of what the federal government spends for people with disabilities currently. and these numbers are from a paper that gene livermore and i did that was published last year. we tried to count all the money spent to support the disabled population. but the