Social Security Reform: Effects on Disabled Beneficiaries

Barbara Smith, U.S. General Accounting Office (GAO)

Disabled beneficiaries and their families account for 17 percent of all Social Security beneficiaries. Yet policymakers have overlooked this group when considering the effects of reform on Social Security beneficiaries, focusing instead on retired workers. I analyze the impacts on disabled beneficiaries of three proposals discussed in the 106th Congress. I use a policy simulation model designed to estimate the effects on benefits of a variety of policy reforms to Social Security. I find that these three proposals result in reduced benefit income for most of the disabled beneficiaries I simulated when compared with a solvency scenario that maintains current-law benefits while increasing payroll taxes. The income from the individual account was not sufficient to compensate for the decline in the insurance benefits received by disabled beneficiaries. I then discuss the implications of my results in light of the changing economic and demographic characteristics of disabled beneficiaries.