Why are disability benefit rates so different across small areas?
By Stephan Lindner :: April 4th, 2014
Social Security Disability Insurance (DI) is designed to—and does— provide crucial support to individuals with disabilities (in 2012, $120 billion went to nine million people), though not everyone who receives it is truly unable to work, making the program a target for reform.
What do we know about who receives DI? It’s an often overlooked aspect of the program, but participation is highly concentrated in southern states. And even within states, some counties have many people on DI, while neighboring counties do not.
Such sharp differences across small geographic areas are puzzling: What could explain them? Solving that puzzle could lead to meaningful reform and policies that are more closely tailored to people’s actual needs.
As the map shows, almost all counties in which more than 10 percent of the adult population receives DI are in southern states. The 10 counties with the highest DI beneficiary rates—more than one in seven people—are in just three states: Kentucky, Virginia, and West Virginia (see Table 1). The 10 counties with the lowest DI beneficiary rates tend to be in western states like Colorado, Wyoming, or Idaho (see Table 2).
Note, however, that four of these counties are in Virginia, a state with some of the highest and lowest DI beneficiary rates in the country. Although Virginia is an extreme example, every state with counties with very high rates of DI beneficiaries also has a couple of counties with a moderate or low number of people on DI. Conversely, some counties in states with generally low DI beneficiary rates have a high number of people on the program.
What contributes to these geographical differences in DI participation rates? We don’t know for sure, but here are some possible explanations:
- Prevalence of disabilities: Disability rates are generally higher in the South and Southeast, creating a higher need for DI in these regions.
- Economic conditions: Some of the sharp differences across counties could be a result of economic conditions. For instance, all of the top counties displayed in the table have large coal mining industries. As coal prices plummeted in the 1980s and threw the industry in a long-lasting crisis, DI beneficiary rates in these regions skyrocketed.
- State policies: Sharp differences in DI participation rates between adjacent states like Kansas and Missouri could stem from differences in state policies for other safety net programs like the Supplemental Nutrition Assistance Program.
- Determination of DI applications: Caseworkers in field offices assess that state’s DI applications. We do know that caseworkers often decide about identical claims very differently.
- Knowledge about the program: DI is complicated. Knowledge about the program might differ across regions, which could influence application decisions. Evidence that this might be the case comes from the Earned Income Tax Credit, where knowledge about program details differs greatly even across small areas.
We just don’t know exactly how these (or other) factors influence DI beneficiary rates across small geographical areas, but gaining a better understanding could lead to better policies. For example, if different areas have different interpretations of who can and cannot work, then clearer federal guidelines may promote a more equitable program administration.
Alternatively, if counties with similar industrial bases have very different DI rates, then those counties with low rates could serve as a model of how to accommodate workers with disabilities in other industries, reducing the inflow into the disability program and keeping more people in the workforce.