When One Size Does Not Fit All: Modernizing the Supplemental Security Income Program

AuthorMary C. Daly,Mark Duggan
Published date01 November 2019
Date01 November 2019
DOIhttp://doi.org/10.1177/0002716219884072
Subject MatterMeans-Tested Transfer Programs
ANNALS, AAPSS, 686, November 2019 229
DOI: 10.1177/0002716219884072
When One Size
Does Not Fit
All:
Modernizing
the
Supplemental
Security
Income
Program
By
MARY C. DALY
and
MARK DUGGAN
884072ANN THE ANNALS OF THE AMERICAN ACADEMYWHEN ONE SIZE DOES NOT FIT ALL
research-article2019
The federal Supplemental Security Income (SSI) pro-
gram is an important part of the safety net in the
United States, paying means-tested benefits to children
with disabilities, nonelderly adults with disabilities, and
elderly individuals. In this article, we describe the eligi-
bility criteria for the program, how these have changed
over time, and the impact of these changes on SSI
enrollment. We also show that over time, SSI has grown
to serve a heterogenous population, with an array of life
experiences and needs. In this context, we discuss
potential reforms intended to modernize the program
and increase its ability to achieve its goals. These
include a proposal to raise the generosity of benefits for
elderly SSI recipients, increase the incentive to work
among nonelderly adult SSI recipients, and harmonize
disability decision-making across medical examiners
and administrative law judges.
Keywords: social policy; welfare; labor market; disability;
reform; implementation; Security Disability
Insurance
Supplemental Security Income (SSI) is a
national means-tested transfer program for
aged, blind, and disabled individuals with low
incomes and assets. The federal SSI program
was enacted in 1972 and began paying cash ben-
efits in 1974, replacing a patchwork of state-run
entitlement programs that were created under
the Social Security Act of 1935 and its subse-
quent amendments in 1950. The establishment
Mary C. Daly is the president and chief executive
officer of the Federal Reserve Bank of San Francisco.
Her research focuses on labor market dynamics and the
aggregate and distributional impacts of monetary and
fiscal policy.
Mark Duggan is the Trione Director of the Stanford
Institute for Economic Policy Research and The Wayne
and Jodi Cooperman Professor of Economics at
Stanford. His research focuses on the health care sector
and the effects of government expenditure programs
such as Medicare, Medicaid, and Social Security.
Correspondence: mary.daly@sf.frb.org
230 THE ANNALS OF THE AMERICAN ACADEMY
of SSI was the culmination of a four-year debate over a more ambitious welfare
reform proposal—the Family Assistance Plan (FAP)—that was intended to extend
the federal social safety net to all low-income Americans. While Congress eventu-
ally rejected the universality of FAP, it passed SSI, a categorical welfare program
based on the same negative income tax principles as FAP but targeted on a much
smaller subset of low-income individuals who were not expected to work—the
aged, blind, and disabled.1
SSI is funded by the federal government and administered by the federal
Social Security Administration (SSA), following federally determined income,
asset, and medical eligibility criteria (for those with disabilities). Benefits are set
at the federal level and rise each year with inflation (using the Bureau of Labor
Statistics Consumer Price Index). States are allowed to provide supplemental
funding for SSI benefits, with all but four states supplementing the federal ben-
efit for some or all of their SSI beneficiaries. In eleven states and the District of
Columbia, the federal government administers state SSI supplements (SSA
2018c). In the other thirty-five states, SSI supplements are paid directly by state
governments to SSI recipients.2
SSI began as a relatively small program providing benefits to a largely elderly
population. For example, in 1974, more than 60 percent of the program’s 4.0 mil-
lion beneficiaries were aged 65 and up. Since that time, SSI has grown to be one
of the largest federal means-tested cash assistance programs in the United States,
with a caseload that is now dominated by children and working-age adults with
disabilities.3 In December 2017, 8.2 million people—the vast majority under age
65—received federal SSI benefits. Total SSI benefits paid in 2017 exceeded $54
billion, reflecting an average annualized benefit of about $7,000. Figure 1 shows
trends in program enrollment and expenditures since SSI’s inception in 1974.
Total SSI expenditures are comparable to spending on the Earned Income Tax
Credit (EITC) and Supplemental Nutrition Assistance Program (food stamp
program) and substantially larger than the amount spent on the Temporary
Assistance to Needy Families (TANF). An additional $127 billion was paid for
SSI recipients’ health insurance through the Medicaid program in 2014.4
Rapid program growth, the changing composition of SSI beneficiaries, and
increasing pressure to better integrate traditional “nonworkers” into the labor mar-
ket all have raised questions about the role that SSI plays in the broader U.S. social
welfare system. While there have been various attempts to improve the economic
outcomes of SSI recipients over time, for example, by encouraging current SSI
recipients to return to work or by assisting child SSI recipients in transitioning off
the program and into gainful employment in adulthood, SSI remains an absorbing
state for most recipients. In other words, once individuals go on the SSI program
and begin to draw benefits, relatively few will later exit the program to work.
NOTE: The views expressed here are the authors’ and not necessarily those of others at the
Federal Reserve Bank of San Francisco or in the Federal Reserve System. The article draws
heavily from prior work including Burkhauser and Daly (2002, 2011); Daly and Burkhauser
2003; and Duggan, Kearney, and Rennane (2016). We thank our prior coauthors for many
useful discussions on these issues, along with Robert Moffitt, James Ziliak, and many conference
participants for their helpful feedback.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT